1038-00001 · Cascade Retail Holdings · Correspondence

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CALDERWOOD & HARKNESS LLP Attorneys at Law

1401 K Street NW, Suite 1200 Washington, D.C. 20005

Telephone: (202) 555-7100 Facsimile: (202) 555-7199 www.calderwoodharkness.com

July 7, 2025

Via Hand Delivery and Encrypted Email

PRIVILEGED AND CONFIDENTIAL — SUBJECT TO JOINT DEFENSE AND COMMON INTEREST AGREEMENT DATED JULY 1, 2025

Diana Whitfield, Esq. Lead Partner Whitfield, Greer & Tanaka LLP 100 Congress Avenue, Suite 2200 Austin, TX 78701

Re: Joint Defense Strategy Coordination — FTC v. Cascade Retail Holdings Inc. et al., Case No. 2:25-cv-01087-RAJ (W.D. Wash.); FTC Administrative Docket No. 9438

Calderwood & Harkness Matter No.: 1038-00001

Dear Diana:

I. Purpose and Background

I write in connection with the Joint Defense and Common Interest Agreement executed on July 1, 2025 (the "JDA"), between Calderwood & Harkness LLP, on behalf of our client Cascade Retail Holdings Inc. ("Cascade"), and Whitfield, Greer & Tanaka LLP ("WGT"), on behalf of your client Pinnacle Market Group Inc. ("Pinnacle"). The purpose of this letter is to formalize and memorialize the coordinated defense strategy that our respective teams will pursue in connection with the Federal Trade Commission's challenge to Cascade's proposed $4.7 billion all-cash acquisition of Pinnacle, as reflected in the pending federal court and administrative proceedings referenced above.

As you are aware, the briefing schedule in this matter is compressed and demands prompt coordination. Pursuant to the court's scheduling order, Cascade's and Pinnacle's joint Opposition to the FTC's Motion for Preliminary Injunction is due on August 11, 2025, with the FTC's Reply due on August 25, 2025. The evidentiary hearing is set to commence on September 8, 2025, before the Honorable Richard A. Johannsen, and is estimated to span five court days. Our teams must therefore move quickly and efficiently to develop the factual record, coordinate expert analysis, prepare witnesses, and submit comprehensive briefing on an aggressive timeline.

Additionally, the initial case management conference is scheduled for July 14, 2025, before Judge Johannsen, at which both defense teams will need to present a unified position on the case schedule, discovery protocols, and any outstanding procedural matters. Coordination in advance of that conference is essential.

This letter memorializes the understandings reached during the productive telephone conference held on June 30, 2025, between you and me and members of our respective teams, as well as the discussions that have continued since our firms' engagement. I want to express my appreciation for the collaborative spirit you and your colleagues have shown since the outset. The alignment between our clients' interests and the cooperative posture of both legal teams will, I am confident, serve us well in the litigation ahead.

II. Overview of FTC's Claims and Litigation Posture

Before turning to the allocation of responsibilities, it is useful to briefly summarize the FTC's claims and the current posture of the litigation to ensure our teams are operating from a shared understanding of the case.

On June 23, 2025, the FTC filed a Complaint for Temporary Restraining Order and Preliminary Injunction in the United States District Court for the Western District of Washington, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), seeking to enjoin Cascade from consummating its proposed acquisition of Pinnacle pending resolution of the FTC's administrative proceeding (FTC Administrative Docket No. 9438). The administrative complaint, authorized by a 3–2 vote of the Commission, was filed concurrently. The divided vote within the Commission is notable and may prove strategically relevant, as it suggests internal uncertainty regarding the merits of the Commission's theory and may inform our approach to the equities analysis in the preliminary injunction briefing.

The FTC has defined the alleged relevant product market as "online marketplace platform services for third-party sellers in the United States." This market definition is, in our view, artificially narrow and excludes substantial competitive alternatives that discipline the pricing and conduct of marketplace platforms. The FTC's core theory of competitive harm posits that the merger would combine two of four significant online marketplace platforms—CascadeMarket (operated by Cascade) and Pinnacle—thereby eliminating direct, head-to-head competition between them and affording the merged firm undue leverage over third-party sellers. Specifically, the FTC alleges that the transaction would enable the combined entity to increase take rates charged to sellers, reduce the quality of services provided to sellers, and diminish incentives for innovation. The FTC also alleges a broader "trend toward concentration" in online marketplace services that, it contends, this transaction would accelerate.

The FTC's Complaint alleges the following market shares measured by gross merchandise volume ("GMV") within its proposed relevant market:

Based on these share figures, the FTC calculates a pre-merger Herfindahl-Hirschman Index ("HHI") of 2,361, a post-merger HHI of 2,856, and a delta of 495. While these figures exceed the thresholds identified in the Horizontal Merger Guidelines as potentially indicating competitive concern, they are entirely dependent upon the FTC's narrow and, we submit, unjustifiable market definition. Under a properly defined relevant market, these concentration figures diminish dramatically, as discussed below.

It is also relevant to note that the Independent Online Sellers Alliance ("IOSA"), a trade association representing approximately 12,000 third-party sellers operating on various marketplace platforms, has moved to intervene in the federal court action on the side of the FTC. IOSA is represented by Galloway & Peck LLP, with Martina Galloway of that firm serving as lead counsel. Our opposition to IOSA's intervention motion is discussed in Section III below.

III. Allocation of Briefing Responsibilities for PI Opposition

Given the breadth of the issues to be addressed in the Opposition to the FTC's Motion for Preliminary Injunction and the distinct factual and legal contributions that each defense team is best positioned to make, we propose the following allocation of briefing responsibilities. This allocation reflects the natural division between Cascade-specific and Pinnacle-specific arguments, while also identifying areas where both teams will need to collaborate closely.

A. Calderwood & Harkness Lead Areas

1. Market Definition. Calderwood & Harkness will take primary responsibility for briefing the argument that the FTC's proposed relevant market of "online marketplace platform services for third-party sellers" is artificially narrow, exclusionary, and inconsistent with commercial realities and established principles of antitrust market definition.

The defense position, as we have discussed, is that the relevant market should be defined broadly as "all e-commerce retail" or, at a minimum, as a market that encompasses both marketplace and direct retail channels for consumer goods sold online. The significance of this distinction cannot be overstated. Under the FTC's proposed market definition, the combined entity would hold an alleged 38.3% share. Under a properly defined market encompassing all e-commerce retail, the combined entity's share of total U.S. e-commerce GMV—which reached approximately $757 billion in 2024—is approximately 7.3%, a figure that falls well below any threshold warranting competitive concern.

Moreover, even on a marketplace-only basis, the combined marketplace GMV of Cascade's CascadeMarket platform ($3.1 billion) and Pinnacle ($11.4 billion) totals $14.5 billion, which represents approximately 1.9% of total U.S. e-commerce GMV. This framing underscores the degree to which the FTC's market definition exaggerates the competitive significance of this transaction.

Our market definition analysis will address both demand-side and supply-side substitution between marketplace and direct retail channels. On the demand side, we will present evidence that third-party sellers routinely sell through both marketplace platforms and their own direct-to-consumer websites, and that sellers view these channels as substitutes. On the supply side, we will demonstrate that direct retailers can and do establish marketplace functionalities, and that marketplace platforms can and do expand into direct retail, creating competitive fluidity between the two channels that belies the FTC's artificial market boundary.

Our briefing will also address the competitive constraint posed by social commerce platforms, including Brevity Social Commerce (launched in 2023) and Trove Marketplace (launched in 2024). These new entrants demonstrate the dynamism of the e-commerce landscape and the ease with which new competitive alternatives can emerge and attract sellers and consumers. Their entry directly undermines the FTC's "trend toward concentration" narrative and supports the conclusion that the relevant market is broader and more competitive than the FTC acknowledges.

Calderwood & Harkness will coordinate closely with our retained economic expert, Dr. Priya Ramanathan of Brindoval Analytics LLC, on the expert economic analysis supporting a broader market definition. Dr. Ramanathan's analysis will include critical loss analysis, SSNIP test modeling, and econometric evidence regarding cross-platform substitution patterns. Our team will prepare all sections of the opposition brief addressing market definition, and we will circulate drafts to WGT for review and input as described in Section III.C below.

2. Procompetitive Efficiencies. Calderwood & Harkness will lead the presentation of merger-specific, verifiable, and cognizable efficiencies that the proposed transaction is reasonably expected to generate. These efficiencies are substantial, well-documented, and directly tied to the integration of the two companies' complementary assets.

The merging parties project total annual efficiencies of approximately $340 million by Year 3 post-closing, consisting of two principal categories:

(a) Logistics and Fulfillment Cost Savings — $195 Million Annually. The integration of Pinnacle's approximately 185,000 active third-party sellers into Cascade's existing 22-warehouse fulfillment network is projected to generate $195 million in annual cost savings. These savings arise from the elimination of duplicative logistics infrastructure, the optimization of shipping routes and inventory placement across a broader network, and the negotiation of more favorable rates with carriers due to increased volume. Pinnacle's sellers currently rely on a combination of self-fulfillment and third-party logistics providers; access to Cascade's established fulfillment infrastructure will materially reduce per-unit fulfillment costs and improve delivery speeds. These savings cannot be achieved absent the merger because Pinnacle lacks the capital and scale to build a comparable fulfillment network independently.

(b) Technology and Platform Synergies — $145 Million Annually. The consolidation of the CascadeMarket and Pinnacle technology platforms is expected to yield $145 million in annual technology and operational savings. These synergies include the elimination of redundant engineering teams, the consolidation of data center operations, the integration of search and recommendation algorithms, and the deployment of Cascade's proprietary analytics tools across the combined seller base. Platform consolidation will also accelerate the development of new seller tools and consumer-facing features by combining the engineering talent and intellectual property of both organizations.

