UPDATE 1-Kleiner to appeal judge's decision in discrimination case

By Sarah McBride

SAN FRANCISCO, July 20 (Reuters) - Venture-capital firm Kleiner Perkins Caufield & Byers said o n F riday it would appeal a California judge's decision that an employment discrimination case brought by one of its partners should stay in court rather than move to arbitration as Kleiner had requested.

The appeal, which could take months, seems likely to keep one of Silicon Valley's higher-profile cases in the public eye for now. Kleiner Partner Ellen Pao's suit has become the talk of the Bay Area, inspiring debate on its merits as well as the broader question of sexism in the technology industry.

"I thought your papers were terrific," Superior Court Judge Harold Kahn told Kleiner lawyer Lynne Hermle in a court hearing earlier on Fr iday. "I just disagreed with them."

In a statement, Kleiner said it was disappointed in the decision and would appeal.

"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," a spokesperson said. "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."

Pao's lawsuit paints a picture of a firm where complaints against harassment went ignored, where a senior partner suggested that marrying the alleged harasser might be the solution to Pao's difficulties, and where women were labeled "buzz" kills.

In response, Kleiner characterized Pao as an underperforming partner who never told the firm she was unhappy with her treatment by male colleagues.

The firm sought to move the case to arbitration last month, saying the agreements governing various Kleiner funds mandated it. The firm argued that Pao was knowledgeable about her obligations.

Pao attorney Alan Exelrod has argued that Pao was suing the Kleiner firm itself - not its funds. Pao never signed any arbitration agreements with the firm, Exelrod argued.

But Kleiner attorney Hermle charged in court on Friday and in a filing o n T hursday that Pao was trying to have it both ways, suing the firm for discrimination even after signing agreements that seemingly acknowledged the authority of the funds rather than the firm in key areas.

Kleiner Perkins, founded in 1972, has backed big-name firms such as online retailer Amazon.com Inc, gaming company Electronic Arts Inc, biotechnology company Genentech, browser company Netscape, information-technology company Sun Microsystems and gaming company Zynga Inc.

The case in Superior Court of the State of California, County of San Francisco is Ellen Pao v Kleiner Perkins Caufield & Byers LLC and Does 1-20, case no. 12-520719.