Silicon Valley gender discrimination lawsuit: the essentials

Posted on 28 March 2015 by Drew Shagrin

French lawyers who work with American clients know that the American legal and business communities held their breath this past week waiting for the jury in a San Francisco courtroom to deliver its verdict in an employment-related lawsuit involving a legendary Silicon Valley venture capital firm. Today’s Law Talk helps French lawyers (and any other readers) understand what happened.

The defendant: Kleiner Perkins Caufiel & Byers, the VC firm that provided early funding for many prominent companies, including Facebook, Google, Genentech, and Amazon.

The plaintiff: Ellen Pao, a former lawyer who joined Kleiner Perkins in 2005 and was made a “junior investing partner” in 2007, and who was asked to leave the firm in 2012 (a few months after filing the complaint in this case).

The complaint: In 2012, having been passed over for promotion to full partner, Ms. Pao filed a complaint in California Superior Court. The complaint asserted three causes of action: gender discrimination, retaliation, and failure to take reasonable steps to prevent discrimination, all in violation of California Government Code Section 12940.

The amount at stake: Ms. Pao had asked the jury to award $16 million in compensatory damages (based on the foregone higher compensation that she would have received had she become a full partner). For any finding of liability, the jury was also allowed to award punitive damages, which in theory would both reform this defendant and deter others from enaging in similar conduct. A typical cap on punitive damages in California is 9 times the amount of compensatory damages. Between the compensatory damages and the punitive damages, the amount at stake was nearly $160 million.

The jury vedict: Friday, nearly 3 years after the filing of the complaint, the jury delivered its verdict, specifically answering 4 questions. For each answer, the jury majority needed to be 9 out of 12, and the standard of proof was a preponderance of the evidence (ie, “more likely than not”). Here are the questions and in each case the jury’s answer:

1. Did Kleiner Perkins discriminate against Ms. Pao because of her gender by failing to promote her and by terminating her employment? The jury answered no.

2. Did Kleiner Perkins retaliate against her by failing to promote her because she had conversations with partners about the discrimination in December 2011 and/or because she gave a memorandum about the discrimination to the firm on Jan. 4, 2012? The jury answered no.

3. Did Kleiner Perkins retaliate against her by terminating her employment because of either/or her memo and her suit? The jury answered no.

4. Did Kleiner Perkins fail to take all reasonable steps to prevent gender discrimination against her? The jury answered no.

Some of the primary legal documents: There’s no shortage of commentary about this case (some of the better articles are listed further down in this Law Talk), but sometimes a lawyer just wants a direct unmediated look at the primary legal documents. We’ve gathered some of them for you:

2012 complaint.

Plaintiff’s trial brief.

Defendant’s trial brief.

Jury instructions.

Verdict form to be filled out by the jury (a distillation of the jury instructions, essentially an algorithm to guide the deliberations).

About the lawyers and the judge: They’ve been all over the American press lately, and you might be curious to know more about them. The lead counsel for Kleiner Perkins was Lynn Hermle of Orrick Herrington and Sutcliffe. Here’s her bio page on the Orrick site. (You might know some Orrick lawyers: since Orrick’s 2006 merger with Rambaud Martel, they have a Paris office.) The lead counsel for Ms. Pao was Allan Exelrod of Rudy, Exelrod, Zieff & Lowe. Here’s his bio page on the Rezlaw site. Co-lead counsel was Therese Lawless of Lawless & Lawless. Here’s her bio page on the Lawless website. The judge was Harold Kahn, named to the bench in 2002 by then-Governor Gray Davis. Here’s his not-very-informative Wikipedia page, and here’s a 2002 newspaper profile of him, shortly after he took the bench.

Interesting commentary: Now that the jury has issued its verdict, much of the recent press coverage has lost its interest, but here are two pre-verdict articles with enduring value. First, the New York Times magazine published an article on the industry background and what was really at stake. Second, the New Yorker magazine published an article on what we mean by “discrimination.”

What’s ahead: A complaint was just filed against Twitter, asserting gender discrimination. While the Pao v. Kleiner Perkins case was interesting, it was limited to one specific plaintiff. In contrast, the Twitter complaint seeks certification of a whole plaintiff class. (Go back and read again the Law Talk from early February on class-action lawsuits.) We’re going to hear a lot more about the Twitter case . . . .

Bankruptcy and commercial law and the myth of the economically rational actor

Posted on 23 March 2015 by Drew Shagrin

“Bankruptcy and commercial law provide the essential rules necessary for any country’s daily life; these laws affect every type of exchange, from buying a Twinkie to building a hydroelectric dam. No company or entrepreneur can do anything without considering their effect on each transaction undertaken.”