Our briefing will analyze these efficiencies under the framework established by the Horizontal Merger Guidelines, including whether the efficiencies are (i) merger-specific—i.e., not achievable through means other than the proposed transaction, (ii) verifiable—i.e., supported by credible documentary evidence and reasonable projections, and (iii) cognizable—i.e., sufficient in magnitude and kind to offset any alleged competitive harm. We will also present evidence regarding the expected pass-through of efficiency benefits to consumers and sellers, including reduced fulfillment fees, improved delivery times, and enhanced platform functionality.

Calderwood & Harkness will coordinate with Cascade's SVP of Marketplace & Platform Strategy, Patricia "Trish" Delacroix, and Cascade's CFO, Sonia Alvarez-Kirk, on the development and documentation of the efficiency projections. We will also work with transaction counsel at Harmon Ridgeway & Strauss LLP—specifically Phillip Strauss and Monica Chen-Barrios—to obtain any transaction-related supporting materials, including integration planning documents, financial models, and board presentations, as needed to substantiate the efficiency claims.

3. Legal Framework (Section 13(b) Standard). Calderwood & Harkness will draft the legal standard section of the Opposition, setting forth the applicable framework for evaluating the FTC's Motion for Preliminary Injunction under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b).

As you know, the standard for granting a preliminary injunction under Section 13(b) differs from the traditional four-factor preliminary injunction test applied in most civil litigation. Under Section 13(b), the FTC bears the burden of demonstrating that it is "likely to succeed on the merits" of its challenge to the transaction and that the "equities" balance in favor of injunctive relief. This standard, while nominally deferential to the Commission, has been applied with increasing rigor in recent years, particularly in cases where the government's market definition or theory of harm is contested.

Our briefing will address each prong of the Section 13(b) analysis in detail. With respect to the likelihood of success, we will argue that the FTC cannot carry its burden because the proposed relevant market is too narrow, the merger does not substantially lessen competition in a properly defined market, the transaction generates substantial procompetitive efficiencies, and the evidence of new entry and expansion undermines any presumption of competitive harm.

With respect to the equities, we will present evidence regarding the irreparable harm that an injunction would inflict on the merging parties, including the risk that the transaction will fail if the preliminary injunction is granted. The Merger Agreement contains a reverse termination fee of $282 million payable by Cascade if the transaction is not consummated under certain circumstances, and the outside date for consummation is March 14, 2026, extendable to June 14, 2026 solely in the event that antitrust clearance is the only unsatisfied condition to closing. A prolonged injunction would place substantial pressure on the transaction timeline and risk the expiration of the outside date, with attendant financial and operational consequences for both companies and their shareholders.

We will draw upon the most relevant and recent case law from this Circuit and other federal courts that have addressed Section 13(b) motions in the merger context, ensuring that the legal framework section provides a strong foundation for the fact-specific arguments that follow.

4. Ease of Entry and Expansion. Calderwood & Harkness will prepare the sections of the Opposition addressing the ease of entry into and expansion within the relevant market. This argument is closely related to the market definition analysis and provides an independent basis for concluding that the proposed transaction will not substantially lessen competition.

Our briefing will highlight the evidence of successful new entry in recent years, including the launch of Brevity Social Commerce in 2023 and Trove Marketplace in 2024. Both platforms have attracted meaningful numbers of third-party sellers in a relatively short period, demonstrating that barriers to entry in online marketplace services are low and that new competitive alternatives can emerge rapidly in response to market opportunities.

In addition, we will present evidence regarding the expansion capabilities of existing competitors, particularly Vertex Commerce Inc. (with an alleged 35.7% market share under the FTC's proposed definition) and Nomad Shops LLC (14.6% share). Both companies have the resources, infrastructure, and strategic incentive to expand their marketplace operations in response to any attempt by the merged entity to exercise market power. Vertex Commerce, in particular, is a formidable competitor with a share that exceeds the combined post-merger share alleged by the FTC, and its presence in the market provides a powerful competitive check on the merged firm's pricing and conduct.

5. Daubert Motion re: Dr. Wallace Keenan. Calderwood & Harkness will prepare and file a motion under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), and Federal Rule of Evidence 702, to exclude or limit the testimony of the FTC's economic expert, Dr. Wallace Keenan of Thornfield Research Group. Our review of the FTC's supporting declarations and the publicly available summary of Dr. Keenan's anticipated testimony indicates that his analysis suffers from significant methodological deficiencies that render it unreliable and inadmissible.

Specifically, our Daubert challenge will focus on two principal grounds:

(a) Dr. Keenan's application of the hypothetical monopolist test (SSNIP test) fails to account for supply-side substitution between marketplace and direct retail channels. By ignoring the ability and likelihood of direct retailers to offer marketplace services in response to a small but significant non-transitory increase in price, Dr. Keenan's analysis artificially narrows the relevant market and inflates the concentration figures upon which his competitive effects opinions depend.

(b) Dr. Keenan's HHI calculations are predicated on an improperly defined relevant market and therefore do not provide a reliable basis for assessing the competitive significance of the proposed transaction. Because the market share inputs to his HHI analysis are derived from his flawed market definition, the resulting concentration metrics are unreliable as a matter of both economics and law.

Aaron Liu of our San Francisco office will take primary drafting responsibility for the Daubert motion under my supervision. We anticipate filing the motion on a timeline consistent with the court's scheduling order and will circulate a draft to WGT for review before filing.

6. Opposition to IOSA's Motion to Intervene. Calderwood & Harkness will prepare and file the Opposition to the Motion to Intervene filed by Galloway & Peck LLP on behalf of the Independent Online Sellers Alliance. Our opposition will argue that IOSA lacks Article III standing to intervene, that IOSA's interests are adequately represented by the FTC as the government plaintiff in this action, and that granting intervention would inject unnecessary complexity and delay into proceedings that are already operating under a compressed schedule. We will circulate a draft of the opposition to WGT for review and input prior to filing, as the intervention, if granted, could affect Pinnacle's interests as well.

B. Whitfield, Greer & Tanaka Lead Areas

1. Pinnacle-Specific Competitive Trajectory Evidence. We request that WGT take the lead on developing and presenting evidence of Pinnacle's weakening competitive position, a critical component of the defense that speaks directly to the competitive dynamics underlying the transaction.

The available data demonstrate that Pinnacle has experienced a significant and sustained deceleration in its competitive trajectory. Pinnacle's year-over-year GMV growth rate has declined sharply, from 28% in 2022 to approximately 9% in 2024. Concurrently, Pinnacle's seller churn rate—the percentage of active sellers who leave the platform or cease meaningful selling activity in a given period—has increased from 12% in 2022 to 21% in 2024. These trends indicate that Pinnacle's competitive position is eroding and that, absent the proposed transaction, Pinnacle may not remain a significant competitive force in the market over the medium to long term.

WGT is uniquely positioned to develop this record through access to Pinnacle's internal documents and data, including strategic planning documents, board presentations, financial analyses, and internal communications that reflect Pinnacle's own assessment of its competitive challenges. WGT should coordinate with Pinnacle's CEO, Rajiv Chandravar; CPO, Lena Kowalski; and CFO, Thomas Breck, on fact development and potential testimony in support of the weakening-firm or flailing-firm argument. Where relevant, WGT should also develop the documentary record from Pinnacle's auditor, Kessler Fong Accounting Group LLP, regarding Pinnacle's financial trajectory and any going-concern or related considerations.

We recognize the sensitivity of presenting evidence of a client's competitive challenges, and we appreciate WGT's willingness to develop this record in a manner that supports the joint defense while protecting Pinnacle's interests. Close coordination will be essential to ensure that the weakening-firm argument is presented effectively without creating unintended consequences for Pinnacle in other contexts.

2. Pinnacle's Independent Business Rationale for the Transaction. We also request that WGT prepare the sections of the Opposition addressing Pinnacle's independent business rationale for entering into the transaction—that is, why Pinnacle's board of directors and management team determined that the acquisition was in the best interests of Pinnacle and its shareholders.

The key elements of this argument include the following:

• The merger consideration of $26.85 per share in cash, representing a premium of approximately 20.4% over Pinnacle's unaffected closing stock price of $22.30 on March 7, 2025, the last trading day prior to public reports of the transaction.

• The fairness opinion delivered by Ridgeline Capital Partners (Nadine Vasquez, Managing Director), concluding that the merger consideration was fair, from a financial point of view, to Pinnacle's shareholders.

• Pinnacle's pre-announcement market capitalization of approximately $3.9 billion, providing context for the magnitude of the premium and the value delivered to shareholders.

• The Pinnacle board's evaluation of strategic alternatives, including the option of remaining independent, and the board's conclusion that the merger offered the best available path to maximizing shareholder value in light of Pinnacle's competitive challenges and market conditions.

This evidence is relevant both to the equities analysis under Section 13(b) and to the broader narrative regarding the procompetitive nature of the transaction. A transaction that delivers substantial value to the target company's shareholders and is supported by an independent fairness opinion carries significant weight in the equities balance.

3. Pinnacle's Seller and Consumer Benefits. Finally, we request that WGT develop the evidence and briefing regarding the specific benefits that the transaction will deliver to Pinnacle's approximately 185,000 active third-party sellers and, by extension, to the consumers those sellers serve. This evidence is complementary to the efficiencies analysis that Calderwood & Harkness will lead and should be presented in a manner that demonstrates how the integration of the two companies' platforms and infrastructure will create value at the seller level.

Key benefits to be addressed include:

• Access to Cascade's Fulfillment Network. Pinnacle's sellers will gain access to Cascade's 22-warehouse fulfillment network, enabling faster and more cost-effective order fulfillment. Many of Pinnacle's smaller sellers currently rely on self-fulfillment or fragmented third-party logistics arrangements; access to Cascade's established infrastructure will materially improve their competitive position.

• Expanded Consumer Reach. The transaction will provide Pinnacle's sellers with access to Cascade's consumer channels, including the CascadeDirect.com e-commerce platform and Cascade's approximately 340 brick-and-mortar retail locations across 38 states. This omnichannel reach will enable Pinnacle's sellers to access consumer segments that are currently difficult to reach through online marketplace channels alone.

