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U.S. District Judge James Robart. (File Photo)

A federal judge in Seattle today heard arguments and delivered some blunt feedback in a three-year-old gender discrimination lawsuit brought against Microsoft by current and former technical employees that could be expanded to cover a pool of thousands of women in engineering, IT and other technical roles.

Kelly Dermody. (Lieff Cabraser Heimann & Bernstein LLP Photo)

The case dates back to 2015, when former high-ranking cybersecurity employee Katie Moussouris and current employee Holly Muenchow brought a gender discrimination lawsuit against the company, alleging “continuing policy, pattern and practice of sex discrimination against female employees in technical and engineering roles, including technical sales and services positions with respect to performance evaluations, pay, promotions, and other terms and conditions of employment.”

The hearing focused on a motion by the plaintiffs to certify the suit as a class action. U.S. District Court Judge James Robart’s decision will hinge on whether Microsoft’s performance evaluation policies systematically “undervalued” women in comparison to similarly qualified men when it comes to promotions and compensation.

Moussouris and Muenchow want to band together more than 8,600 women in technical roles that have worked at the company since 2012 to join the case to influence Microsoft to change its evaluation policies.

The plaintiffs were on the defensive for the majority of the hearing Monday. Judge Robart said Kelly Dermody, one of the attorneys representing the plaintiffs from San Francisco-based Lieff Cabraser Heimann & Bernstein LLP was “hatching a new theory” that he said he never saw in the record when preparing for the hearing.

“I’m not, as you can tell, very impressed with your performance,” Robart told Dermody early on. “I don’t know what you think you’re doing, but you can’t just make this stuff up as you go along.”

Lynne Hermle. (Photo via Orrick)

On one occasion he asked Microsoft attorneys to tell him everything wrong with one of Dermody’s statements. He also chided the Microsoft side at one point, saying he was underwhelmed by an answer to one of his questions.

Robart did not make a ruling Monday. Following the hearing, Dermody said the judge asked good questions of both sides.

“The judge asked lots of important, good questions,” Dermody said. “He’s a very careful judge and he took it under advisement, so we don’t know.”

Microsoft representatives declined to discuss the case following the hearing.

The plaintiffs allege that Microsoft evaluation practices led to reduced compensation and fewer promotion opportunities for women than their male colleagues as well as “unchecked gender bias that pervades its corporate culture,” according to court documents. In court Monday, Dermody argued that Microsoft gives managers the criteria for evaluations, but doesn’t tell them what the criteria means or what to do with it.

“The same collection of managers can evaluate the same performance differently,” Dermody said during the proceedings.

Microsoft attorneys and Judge Robart jumped on the argument that the company didn’t provide a lot of guidance for applying evaluation criteria as evidence that the procedures couldn’t be biased toward women because they weren’t applied in the same way from manager to manager and group to group.

Dermody went on to argue that the compensation process is allegedly based on peer groups made up of employees at different salary levels, or pay bands. Experts working with the Moussouris and Muenchow calculated that Microsoft’s evaluation system has cost women in technical roles up to 500 promotions and $238 million in lost compensation over the last few years.

“Because the peer groups are broken into different pay bands, what drives the pay is what pay band you’re in, not performance,” Dermody said.

Microsoft countered that each of the three plaintiffs bring only arguments specific to themselves to the table, rather than evidence of systemic bias at the company. Lynne Hermle, a Silicon Valley-based partner at global law firm Orrick, argued on behalf of Microsoft that despite the plaintiffs having years to prepare for this moment they brought little evidence outside their own experience.

“The plaintiffs have had almost three years to investigate the allegations, marshall their evidence, focus their theory, develop their statistical evidence, and present that to your honor … What you’ve seen in those three years, is plaintiffs backing off and changing their theories,” Hermle said.

Hermle added that all the training managers receive in evaluation techniques focuses on checking bias and office politics at the door.

One of Microsoft’s main means for evaluating performance used to be a “stack ranking” that pitted employees against each other on a one through five scale. The best employees got a one, and the lowest score was a five.

In 2014, Microsoft redesigned its evaluation system and moved away from pitting employees performance against each other to emphasize collaboration and the individual’s overall contribution to the business. A previously implemented concept called “calibration meetings” remains a part of the review process and includes input from colleagues and managers.

Moussouris worked at Microsoft from 2007 to 2014. In that time, she claims, she was given worse rankings than her manager told her she deserved, paid less than male peers, and passed over for promotion during her last four years at the company. She also alleged in the lawsuit that she complained about the director of her team, the Trustworthy Computing Group, for sexually harassing other women. The director has since been moved to another part of the group. Moussouris added in her deposition that she believes he retaliated against her by giving her a lower bonus, though the company found no evidence of that.

Muenchow, who has been working at Microsoft since 2002 and is still employed there, said in the lawsuit that she only progressed four levels in the company’s technical career track in the 16 years that she has been there. She believes that she was passed over for promotions even though she was qualified, and male colleagues were promoted. She said in her deposition that she has been criticized for being too assertive.

“There are times that, say, for example, male colleagues have received criticism that they’re too assertive, but they receive that for behavior that’s way out of proportion to the kind of behavior that I exhibit that then I receive the criticism for being too assertive,” Muenchow said in her 2016 deposition, “Whereas I see male colleagues doing the same behavior I do, of assertiveness, and getting promoted and/or positive feedback for that.”

Microsoft argues that the plaintiffs were each promoted on several occasions and paid well. Moussouris in particular was among the highest paid in her “cost center,” making more than her male manager. But Microsoft contends her communication skills needed improvement, something Moussouris mentioned in her own-self evaluations.

The lawsuit comes at a heightened time for diversity issues in industries like tech and show business. The #metoo movement has empowered women to speak out — and for a broader audience to listen — about workplace harassment issues.

In court documents, Microsoft says it has been committed to diversity and inclusion for more than 20 years. It has a 25-person team working on diversity issues, and a budget of more than $55 million per year through 2020 for new initiatives.

Microsoft reports that a little under 26 percent of its global workforce is female. In tech and leadership roles, the split is about 80/20 in favor of men.

As revealed by court documents, a recent diversity announcement about near equal pay for men was panned internally, resulting in a spate of emails from employees saying their experience did not match the story Microsoft was putting out there. Microsoft said in court documents that achieving a diverse and inclusive workplace “is a process that requires constant self-assessment and re-commitment.” The company added that it is “keenly aware of the gender imbalance in the tech industry and is deeply invested in improving it.”

But, Microsoft argues, this case isn’t about diversity issues at a huge global company. Microsoft claims the plaintiffs experienced unique circumstances and haven’t been able to find a common link of a company policy between them and the other potential female members of the class they wish to form.

“Katie Moussouris’s and Holly Muenchow’s individual claims will turn on their unique circumstances, as there are non-discriminatory explanations for their pay and promotion experiences,” according to court documents. “Their claims and the absent class members’ claims will not rise or fall together—the hallmark of typicality. Moreover, Moussouris actively participated as a manager in the reviews Plaintiffs now attack, as did thousands of other class members who also served as managers. A class cannot consist of both supervisors who participated in an allegedly discriminatory process and those they evaluated, as that poses an irreconcilable intra-class conflict.”

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