• Kleiner Attorney Lynn Hermle Shows This Trial is Far from Over

    Lynn Hermle.2Defense attorney Lynn Hermle set the stage yesterday for a bruising battle, delivering a series of jabs over the course of roughly four hours as she began her cross-examination of Ellen Pao, the former Kleiner Perkins Caufield & Byers partner who is suing the firm for gender discrimination and retaliation.

    Many of Hermle’s punches landed.

    Hermle, for example, asked Pao to confirm that she was hired within the same general time frame as several other former and current Kleiner employees in the spring and summer of 2005, including Randy Komisar, Beth Seidenberg, and Dana Mead. Hermle then asked Pao to confirm that “one man and one woman” were later promoted to general partner — Komisar and Seidenberg — while “one man and one woman,” meaning Mead and Pao, were not.

    The idea, of course, was to remind jurors that Kleiner promotes some but not all of its partners, no matter their gender.

    Hermle continued on, asking Pao to confirm the names of the women who Kleiner Perkins hired either in the same time frame or after Pao was hired, including: Mary Meeker. “Yes.” Megan Quinn. “Yes.” Jessica Owens. “Yes.” Tina Ju. “Yes.” Hermle continued on, citing Christina Lee; Lila Ibrahim; and Maritza Liaw; as well as mentioning, for good measure, Juliet de Baubigny and Kleiner’s CFO for the last 14 years, Susan Biglieri, who were already at the firm when Pao joined it.

    Hermle also established a discrepancy between Pao’s testimony on the stand and a videotaped deposition of Pao from April 2014 that Hermle played at various intervals yesterday. Specifically, while jurors looked on, Hermle asked Pao to look at her employment agreement with Kleiner, which mandated “compliance with [Kleiner] policies, including, but not limited to, policies prohibiting discrimination and unlawful harassment, securities trading, disclosure of confidential information, conflicts of interest and violation of applicable laws.”

    Hermle then said: “You made no attempt to obtain copies of these policies?” Pao answered that she did, in 2012, the year she filed her lawsuit against Kleiner. “But in the seven years between 2005 and 2012, you made no attempt to ask for any copies of these policies — is that correct?” asked Hermle. “Yes it is,” said Pao.

    On the heels of Pao’s testimony Monday that she engaged numerous Kleiner partners about the firm’s need for better HR policies, the admission didn’t look good.

    The veracity of Pao’s claims were further called into question when Hermle asked Pao about her interactions with Biglieri about those policies.

    Hermle: “You never asked Sue Biglieri if the firm maintained an [equal employment] policy?” Pao: “She told me it did not.” Cue the videotaped deposition from last year, in which Hermle asks Pao: “Did you ever ask [Sue] Biglieri about an EE policy?” and Pao answers, after a reflective beat, “No.” Hermle then asks in the deposition video: “Did you ever ask anyone at Kleiner for a policy that prohibited discrimination or harassment?” “No.”

    Surprisingly, Pao’s attorneys barely said a word while Hermle hammered at Pao, though presumably, they will have a chance to ask follow-up questions.

    Among the issues they might raise is Komisar’s advancement at the firm. Though Hermle yesterday compared his trajectory at Kleiner to Pao’s, Kleiner had worked with Komisar for years before 2005, including backing him in prior ventures and partnering with him on boards, which gave him a considerable advantage over Pao.

    They might also note that asking for copies of a company’s equal employment policy might have been seen as declaration of war. After all, employees don’t usually seek out such documentation unless they’re preparing to sue, and Pao has testified that she filed her suit after years of seeking a solution internally.

    No doubt Pao’s team will also walk through the names of those female employees who Hermle mentioned, some of whom were hired into support roles, and many who remain only loosely affiliated with the firm today.

    Still, Hermle made it clear from the start that this trial is far from over. Among other inconsistencies that Hermle worked to expose throughout her first day of questioning was whether Pao was “pressured” into a relationship with former colleague Ajit Nazre, as she has said, or Pao entered into it willingly, as dozens of very personal text messages and emails introduced into evidence yesterday suggest.

    To unsettle Pao, Hermle even plucked the word “humble” from the official description for the job that Pao had first taken at Kleiner.

    “[Y]ou understand what humble means, Ms. Pao? How would you define it?”

    “Modest, not arrogant. Someone who is not exaggerating their skills,” answered Pao.

    “And it would also include — would it not — someone who doesn’t think they’re better than their coworkers – without being dismissive of their coworkers’ accomplishments. That would fall within the definition wouldn’t it?” asked Hermle.

    “Yes,” sound Pao, who then waited, along with everyone else in the crowded courtroom, to see where Hermle would take her questioning next.

  • Oh No You Didn’t, Facebook

    wedgieYesterday, Facebook sued DLA Piper along with three other firms and nine lawyers who represented Paul Ceglia, a New York man who emerged in 2010 with claims that he was entitled to at least 50 percent of Facebook.