C. Joint and Shared Responsibilities

In addition to the distinct lead areas identified above, there are several areas in which both firms will need to collaborate closely:

• Competitive Effects Analysis. Both firms will collaborate on the competitive effects analysis sections of the Opposition, with particular focus on the multi-homing behavior of sellers across CascadeMarket, Pinnacle, Vertex Commerce, and Nomad Shops. Multi-homing evidence is critical to demonstrating that the merger will not confer market power because sellers can and do maintain presences on multiple platforms simultaneously and can shift volume in response to changes in platform quality or pricing.

• Coordinated Effects. Both firms will contribute to the analysis of coordinated effects, given Vertex Commerce's dominant 35.7% market share. The defense position should emphasize that the market structure is not conducive to coordination and that the transaction does not materially increase the risk of coordinated behavior.

• Cross-Review. Both firms will review and provide input on all sections of the Opposition prior to filing to ensure consistency, avoid contradictions, and strengthen the overall presentation.

• Filing Protocol. Calderwood & Harkness will serve as filing counsel given Cascade's status as the lead defendant in the captioned action. All filings will bear both firms' signatures where joint filings are appropriate or where the court requires separate counsel to appear.

IV. Expert Coordination

Effective coordination of our expert work is essential to presenting a unified and credible economic analysis to the court. The following summarizes the current state of expert retention and the coordination we require from WGT.

Calderwood & Harkness has retained Brindoval Analytics LLC ("Brindoval") pursuant to an expert retention agreement dated July 2, 2025. The engagement team at Brindoval consists of Dr. Priya Ramanathan, Managing Director, who will serve as the testifying expert, and Dr. Lucas Engström, Senior Economist, who will provide supporting analytical work. Brindoval has been retained on a flat fee of $1,800,000 through the conclusion of the preliminary injunction hearing, plus reasonable out-of-pocket expenses. This fee encompasses the preparation of Dr. Ramanathan's opening and rebuttal expert reports, all supporting analyses, and Dr. Ramanathan's testimony at the evidentiary hearing.

Pursuant to the court's scheduling order, expert reports from both sides are due on August 18, 2025, and rebuttal expert reports are due on August 29, 2025. Dr. Ramanathan's opening report will cover the three core areas of her testimony: (i) market definition, (ii) competitive effects, and (iii) efficiencies analysis. Her rebuttal report will respond to the opinions and analysis offered by the FTC's economic expert, Dr. Wallace Keenan of Thornfield Research Group.

To support this work, it is essential that WGT facilitate Brindoval's access to Pinnacle-specific data and personnel. Specifically, we request that WGT make the following categories of Pinnacle data available to Brindoval under appropriate confidentiality protections, including designation as "Outside Counsel Eyes Only" or "Confidential — Joint Defense Privileged" as applicable:

• Pinnacle's GMV data, including platform-level and category-level detail (FY2024 total: $11.4 billion);

• Pinnacle's net revenue data (FY2024 total: $1.82 billion, reflecting an average take rate of approximately 16%);

• Pinnacle's seller churn data by quarter and by seller category;

• Category-level transaction data, including order volume, average order value, and seller mix by category;

• Seller multi-homing data, including information regarding the percentage of Pinnacle sellers who also sell on CascadeMarket, Vertex Commerce, Nomad Shops, and other platforms.

We also request that WGT identify any Pinnacle personnel with whom Dr. Ramanathan or Dr. Engström should conduct interviews to inform their analysis. At a minimum, interviews with Pinnacle's CPO, Lena Kowalski, and CFO, Thomas Breck, would be valuable for understanding Pinnacle's competitive dynamics and financial trajectory.

We further request WGT's input on any Pinnacle-specific issues that should be addressed in the expert reports. If there are aspects of Pinnacle's competitive experience, seller relationships, or market conditions that WGT believes are important to the expert analysis, we want to ensure those issues are raised with Brindoval promptly.

Finally, please advise whether Pinnacle intends to retain its own, separate economic expert for the preliminary injunction proceeding or will rely on Dr. Ramanathan's testimony. If Pinnacle intends to retain a separate expert, we will need to coordinate the scope of each expert's opinions to avoid overlap or inconsistency and to ensure compliance with any limitations the court may impose on the number of expert witnesses.

V. Deposition Coordination

Fact discovery in this matter closes on August 4, 2025. All depositions—including depositions of party witnesses and any third-party depositions—must be completed before that date. Coordination on deposition strategy and scheduling is therefore a matter of immediate priority.

A. Defense Depositions of FTC Witnesses

The Defendants intend to depose the following FTC witnesses, and we propose the following allocation of responsibility:

Claire Dunmore — FTC Rule 30(b)(6) Designee on Market Definition. Calderwood & Harkness, with Elliot Nguyen serving as lead examiner, will take the lead on the deposition of Ms. Dunmore. Nguyen has already begun preparing a detailed deposition outline covering the following topics: the FTC's methodology for defining the relevant product and geographic markets; the identification of marketplace platforms and other competitive alternatives included in and excluded from the proposed relevant market and the basis for those inclusions and exclusions; the FTC's basis for calculating market share figures, including the data sources and methodological assumptions underlying its GMV calculations; and the FTC's treatment of social commerce platforms, hybrid retail models, and other emerging competitive alternatives. WGT is welcome to attend the deposition and to pose questions on topics specifically related to Pinnacle's competitive position or other matters within WGT's areas of responsibility.

Dr. Nathaniel Hargrove — FTC Bureau of Economics Staff Economist. The Defendants also intend to depose Dr. Hargrove, who we understand played a significant role in the Bureau of Economics' analysis underlying the Commission's decision to challenge the transaction. Coordination between our teams on the questioning strategy for Dr. Hargrove's deposition is important, as his testimony may touch on both market definition issues and Pinnacle-specific competitive dynamics. We propose discussing the allocation of questioning at our first weekly coordination call.

We also propose that WGT take the lead on any deposition topics specifically related to Pinnacle's competitive position, including questioning designed to elicit the FTC's assessment of Pinnacle's competitive trajectory and the FTC's basis for characterizing Pinnacle as a significant competitive force.

B. Preparation of Defense Witnesses for FTC Depositions

The FTC is likely to seek depositions of key personnel from both Cascade and Pinnacle. Based on the FTC's discovery requests to date and the issues raised in its Complaint, we anticipate the following witnesses will be deposed:

Cascade Witnesses (Calderwood & Harkness to Prepare):

• Margaret "Meg" Thornberry, Chief Executive Officer

• David Ruan, President and Chief Operating Officer

• Patricia "Trish" Delacroix, SVP of Marketplace & Platform Strategy

• Sonia Alvarez-Kirk, Chief Financial Officer

• Jerome Weston, General Counsel

Pinnacle Witnesses (Whitfield, Greer & Tanaka to Prepare):

• Rajiv Chandravar, Chief Executive Officer

• Lena Kowalski, Chief Product Officer

• Thomas Breck, Chief Financial Officer

• Anita Suresh, General Counsel

Coordination on witness preparation messaging is critical. Both sets of witnesses must present a consistent narrative regarding the procompetitive rationale for the transaction, the current competitive conditions in the market, and the projected efficiencies. Any inconsistency between the testimony of Cascade and Pinnacle witnesses would be seized upon by the FTC and could undermine our credibility with the court. I propose that our teams share witness preparation outlines and key messaging points in advance to ensure alignment. Where possible, we should also coordinate the scheduling of witness preparation sessions to allow for sequencing that ensures each team is aware of the testimony that prior witnesses have provided.

C. Third-Party Subpoenas

Calderwood & Harkness is currently preparing subpoenas duces tecum directed to the following third parties:

• Vertex Commerce Inc., 2100 North First Street, San Jose, CA 95131 — seeking marketplace operations data, take rate information, seller growth metrics, and communications with the FTC regarding the proposed transaction.

• Nomad Shops LLC, 45 Main Street, Suite 700, Brooklyn, NY 11201 — seeking comparable marketplace operations data, take rate information, seller growth and churn metrics, and communications with the FTC regarding the proposed transaction.

This third-party data is essential to our market definition and competitive effects analysis and will provide critical inputs for Dr. Ramanathan's expert work. We request WGT's input on any additional third-party discovery that may be useful for Pinnacle's defense. If WGT is aware of other marketplace participants, potential entrants, or industry participants from whom relevant data or testimony should be sought, please let us know promptly so that subpoenas can be issued and served in time to allow for compliance before the August 4 fact discovery cutoff. We should also coordinate on any third-party depositions that may be warranted based on the documents received.

VI. Document Sharing Protocols Under the Joint Defense Agreement

Effective document sharing is the backbone of a coordinated joint defense. This section reiterates the document sharing framework established in the JDA dated July 1, 2025, and identifies specific categories of documents that should be shared promptly between the defense teams.

All materials shared between Calderwood & Harkness and WGT pursuant to the JDA shall be marked "JOINT DEFENSE PRIVILEGED — CONFIDENTIAL" in accordance with the applicable provisions of the Agreement. Documents are to be shared exclusively via the secure document platform designated in the JDA; under no circumstances should joint defense materials be transmitted via unsecured email or other unprotected channels.

Each party retains the right to designate certain materials as "Outside Counsel Eyes Only" where commercially sensitive information of the respective client is involved. This designation is particularly important given that Cascade and Pinnacle, while aligned in their defense of the proposed transaction, remain separate companies with distinct business operations and confidential commercial information that must be protected.

The following categories of documents should be shared promptly between the teams:

(a) Cascade's Second Request production, which was certified as substantially complete on June 10, 2025 (HSR Filing Transaction No. HSR-20250402-0347; FTC File No. 251-0089). Calderwood & Harkness will upload all non-privileged documents from this production to the secure platform.

(b) Pinnacle's Second Request production. We request that WGT upload Pinnacle's responsive documents to the shared platform on a similar basis.

(d) Expert draft reports and supporting data, subject to applicable work-product protections. Draft expert reports should be shared with sufficient lead time to allow for meaningful review and input by both teams prior to finalization.

