1038-00004 · Calderwood & Harkness LLP · CID Response

cid-response-cover-letter-first-production.docx DOCUMENT M&A / Corporate

4 / 12 ← → ✕

CALDERWOOD & HARKNESS LLP Attorneys at Law

1201 Third Avenue, Suite 4400 Seattle, WA 98101 Telephone: (206) 555-8200 Facsimile: (206) 555-8201 www.calderwoodharkness.com

April 23, 2024

Meredith Calloway-Voss Lead Assistant Attorney General Consumer Protection Division Office of the Attorney General, State of Washington 800 Fifth Avenue, Suite 2000 Seattle, WA 98104

Re: Civil Investigative Demand to Cascade Retail Holdings Inc., dated March 26, 2024

C&H Matter No. 1038-00004

Dear Ms. Calloway-Voss:

I. Introduction and Purpose of Letter

Calderwood & Harkness LLP represents Cascade Retail Holdings Inc. ("Cascade" or "CRH"), a Delaware corporation with principal offices at 4500 Overlake Boulevard, Suite 800, Bellevue, Washington 98004. This letter accompanies Cascade's initial rolling production of documents responsive to the Civil Investigative Demand ("CID") issued by the Consumer Protection Division of the Washington State Office of the Attorney General on March 26, 2024, pursuant to the investigative authority conferred by RCW 19.86.110.

Calderwood & Harkness was formally retained by Cascade on April 9, 2024, as reflected in the engagement letter of that date. Upon retention, counsel immediately commenced efforts to identify, collect, review, and produce documents responsive to the CID's requests.

This production is being made in a spirit of cooperation and good faith, and in accordance with the timetable discussed during the telephonic conference between the undersigned and your office on April 11, 2024. Notwithstanding the foregoing, this production is made without waiver of any rights, objections, privileges, or defenses available to Cascade under applicable law, including but not limited to the Washington Consumer Protection Act, RCW 19.86 et seq., the Washington Civil Rules, and applicable constitutional protections. Cascade expressly reserves all such rights, objections, privileges, and defenses as more fully set forth below.

II. Scope of the CID

For the convenience of the Attorney General's office, we briefly recite the scope of the CID at issue. The CID contains twenty-three (23) document requests and fourteen (14) interrogatories directed to Cascade's use of "compare-at," "original price," and "was/now" reference pricing on its ecommerce platform (cascaderetail.com) and in in-store signage across its one hundred eighty-seven (187) retail locations operating in fourteen (14) western United States states, including Washington, Oregon, California, Idaho, Montana, Nevada, Utah, Arizona, Colorado, New Mexico, Wyoming, Alaska, Hawaii, and North Dakota.

The CID pertains to consumer complaints regarding Cascade's pricing practices — specifically, one hundred forty-seven (147) consumer complaints filed with the Attorney General's office between January 2023 and February 2024 — and the Attorney General's review of Cascade's pricing disclosure practices with particular focus on six product categories: (1) women's apparel; (2) men's footwear; (3) home textiles; (4) small kitchen appliances; (5) outdoor furniture; and (6) consumer electronics accessories.

The CID also specifically references the Attorney General's concerns regarding Cascade's "Smart Price" promotional program, which was launched on October 15, 2023. The Smart Price program utilizes algorithmically generated reference prices to display comparative pricing information to consumers in both the ecommerce and brick-and-mortar retail channels. The Attorney General's office has indicated that the investigation will evaluate, among other things, whether the reference prices generated by the Smart Price algorithm are based on bona fide former selling prices or other legitimate pricing benchmarks, and whether consumers may be misled by the comparative pricing information displayed under the program.

III. Description of Initial Rolling Production

A. Volume and Format

Cascade is today producing approximately twelve thousand four hundred (12,400) documents, Bates-stamped CRH-CID-000001 through CRH-CID-012400. The precise ending Bates number for this production will be confirmed in the accompanying Bates index enclosed herewith, and any minor discrepancy between the estimated count referenced in this letter and the final count reflected in the index should be resolved by reference to the index itself.

Documents have been produced in the following formats, consistent with the production specifications set forth in the CID and as discussed during the April 11, 2024 telephonic conference:

• Native format has been used where appropriate, including for spreadsheets (Microsoft Excel files), databases, and other structured data files where conversion to image format would materially compromise the utility or integrity of the document.

• Single-page TIFF images with extracted text (.txt) files and associated metadata load files (e.g. .dat format and Harborline Services Inc. .lfp format) have been used for all processed documents, including emails, word-processing documents, PDF files, and presentation files.

• Metadata fields produced in the load files include, at a minimum: custodian, author, date created, date last modified, date sent, date received, from, to, cc, bcc, subject, file name, file extension, file path, MD5 hash value, and Bates begin/end numbers.

E-discovery processing, de-duplication (using MD5 hash values at the document family level), and hosting were performed by Stormfield Document Solutions LLC, located at 820 SW Washington Street, Suite 450, Portland, Oregon 97205. Stormfield Document Solutions is a nationally recognized e-discovery vendor with experience in government investigation matters, and its processing protocols were applied consistently to all data sources collected in connection with this production.

