WIN OR LOSE, DISCRIMINATION SUIT IS HAVING AN EFFECT ON SILICON VALLEY

Original Story: latimes.com

She was a junior partner at one of Silicon Valley's most powerful venture capital firms. But was Ellen Pao a greedy underperformer? Or was she a victim of a sexist corporate culture?

That's the choice confronting a jury in a trial that has riveted an industry struggling to attract and keep talented women in the workforce.

Ellen Pao vs. Kleiner Perkins Caufield & Byers wrapped up Wednesday after weeks of testimony exposed salacious details of workplace trysts, all-male outings, porn talk and alleged routine harassment. Jurors must decide whether the firm discriminated against Pao, 45, because she is a woman, and then fired her in retaliation after she sued in 2012. A Boston employment lawyer represents clients facing gender discrimination in the workplace.

"Even before there's a verdict in this case, and regardless of what the verdict is, people in Silicon Valley are now talking," said Kelly Dermody, managing partner at Lieff Cabraser Heimann & Bernstein, who chairs the San Francisco law firm's employment practice group.

"People are second-guessing and questioning whether there are exclusionary practices [and] everyday subtle acts of exclusion that collectively limit women's ability to succeed or even to compete for the best opportunities. And that's an incredibly positive impact."

Women in tech have long complained about an uneven playing field — lower pay for equal work, being passed over for promotions and a hostile "brogrammer" culture — and have waited for a catalyst to finally overhaul the status quo.

This trial — pitting a disgruntled, multimillionaire former junior partner against a powerful Menlo Park, Calif., venture capital firm — was far from the open-and-shut case that many women had hoped for. And Pao, portrayed as an uncooperative and conflict-ridden worker "with sharp elbows," makes a less-than-ideal test case for gender bias in Silicon Valley. A Memphis employment discrimination lawyer is following this story closely.

"She's not the most likable person in the world, but the kinds of evidence she's alleged does track some of these long-documented patterns of both subtle stereotyping and blatant boys club activity," said Joan C. Williams, a professor at UC Hastings College of the Law.

More gender discrimination suits against big tech firms are expected to follow; some already have, including lawsuits against Facebook Inc. and Twitter Inc.

The monthlong trial in San Francisco County Superior Court uncovered the inner workings of the highly successful venture capital firm, which has invested in companies including Google Inc., Snapchat Inc., Twitter, Spotify and Uber. It also revealed sordid tidbits about alleged behind-the-scenes antics.

Pao claimed that after inquiring about why women weren't invited to a dinner with Al Gore, she was told that they "kill the buzz." She testified that she had received a book that contained sexual poetry from a married male partner and had been subjected to colleagues' discussion of pornography on a private plane.

Another female former partner testified that a male colleague had touched her with his leg under a table and appeared at her hotel room one night in a bathrobe and slippers.

The jury is now deliberating over four claims: that Kleiner Perkins willfully discriminated against Pao because of gender; that it retaliated against her by failing to promote her when she spoke up; that it failed to take reasonable steps to prevent gender discrimination against her; and that it retaliated by terminating her employment.

Pao is seeking $16 million in lost wages and bonuses, and punitive damages that could raise her total award to as much as $160 million. The jury will decide how much, if any, compensatory damages to award. If punitive damages are awarded, that amount will "be an issue decided later," according to Judge Harold Kahn's jury instructions.

In closing arguments, Pao's attorney Alan Exelrod alleged that Kleiner Perkins cultivated a misogynistic culture that fast-tracked men at the expense of more-deserving women.

"Men were judged by one standard and women by another," Exelrod said to the jury. "The leaders of Kleiner Perkins are the ones responsible for this double standard."

When it was her turn, Lynne Hermle, Kleiner Perkins' attorney, slammed Pao as greedy and unqualified. Pao is now interim chief executive of Reddit Inc.

"Neither her gender nor any complaints was the driver in any of the events at issue here. Like so many other misplaced accusations … these claims are simply a continuation of Ellen Pao's attempts to blame others for her own failings," Hermle said. "The complaints of Ellen Pao were made for only one purpose: a huge payout for Team Ellen." A Memphis employee rights lawyer represents clients involved in employee rights cases.

That strategy — to attack Pao's character and to make her experience at the firm a one-off situation of her own making — could hurt her claim that a history of widespread discrimination existed at the firm, said Amy Oppenheimer, a workplace investigator who works with clients in Silicon Valley.

"Whether it's correct or not, the defense has been able to focus on her shortcomings," Oppenheimer said. "So it's been much more about this individual than about the pattern of bias."

Pao's legal team has accused Kleiner Perkins of leading a smear campaign to discredit Pao and distract jurors. During closing arguments, attorney Therese Lawless sought to dispel criticism of her personality Wednesday.

"For the men, it didn't hurt them getting promoted. But it hurt her," Lawless said.

The case has spurred heated debate within Silicon Valley among male and female tech workers.

"Whether she wins or loses, the impact of the case has already been felt," said Wayne Sutton, a tech entrepreneur and general partner at San Francisco accelerator BuildUp. "People know the problems are bigger than this."

For some women, tales of alleged harassment at Kleiner Perkins reminded them of their own struggles in the tech world.

Divya Manian, a product manager at a Silicon Valley software firm, said she empathized with Pao.

"Ellen Pao's conflict around the way her co-workers treated her — that's something we've heard many times before," the 31-year-old said. "It's something I've experienced at conferences and it was something I didn't speak up about."

Manian noted that a lot of positive changes have been taking place in the valley as women have become more outspoken about unequal treatment: Diversity is "taking center stage" in recruitment conversations and more women have been hired as a result, she said.

So win or lose, many expect Pao's trial will force further change.

"It's going to open the floodgates for women who have gone through worse," Manian said.