Do you agree?

The quote above comes from Bruce Markell, currently a professor of law at Florida State University, formerly a highly regarded United States Bankruptcy Judge, and a very long time ago the partner for a bankruptcy research project assigned to me when I was a summer associate in a large law firm. I have an enormous amount of respect for Judge Markell, and I genuinely like him, and for many years I would have been inclined to say that his statement above is correct. However, I can’t agree with his statement as drafted. To help the analysis, let’s separate the statement into two separate components, each to be evaluated independently:

Bankruptcy and commercial law provide the essential rules necessary for any country’s daily life; these laws affect every type of exchange, from buying a Twinkie to building a hydroelectric dam.

I agree with this as an absolute truth, and you probably do, too. OK, there’s a reasonable challenge to this assertion as applied to countries whose exchanges are driven by cultural norms as much as (or even more than) laws. But in modern industrial democracies, it’s hard to argue with the accuracy of the first part of Judge Markell’s statement. Now on to part 2:

No company or entrepreneur can do anything without considering [the] effect [of bankruptcy and commercial law] on each transaction undertaken.

I agree that no company or entrepreneur can rationally do anything without considering the effect of bankruptcy and commercial law on each transaction undertaken. However, business decisions, like personal ones, sometimes get made with irrational disregard for factors that would be dispositive to a rational actor. I know this from my own experience, and you probably do, too–maybe it’s because of trust in a valued relationship. Or maybe it’s fear of derailing a deal’s momentum, or some other psychological factor. Ultimately, companies act and decide through people, and people are, well, human, with human psychological foibles.

Most economists now recognize that the long-cherished hypothetical rational actor is just that, hypothetical. If you’re a traditionalist and continue to believe in the economic rationality of people, then I encourage you to read Predictably Irrational by Duke professor Dan Ariely. (If you’re more comfortable reading in French, its translated version is called C’est (vraiment) moi qui décide?) In that book, Professor Ariely summarizes many of the insights of the field now known as behavioral economics, and makes them accessible, relevant, and entertaining. (He himself is responsible for some of those insights, even if the Nobel prize glory for behavioral economics went to his psychologist colleague and occasional collaborator Daniel Kahneman.)

We’ll come back to American bankruptcy and commercial law in future Law Talks. If you do business in the United States, or if you advise companies that do business in the United States, then it truly is irrational for you to ignore their effect. To paraphrase Judge Markell, “no company or entrepreneur doing business in the US can rationally do anything without considering the effect of American bankrupcty and commercial law on each transaction undertaken.”

For now, simply enjoy Dan Ariely’s entertaining and informative 2008 TED Talk “Are we in control of our own decisions?”:

And if you have an experience with irrational decision-making in business, whether or not it involves bankrupcty and commercial law, please feel free to share it in the comments!

US copyright law and the “Blurred Lines” jury verdict

Posted on 17 March 2015 by Drew Shagrin

The intersection of music and US copyright law is in the news, thanks to the recent jury verdict regarding the song “Blurred Lines” by Robin Thicke, T.I., and Pharrell Williams. “Blurred Lines” created a sensation in 2013, not only for catchy music that led to the sale of nearly 15 million singles, but also for lyrics and a video that Robin Thicke himself admitted in an interview in the magazine GQ are degrading to women. (He later said that the admission was an ironic joke, and that in fact the lyrics and the video are pro-feminist and liberating for women, but not many people seem to agree.)

The writers of the song openly acknowledged heavy sampling of Marvin Gaye’s song “Got To Give It Up.” The owners of the rights to that song—Marvin Gaye’s surviving family members— thought that the sampling crossed the line separating permissible and impermissible borrowing, and made an accusation of copyright infringement in out-of-court communications. In response, and in anticipation of a lawsuit, the three writers of “Blurred Lines” went to federal court seeking declaratory relief: they wanted a court judgment confirming that “Blurred Lines” was not a copyright infringement (with respect not only to Marvin Gaye’s “Got To Give It Up,” but also the Funkadelic song “Sexy Ways” owned today by Bridgeport Music). See the complaint here.

The Gaye family and Bridgeport Music counterclaimed, seeking damages. After discovery, the “Blurred Lines” artists moved for summary judgment, asserting that there were no relevant facts in dispute and asking the judge to rule as a matter of law that there was no copyright infringement. The judge disagreed with them, and allowed the dispute to proceed to a trial. See the judge’s summary judgment decision here.

Foreign lawyers, take note: an appeal in the US is generally based on an alleged mistake of law, so one likely basis of any appeal is this summary judgment decision.

