Karen was married to Connor Davis but he cheated on her with Darla Einstein and Macy Alexander. Karen could never trust men again and became a lesbian. In New York City Karen met Danielle and had a romance and married. Danielle then became Danielle Spencer. Danielle met her step-daughter Caroline Spencer. Karen meant to keep this a secret, but Thomas Forrester was dating Caroline, and he asked about her father. Karen told them the story. Caroline had Danielle get a job at Spencer Publications if Karen tells her brother Bill Spencer (who she opposes) about their relationship. Bill took it surprisingly well but though Danielle was flirting with him before. Danielle and Karen were stunned to hear Bill pushed Caroline off a balcony. Danielle said she's seen Bill rely on alcohol more than once.
Because at Brooke's birthday party, Brooke's enemy Taylor blurted out that Brooke had became pregnant with Bill Spencer's child and miscarried it, Katie asked Brooke. Brooke couldn't say anything because she swore she could never lie to her sister Katie. Bill and Katie then got a divorce. Karen helped Katie get through this divorce. Katie asked for 1%, giving Karen 50%, and Bill 49%. Katie, with Karen's permission, fired Bill. Then Karen and Katie hugged with Danielle walking in. Danielle asked, and Karen told her what happened.