De-duplication was performed across all custodians on a global basis. To the extent that a single document was collected from multiple custodians, the document was produced once, and the load file reflects all custodians from whom the document was collected.

B. Categories of Documents Produced

The documents included in this initial production are organized by CID request number and encompass the following principal categories. The categories described below are intended to provide the Attorney General's office with a general overview of the production and should not be construed as an exhaustive or definitive description of every document produced. To the extent that a particular document is responsive to multiple CID requests, it has been identified as such in the accompanying Bates index.

1. Pricing Policies and Procedures (Responsive to CID Requests Nos. 1, 2, 3, and 7)

This production includes internal Cascade policy documents governing reference-price setting, markdown procedures, and promotional pricing guidelines in effect from January 1, 2023 through March 26, 2024 (the date of the CID). These documents include Cascade's corporate pricing policy manual (revised editions dated February 2023 and September 2023), divisional standard operating procedures for each of the six product categories at issue, and internal guidance memoranda issued by the Pricing Strategy Group within Cascade's Marketing & Pricing Strategy division. Also included are approval workflows and authorization matrices governing the implementation of promotional pricing events, clearance markdowns, and seasonal pricing adjustments.

2. Smart Price Program Documentation (Responsive to CID Requests Nos. 4, 5, 6, and 8)

This production includes records relating to the design, development, implementation, and ongoing operation of the "Smart Price" promotional program launched on October 15, 2023. These documents include the initial business case and proposal prepared by Cascade's Marketing & Pricing Strategy division; the executed Master Services Agreement and associated Statements of Work between Cascade and Praxton Analytics LLC ("Praxton"), the third-party pricing analytics consultant retained by Cascade to build the algorithmic reference-price model underlying the Smart Price program; technical specification documents describing the data inputs, weighting methodologies, and algorithmic logic used by the Smart Price model; internal testing and validation reports; post-launch performance dashboards and summary analytics; and correspondence between Cascade personnel and Praxton representatives regarding model calibration, data sourcing, and output validation. Praxton Analytics LLC is located at 1600 Market Street, Suite 3200, Philadelphia, Pennsylvania 19103, and serves as an independent contractor to Cascade pursuant to the referenced Master Services Agreement dated July 12, 2023.

3. Marketing and Advertising Materials (Responsive to CID Requests Nos. 9, 10, and 11)

This production includes representative samples of in-store signage, ecommerce product listing pages (captured as screenshots and as native HTML files where available), promotional email campaigns, weekly advertising circulars, and digital display advertisements that include "compare-at," "original price," or "was/now" pricing for items within the six product categories at issue. The samples produced span the period from January 2023 through March 2024 and include materials deployed through both the brick-and-mortar retail channel and the cascaderetail.com ecommerce platform. Where signage templates or creative assets were maintained in centralized marketing repositories, the templates have been produced along with representative examples of their deployment.

4. Consumer Complaint Files (Responsive to CID Requests Nos. 12, 13, and 14)

This production includes Cascade's internal records of consumer complaints and customer-service interactions relating to pricing discrepancies, reference-price accuracy, or alleged misleading price representations. These records include entries from Cascade's customer relationship management ("CRM") system, correspondence between Cascade's Customer Experience department and individual consumers, internal investigation notes and resolution memoranda, and records of complaints that were escalated internally within Cascade to supervisory or management-level personnel, including the office of Terence Ashford, Chief Compliance Officer. Cascade has made reasonable efforts to identify and collect all complaint records that relate to the subject matter of the CID within the relevant time period.

5. Compliance-Related Communications (Responsive to CID Requests Nos. 15, 16, and 17)

This production includes non-privileged internal memoranda and email correspondence among Cascade personnel discussing pricing-disclosure practices and regulatory compliance. Key custodians whose files have been reviewed and produced in this category include Raymond Soo, Vice President of Marketing & Pricing Strategy, and Terence Ashford, Chief Compliance Officer. The documents produced in this category include, among other things, internal audit reports, compliance review memoranda, email threads discussing the application of FTC Guides Against Deceptive Pricing (16 C.F.R. Part 233) to Cascade's promotional practices, and internal communications regarding the adoption and implementation of compliance checkpoints for the Smart Price program. Certain documents within this category have been withheld on privilege grounds, as reflected on the enclosed privilege log described in Section IV below.

6. Training Materials (Responsive to CID Requests Nos. 18 and 19)

This production includes employee training materials and merchandising guidelines addressing reference-price displays for both brick-and-mortar and ecommerce channels. These materials include onboarding training decks for new merchandising and pricing associates, annual compliance training presentations (for fiscal years 2023 and 2024), procedural job aids distributed to store-level associates regarding the proper display of comparative pricing signage, and ecommerce content management guidelines issued to the digital merchandising team governing the formatting and sourcing of reference-price data on cascaderetail.com product detail pages.

7. Prior Regulatory Correspondence (Responsive to CID Request No. 20)

To the extent non-privileged, this production includes records of Cascade's prior engagement with Dunlap, Mercer & Fosse LLP regarding FTC pricing-guidance compliance in 2022. The documents produced in this category are limited to non-privileged factual materials, including certain publicly available regulatory guidance materials compiled by Dunlap, Mercer & Fosse and shared with Cascade's compliance team. Communications between Cascade and Dunlap, Mercer & Fosse that reflect legal advice, attorney mental impressions, or attorney work product have been withheld and are identified on the enclosed privilege log.