Details of many of the pre-trial procedural maneuvers can be found here. Bridgeport Music reached a settlement, but the Gaye family claim proceeded to trial. And just last week, the jury in the case issued a verdict in favor of the Gaye family members.

There’s no shortage of critical commentary by IP law scholars, IP law practitioners, musicians, and other informed observers. As Columbia professor Tim Wu put it in The New Yorker magazine:

A serious error has been made: the judge overseeing the case should never have let the case go before a jury. The ruling against Thicke was a mistake, and it should, and likely will, be reversed on appeal . . . The question is not whether Pharrell borrowed from Gaye but whether Gaye owned the thing that was borrowed. And this is where the case falls apart. For it was not any actual sequence of notes that Pharrell borrowed, but rather the general style of Gaye’s songs. That is why “Blurred Lines” sounds very much like a Marvin Gaye song. But to say that something “sounds like” something else does not amount to copyright infringement.

The New York Times music critic had this to say:

Owing to the specifics of copyright law, the jury was instructed to base its decision on the sheet music, a fact that reflects how inadequate copyright law is when it comes to contemporary songwriting and production practices. In 2015, the arrangement of notes on a sheet of paper is among the least integral parts of pop music creation. We’re decades beyond the time when a songwriter penned a tune on paper, then gave it to musicians to perform. . . Besides, in an age in which popular music is incredibly diverse, with more sonic references, instruments and digital trickery available than ever, using sheet music as a measure of a song’s originality is a weak tactic, and possibly an irresponsible one. The “Blurred Lines” verdict is a victory for an outmoded law, but also an outmoded way of thinking about music.

Speaking of jury instructions, they’re the other likely basis for an appeal. Here you can see the actual jury instructions provided in the “Blurred Lines” trial. You IP litigators out there might enjoy comparing them with the model copyright infringement jury instructions in the 9^th federal court circuit, where the “Blurred Lines” case was adjudicated.

Here’s a contrary law professor view, finding the jury verdict “hand-wringing” but predicting that the legal issues–the summary judgment decision and the jury instructions–will be upheld on any appeal.

And here’s a practitioner comment on the evidence made available to the jury.

On the human interest side, here’s a New York Times profile of the lawyer who represented the Gaye family.

Finally, you can listen for yourself to the similarities between the two songs. Here’s “Blurred Lines” (not the version with topless women):

And here’s a video of Marvin Gaye’s “Got To Give It Up”:

Same vibe and style, yes. Same melody? Not at all!

The same melody in 2 different songs really was at issue when George Harrison lost a copyright infringement lawsuit in 1976 involving his 1970 hit “My Sweet Lord” and its uncanny musical similarity to the 1963 hit “He’s So Fine,” written by Ronnie Mack, recorded by The Chiffons, and owned at the time of the lawsuit by Bright Tunes Music. George Harrison denied any intentional copying, and Judge Richard Owen discussed “subconscious” plagiarism in his decision:

Did Harrison deliberately use the music of “He’s So Fine”? I do not believe he did so deliberately. Nevertheless, it is clear that “My Sweet Lord” is the very same song as He’s So Fine with different words, and Harrison had access to “He’s So Fine.” This is, under the law, infringement of copyright, and is no less so even though subconsciously accomplished.

You can find the complete decision at the Music Copyright Infringement Service, a joint project of the Columbia and USC law schools. A nifty feature lets you hear, for both the complaining work and the defending work, the complete sound recording and a rendition of just the isolated melody. Even more nifty : a superimposition of the isolated melodies. When you listen to the superimposition of melodies, it’s hard to disagree with Judge Owen : “My Sweet Lord” is indeed the very same song as “He’s So Fine” but with different words.

For background of and details on the “My Sweet Lord” case, see this article originally published in 910 magazine, as well as this article from the Performing Songwriter site (with several embedded videos, including the following alternate superimposition of the recorded versions of the two songs).

There was a very different outcome for John Fogerty, the songwriter and singer behind the group Creedence Clearwater Revival, when he was accused of copying . . . himself! Among his many songs: “Run Through The Jungle,” written in 1970 and recorded by Creedence Clearwater Revival; and “The Old Man Down The Road,” published in 1985 by John Fogerty as a solo artist. “Run Through The Jungle” was owned in 1985 by Fantasty Records, and Fantasy sued Fogerty for copyright infringement–he was sued for writing a new song that was too much like his own earlier song! A jury found in favor of defendant Fogerty. Unfortunately for him, the court denied his request for attorney’s fees, because Fantasy hadn’t brought its suit in bad faith. The legal fees issue went all the way up to the US Supreme Court, which clarified the standards to govern a trial court in awarding (or not) attorney’s fees in copyright disputes. (The federal circuits had been divided on this question of statutory interpretation.)

