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Ellen Pao can sue Kleiner Perkins for punitive damages, rules judge

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Harold E. Kahn said a reasonable juror could find evidence of gender discrimination

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Ellen Pao is suing for both punitive and compensatory damages in her gender discrimination trial against the venture capital firm Kleiner Perkins. Today, Judge Harold E. Kahn upheld the punitive damages claim, saying, "There is sufficient evidence from which a reasonable juror could conclude that Kleiner Perkins engaged in intentional gender discrimination."

The trial is expected to reach closing arguments Tuesday. Pao, now the interim CEO of Reddit, will also be allowed to sue for compensatory damages. She is asking for $16 million in lost wages from being denied a promotion and fired from the firm in 2012. Punitive damages, however, are typically much higher because — as the name implies — the amount is meant to punish the defendant for inflicting harm. According to the Mercury News, in Pao's case, punitive damages would have been "likely more than $100 million."

Kleiner's attorney Lynne Hermle asked the judge to dismiss the punitive damages claim on Tuesday — and it was a bit of a shock that Kahn entertained the notion, questioning whether Pao had proven the malice, fraud, or oppression, the standards for punitive damages.

The motion was initially filed on Tuesday unbeknownst to the jury, in one of many on-the-record discussions that happens out of the earshot of the six men and six women who will decide this case. Yesterday both legal teams were presenting arguments to Judge Kahn for hours after the jury, when the San Francisco Superior Court is normally closed. It was clearly a tough call. The ruling is a pitfall for Kleiner Perkins, the prestigious Silicon Valley venture capital firm that has financed companies like Google, Amazon, Electronic Arts, and Uber.

The back-and-forth between Judge Kahn and Pao's lawyer Alan Exelrod on Tuesday was very telling. In addition to gender discrimination, Pao is also suing for retaliation and failure to prevent retaliation after she complained about a partner named Ajit Nazre. Pao claims Nazre pressured her into a consensual affair and he was later fired for sexually harassing another female partner. The lawsuit alleges Kleiner soured on her after she complained about being excluded by Nazre and a host of other subtle instances of sexism. But Judge Kahn seems unconvinced about aspects of Pao's complaint:

Exelrod argued to Kahn that Kleiner Perkins partners are "highly exaggerating Ms. Pao’s interpersonal issues [...] It’s all about her personality."

Kahn replied, "Malice, fraud or oppression has to be based on the facts as they actually occurred to the parties involved. To me, I look at this case in a very, very legalistic way. Has Ms. Pao proved each of her claims by a preponderance of the evidence, and has she proved her damages, and has Kleiner Perkins proved any offset of those damages."

Exelrod persisted, saying that he’d proved that Chi-Hua Chien and Ajit Nazre, two partners hostile to Pao, gave input on a negative performance review that was "covered up."

Pao certainly seems to be on trial for being likable as much of her performance as as a junior partner. But a recent witness, senior partner Juliet de Baubigny, disputed Pao's "cover up" narrative. De Baubigny used to help manage Kleiner's annual performance reviews, which include a list of the employees who contributed feedback. She testified that names were "dropped off" if the partner's opinion was not included in the final draft.

The cover-up is one of many allegations made in Pao's complaint that seemed to be corroborated or disputed depending on whether the jury believes the plaintiff or defendant, rather than on clear evidence or facts.

UPDATE: In a document sent out by Judge Kahn this morning, he began by noting that he was legally obligated to favor the plaintiff.

Defendant Kleiner Perkins’ motion for nonsuit on plaintiff Ms. Pao’s request for punitive damages is denied. Interpreting the evidence most favorably to Ms. Pao and most strongly against Kleiner Perkins, and resolving all presumptions, inferences, and doubts in favor of Ms. Pao, as I am required to do on a nonsuit motion (Wegner, Fairbank, and Epstein, California Practice Guide: Cilvil Trials and Evidence (The Rutter Group 2014) 12:203), there is sufficient evidence from which a reasonable juror could find, as to Ms. Pao’s claims for gender discrimination and retaliation, that Kleiner Perkins acted with malice, fraud or oppression. Per this standard, there is sufficient evidence from which a reasonable juror could conclude that Kleiner Perkins engaged in intentional gender discrimination by failing to promote Ms. Pao and terminating her employment and that Kleiner Perkins attempted to hide its illegal conduct by offering knowingly false and pre textual explanations for its decisions not to promote Ms. Pao and to terminate her employment. […]

Similarly, per the nonsuit standard, there is sufficient evidence from which a reasonable juror could conclude that Kleiner Perkins retaliated against Ms. Pao for making a protected complaint in December 2011 and January 2012 and for filing this lawsuit by failing to promote her and terminating her employment and that Kleiner Perkins attempted to hide its illegal conduct by offering knowingly false and pre textual explanations for its decisions not to promote Ms. Pao and to terminate her employment.