(e) Privilege log entries. Both firms should coordinate on maintaining consistent privilege assertions to avoid inadvertent waiver or conflicting positions. Calderwood & Harkness is maintaining the Defendants' consolidated Privilege Log, with Elliot Nguyen and Aaron Liu serving as the primary contacts for privilege log coordination.

Each firm should designate a primary contact for document sharing to ensure efficient and timely communication. Calderwood & Harkness's primary contact for document sharing will be Elliot Nguyen. We request that WGT designate Kenneth Oshiro as its primary contact for this purpose, as we discussed on the June 30 call.

VII. Weekly Coordination Call Schedule

Given the compressed timeline and the volume of work to be completed before the August 11 filing deadline and the September 8 evidentiary hearing, regular coordination between our teams is essential. We propose the following schedule:

Standing Weekly Calls. Beginning the week of July 14, 2025—following the initial case management conference—we propose a standing weekly coordination call every Monday at 2:00 PM Eastern Time / 1:00 PM Central Time / 11:00 AM Pacific Time.

Participants. The regular participants on these calls should include:

• Calderwood & Harkness: Howard Bellamy, Elaine Forsythe, Elliot Nguyen, and Aaron Liu

• Whitfield, Greer & Tanaka: Diana Whitfield and Kenneth Oshiro

Additional team members from either firm may join as needed depending on the agenda topics for a given week.

Standing Agenda. Each call should address the following items at a minimum: (i) status of briefing assignments and drafting progress; (ii) discovery updates, including the status of third-party subpoena responses and any outstanding discovery disputes; (iii) expert progress, including data requests and report preparation timeline; (iv) witness preparation scheduling and coordination; and (v) any new developments in the case or related proceedings.

Ad Hoc Calls. In addition to the standing weekly calls, either team may convene ad hoc calls as needed to address urgent matters, including court orders, discovery disputes, or developments requiring immediate coordination.

In-Person Strategy Session. We propose scheduling an in-person strategy session in Washington, D.C. or Seattle during the week of August 4, 2025—immediately following the close of fact discovery—to finalize the PI opposition strategy, review the state of the record, coordinate expert testimony, and begin preparing for the evidentiary hearing. The timing of this session will allow both teams to assess the full evidentiary landscape before finalizing the Opposition brief due August 11. Please advise on WGT's preference for location and availability during that week.

VIII. Preliminary Injunction Hearing Preparation

The evidentiary hearing on the FTC's Motion for Preliminary Injunction is scheduled to commence on September 8, 2025, before Judge Johannsen at the United States District Court for the Western District of Washington, located at 700 Stewart Street, Seattle, WA 98101. The hearing is estimated to span five court days. Thorough and coordinated preparation is essential to presenting an effective defense at the hearing.

Pre-Hearing Brief. The Defendants will file a Pre-Hearing Brief in advance of the evidentiary hearing, setting forth the factual and legal framework for the defense case. Calderwood & Harkness will take the lead on drafting the Pre-Hearing Brief, with WGT providing input on Pinnacle-specific facts and arguments. A draft will be circulated to WGT with sufficient time for review and comment.

Proposed Findings of Fact and Conclusions of Law. In accordance with the court's procedures, the Defendants will submit Proposed Findings of Fact and Conclusions of Law following the hearing. Calderwood & Harkness will prepare the initial draft, incorporating findings related to market definition, legal framework, efficiencies, ease of entry, and competitive effects. WGT will supplement the draft with Pinnacle-specific findings, including findings related to Pinnacle's competitive trajectory, business rationale, and seller benefits.

Witness List. The Defendants' anticipated witness list for the evidentiary hearing includes the following individuals:

• Cascade Witnesses:

• Margaret "Meg" Thornberry, CEO — to testify regarding corporate strategy and the procompetitive rationale for the transaction

• Patricia "Trish" Delacroix, SVP of Marketplace & Platform Strategy — to testify regarding projected efficiencies and the integration plan

• Pinnacle Witnesses:

• Rajiv Chandravar, CEO — to testify regarding Pinnacle's competitive challenges, decelerating growth trajectory, and the strategic rationale for the transaction from Pinnacle's perspective

• Thomas Breck, CFO — to testify regarding Pinnacle's financial condition and trajectory

• Expert Witness:

• Dr. Priya Ramanathan, Brindoval Analytics LLC — to testify regarding market definition, competitive effects, and efficiencies analysis

Exhibit List. Both firms will contribute proposed exhibits for the evidentiary hearing. Calderwood & Harkness will compile and file the Defendants' consolidated exhibit list, which we anticipate will include approximately 75 exhibits. We request that WGT identify proposed Pinnacle-specific exhibits—including internal documents, financial data, and board materials—well in advance of the exhibit list deadline so that they can be incorporated into the consolidated list.

Witness Preparation. Witness preparation sessions should be scheduled throughout August. For the key hearing witnesses, we propose coordinated mock examination sessions to ensure that each witness is prepared for both direct and cross-examination and that the testimonies of the various defense witnesses are consistent and complementary. These sessions should include practice cross-examinations by attorneys from the other firm to provide each witness with a fresh perspective on the lines of questioning they may face from FTC counsel.

IX. Budget and Cost Allocation

Each firm will bear its own fees and expenses for work performed on behalf of its respective client, consistent with each firm's engagement letter with its client. Shared costs—including, but not limited to, expert fees payable to Brindoval Analytics LLC, court reporter fees for joint depositions, charges associated with the secure document sharing platform, and any other costs incurred jointly on behalf of both Defendants—will be allocated between the parties as agreed pursuant to the terms of the Joint Defense Agreement.

For planning purposes, Calderwood & Harkness's estimated fees through the conclusion of the preliminary injunction hearing are in the range of $3.2 million to $4.5 million, representing approximately 2,200 to 3,000 attorney hours. This estimate is in addition to Brindoval Analytics' $1.8 million flat fee for expert services. These estimates are, of course, subject to revision based on the scope and intensity of discovery, the number of depositions, and any unanticipated developments in the case.

We request that WGT advise on its anticipated budget through the PI hearing so that both teams can provide a combined estimate to their respective clients. A coordinated budget presentation will assist both Cascade and Pinnacle in planning and will provide transparency regarding the total litigation costs associated with the joint defense.

X. Miscellaneous Coordination Items

Several additional coordination matters warrant attention:

Communications with the Court. All joint filings, joint status reports, and other joint communications with the court should be coordinated between our teams. The next joint status report is expected to be filed following the July 14, 2025 case management conference, and we should confer in advance of that conference to ensure alignment on the positions to be presented to Judge Johannsen.

Media Strategy. Cascade has retained Pendleton Crier & Associates (Douglas Crier, Senior Managing Director) to manage public communications related to the transaction and the FTC challenge. Given the high-profile nature of this case, it is important that any public statements by Pinnacle or WGT be coordinated with Cascade's communications advisors to ensure consistent messaging and to avoid statements that could be used adversely in the litigation. We propose a brief introductory call between the communications advisors for both sides to establish protocols for press inquiries, public statements, and media strategy. Please let us know whether Pinnacle has retained a separate communications firm and, if so, the appropriate contact.

Coordination with Transaction Counsel. Harmon Ridgeway & Strauss LLP continues to serve as primary transaction counsel for the merger. Phillip Strauss and Monica Chen-Barrios are available to address questions regarding the Merger Agreement, HSR filings, and other transaction-related matters as they arise in the litigation. Provisions of the Merger Agreement that are directly relevant to the litigation timeline include the outside date of March 14, 2026, which is extendable to June 14, 2026 solely in the event that regulatory antitrust clearance is the only unsatisfied condition to closing. We should bear these dates in mind as we develop our litigation strategy and assess the risks associated with any delays in the proceedings.

Financing Considerations. We note our awareness of the commitment letter provisions from Whitmore National Bank, N.A. (Brian Alderman, Managing Director) in connection with the financing for the transaction. To the extent that lender-related deadlines or commitment letter expiration dates may affect the litigation strategy or the equities analysis in the preliminary injunction briefing, we request that WGT and transaction counsel keep us apprised of any relevant developments.

XI. Closing

We are confident in the strength of the joint defense position. The FTC's case rests on an artificially narrow market definition that ignores the realities of a dynamic and rapidly evolving e-commerce landscape. The transaction generates substantial, well-documented, and verifiable efficiencies that will benefit sellers and consumers. The evidence of new entry and the competitive strength of existing rivals directly refute the Commission's theory of harm. And the divided 3–2 vote within the Commission itself suggests that even the agency most familiar with the competitive landscape is not convinced that this transaction poses a serious threat to competition.

That said, the compressed timeline leaves little margin for error. Close and continuous coordination between our teams will be essential to mounting the most effective defense possible within the deadlines imposed by the court. I urge that we treat the schedules and allocations outlined in this letter as firm commitments, subject to modification only as circumstances may require and upon mutual agreement.

I respectfully request that you confirm your agreement with the proposed allocation of responsibilities, coordination protocols, and schedule outlined in this letter, or suggest any modifications you believe are appropriate. We are, of course, happy to discuss any aspect of this letter at your convenience. Given the urgency of the timeline, we would appreciate a written confirmation or response by July 11, 2025.