This Law Talk will close with a preview of a class being offered at NYU :

Recycling Pop Music: Innovation, Imitation and Originality

Course description here . Oh, to be a student with the time to study such things!

Abercrombie, the hijab, and religious discrimination in US employment law

Posted on 9 March 2015 by Drew Shagrin

The US Supreme Court recently heard oral arguments in a case in which clothing company Abercrombie & Fitch had refused to hire a candidate for a store sales position because of a hijab headscarf that she wore for religious reasons.

It’s clear that American law, specifically Title VII of the Civil Rights Act of 1964, doesn’t let an employer refuse to hire an individual on account of her religious observance or practice, unless it can’t accommodate the religious practice without undue hardship in the conduct of its business.

What isn’t clear, and what the US Supreme Court will soon decide, is whether an employer can be liable under Title VII for refusing to hire an applicant on account of her religious practice where the candidate didn’t provide the employer with direct, explicit notice of her need for a religious accommodation.

In the recent case, the candidate had applied for a job in a children’s clothing store owned by Abercrombie; she wore a black headscarf to the interview but didn’t say why; and Abercrombie refused to hire her because the headscarf was inconsistent with the company’s “Look Policy” that forbids black clothing and caps. As it turns out, the candidate is Muslim, and wears the black hijab headscarf as part of her religious practice.

The Equal Employment Opportunity Commission, a federal government agency, sued Abercrombie on the candidate’s behalf in federal court. The EEOC argued that the refusal to hire her because of her headscarf was a violation of Title VII. Abercrombie responded, in part, that the candidate should have informed the interviewer that she required an accommodation from the Look Policy.

The district court granted summary judgment for the EEOC. (Summary judgment is a ruling on the law where the facts aren’t in dispute.) The Court of Appeals for the Tenth Circuit reversed, holding that summary judgment should have been granted in favor of Abercrombie. And just 2 weeks ago, the Supreme Court heard oral arguments in a case that’s very narrowly framed: can an employer be liable under Title VII for refusing to hire an applicant based on a religious practice where she didn’t provide the employer with direct, explicit notice of her need for a religious accommodation?

Another way of framing the issue is “Who has the burden of raising the issue during the interview?” The EEOC’s position is that a candidate shouldn’t be required to make a specific request for a religious accommodation to wear a hijab. Abercrombie’s position is that an employer shouldn’t have to guess whether a head scarf is worn for religious reasons or fashion reasons.

Justice Samuel Alito colorfully illustrated the issue during oral argument, in the following question to Shay Dvoretzky, Abercrombie’s lawyer:

All right. Let’s say four — four people show up for a job interview at Abercrombie. And half — this is going to sound like a joke, but, you know, it’s not. (Laughter.) So the first is a Sikh man wearing a turban, the second is a Hasidic man wearing a hat, the third is a Muslim woman wearing a hijab, the fourth is a Catholic nun in a habit. Now, do you think the employer has to — that those people have to say, we just want to tell you, we’re dressed this way for a religious reason. We’re not just trying to make a fashion statement.

You can listen to the oral arguments, and read the oral argument transcript, by clicking on the link near the bottom of this page of the Oyez website.

A decision is expected within the next few months.

(The New York Times illustrated an article on the oral argument with a photo of rejected candidate Samantha Elauf, her mother, and the EEOC General Counsel on the Supreme Court steps.)

Maternity leave in the US: a representative demonstration of federalism

Posted on 4 March 2015 by Drew Shagrin

President Obama recently mentioned paid maternity leave as a priority goal in his State of the Union message to Congress. Maternity and parental leave laws vary from state to state in the United States, in a representative demonstration of American federalism. Today’s Law Talk blog article will help the reader understand both American federalism and American parental leave policies.

First, though, an observation: the US doesn’t seem very generous when its national paid parental leave policy–there is none–is compared with that of other countries (16 weeks in France, for instance, or 50 in Canada).

A fundamental characteristic of American government is that the country consists of 50 sovereign states in a federal system where the national government has limited power. The roots of this federalism go back to 1776: through their famous Declaration of Independence from Great Britain, the 13 colonies became 13 “states” joined in a battle for independence. They organized themselves under a document, finalized in late 1777 and ratified over the next few years, known as the Articles of Confederation. After their independence was confirmed through the 1783 Treaty of Paris, these new states—countries—remained bound together for limited purposes under the pre-existing Articles of Confederation. The many flaws with the Articles of Confederation led to the drafting of a proposed replacement constitution at a 1787 convention, and this new document, the US Constitution, went into effect in 1789. Between its initial text and the 10th amendment ratified a few years later, the US Constitution confirmed three categories of government authority:

-the national government has exclusive authority in some areas (such as defense and interstate commerce);

-the national and state governments have concurrent authority for other areas; and

-the state governments have exclusive authority for areas where the Constitution doesn’t grant authority to the national government.