C. Bates Index and Production Media

An index identifying each document produced in this initial rolling production by Bates range, custodian, date range, document type, and CID request number(s) to which it is responsive is enclosed with this letter. The index is provided in both PDF and Microsoft Excel formats for the convenience of the Attorney General's office.

The production itself is being delivered via secure, encrypted file transfer through Stormfield Document Solutions' secure transfer portal. Access credentials for the file transfer have been provided separately to your office via encrypted email directed to the email address you designated during the April 11, 2024 telephonic conference. If your office encounters any technical difficulties accessing or downloading the production files, please contact the undersigned or Stormfield Document Solutions' project manager, Kendra Okafor, at (503) 555-4790.

IV. Privilege Log and Privilege Withholdings

Cascade has withheld from this production certain documents and communications on the basis of the attorney-client privilege, the work-product doctrine, and/or the joint-defense privilege. The decision to withhold each such document was made following a document-by-document review conducted by attorneys at Calderwood & Harkness in accordance with applicable legal standards.

An initial privilege log identifying each withheld document is enclosed with this production. For each entry on the privilege log, the following information is provided: (a) the date of the document or communication; (b) the author or sender; (c) the recipient(s) and any persons copied; (d) a general description of the subject matter of the document or communication, described with sufficient specificity to allow the Attorney General's office to assess the privilege claim without disclosing privileged content; and (e) the specific privilege(s) or protection(s) asserted as the basis for withholding.

The privilege log entries cover, among other things, the following categories of withheld materials:

• Communications between Cascade's in-house legal department, including Diana Prescott-Levy, General Counsel, and members of her legal staff, and Cascade's business personnel, in which legal advice was sought or rendered regarding pricing-disclosure practices, regulatory compliance, or the subject matter of the CID;

• Communications between Cascade's in-house legal department and outside counsel at Calderwood & Harkness LLP concerning the CID, the investigation, and the preparation of this production;

• Communications between Cascade's in-house legal department and Nora Chisholm of Dunlap, Mercer & Fosse LLP relating to prior regulatory compliance advice rendered in 2022 regarding FTC pricing-guidance compliance; and

• Attorney work-product materials, including legal memoranda, research, draft analyses, and litigation-strategy documents prepared in anticipation of litigation or in connection with the Attorney General's investigation.

Cascade takes this opportunity to state expressly that the production of any document in connection with this CID response is not intended to waive, and shall not be deemed to constitute a waiver of, any applicable attorney-client privilege, work-product protection, joint-defense privilege, or any other applicable privilege or protection. In the event that any privileged or protected document has been inadvertently produced, Cascade reserves the right to claw back such document pursuant to the protections afforded by Washington Civil Rule 26(b)(6) and Federal Rule of Evidence 502(b), and Cascade requests the prompt return or destruction of any such document upon notification of the inadvertent disclosure. The inadvertent production of any privileged or protected document shall not be deemed a waiver of the privilege or protection as to that document or any other document, whether or not related to the same subject matter.

V. General Objections and Reservations of Rights

Cascade preserves and does not waive any general or specific objections to the CID, including but not limited to objections based on the following grounds:

1. Overbreadth. To the extent that certain CID requests seek documents or information that are not reasonably related to the subject matter of the investigation, or that extend to time periods, geographic regions, product categories, or business units that are not reasonably implicated by the consumer complaints at issue, Cascade objects on the basis of overbreadth.

2. Undue Burden. To the extent that certain CID requests impose a burden on Cascade that is disproportionate to the likely benefit of the information sought, taking into account the needs of the investigation, the amount of information already produced, and the cost and effort required to locate, collect, review, and produce the requested materials, Cascade objects on the basis of undue burden.

3. Relevance. To the extent that certain CID requests seek documents or information that are not relevant to the Attorney General's investigation of Cascade's pricing practices, Cascade objects on the basis of relevance.

4. Proportionality. To the extent that certain CID requests are not proportional to the needs of the investigation, considering the importance of the issues at stake, the parties' relative access to relevant information, and the importance of the discovery in resolving the issues, Cascade objects on the basis of proportionality.

5. Privilege. Cascade objects to producing any documents or information protected by the attorney-client privilege, the work-product doctrine, the joint-defense privilege, or any other applicable privilege or protection, as more fully described in Section IV above.

6. Trade Secrets and Confidential Business Information. Cascade objects to producing documents or information that constitute or contain trade secrets, proprietary business information, or competitively sensitive data without adequate protections against disclosure. Cascade respectfully requests that the Attorney General's office enter into a stipulated protective order or confidentiality agreement to govern the treatment of such materials. Cascade is prepared to propose terms for such an agreement at the meet-and-confer described in Section VII below.

The production of documents responsive to specific CID requests does not constitute a waiver of Cascade's objections to those requests or to any other requests in the CID. By producing documents, Cascade does not concede the relevance, materiality, or admissibility of any document produced, nor does Cascade concede that any particular CID request is valid, lawful, or otherwise enforceable in whole or in part.