I look forward to working with you and your team as we prepare for the challenges ahead.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Howard Bellamy Partner, Antitrust & Competition Practice Group

1401 K Street NW, Suite 1200 Washington, D.C. 20005 Telephone: (202) 555-7114

Email: hbellamy@calderwoodharkness.com

cc (via encrypted email, under the protections of the Joint Defense and Common Interest Agreement dated July 1, 2025):

Elaine Forsythe, Calderwood & Harkness LLP Elliot Nguyen, Calderwood & Harkness LLP Aaron Liu, Calderwood & Harkness LLP Kenneth Oshiro, Whitfield, Greer & Tanaka LLP

Platform	Alleged Market Share (by GMV)
Cascade (CascadeMarket)	8.2%
Pinnacle	30.1%
Combined (Post-Merger)	38.3%
Vertex Commerce Inc.	35.7%
Nomad Shops LLC	14.6%
All Others	11.4%

CALDERWOOD & HARKNESS LLP Attorneys at Law
1401 K Street NW, Suite 1200 Washington, D.C. 20005
Telephone: (202) 555-7100 Facsimile: (202) 555-7199 www.calderwoodharkness.com
July 7, 2025
Via Hand Delivery and Encrypted Email
PRIVILEGED AND CONFIDENTIAL — SUBJECT TO JOINT DEFENSE AND COMMON INTEREST AGREEMENT DATED JULY 1, 2025
Diana Whitfield, Esq. Lead Partner Whitfield, Greer & Tanaka LLP 100 Congress Avenue, Suite 2200 Austin, TX 78701
Re: Joint Defense Strategy Coordination — FTC v. Cascade Retail Holdings Inc. et al., Case No. 2:25-cv-01087-RAJ (W.D. Wash.); FTC Administrative Docket No. 9438
Calderwood & Harkness Matter No.: 1038-00001
Dear Diana:
I. Purpose and Background
I write in connection with the Joint Defense and Common Interest Agreement executed on July 1, 2025 (the "JDA"), between Calderwood & Harkness LLP, on behalf of our client Cascade Retail Holdings Inc. ("Cascade"), and Whitfield, Greer & Tanaka LLP ("WGT"), on behalf of your client Pinnacle Market Group Inc. ("Pinnacle"). The purpose of this letter is to formalize and memorialize the coordinated defense strategy that our respective teams will pursue in connection with the Federal Trade Commission's challenge to Cascade's proposed $4.7 billion all-cash acquisition of Pinnacle, as reflected in the pending federal court and administrative proceedings referenced above.
As you are aware, the briefing schedule in this matter is compressed and demands prompt coordination. Pursuant to the court's scheduling order, Cascade's and Pinnacle's joint Opposition to the FTC's Motion for Preliminary Injunction is due on August 11, 2025, with the FTC's Reply due on August 25, 2025. The evidentiary hearing is set to commence on September 8, 2025, before the Honorable Richard A. Johannsen, and is estimated to span five court days. Our teams must therefore move quickly and efficiently to develop the factual record, coordinate expert analysis, prepare witnesses, and submit comprehensive briefing on an aggressive timeline.
Additionally, the initial case management conference is scheduled for July 14, 2025, before Judge Johannsen, at which both defense teams will need to present a unified position on the case schedule, discovery protocols, and any outstanding procedural matters. Coordination in advance of that conference is essential.
This letter memorializes the understandings reached during the productive telephone conference held on June 30, 2025, between you and me and members of our respective teams, as well as the discussions that have continued since our firms' engagement. I want to express my appreciation for the collaborative spirit you and your colleagues have shown since the outset. The alignment between our clients' interests and the cooperative posture of both legal teams will, I am confident, serve us well in the litigation ahead.
II. Overview of FTC's Claims and Litigation Posture
Before turning to the allocation of responsibilities, it is useful to briefly summarize the FTC's claims and the current posture of the litigation to ensure our teams are operating from a shared understanding of the case.
On June 23, 2025, the FTC filed a Complaint for Temporary Restraining Order and Preliminary Injunction in the United States District Court for the Western District of Washington, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), seeking to enjoin Cascade from consummating its proposed acquisition of Pinnacle pending resolution of the FTC's administrative proceeding (FTC Administrative Docket No. 9438). The administrative complaint, authorized by a 3–2 vote of the Commission, was filed concurrently. The divided vote within the Commission is notable and may prove strategically relevant, as it suggests internal uncertainty regarding the merits of the Commission's theory and may inform our approach to the equities analysis in the preliminary injunction briefing.
The FTC has defined the alleged relevant product market as "online marketplace platform services for third-party sellers in the United States." This market definition is, in our view, artificially narrow and excludes substantial competitive alternatives that discipline the pricing and conduct of marketplace platforms. The FTC's core theory of competitive harm posits that the merger would combine two of four significant online marketplace platforms—CascadeMarket (operated by Cascade) and Pinnacle—thereby eliminating direct, head-to-head competition between them and affording the merged firm undue leverage over third-party sellers. Specifically, the FTC alleges that the transaction would enable the combined entity to increase take rates charged to sellers, reduce the quality of services provided to sellers, and diminish incentives for innovation. The FTC also alleges a broader "trend toward concentration" in online marketplace services that, it contends, this transaction would accelerate.
The FTC's Complaint alleges the following market shares measured by gross merchandise volume ("GMV") within its proposed relevant market:
Based on these share figures, the FTC calculates a pre-merger Herfindahl-Hirschman Index ("HHI") of 2,361, a post-merger HHI of 2,856, and a delta of 495. While these figures exceed the thresholds identified in the Horizontal Merger Guidelines as potentially indicating competitive concern, they are entirely dependent upon the FTC's narrow and, we submit, unjustifiable market definition. Under a properly defined relevant market, these concentration figures diminish dramatically, as discussed below.
It is also relevant to note that the Independent Online Sellers Alliance ("IOSA"), a trade association representing approximately 12,000 third-party sellers operating on various marketplace platforms, has moved to intervene in the federal court action on the side of the FTC. IOSA is represented by Galloway & Peck LLP, with Martina Galloway of that firm serving as lead counsel. Our opposition to IOSA's intervention motion is discussed in Section III below.
III. Allocation of Briefing Responsibilities for PI Opposition
Given the breadth of the issues to be addressed in the Opposition to the FTC's Motion for Preliminary Injunction and the distinct factual and legal contributions that each defense team is best positioned to make, we propose the following allocation of briefing responsibilities. This allocation reflects the natural division between Cascade-specific and Pinnacle-specific arguments, while also identifying areas where both teams will need to collaborate closely.
A. Calderwood & Harkness Lead Areas
1. Market Definition. Calderwood & Harkness will take primary responsibility for briefing the argument that the FTC's proposed relevant market of "online marketplace platform services for third-party sellers" is artificially narrow, exclusionary, and inconsistent with commercial realities and established principles of antitrust market definition.
The defense position, as we have discussed, is that the relevant market should be defined broadly as "all e-commerce retail" or, at a minimum, as a market that encompasses both marketplace and direct retail channels for consumer goods sold online. The significance of this distinction cannot be overstated. Under the FTC's proposed market definition, the combined entity would hold an alleged 38.3% share. Under a properly defined market encompassing all e-commerce retail, the combined entity's share of total U.S. e-commerce GMV—which reached approximately $757 billion in 2024—is approximately 7.3%, a figure that falls well below any threshold warranting competitive concern.
Moreover, even on a marketplace-only basis, the combined marketplace GMV of Cascade's CascadeMarket platform ($3.1 billion) and Pinnacle ($11.4 billion) totals $14.5 billion, which represents approximately 1.9% of total U.S. e-commerce GMV. This framing underscores the degree to which the FTC's market definition exaggerates the competitive significance of this transaction.
Our market definition analysis will address both demand-side and supply-side substitution between marketplace and direct retail channels. On the demand side, we will present evidence that third-party sellers routinely sell through both marketplace platforms and their own direct-to-consumer websites, and that sellers view these channels as substitutes. On the supply side, we will demonstrate that direct retailers can and do establish marketplace functionalities, and that marketplace platforms can and do expand into direct retail, creating competitive fluidity between the two channels that belies the FTC's artificial market boundary.
Our briefing will also address the competitive constraint posed by social commerce platforms, including Brevity Social Commerce (launched in 2023) and Trove Marketplace (launched in 2024). These new entrants demonstrate the dynamism of the e-commerce landscape and the ease with which new competitive alternatives can emerge and attract sellers and consumers. Their entry directly undermines the FTC's "trend toward concentration" narrative and supports the conclusion that the relevant market is broader and more competitive than the FTC acknowledges.
Calderwood & Harkness will coordinate closely with our retained economic expert, Dr. Priya Ramanathan of Brindoval Analytics LLC, on the expert economic analysis supporting a broader market definition. Dr. Ramanathan's analysis will include critical loss analysis, SSNIP test modeling, and econometric evidence regarding cross-platform substitution patterns. Our team will prepare all sections of the opposition brief addressing market definition, and we will circulate drafts to WGT for review and input as described in Section III.C below.
2. Procompetitive Efficiencies. Calderwood & Harkness will lead the presentation of merger-specific, verifiable, and cognizable efficiencies that the proposed transaction is reasonably expected to generate. These efficiencies are substantial, well-documented, and directly tied to the integration of the two companies' complementary assets.
The merging parties project total annual efficiencies of approximately $340 million by Year 3 post-closing, consisting of two principal categories:
(a) Logistics and Fulfillment Cost Savings — $195 Million Annually. The integration of Pinnacle's approximately 185,000 active third-party sellers into Cascade's existing 22-warehouse fulfillment network is projected to generate $195 million in annual cost savings. These savings arise from the elimination of duplicative logistics infrastructure, the optimization of shipping routes and inventory placement across a broader network, and the negotiation of more favorable rates with carriers due to increased volume. Pinnacle's sellers currently rely on a combination of self-fulfillment and third-party logistics providers; access to Cascade's established fulfillment infrastructure will materially reduce per-unit fulfillment costs and improve delivery speeds. These savings cannot be achieved absent the merger because Pinnacle lacks the capital and scale to build a comparable fulfillment network independently.
(b) Technology and Platform Synergies — $145 Million Annually. The consolidation of the CascadeMarket and Pinnacle technology platforms is expected to yield $145 million in annual technology and operational savings. These synergies include the elimination of redundant engineering teams, the consolidation of data center operations, the integration of search and recommendation algorithms, and the deployment of Cascade's proprietary analytics tools across the combined seller base. Platform consolidation will also accelerate the development of new seller tools and consumer-facing features by combining the engineering talent and intellectual property of both organizations.