FOR DOV CHARNEY OF AMERICAN APPAREL, AN ABRUPT FALL FROM GRACE

Original Story: nytimes.com

Dov Charney was no one’s idea of a button-down executive.

For years, Mr. Charney, the founder of American Apparel, has stood like a tabloid monument to fashion industry excess, a barely restrained id in a fitted black shirt. The stories about his personal life are legion: the accusations of sexual harassment, suggestive emails, nude photos — the list goes on.

But on Wednesday, the company that Mr. Charney founded in 1998 decided enough was enough. Worried that Mr. Charney had become a liability, the board ousted him from his roles as chairman and chief executive in a coup that leaves American Apparel facing an uncertain future.

“The company has grown a lot bigger than just one person and the liabilities Dov brought to the situation began to far outweigh his strengths,” said Allan Mayer, the board’s new co-chairman. A lawyer representing Mr. Charney did not return telephone calls on Thursday.

Exactly what prompted the move was unclear. People with knowledge of the situation said an internal investigation had turned up new details about Mr. Charney’s salacious behavior — only this time, they said, American Apparel could no longer afford the potential cost. Its creditors were growing anxious after years of losses at the company. Even a suggestion of new controversy might frighten stockholders, who have watched their investment plummet in value in recent years.

Mr. Mayer said Mr. Charney’s conduct, not the company’s financial performance, was behind the board’s decision. He said new facts had emerged this year, but declined to elaborate.

“The independent directors became aware of some facts we’d been previously unaware of,” Mr. Mayer said. “The only right and sensible thing to do at that point was to ask Dov to leave.”

Even if Mr. Charney’s conduct was the primary reason for his dismissal, the company’s numbers are unsettling. American Apparel’s share price has plunged more than 80 percent over the last five years. Financial institutions have demanded credit-card-style interest rates of up to 20 percent on its loans, a development that suggests how uneasy creditors are. Other financial companies flatly refused to have anything to do with American Apparel as long as Mr. Charney, 45, was at its helm.

About six weeks ago, the board began to start seriously considering forcing the founder to go.

At the end of the company’s annual meeting on Wednesday, Mr. Charney and five directors had a conference in a glass office tower in Times Square, where the board delivered the news that Mr. Charney was out. According to someone with direct knowledge of the episode, Mr. Charney was shocked.

The six men spent the next nine hours in that room, going around and around on the reasoning, as Mr. Charney made his case that the board was making a mistake. The board was unconvinced.

The company appointed John Luttrell, who has been with the company since 2011, as interim chief executive. David Danziger was appointed co-chairman of the board with Mr. Mayer. Under the terms of his contract, Mr. Charney will be suspended immediately and formally terminated after 30 days. The directors also voted to remove him as chairman.

Mr. Charney still owns 27 percent of the company’s stock.

According to a regulatory filing the company submitted on Wednesday, the decision to fire Mr. Charney comes not just with financial potential, but also with financial risk, because the move may initiate a default on some of the company’s credit facilities. If its lenders refuse to give American Apparel a waiver on the triggers, the filing warned, the effect “would have a material adverse effect on our liquidity, financial condition and results of operations, and could cause us to become bankrupt or insolvent.”

Mr. Charney, who was born in Montreal, moved to Los Angeles in 1997 to start a wholesale business that became American Apparel. Six years later, American Apparel became a retail business and immediately took off.

Early on, Mr. Charney received accolades for making clothing in the United States, even as more and more apparel production moved oversees, and for being vocal about workers’ rights. On Thursday, company executives said that neither the mission of the company — nor its suggestive marketing and advertising strategy, which has been frequently compared to soft-core pornography — would change.

“We are committed to staying true to being made in America, to being sweatshop-free, to being a high-quality basic and fashion product,” Mr. Luttrell said. “The targeted customer demographic will not change, either.”

But Mr. Charney’s penchant for inappropriate behavior has dogged him and the company for years.

In May 2005, three former employees filed two separate sexual harassment lawsuits in Los Angeles County Superior Court accusing Mr. Charney of creating an unsafe environment where women were subject to sexual misconduct and innuendo.

Nearly a year later, in February 2006, another former employee filed a complaint with the Los Angeles office of the Equal Employment Opportunity Commission, saying she was sexually harassed by an unidentified co-worker and was fired as a result of a hostile working environment.

The commission determined in August 2010 that the company not only discriminated against Sylvia Hsu, but also against “women, as a class, on the basis of their female gender, by subjecting them to sexual harassment,” the company’s annual report said.

In early 2011, five more former female employees filed sexual harassment lawsuits against Mr. Charney, including accusations that he had asked some of them to engage in sex acts against their will.

Despite his vocal support for workers’ rights, he was forced to let go of 1,800 workers, more than 30 percent of his factory staff, in 2009 as part of an immigration sweep when a federal investigation turned up irregularities in the identity documents the workers presented when they were hired.

An additional 700 left voluntarily, which company officials said had a devastating effect on American Apparel’s productivity in 2010. His management style, which executives described as controlling and disorganized, was also a problem.

And over the last year or so, current and former executives say that Mr. Charney created disarray by pushing out a large number of employees, including members of upper-level management like the general counsel, Glenn A. Weinman, who left the company in May.

In addition to disappointing earnings in recent quarters — the company’s net losses last year were $106.3 million — the company has struggled with a new distribution center opened last year. The new center had problems with missed shipments and personnel that created extra costs for the company and lost revenue from problems with inventory.

This is a crowded moment to be a retailer searching for a new chief executive, as companies like J. C. Penney and Target are also looking for new leadership. But a company insider said on Thursday that several attractive candidates had already expressed interest in running American Apparel — so long as Mr. Charney was in no way involved.

On Thursday, shares in the company rose nearly 7 percent to close at 68 cents a share.