Cascade reserves the right to supplement, clarify, or amend its production and responses as additional documents are identified, collected, reviewed, and processed, and as counsel's understanding of the scope and subject matter of the investigation continues to develop.

Nothing in this production, or in this letter accompanying the production, constitutes an admission by Cascade of any violation of the Washington Consumer Protection Act, RCW 19.86 et seq., the Federal Trade Commission Act, 15 U.S.C. § 45, the FTC Guides Against Deceptive Pricing, 16 C.F.R. Part 233, or any other federal, state, or local law, regulation, or ordinance. Cascade expressly denies that it has engaged in any unfair or deceptive act or practice within the meaning of RCW 19.86.020 or any other applicable provision of law.

VI. Continuing Obligation and Supplemental Production

Cascade acknowledges its continuing obligation to supplement this production as additional responsive documents are identified and reviewed. Document review and collection efforts are ongoing and are being conducted on a diligent and expeditious basis.

At this time, Cascade anticipates producing additional responsive documents in a supplemental rolling production, which Cascade expects to complete on or before May 31, 2024. The supplemental production is expected to include, among other things, documents from additional custodians who are currently being interviewed, as well as documents from additional data sources that are in the process of being collected and processed by Stormfield Document Solutions.

Specifically, the following additional collection and review activities are currently underway:

• Interviews of additional custodians within Cascade's Merchandising, eCommerce Operations, and Store Operations divisions to identify additional repositories of potentially responsive documents;

• Collection and processing of data from Cascade's ecommerce content management system, which contains historical product listing data, pricing history tables, and reference-price audit trails for the cascaderetail.com platform;

• Collection and processing of structured data from Cascade's point-of-sale ("POS") system relating to transactional pricing for the six product categories at issue during the relevant time period; and

• Review of backup and archived email repositories for certain custodians whose primary mailboxes yielded a limited volume of responsive documents.

Cascade will promptly notify the Attorney General's office of the timeline for any supplemental production and will provide advance notice in the event that the anticipated May 31, 2024 completion date requires adjustment.

VII. Proposal for Meet-and-Confer

In the interest of efficiency and cooperation, Cascade respectfully proposes a meet-and-confer between counsel for the parties to discuss the following topics:

1. The scope and prioritization of remaining CID requests, including identification of any requests that the Attorney General's office considers to be of highest priority, so that Cascade may allocate its review and collection resources accordingly;

2. Any clarifications that the Attorney General's office may wish to provide regarding the categories of documents or information sought by particular CID requests, including any requests that may benefit from narrowing or refinement in order to focus the production on the most relevant and probative materials;

3. The parameters of any protective order or confidentiality agreement to govern the treatment of trade secrets, proprietary business information, and other confidential materials produced in connection with the CID;

4. The format and organization of Cascade's production, including any preferences or requirements of the Attorney General's office regarding production specifications, load file formats, or metadata fields; and

5. Potential resolution pathways, including the possibility of addressing the Attorney General's concerns through cooperative engagement, voluntary compliance measures, or other alternative approaches rather than formal enforcement proceedings.

Cascade suggests scheduling the meet-and-confer during the week of May 13, 2024, at a mutually convenient time. We are available to meet in person at the Attorney General's offices, at Calderwood & Harkness's offices, or by videoconference, at the Attorney General's preference. If the proposed timeframe is not workable for your office, please do not hesitate to suggest alternative dates.

Calderwood & Harkness is authorized to represent that Cascade is committed to responding to the CID fully and in good faith, and to engaging constructively and cooperatively with the Attorney General's office throughout this process. Cascade takes seriously its obligations under Washington law and its responsibility to its customers, and Cascade welcomes the opportunity to work with the Consumer Protection Division to address any concerns regarding its pricing practices.

VIII. Contact Information

All communications regarding this matter should be directed to the undersigned or to Alan Ngo, the responsible partner for this engagement, at the following address:

Calderwood & Harkness LLP 1201 Third Avenue, Suite 4400 Seattle, WA 98101

Patrick Gallagher, Associate Telephone: (206) 555-8247

Email: pgallagher@calderwoodharkness.com

Alan Ngo, Partner Telephone: (206) 555-8212

Email: ango@calderwoodharkness.com

We appreciate your courtesy and cooperation in this matter, and we look forward to working with your office as this process moves forward. Should you have any questions regarding this production or any other aspect of the CID response, please do not hesitate to contact us at your earliest convenience.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Patrick Gallagher Associate

1201 Third Avenue, Suite 4400 Seattle, WA 98101 Telephone: (206) 555-8247

Email: pgallagher@calderwoodharkness.com

cc:

Alan Ngo, Partner, Calderwood & Harkness LLP Diana Prescott-Levy, General Counsel, Cascade Retail Holdings Inc. Jordan A. Kittridge, Investigating Assistant Attorney General, Consumer Protection Division, Office of the Attorney General, State of Washington

Enclosures:

1. Document production (via secure file transfer) — approximately 12,400 documents (Bates range CRH-CID-000001 through CRH-CID-012400)

