As expected, Judge Harold Kahn has denied a motion by Kleiner Perkins to compel arbitration in a lawsuit filed by one of its partners, Ellen Pao, for gender discrimination and retaliation.
Kleiner is appealing.
"Ellen is pleased with today's decision," her lawyer, Alan Exelrod of Rudy Exelrod Zieff & Lowe told reporters at the doors of Kahn's courtroom today.
The case is quite the saga—Pao admits sleeping with another partner, Ajit Nazre, and then broke it off. She says Nazre forced her into the relationship and retaliated against her, as did other partners after she started complaining about his behavior. Kleiner has denied all of her "material" claims.
On the issue of arbitration, Kleiner argued that the firm and the venture-capital funds it runs were so intertwined that the court should enforce the funds' arbitration agreements against Pao, even though she did not have an arbitration agreement with Kleiner Perkins itself. Judge Harold Kahn didn't buy it.
"We're going round and round," he told Kleiner's lead lawyer, Lynne Hermle of Orrick Herrington & Sutcliffe. "Your remedy is to across the street."
That's a reference to California's First District Court of Appeal. As Business Insider exclusively reported yesterday, Kleiner, as the defendant, has an automatic right to appeal the case.
Such an appeal would likely take a year. While the appeal on the arbitration issue is being heard, no other parts of the case can move forward.
Shortly after the ruling, Kleiner issued this statement:
KPCB is disappointed in Judge Kahn’s decision and intends to file an appeal believing it has strong arguments and precedent to move the matter to arbitration. Ms. Pao, like other partners, signed a variety of standard agreements and it is these agreements with the managing LLCs that govern her claims and require, among other things, that disputes be resolved through arbitration. We expect arbitration to be a more efficient and speedier dispute resolution process than trying a matter before a jury years down the line in the San Francisco Superior Court.
Kleiner only took a few minutes to make up its mind. Minutes before the statement, in a courthouse elevator, Hermle said that an appeal was her client's decision to make. So we turned to Kleiner Perkins general counsel Paul Vronsky, who didn't have an immediate comment on the firm's plans.
"I started following you on Twitter," he said, though.
We're not sure if we should be flattered or point out that Kleiner is an investor in Twitter, too.
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