This division of authority across levels of government often leads to disagreement. The disagreement once rose to the level of war—the Civil War of 1861-1865—and was quite heated during the civil rights battles of the 1950’s and 60’s, such as when President Eisenhower called upon the military to ensure Arkansas compliance with federal court desegregation orders in the face of resistance in the name of “states’ rights.” The tension is usually less violent, but still ever-present.

As a result of this division of authority, some areas of policy will be developed through laws at the national level alone; others will be developed through laws at both the national and state levels; and still others will be developed through laws at only the state level.

Where does parental leave policy fit into this framework? It’s pretty clear that the Constitution is silent on whether the national government has the authority to compel employers to allow parent employees to take time off in connection with the birth of a child. If that were the end of the analysis, then it would be clear, given the limited authority of the national government, that there’s no authority to enact a federal parental leave policy.

However, there are at least two constitutional grants of authority to the national government that might permit a national parental leave policy: the Commerce Clause’s grant to the national government of authority to regulate interstate commerce; and the Fourteenth Amendment’s grant of authority to the national government to enforce the “Equal Protection” clause of the Fourteenth Amendment, including that clause’s judicially-identified freedom from gender-based discrimination in the workplace.

This was the constitutional framework when President Clinton signed into law, very early in his first term, the Family and Medical Leave Act of 1993. The FMLA required (and continues to require) covered employers to provide eligible employees with job-protected but unpaid leave for qualified medical and family reasons, including the birth of a child. Given that not all employers are covered, and not all employees are eligible, not all employees in the US benefit today from the FMLA: according to a 2007 study, two-thirds of American workers worked then for covered employers, and 54% of American workers were then eligible for FMLA leave.

What does the FMLA guarantee to eligible workers? The right to take up to 12 work weeks of unpaid leave during any 12-month period to attend to the serious health condition of the employee, parent, spouse or child, or for pregnancy or care of a newborn child, or for adoption or foster care of a child.

The constitutionality of the FMLA was reviewed by the US Supreme Court in a case that arose because the law applied to state government employers . In 1997, the State of Nevada fired a worker for failure to show up to work after having exhausted his FMLA leave. The fired worker sued the State of Nevada for alleged violations of the FMLA, and in its defense the State of Nevada challenged the FMLA’s constitutionality, arguing that the national government didn’t have the authority to impose a family leave policy on a state government employer under the Eleventh Amendment (which addresses a state’s sovereign immunity). The lawsuit made its way up to the US Supreme Court, and in 2003, a divided Court upheld the constitutionality of the FMLA: first, the Court found that the FMLA was a valid exercise of authority under the Fourteenth Amendment; and then the Court found that the FMLA validly impinged on state sovereign immunity, notwithstanding the Eleventh Amendment. (One justice, in a concurring opinion that agreed with the conclusion but not the reasoning, would have upheld the constitutionality of the FMLA under the Commerce Clause but not under the Fourth Amendment.)

It’s still the case that the US has no national law providing for paid time off for new parents. However, some of the 50 states do.

States can also enact FMLA-like laws with their own rules that impose a job-protected leave requirement on a broader range of employers than under the FMLA, or expand eligibility to a broader range of employees than under the FMLA.

The culture of federalism is such that a national lawmaker (a representative or senator) might support the expansion of paid leave as good policy, yet oppose a national law to get there (such policies best being left to the states).

This is the context today for President Obama’s recent State of the Union message. (The State of the Union message is itself a feature of the US Constitution, which requires the President to periodically give Congress information on the state of the union and recommend measures believed to be necessary and expedient.) In January’s State of the Union message, President Obama announced a plan to expand paid leave for workers, starting with the federal government. The plan has three components:

Calling on Congress to pass legislation that would guarantee paid leave for employees throughout the United States.

Proposing the appropriation of funds to encourage states to develop their own paid leave programs.

Using presidential authority over the federal workforce to provide paid leave for federal employees. (The President has already signed an order to this effect.)

You now know enough about federalism and family leave policies in the US to delve further. Here are a few resources to get started:

A recent news article on President Obama’s plan to expand paid leave

The majority, concurring, and dissenting opinions in Nevada vs Hibbs

The US Department of Labor page on the FMLA

A Wikipedia article on the FMLA

The US Constitution