2. Bates index (PDF and Microsoft Excel formats)

3. Privilege log

CALDERWOOD & HARKNESS LLP Attorneys at Law
1201 Third Avenue, Suite 4400 Seattle, WA 98101 Telephone: (206) 555-8200 Facsimile: (206) 555-8201 www.calderwoodharkness.com
April 23, 2024
Meredith Calloway-Voss Lead Assistant Attorney General Consumer Protection Division Office of the Attorney General, State of Washington 800 Fifth Avenue, Suite 2000 Seattle, WA 98104
Re: Civil Investigative Demand to Cascade Retail Holdings Inc., dated March 26, 2024
C&H Matter No. 1038-00004
Dear Ms. Calloway-Voss:
I. Introduction and Purpose of Letter
Calderwood & Harkness LLP represents Cascade Retail Holdings Inc. ("Cascade" or "CRH"), a Delaware corporation with principal offices at 4500 Overlake Boulevard, Suite 800, Bellevue, Washington 98004. This letter accompanies Cascade's initial rolling production of documents responsive to the Civil Investigative Demand ("CID") issued by the Consumer Protection Division of the Washington State Office of the Attorney General on March 26, 2024, pursuant to the investigative authority conferred by RCW 19.86.110.
Calderwood & Harkness was formally retained by Cascade on April 9, 2024, as reflected in the engagement letter of that date. Upon retention, counsel immediately commenced efforts to identify, collect, review, and produce documents responsive to the CID's requests.
This production is being made in a spirit of cooperation and good faith, and in accordance with the timetable discussed during the telephonic conference between the undersigned and your office on April 11, 2024. Notwithstanding the foregoing, this production is made without waiver of any rights, objections, privileges, or defenses available to Cascade under applicable law, including but not limited to the Washington Consumer Protection Act, RCW 19.86 et seq., the Washington Civil Rules, and applicable constitutional protections. Cascade expressly reserves all such rights, objections, privileges, and defenses as more fully set forth below.
II. Scope of the CID
For the convenience of the Attorney General's office, we briefly recite the scope of the CID at issue. The CID contains twenty-three (23) document requests and fourteen (14) interrogatories directed to Cascade's use of "compare-at," "original price," and "was/now" reference pricing on its ecommerce platform (cascaderetail.com) and in in-store signage across its one hundred eighty-seven (187) retail locations operating in fourteen (14) western United States states, including Washington, Oregon, California, Idaho, Montana, Nevada, Utah, Arizona, Colorado, New Mexico, Wyoming, Alaska, Hawaii, and North Dakota.
The CID pertains to consumer complaints regarding Cascade's pricing practices — specifically, one hundred forty-seven (147) consumer complaints filed with the Attorney General's office between January 2023 and February 2024 — and the Attorney General's review of Cascade's pricing disclosure practices with particular focus on six product categories: (1) women's apparel; (2) men's footwear; (3) home textiles; (4) small kitchen appliances; (5) outdoor furniture; and (6) consumer electronics accessories.
The CID also specifically references the Attorney General's concerns regarding Cascade's "Smart Price" promotional program, which was launched on October 15, 2023. The Smart Price program utilizes algorithmically generated reference prices to display comparative pricing information to consumers in both the ecommerce and brick-and-mortar retail channels. The Attorney General's office has indicated that the investigation will evaluate, among other things, whether the reference prices generated by the Smart Price algorithm are based on bona fide former selling prices or other legitimate pricing benchmarks, and whether consumers may be misled by the comparative pricing information displayed under the program.
III. Description of Initial Rolling Production
A. Volume and Format
Cascade is today producing approximately twelve thousand four hundred (12,400) documents, Bates-stamped CRH-CID-000001 through CRH-CID-012400. The precise ending Bates number for this production will be confirmed in the accompanying Bates index enclosed herewith, and any minor discrepancy between the estimated count referenced in this letter and the final count reflected in the index should be resolved by reference to the index itself.
Documents have been produced in the following formats, consistent with the production specifications set forth in the CID and as discussed during the April 11, 2024 telephonic conference:
• Native format has been used where appropriate, including for spreadsheets (Microsoft Excel files), databases, and other structured data files where conversion to image format would materially compromise the utility or integrity of the document.
• Single-page TIFF images with extracted text (.txt) files and associated metadata load files (e.g. .dat format and Harborline Services Inc. .lfp format) have been used for all processed documents, including emails, word-processing documents, PDF files, and presentation files.
• Metadata fields produced in the load files include, at a minimum: custodian, author, date created, date last modified, date sent, date received, from, to, cc, bcc, subject, file name, file extension, file path, MD5 hash value, and Bates begin/end numbers.
E-discovery processing, de-duplication (using MD5 hash values at the document family level), and hosting were performed by Stormfield Document Solutions LLC, located at 820 SW Washington Street, Suite 450, Portland, Oregon 97205. Stormfield Document Solutions is a nationally recognized e-discovery vendor with experience in government investigation matters, and its processing protocols were applied consistently to all data sources collected in connection with this production.
De-duplication was performed across all custodians on a global basis. To the extent that a single document was collected from multiple custodians, the document was produced once, and the load file reflects all custodians from whom the document was collected.
B. Categories of Documents Produced
The documents included in this initial production are organized by CID request number and encompass the following principal categories. The categories described below are intended to provide the Attorney General's office with a general overview of the production and should not be construed as an exhaustive or definitive description of every document produced. To the extent that a particular document is responsive to multiple CID requests, it has been identified as such in the accompanying Bates index.