Our briefing will analyze these efficiencies under the framework established by the Horizontal Merger Guidelines, including whether the efficiencies are (i) merger-specific—i.e., not achievable through means other than the proposed transaction, (ii) verifiable—i.e., supported by credible documentary evidence and reasonable projections, and (iii) cognizable—i.e., sufficient in magnitude and kind to offset any alleged competitive harm. We will also present evidence regarding the expected pass-through of efficiency benefits to consumers and sellers, including reduced fulfillment fees, improved delivery times, and enhanced platform functionality.
Calderwood & Harkness will coordinate with Cascade's SVP of Marketplace & Platform Strategy, Patricia "Trish" Delacroix, and Cascade's CFO, Sonia Alvarez-Kirk, on the development and documentation of the efficiency projections. We will also work with transaction counsel at Harmon Ridgeway & Strauss LLP—specifically Phillip Strauss and Monica Chen-Barrios—to obtain any transaction-related supporting materials, including integration planning documents, financial models, and board presentations, as needed to substantiate the efficiency claims.
3. Legal Framework (Section 13(b) Standard). Calderwood & Harkness will draft the legal standard section of the Opposition, setting forth the applicable framework for evaluating the FTC's Motion for Preliminary Injunction under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b).
As you know, the standard for granting a preliminary injunction under Section 13(b) differs from the traditional four-factor preliminary injunction test applied in most civil litigation. Under Section 13(b), the FTC bears the burden of demonstrating that it is "likely to succeed on the merits" of its challenge to the transaction and that the "equities" balance in favor of injunctive relief. This standard, while nominally deferential to the Commission, has been applied with increasing rigor in recent years, particularly in cases where the government's market definition or theory of harm is contested.
Our briefing will address each prong of the Section 13(b) analysis in detail. With respect to the likelihood of success, we will argue that the FTC cannot carry its burden because the proposed relevant market is too narrow, the merger does not substantially lessen competition in a properly defined market, the transaction generates substantial procompetitive efficiencies, and the evidence of new entry and expansion undermines any presumption of competitive harm.
With respect to the equities, we will present evidence regarding the irreparable harm that an injunction would inflict on the merging parties, including the risk that the transaction will fail if the preliminary injunction is granted. The Merger Agreement contains a reverse termination fee of $282 million payable by Cascade if the transaction is not consummated under certain circumstances, and the outside date for consummation is March 14, 2026, extendable to June 14, 2026 solely in the event that antitrust clearance is the only unsatisfied condition to closing. A prolonged injunction would place substantial pressure on the transaction timeline and risk the expiration of the outside date, with attendant financial and operational consequences for both companies and their shareholders.
We will draw upon the most relevant and recent case law from this Circuit and other federal courts that have addressed Section 13(b) motions in the merger context, ensuring that the legal framework section provides a strong foundation for the fact-specific arguments that follow.
4. Ease of Entry and Expansion. Calderwood & Harkness will prepare the sections of the Opposition addressing the ease of entry into and expansion within the relevant market. This argument is closely related to the market definition analysis and provides an independent basis for concluding that the proposed transaction will not substantially lessen competition.
Our briefing will highlight the evidence of successful new entry in recent years, including the launch of Brevity Social Commerce in 2023 and Trove Marketplace in 2024. Both platforms have attracted meaningful numbers of third-party sellers in a relatively short period, demonstrating that barriers to entry in online marketplace services are low and that new competitive alternatives can emerge rapidly in response to market opportunities.
In addition, we will present evidence regarding the expansion capabilities of existing competitors, particularly Vertex Commerce Inc. (with an alleged 35.7% market share under the FTC's proposed definition) and Nomad Shops LLC (14.6% share). Both companies have the resources, infrastructure, and strategic incentive to expand their marketplace operations in response to any attempt by the merged entity to exercise market power. Vertex Commerce, in particular, is a formidable competitor with a share that exceeds the combined post-merger share alleged by the FTC, and its presence in the market provides a powerful competitive check on the merged firm's pricing and conduct.
5. Daubert Motion re: Dr. Wallace Keenan. Calderwood & Harkness will prepare and file a motion under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), and Federal Rule of Evidence 702, to exclude or limit the testimony of the FTC's economic expert, Dr. Wallace Keenan of Thornfield Research Group. Our review of the FTC's supporting declarations and the publicly available summary of Dr. Keenan's anticipated testimony indicates that his analysis suffers from significant methodological deficiencies that render it unreliable and inadmissible.
Specifically, our Daubert challenge will focus on two principal grounds:
(a) Dr. Keenan's application of the hypothetical monopolist test (SSNIP test) fails to account for supply-side substitution between marketplace and direct retail channels. By ignoring the ability and likelihood of direct retailers to offer marketplace services in response to a small but significant non-transitory increase in price, Dr. Keenan's analysis artificially narrows the relevant market and inflates the concentration figures upon which his competitive effects opinions depend.
(b) Dr. Keenan's HHI calculations are predicated on an improperly defined relevant market and therefore do not provide a reliable basis for assessing the competitive significance of the proposed transaction. Because the market share inputs to his HHI analysis are derived from his flawed market definition, the resulting concentration metrics are unreliable as a matter of both economics and law.
Aaron Liu of our San Francisco office will take primary drafting responsibility for the Daubert motion under my supervision. We anticipate filing the motion on a timeline consistent with the court's scheduling order and will circulate a draft to WGT for review before filing.
6. Opposition to IOSA's Motion to Intervene. Calderwood & Harkness will prepare and file the Opposition to the Motion to Intervene filed by Galloway & Peck LLP on behalf of the Independent Online Sellers Alliance. Our opposition will argue that IOSA lacks Article III standing to intervene, that IOSA's interests are adequately represented by the FTC as the government plaintiff in this action, and that granting intervention would inject unnecessary complexity and delay into proceedings that are already operating under a compressed schedule. We will circulate a draft of the opposition to WGT for review and input prior to filing, as the intervention, if granted, could affect Pinnacle's interests as well.
B. Whitfield, Greer & Tanaka Lead Areas
1. Pinnacle-Specific Competitive Trajectory Evidence. We request that WGT take the lead on developing and presenting evidence of Pinnacle's weakening competitive position, a critical component of the defense that speaks directly to the competitive dynamics underlying the transaction.
The available data demonstrate that Pinnacle has experienced a significant and sustained deceleration in its competitive trajectory. Pinnacle's year-over-year GMV growth rate has declined sharply, from 28% in 2022 to approximately 9% in 2024. Concurrently, Pinnacle's seller churn rate—the percentage of active sellers who leave the platform or cease meaningful selling activity in a given period—has increased from 12% in 2022 to 21% in 2024. These trends indicate that Pinnacle's competitive position is eroding and that, absent the proposed transaction, Pinnacle may not remain a significant competitive force in the market over the medium to long term.
WGT is uniquely positioned to develop this record through access to Pinnacle's internal documents and data, including strategic planning documents, board presentations, financial analyses, and internal communications that reflect Pinnacle's own assessment of its competitive challenges. WGT should coordinate with Pinnacle's CEO, Rajiv Chandravar; CPO, Lena Kowalski; and CFO, Thomas Breck, on fact development and potential testimony in support of the weakening-firm or flailing-firm argument. Where relevant, WGT should also develop the documentary record from Pinnacle's auditor, Kessler Fong Accounting Group LLP, regarding Pinnacle's financial trajectory and any going-concern or related considerations.
We recognize the sensitivity of presenting evidence of a client's competitive challenges, and we appreciate WGT's willingness to develop this record in a manner that supports the joint defense while protecting Pinnacle's interests. Close coordination will be essential to ensure that the weakening-firm argument is presented effectively without creating unintended consequences for Pinnacle in other contexts.
2. Pinnacle's Independent Business Rationale for the Transaction. We also request that WGT prepare the sections of the Opposition addressing Pinnacle's independent business rationale for entering into the transaction—that is, why Pinnacle's board of directors and management team determined that the acquisition was in the best interests of Pinnacle and its shareholders.
The key elements of this argument include the following:
• The merger consideration of $26.85 per share in cash, representing a premium of approximately 20.4% over Pinnacle's unaffected closing stock price of $22.30 on March 7, 2025, the last trading day prior to public reports of the transaction.
• The fairness opinion delivered by Ridgeline Capital Partners (Nadine Vasquez, Managing Director), concluding that the merger consideration was fair, from a financial point of view, to Pinnacle's shareholders.
• Pinnacle's pre-announcement market capitalization of approximately $3.9 billion, providing context for the magnitude of the premium and the value delivered to shareholders.
• The Pinnacle board's evaluation of strategic alternatives, including the option of remaining independent, and the board's conclusion that the merger offered the best available path to maximizing shareholder value in light of Pinnacle's competitive challenges and market conditions.
This evidence is relevant both to the equities analysis under Section 13(b) and to the broader narrative regarding the procompetitive nature of the transaction. A transaction that delivers substantial value to the target company's shareholders and is supported by an independent fairness opinion carries significant weight in the equities balance.
3. Pinnacle's Seller and Consumer Benefits. Finally, we request that WGT develop the evidence and briefing regarding the specific benefits that the transaction will deliver to Pinnacle's approximately 185,000 active third-party sellers and, by extension, to the consumers those sellers serve. This evidence is complementary to the efficiencies analysis that Calderwood & Harkness will lead and should be presented in a manner that demonstrates how the integration of the two companies' platforms and infrastructure will create value at the seller level.
Key benefits to be addressed include:
• Access to Cascade's Fulfillment Network. Pinnacle's sellers will gain access to Cascade's 22-warehouse fulfillment network, enabling faster and more cost-effective order fulfillment. Many of Pinnacle's smaller sellers currently rely on self-fulfillment or fragmented third-party logistics arrangements; access to Cascade's established infrastructure will materially improve their competitive position.
