When can arbitration be compelled by a party who did not sign the agreement containing the arbitration provision? This question was raised recently in a well-publicized and ongoing San Francisco Superior Court lawsuit alleging gender bias and discrimination at the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers.
Junior partner Ellen Pao filed the suit in May, and the firm sought to compel arbitration. KPCB’s counsel argued that each of the firm’s investment funds is managed by a separate limited liability company and partner compensation, which is central to Pao’s claim for damages, is governed by each LLC’s operating agreement. KPCB says these operating agreements contain mandatory arbitration clauses that bind Pao and other partners. Pao, on the other hand, argues that her claim is not against the LLCs but against KPCB with whom she has no arbitration agreement.
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