1. Pricing Policies and Procedures (Responsive to CID Requests Nos. 1, 2, 3, and 7)
This production includes internal Cascade policy documents governing reference-price setting, markdown procedures, and promotional pricing guidelines in effect from January 1, 2023 through March 26, 2024 (the date of the CID). These documents include Cascade's corporate pricing policy manual (revised editions dated February 2023 and September 2023), divisional standard operating procedures for each of the six product categories at issue, and internal guidance memoranda issued by the Pricing Strategy Group within Cascade's Marketing & Pricing Strategy division. Also included are approval workflows and authorization matrices governing the implementation of promotional pricing events, clearance markdowns, and seasonal pricing adjustments.
2. Smart Price Program Documentation (Responsive to CID Requests Nos. 4, 5, 6, and 8)
This production includes records relating to the design, development, implementation, and ongoing operation of the "Smart Price" promotional program launched on October 15, 2023. These documents include the initial business case and proposal prepared by Cascade's Marketing & Pricing Strategy division; the executed Master Services Agreement and associated Statements of Work between Cascade and Praxton Analytics LLC ("Praxton"), the third-party pricing analytics consultant retained by Cascade to build the algorithmic reference-price model underlying the Smart Price program; technical specification documents describing the data inputs, weighting methodologies, and algorithmic logic used by the Smart Price model; internal testing and validation reports; post-launch performance dashboards and summary analytics; and correspondence between Cascade personnel and Praxton representatives regarding model calibration, data sourcing, and output validation. Praxton Analytics LLC is located at 1600 Market Street, Suite 3200, Philadelphia, Pennsylvania 19103, and serves as an independent contractor to Cascade pursuant to the referenced Master Services Agreement dated July 12, 2023.
3. Marketing and Advertising Materials (Responsive to CID Requests Nos. 9, 10, and 11)
This production includes representative samples of in-store signage, ecommerce product listing pages (captured as screenshots and as native HTML files where available), promotional email campaigns, weekly advertising circulars, and digital display advertisements that include "compare-at," "original price," or "was/now" pricing for items within the six product categories at issue. The samples produced span the period from January 2023 through March 2024 and include materials deployed through both the brick-and-mortar retail channel and the cascaderetail.com ecommerce platform. Where signage templates or creative assets were maintained in centralized marketing repositories, the templates have been produced along with representative examples of their deployment.
4. Consumer Complaint Files (Responsive to CID Requests Nos. 12, 13, and 14)
This production includes Cascade's internal records of consumer complaints and customer-service interactions relating to pricing discrepancies, reference-price accuracy, or alleged misleading price representations. These records include entries from Cascade's customer relationship management ("CRM") system, correspondence between Cascade's Customer Experience department and individual consumers, internal investigation notes and resolution memoranda, and records of complaints that were escalated internally within Cascade to supervisory or management-level personnel, including the office of Terence Ashford, Chief Compliance Officer. Cascade has made reasonable efforts to identify and collect all complaint records that relate to the subject matter of the CID within the relevant time period.
5. Compliance-Related Communications (Responsive to CID Requests Nos. 15, 16, and 17)
This production includes non-privileged internal memoranda and email correspondence among Cascade personnel discussing pricing-disclosure practices and regulatory compliance. Key custodians whose files have been reviewed and produced in this category include Raymond Soo, Vice President of Marketing & Pricing Strategy, and Terence Ashford, Chief Compliance Officer. The documents produced in this category include, among other things, internal audit reports, compliance review memoranda, email threads discussing the application of FTC Guides Against Deceptive Pricing (16 C.F.R. Part 233) to Cascade's promotional practices, and internal communications regarding the adoption and implementation of compliance checkpoints for the Smart Price program. Certain documents within this category have been withheld on privilege grounds, as reflected on the enclosed privilege log described in Section IV below.
6. Training Materials (Responsive to CID Requests Nos. 18 and 19)
This production includes employee training materials and merchandising guidelines addressing reference-price displays for both brick-and-mortar and ecommerce channels. These materials include onboarding training decks for new merchandising and pricing associates, annual compliance training presentations (for fiscal years 2023 and 2024), procedural job aids distributed to store-level associates regarding the proper display of comparative pricing signage, and ecommerce content management guidelines issued to the digital merchandising team governing the formatting and sourcing of reference-price data on cascaderetail.com product detail pages.
7. Prior Regulatory Correspondence (Responsive to CID Request No. 20)
To the extent non-privileged, this production includes records of Cascade's prior engagement with Dunlap, Mercer & Fosse LLP regarding FTC pricing-guidance compliance in 2022. The documents produced in this category are limited to non-privileged factual materials, including certain publicly available regulatory guidance materials compiled by Dunlap, Mercer & Fosse and shared with Cascade's compliance team. Communications between Cascade and Dunlap, Mercer & Fosse that reflect legal advice, attorney mental impressions, or attorney work product have been withheld and are identified on the enclosed privilege log.
C. Bates Index and Production Media