• Expanded Consumer Reach. The transaction will provide Pinnacle's sellers with access to Cascade's consumer channels, including the CascadeDirect.com e-commerce platform and Cascade's approximately 340 brick-and-mortar retail locations across 38 states. This omnichannel reach will enable Pinnacle's sellers to access consumer segments that are currently difficult to reach through online marketplace channels alone.
C. Joint and Shared Responsibilities
In addition to the distinct lead areas identified above, there are several areas in which both firms will need to collaborate closely:
• Competitive Effects Analysis. Both firms will collaborate on the competitive effects analysis sections of the Opposition, with particular focus on the multi-homing behavior of sellers across CascadeMarket, Pinnacle, Vertex Commerce, and Nomad Shops. Multi-homing evidence is critical to demonstrating that the merger will not confer market power because sellers can and do maintain presences on multiple platforms simultaneously and can shift volume in response to changes in platform quality or pricing.
• Coordinated Effects. Both firms will contribute to the analysis of coordinated effects, given Vertex Commerce's dominant 35.7% market share. The defense position should emphasize that the market structure is not conducive to coordination and that the transaction does not materially increase the risk of coordinated behavior.
• Cross-Review. Both firms will review and provide input on all sections of the Opposition prior to filing to ensure consistency, avoid contradictions, and strengthen the overall presentation.
• Filing Protocol. Calderwood & Harkness will serve as filing counsel given Cascade's status as the lead defendant in the captioned action. All filings will bear both firms' signatures where joint filings are appropriate or where the court requires separate counsel to appear.
IV. Expert Coordination
Effective coordination of our expert work is essential to presenting a unified and credible economic analysis to the court. The following summarizes the current state of expert retention and the coordination we require from WGT.
Calderwood & Harkness has retained Brindoval Analytics LLC ("Brindoval") pursuant to an expert retention agreement dated July 2, 2025. The engagement team at Brindoval consists of Dr. Priya Ramanathan, Managing Director, who will serve as the testifying expert, and Dr. Lucas Engström, Senior Economist, who will provide supporting analytical work. Brindoval has been retained on a flat fee of $1,800,000 through the conclusion of the preliminary injunction hearing, plus reasonable out-of-pocket expenses. This fee encompasses the preparation of Dr. Ramanathan's opening and rebuttal expert reports, all supporting analyses, and Dr. Ramanathan's testimony at the evidentiary hearing.
Pursuant to the court's scheduling order, expert reports from both sides are due on August 18, 2025, and rebuttal expert reports are due on August 29, 2025. Dr. Ramanathan's opening report will cover the three core areas of her testimony: (i) market definition, (ii) competitive effects, and (iii) efficiencies analysis. Her rebuttal report will respond to the opinions and analysis offered by the FTC's economic expert, Dr. Wallace Keenan of Thornfield Research Group.
To support this work, it is essential that WGT facilitate Brindoval's access to Pinnacle-specific data and personnel. Specifically, we request that WGT make the following categories of Pinnacle data available to Brindoval under appropriate confidentiality protections, including designation as "Outside Counsel Eyes Only" or "Confidential — Joint Defense Privileged" as applicable:
• Pinnacle's GMV data, including platform-level and category-level detail (FY2024 total: $11.4 billion);
• Pinnacle's net revenue data (FY2024 total: $1.82 billion, reflecting an average take rate of approximately 16%);
• Pinnacle's seller churn data by quarter and by seller category;
• Category-level transaction data, including order volume, average order value, and seller mix by category;
• Seller multi-homing data, including information regarding the percentage of Pinnacle sellers who also sell on CascadeMarket, Vertex Commerce, Nomad Shops, and other platforms.
We also request that WGT identify any Pinnacle personnel with whom Dr. Ramanathan or Dr. Engström should conduct interviews to inform their analysis. At a minimum, interviews with Pinnacle's CPO, Lena Kowalski, and CFO, Thomas Breck, would be valuable for understanding Pinnacle's competitive dynamics and financial trajectory.
We further request WGT's input on any Pinnacle-specific issues that should be addressed in the expert reports. If there are aspects of Pinnacle's competitive experience, seller relationships, or market conditions that WGT believes are important to the expert analysis, we want to ensure those issues are raised with Brindoval promptly.
Finally, please advise whether Pinnacle intends to retain its own, separate economic expert for the preliminary injunction proceeding or will rely on Dr. Ramanathan's testimony. If Pinnacle intends to retain a separate expert, we will need to coordinate the scope of each expert's opinions to avoid overlap or inconsistency and to ensure compliance with any limitations the court may impose on the number of expert witnesses.
V. Deposition Coordination
Fact discovery in this matter closes on August 4, 2025. All depositions—including depositions of party witnesses and any third-party depositions—must be completed before that date. Coordination on deposition strategy and scheduling is therefore a matter of immediate priority.
A. Defense Depositions of FTC Witnesses
The Defendants intend to depose the following FTC witnesses, and we propose the following allocation of responsibility:
Claire Dunmore — FTC Rule 30(b)(6) Designee on Market Definition. Calderwood & Harkness, with Elliot Nguyen serving as lead examiner, will take the lead on the deposition of Ms. Dunmore. Nguyen has already begun preparing a detailed deposition outline covering the following topics: the FTC's methodology for defining the relevant product and geographic markets; the identification of marketplace platforms and other competitive alternatives included in and excluded from the proposed relevant market and the basis for those inclusions and exclusions; the FTC's basis for calculating market share figures, including the data sources and methodological assumptions underlying its GMV calculations; and the FTC's treatment of social commerce platforms, hybrid retail models, and other emerging competitive alternatives. WGT is welcome to attend the deposition and to pose questions on topics specifically related to Pinnacle's competitive position or other matters within WGT's areas of responsibility.
Dr. Nathaniel Hargrove — FTC Bureau of Economics Staff Economist. The Defendants also intend to depose Dr. Hargrove, who we understand played a significant role in the Bureau of Economics' analysis underlying the Commission's decision to challenge the transaction. Coordination between our teams on the questioning strategy for Dr. Hargrove's deposition is important, as his testimony may touch on both market definition issues and Pinnacle-specific competitive dynamics. We propose discussing the allocation of questioning at our first weekly coordination call.
We also propose that WGT take the lead on any deposition topics specifically related to Pinnacle's competitive position, including questioning designed to elicit the FTC's assessment of Pinnacle's competitive trajectory and the FTC's basis for characterizing Pinnacle as a significant competitive force.
B. Preparation of Defense Witnesses for FTC Depositions
The FTC is likely to seek depositions of key personnel from both Cascade and Pinnacle. Based on the FTC's discovery requests to date and the issues raised in its Complaint, we anticipate the following witnesses will be deposed:
Cascade Witnesses (Calderwood & Harkness to Prepare):
• Margaret "Meg" Thornberry, Chief Executive Officer
• David Ruan, President and Chief Operating Officer
• Patricia "Trish" Delacroix, SVP of Marketplace & Platform Strategy
• Sonia Alvarez-Kirk, Chief Financial Officer
• Jerome Weston, General Counsel
Pinnacle Witnesses (Whitfield, Greer & Tanaka to Prepare):
• Rajiv Chandravar, Chief Executive Officer
• Lena Kowalski, Chief Product Officer
• Thomas Breck, Chief Financial Officer
• Anita Suresh, General Counsel
Coordination on witness preparation messaging is critical. Both sets of witnesses must present a consistent narrative regarding the procompetitive rationale for the transaction, the current competitive conditions in the market, and the projected efficiencies. Any inconsistency between the testimony of Cascade and Pinnacle witnesses would be seized upon by the FTC and could undermine our credibility with the court. I propose that our teams share witness preparation outlines and key messaging points in advance to ensure alignment. Where possible, we should also coordinate the scheduling of witness preparation sessions to allow for sequencing that ensures each team is aware of the testimony that prior witnesses have provided.
C. Third-Party Subpoenas
Calderwood & Harkness is currently preparing subpoenas duces tecum directed to the following third parties:
• Vertex Commerce Inc., 2100 North First Street, San Jose, CA 95131 — seeking marketplace operations data, take rate information, seller growth metrics, and communications with the FTC regarding the proposed transaction.
• Nomad Shops LLC, 45 Main Street, Suite 700, Brooklyn, NY 11201 — seeking comparable marketplace operations data, take rate information, seller growth and churn metrics, and communications with the FTC regarding the proposed transaction.
This third-party data is essential to our market definition and competitive effects analysis and will provide critical inputs for Dr. Ramanathan's expert work. We request WGT's input on any additional third-party discovery that may be useful for Pinnacle's defense. If WGT is aware of other marketplace participants, potential entrants, or industry participants from whom relevant data or testimony should be sought, please let us know promptly so that subpoenas can be issued and served in time to allow for compliance before the August 4 fact discovery cutoff. We should also coordinate on any third-party depositions that may be warranted based on the documents received.
VI. Document Sharing Protocols Under the Joint Defense Agreement
Effective document sharing is the backbone of a coordinated joint defense. This section reiterates the document sharing framework established in the JDA dated July 1, 2025, and identifies specific categories of documents that should be shared promptly between the defense teams.
All materials shared between Calderwood & Harkness and WGT pursuant to the JDA shall be marked "JOINT DEFENSE PRIVILEGED — CONFIDENTIAL" in accordance with the applicable provisions of the Agreement. Documents are to be shared exclusively via the secure document platform designated in the JDA; under no circumstances should joint defense materials be transmitted via unsecured email or other unprotected channels.
Each party retains the right to designate certain materials as "Outside Counsel Eyes Only" where commercially sensitive information of the respective client is involved. This designation is particularly important given that Cascade and Pinnacle, while aligned in their defense of the proposed transaction, remain separate companies with distinct business operations and confidential commercial information that must be protected.
The following categories of documents should be shared promptly between the teams:
(a) Cascade's Second Request production, which was certified as substantially complete on June 10, 2025 (HSR Filing Transaction No. HSR-20250402-0347; FTC File No. 251-0089). Calderwood & Harkness will upload all non-privileged documents from this production to the secure platform.
(b) Pinnacle's Second Request production. We request that WGT upload Pinnacle's responsive documents to the shared platform on a similar basis.
(c) Any responsive documents received from third-party subpoenas, as they are produced.