    Given that it’s nearly 2015, Facebook’s move comes as something of a surprise. Ceglia’s suit against Facebook was dismissed back in March by a federal judge amid clear evidence that his claims to Facebook were based on a “recently created fabrication.” More, two years ago, Ceglia was arrested and charged with mail and wire fraud for allegedly falsifying the contract and creating bogus emails to support his case. (His criminal trial is now scheduled for May.)

    Facebook’s festering ire at the firms that represented Ceglia is understandable to a point. Ceglia’s lawsuit and the questions it raised were a huge distraction before Facebook went public in 2012.

    Industry observers are probably cheering on Facebook, too, partly in hopes that law firms will think harder about bringing frivolous lawsuits.

    Still, Facebook’s rationale for pursuing these firms at this late date sounds a little vengeful. “We said from the beginning that Paul Ceglia’s claim was a fraud and that we would seek to hold those responsible accountable,” Facebook General Counsel Colin Stretch said in a statement given to reporters yesterday. “DLA Piper and the other named law firms knew the case was based on forged documents, yet they pursued it anyway, and they should be held to account.”

    Stretch might just as well have said, “DLA Piper and the other named law firms deserve an atomic wedgie, and we’re going to give them one to remember.”

    DLA Piper sent StrictlyVC a comment about the suit today. Written by Peter Pantaleo, DLA Piper’s general counsel, the firm calls the lawsuit “entirely baseless” and “filed as a tactic to intimidate lawyers from bringing litigation against Facebook. DLA Piper, which was not part of this case at its outset or its conclusion, was involved for 78 days. Facebook and Mr. Zuckerberg claim that they were damaged in those 78 days, yet a mere 10 months after DLA Piper withdrew from the case and while the litigation was still pending, Facebook went to market with an initial public offering that valued the company at $100 billion. Today, Facebook is worth $200 billion and Mr. Zuckerberg is among the richest people in the world. We will defend this meritless litigation aggressively and we will prevail.”

    Either way, a 2011 conversation we had with a corporate litigation attorney about Ceglia suggests that Facebook’s case against DLA Piper and the other firms probably isn’t a slam dunk.

    Generally speaking, this attorney explained, lawyers have to “ensure that there’s a good faith basis for the claims that they file on behalf of their clients. That doesn’t mean that they have to think that they necessarily will prevail, but there has to be some kind of factual basis, in their view, to provide some support for the allegations.”

    Presumably, DLA Piper didn’t know when it took the case that Ceglia fabricated the evidence to support his claims.

    We’re also guessing it will be hard to argue that Ceglia’s lawyers used uniquely reckless judgment in taking on the Ceglia case. In 2010, for example, DLA Piper decided to represent CNet founder Halsey Minor in a Chapter 11 proceeding despite Minor’s long history of stiffing service providers.

    DLA Piper subsequently dropped Minor eight months after engaging with him, but you see the point: if it were so easy to sue a law firm over its ne’er-do-well customers, we wouldn’t have lawyers.

    Facebook says its lawsuit is a matter of principle. We think it sounds heavy-handed. It also seems very much like another distraction that the company doesn’t need.

    Updated to include a statement from DLA Piper.

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  • Kleiner, Ellen Pao and the Reddit Factor

    ellen paoIt’s looking like Kleiner Perkins will have to hash it out in court with former partner Ellen Pao, who filed an explosive gender-discrimination lawsuit against the venture firm in May of last year. 

    This Wednesday, Kleiner was denied its request to move the case to arbitration.

    In response, Kleiner told the Mercury News yesterday that it will “vigorously defend the matter” and is “confident we will prevail.”

    But Pao’s current job of building strategic partnerships at the social news site Reddit may throw an unexpected wrench into Kleiner’s defense.

    As industry watchers may recall, in October of last year, roughly five months after Pao filed her suit — in which she clams she was repeatedly denied opportunities to advance or pay raises — Pao was abruptly terminated by Kleiner, she said. Kleiner has always disputed the characterization, saying it asked Pao to leave “because of long-standing issues having no relationship or bearing on the litigation.”

    But now that the case is no longer under appeal, her attorney told the Mercury News yesterday that he’s planning to add a wrongful termination claim to the lawsuit.

    Legal experts have told me that Pao’s Reddit gig could work to her advantage in her case against her former employer. For one thing, anyone who claims retaliation in a discrimination case has a duty to look for a job. Joining Reddit could show that Pao tried limiting the financial damage to herself and secured a job under difficult circumstances (i.e., in the middle of a media circus).

    Landing the role could also boost Pao’s credibility and make her more believable to a jury, according to employment attorneys; they say that juries want to know, “Can this person work for someone else?”

    In cases like these, employment attorneys argue that the burden of proof is always on the employer, and retaliation claims are often more powerful and easier to prove than actual discrimination claims.

    And to make matters even worse, Kleiner could be on the hook for more damages than when Pao originally filed her lawsuit as an employee.

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