An index identifying each document produced in this initial rolling production by Bates range, custodian, date range, document type, and CID request number(s) to which it is responsive is enclosed with this letter. The index is provided in both PDF and Microsoft Excel formats for the convenience of the Attorney General's office.
The production itself is being delivered via secure, encrypted file transfer through Stormfield Document Solutions' secure transfer portal. Access credentials for the file transfer have been provided separately to your office via encrypted email directed to the email address you designated during the April 11, 2024 telephonic conference. If your office encounters any technical difficulties accessing or downloading the production files, please contact the undersigned or Stormfield Document Solutions' project manager, Kendra Okafor, at (503) 555-4790.
IV. Privilege Log and Privilege Withholdings
Cascade has withheld from this production certain documents and communications on the basis of the attorney-client privilege, the work-product doctrine, and/or the joint-defense privilege. The decision to withhold each such document was made following a document-by-document review conducted by attorneys at Calderwood & Harkness in accordance with applicable legal standards.
An initial privilege log identifying each withheld document is enclosed with this production. For each entry on the privilege log, the following information is provided: (a) the date of the document or communication; (b) the author or sender; (c) the recipient(s) and any persons copied; (d) a general description of the subject matter of the document or communication, described with sufficient specificity to allow the Attorney General's office to assess the privilege claim without disclosing privileged content; and (e) the specific privilege(s) or protection(s) asserted as the basis for withholding.
The privilege log entries cover, among other things, the following categories of withheld materials:
• Communications between Cascade's in-house legal department, including Diana Prescott-Levy, General Counsel, and members of her legal staff, and Cascade's business personnel, in which legal advice was sought or rendered regarding pricing-disclosure practices, regulatory compliance, or the subject matter of the CID;
• Communications between Cascade's in-house legal department and outside counsel at Calderwood & Harkness LLP concerning the CID, the investigation, and the preparation of this production;
• Communications between Cascade's in-house legal department and Nora Chisholm of Dunlap, Mercer & Fosse LLP relating to prior regulatory compliance advice rendered in 2022 regarding FTC pricing-guidance compliance; and
• Attorney work-product materials, including legal memoranda, research, draft analyses, and litigation-strategy documents prepared in anticipation of litigation or in connection with the Attorney General's investigation.
Cascade takes this opportunity to state expressly that the production of any document in connection with this CID response is not intended to waive, and shall not be deemed to constitute a waiver of, any applicable attorney-client privilege, work-product protection, joint-defense privilege, or any other applicable privilege or protection. In the event that any privileged or protected document has been inadvertently produced, Cascade reserves the right to claw back such document pursuant to the protections afforded by Washington Civil Rule 26(b)(6) and Federal Rule of Evidence 502(b), and Cascade requests the prompt return or destruction of any such document upon notification of the inadvertent disclosure. The inadvertent production of any privileged or protected document shall not be deemed a waiver of the privilege or protection as to that document or any other document, whether or not related to the same subject matter.
V. General Objections and Reservations of Rights
Cascade preserves and does not waive any general or specific objections to the CID, including but not limited to objections based on the following grounds:
1. Overbreadth. To the extent that certain CID requests seek documents or information that are not reasonably related to the subject matter of the investigation, or that extend to time periods, geographic regions, product categories, or business units that are not reasonably implicated by the consumer complaints at issue, Cascade objects on the basis of overbreadth.
2. Undue Burden. To the extent that certain CID requests impose a burden on Cascade that is disproportionate to the likely benefit of the information sought, taking into account the needs of the investigation, the amount of information already produced, and the cost and effort required to locate, collect, review, and produce the requested materials, Cascade objects on the basis of undue burden.
3. Relevance. To the extent that certain CID requests seek documents or information that are not relevant to the Attorney General's investigation of Cascade's pricing practices, Cascade objects on the basis of relevance.
4. Proportionality. To the extent that certain CID requests are not proportional to the needs of the investigation, considering the importance of the issues at stake, the parties' relative access to relevant information, and the importance of the discovery in resolving the issues, Cascade objects on the basis of proportionality.
5. Privilege. Cascade objects to producing any documents or information protected by the attorney-client privilege, the work-product doctrine, the joint-defense privilege, or any other applicable privilege or protection, as more fully described in Section IV above.
6. Trade Secrets and Confidential Business Information. Cascade objects to producing documents or information that constitute or contain trade secrets, proprietary business information, or competitively sensitive data without adequate protections against disclosure. Cascade respectfully requests that the Attorney General's office enter into a stipulated protective order or confidentiality agreement to govern the treatment of such materials. Cascade is prepared to propose terms for such an agreement at the meet-and-confer described in Section VII below.
The production of documents responsive to specific CID requests does not constitute a waiver of Cascade's objections to those requests or to any other requests in the CID. By producing documents, Cascade does not concede the relevance, materiality, or admissibility of any document produced, nor does Cascade concede that any particular CID request is valid, lawful, or otherwise enforceable in whole or in part.