(d) Expert draft reports and supporting data, subject to applicable work-product protections. Draft expert reports should be shared with sufficient lead time to allow for meaningful review and input by both teams prior to finalization.
(e) Privilege log entries. Both firms should coordinate on maintaining consistent privilege assertions to avoid inadvertent waiver or conflicting positions. Calderwood & Harkness is maintaining the Defendants' consolidated Privilege Log, with Elliot Nguyen and Aaron Liu serving as the primary contacts for privilege log coordination.
Each firm should designate a primary contact for document sharing to ensure efficient and timely communication. Calderwood & Harkness's primary contact for document sharing will be Elliot Nguyen. We request that WGT designate Kenneth Oshiro as its primary contact for this purpose, as we discussed on the June 30 call.
VII. Weekly Coordination Call Schedule
Given the compressed timeline and the volume of work to be completed before the August 11 filing deadline and the September 8 evidentiary hearing, regular coordination between our teams is essential. We propose the following schedule:
Standing Weekly Calls. Beginning the week of July 14, 2025—following the initial case management conference—we propose a standing weekly coordination call every Monday at 2:00 PM Eastern Time / 1:00 PM Central Time / 11:00 AM Pacific Time.
Participants. The regular participants on these calls should include:
• Calderwood & Harkness: Howard Bellamy, Elaine Forsythe, Elliot Nguyen, and Aaron Liu
• Whitfield, Greer & Tanaka: Diana Whitfield and Kenneth Oshiro
Additional team members from either firm may join as needed depending on the agenda topics for a given week.
Standing Agenda. Each call should address the following items at a minimum: (i) status of briefing assignments and drafting progress; (ii) discovery updates, including the status of third-party subpoena responses and any outstanding discovery disputes; (iii) expert progress, including data requests and report preparation timeline; (iv) witness preparation scheduling and coordination; and (v) any new developments in the case or related proceedings.
Ad Hoc Calls. In addition to the standing weekly calls, either team may convene ad hoc calls as needed to address urgent matters, including court orders, discovery disputes, or developments requiring immediate coordination.
In-Person Strategy Session. We propose scheduling an in-person strategy session in Washington, D.C. or Seattle during the week of August 4, 2025—immediately following the close of fact discovery—to finalize the PI opposition strategy, review the state of the record, coordinate expert testimony, and begin preparing for the evidentiary hearing. The timing of this session will allow both teams to assess the full evidentiary landscape before finalizing the Opposition brief due August 11. Please advise on WGT's preference for location and availability during that week.
VIII. Preliminary Injunction Hearing Preparation
The evidentiary hearing on the FTC's Motion for Preliminary Injunction is scheduled to commence on September 8, 2025, before Judge Johannsen at the United States District Court for the Western District of Washington, located at 700 Stewart Street, Seattle, WA 98101. The hearing is estimated to span five court days. Thorough and coordinated preparation is essential to presenting an effective defense at the hearing.
Pre-Hearing Brief. The Defendants will file a Pre-Hearing Brief in advance of the evidentiary hearing, setting forth the factual and legal framework for the defense case. Calderwood & Harkness will take the lead on drafting the Pre-Hearing Brief, with WGT providing input on Pinnacle-specific facts and arguments. A draft will be circulated to WGT with sufficient time for review and comment.
Proposed Findings of Fact and Conclusions of Law. In accordance with the court's procedures, the Defendants will submit Proposed Findings of Fact and Conclusions of Law following the hearing. Calderwood & Harkness will prepare the initial draft, incorporating findings related to market definition, legal framework, efficiencies, ease of entry, and competitive effects. WGT will supplement the draft with Pinnacle-specific findings, including findings related to Pinnacle's competitive trajectory, business rationale, and seller benefits.
Witness List. The Defendants' anticipated witness list for the evidentiary hearing includes the following individuals:
• Cascade Witnesses:
• Margaret "Meg" Thornberry, CEO — to testify regarding corporate strategy and the procompetitive rationale for the transaction
• Patricia "Trish" Delacroix, SVP of Marketplace & Platform Strategy — to testify regarding projected efficiencies and the integration plan
• Pinnacle Witnesses:
• Rajiv Chandravar, CEO — to testify regarding Pinnacle's competitive challenges, decelerating growth trajectory, and the strategic rationale for the transaction from Pinnacle's perspective
• Thomas Breck, CFO — to testify regarding Pinnacle's financial condition and trajectory
• Expert Witness:
• Dr. Priya Ramanathan, Brindoval Analytics LLC — to testify regarding market definition, competitive effects, and efficiencies analysis
Exhibit List. Both firms will contribute proposed exhibits for the evidentiary hearing. Calderwood & Harkness will compile and file the Defendants' consolidated exhibit list, which we anticipate will include approximately 75 exhibits. We request that WGT identify proposed Pinnacle-specific exhibits—including internal documents, financial data, and board materials—well in advance of the exhibit list deadline so that they can be incorporated into the consolidated list.
Witness Preparation. Witness preparation sessions should be scheduled throughout August. For the key hearing witnesses, we propose coordinated mock examination sessions to ensure that each witness is prepared for both direct and cross-examination and that the testimonies of the various defense witnesses are consistent and complementary. These sessions should include practice cross-examinations by attorneys from the other firm to provide each witness with a fresh perspective on the lines of questioning they may face from FTC counsel.
IX. Budget and Cost Allocation
Each firm will bear its own fees and expenses for work performed on behalf of its respective client, consistent with each firm's engagement letter with its client. Shared costs—including, but not limited to, expert fees payable to Brindoval Analytics LLC, court reporter fees for joint depositions, charges associated with the secure document sharing platform, and any other costs incurred jointly on behalf of both Defendants—will be allocated between the parties as agreed pursuant to the terms of the Joint Defense Agreement.
For planning purposes, Calderwood & Harkness's estimated fees through the conclusion of the preliminary injunction hearing are in the range of $3.2 million to $4.5 million, representing approximately 2,200 to 3,000 attorney hours. This estimate is in addition to Brindoval Analytics' $1.8 million flat fee for expert services. These estimates are, of course, subject to revision based on the scope and intensity of discovery, the number of depositions, and any unanticipated developments in the case.
We request that WGT advise on its anticipated budget through the PI hearing so that both teams can provide a combined estimate to their respective clients. A coordinated budget presentation will assist both Cascade and Pinnacle in planning and will provide transparency regarding the total litigation costs associated with the joint defense.
X. Miscellaneous Coordination Items
Several additional coordination matters warrant attention:
Communications with the Court. All joint filings, joint status reports, and other joint communications with the court should be coordinated between our teams. The next joint status report is expected to be filed following the July 14, 2025 case management conference, and we should confer in advance of that conference to ensure alignment on the positions to be presented to Judge Johannsen.
Media Strategy. Cascade has retained Pendleton Crier & Associates (Douglas Crier, Senior Managing Director) to manage public communications related to the transaction and the FTC challenge. Given the high-profile nature of this case, it is important that any public statements by Pinnacle or WGT be coordinated with Cascade's communications advisors to ensure consistent messaging and to avoid statements that could be used adversely in the litigation. We propose a brief introductory call between the communications advisors for both sides to establish protocols for press inquiries, public statements, and media strategy. Please let us know whether Pinnacle has retained a separate communications firm and, if so, the appropriate contact.
Coordination with Transaction Counsel. Harmon Ridgeway & Strauss LLP continues to serve as primary transaction counsel for the merger. Phillip Strauss and Monica Chen-Barrios are available to address questions regarding the Merger Agreement, HSR filings, and other transaction-related matters as they arise in the litigation. Provisions of the Merger Agreement that are directly relevant to the litigation timeline include the outside date of March 14, 2026, which is extendable to June 14, 2026 solely in the event that regulatory antitrust clearance is the only unsatisfied condition to closing. We should bear these dates in mind as we develop our litigation strategy and assess the risks associated with any delays in the proceedings.
Financing Considerations. We note our awareness of the commitment letter provisions from Whitmore National Bank, N.A. (Brian Alderman, Managing Director) in connection with the financing for the transaction. To the extent that lender-related deadlines or commitment letter expiration dates may affect the litigation strategy or the equities analysis in the preliminary injunction briefing, we request that WGT and transaction counsel keep us apprised of any relevant developments.
XI. Closing
We are confident in the strength of the joint defense position. The FTC's case rests on an artificially narrow market definition that ignores the realities of a dynamic and rapidly evolving e-commerce landscape. The transaction generates substantial, well-documented, and verifiable efficiencies that will benefit sellers and consumers. The evidence of new entry and the competitive strength of existing rivals directly refute the Commission's theory of harm. And the divided 3–2 vote within the Commission itself suggests that even the agency most familiar with the competitive landscape is not convinced that this transaction poses a serious threat to competition.
That said, the compressed timeline leaves little margin for error. Close and continuous coordination between our teams will be essential to mounting the most effective defense possible within the deadlines imposed by the court. I urge that we treat the schedules and allocations outlined in this letter as firm commitments, subject to modification only as circumstances may require and upon mutual agreement.
I respectfully request that you confirm your agreement with the proposed allocation of responsibilities, coordination protocols, and schedule outlined in this letter, or suggest any modifications you believe are appropriate. We are, of course, happy to discuss any aspect of this letter at your convenience. Given the urgency of the timeline, we would appreciate a written confirmation or response by July 11, 2025.
I look forward to working with you and your team as we prepare for the challenges ahead.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Howard Bellamy Partner, Antitrust & Competition Practice Group
1401 K Street NW, Suite 1200 Washington, D.C. 20005 Telephone: (202) 555-7114
Email: hbellamy@calderwoodharkness.com
cc (via encrypted email, under the protections of the Joint Defense and Common Interest Agreement dated July 1, 2025):
Elaine Forsythe, Calderwood & Harkness LLP Elliot Nguyen, Calderwood & Harkness LLP Aaron Liu, Calderwood & Harkness LLP Kenneth Oshiro, Whitfield, Greer & Tanaka LLP
Platform | Alleged Market Share (by GMV)
Cascade (CascadeMarket) | 8.2%
Pinnacle | 30.1%
Combined (Post-Merger) | 38.3%
Vertex Commerce Inc. | 35.7%
Nomad Shops LLC | 14.6%
All Others | 11.4%

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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