Cascade reserves the right to supplement, clarify, or amend its production and responses as additional documents are identified, collected, reviewed, and processed, and as counsel's understanding of the scope and subject matter of the investigation continues to develop.
Nothing in this production, or in this letter accompanying the production, constitutes an admission by Cascade of any violation of the Washington Consumer Protection Act, RCW 19.86 et seq., the Federal Trade Commission Act, 15 U.S.C. § 45, the FTC Guides Against Deceptive Pricing, 16 C.F.R. Part 233, or any other federal, state, or local law, regulation, or ordinance. Cascade expressly denies that it has engaged in any unfair or deceptive act or practice within the meaning of RCW 19.86.020 or any other applicable provision of law.
VI. Continuing Obligation and Supplemental Production
Cascade acknowledges its continuing obligation to supplement this production as additional responsive documents are identified and reviewed. Document review and collection efforts are ongoing and are being conducted on a diligent and expeditious basis.
At this time, Cascade anticipates producing additional responsive documents in a supplemental rolling production, which Cascade expects to complete on or before May 31, 2024. The supplemental production is expected to include, among other things, documents from additional custodians who are currently being interviewed, as well as documents from additional data sources that are in the process of being collected and processed by Stormfield Document Solutions.
Specifically, the following additional collection and review activities are currently underway:
• Interviews of additional custodians within Cascade's Merchandising, eCommerce Operations, and Store Operations divisions to identify additional repositories of potentially responsive documents;
• Collection and processing of data from Cascade's ecommerce content management system, which contains historical product listing data, pricing history tables, and reference-price audit trails for the cascaderetail.com platform;
• Collection and processing of structured data from Cascade's point-of-sale ("POS") system relating to transactional pricing for the six product categories at issue during the relevant time period; and
• Review of backup and archived email repositories for certain custodians whose primary mailboxes yielded a limited volume of responsive documents.
Cascade will promptly notify the Attorney General's office of the timeline for any supplemental production and will provide advance notice in the event that the anticipated May 31, 2024 completion date requires adjustment.
VII. Proposal for Meet-and-Confer
In the interest of efficiency and cooperation, Cascade respectfully proposes a meet-and-confer between counsel for the parties to discuss the following topics:
1. The scope and prioritization of remaining CID requests, including identification of any requests that the Attorney General's office considers to be of highest priority, so that Cascade may allocate its review and collection resources accordingly;
2. Any clarifications that the Attorney General's office may wish to provide regarding the categories of documents or information sought by particular CID requests, including any requests that may benefit from narrowing or refinement in order to focus the production on the most relevant and probative materials;
3. The parameters of any protective order or confidentiality agreement to govern the treatment of trade secrets, proprietary business information, and other confidential materials produced in connection with the CID;
4. The format and organization of Cascade's production, including any preferences or requirements of the Attorney General's office regarding production specifications, load file formats, or metadata fields; and
5. Potential resolution pathways, including the possibility of addressing the Attorney General's concerns through cooperative engagement, voluntary compliance measures, or other alternative approaches rather than formal enforcement proceedings.
Cascade suggests scheduling the meet-and-confer during the week of May 13, 2024, at a mutually convenient time. We are available to meet in person at the Attorney General's offices, at Calderwood & Harkness's offices, or by videoconference, at the Attorney General's preference. If the proposed timeframe is not workable for your office, please do not hesitate to suggest alternative dates.
Calderwood & Harkness is authorized to represent that Cascade is committed to responding to the CID fully and in good faith, and to engaging constructively and cooperatively with the Attorney General's office throughout this process. Cascade takes seriously its obligations under Washington law and its responsibility to its customers, and Cascade welcomes the opportunity to work with the Consumer Protection Division to address any concerns regarding its pricing practices.
VIII. Contact Information
All communications regarding this matter should be directed to the undersigned or to Alan Ngo, the responsible partner for this engagement, at the following address:
Calderwood & Harkness LLP 1201 Third Avenue, Suite 4400 Seattle, WA 98101
Patrick Gallagher, Associate Telephone: (206) 555-8247
Email: pgallagher@calderwoodharkness.com
Alan Ngo, Partner Telephone: (206) 555-8212
Email: ango@calderwoodharkness.com
We appreciate your courtesy and cooperation in this matter, and we look forward to working with your office as this process moves forward. Should you have any questions regarding this production or any other aspect of the CID response, please do not hesitate to contact us at your earliest convenience.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Patrick Gallagher Associate
1201 Third Avenue, Suite 4400 Seattle, WA 98101 Telephone: (206) 555-8247
Email: pgallagher@calderwoodharkness.com
cc:
Alan Ngo, Partner, Calderwood & Harkness LLP Diana Prescott-Levy, General Counsel, Cascade Retail Holdings Inc. Jordan A. Kittridge, Investigating Assistant Attorney General, Consumer Protection Division, Office of the Attorney General, State of Washington
Enclosures:
1. Document production (via secure file transfer) — approximately 12,400 documents (Bates range CRH-CID-000001 through CRH-CID-012400)
2. Bates index (PDF and Microsoft Excel formats)
3. Privilege log

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts