CALDERWOOD & HARKNESS LLP Attorneys at Law
1201 Third Avenue, Suite 4400 Seattle, Washington 98101 Telephone: (206) 448-7200 Facsimile: (206) 448-7201 www.calderwoodharkness.com
May 31, 2024
Via Electronic Transmission and Hand Delivery
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 Dated March 26, 2024, Issued to Cascade Retail Holdings Inc. Calderwood & Harkness Matter No. 1038-00004
Dear Ms. Calloway-Voss:
I. Purpose and Introduction
This letter accompanies the supplemental document production of Cascade Retail Holdings Inc. ("Cascade" or "CRH") in response to the Civil Investigative Demand ("CID") issued by the Washington State Attorney General's Office, Consumer Protection Division (the "Division"), on March 26, 2024, pursuant to the authority granted under RCW 19.86.110 of the Washington Consumer Protection Act. Calderwood & Harkness LLP represents Cascade in connection with this matter and in all proceedings related to or arising from the CID.
This supplemental production follows the initial rolling production transmitted to the Division on April 23, 2024 (the "First Production"). As outlined in our cover letter accompanying that First Production, Cascade committed to providing additional responsive materials on a rolling basis as document review and quality-assurance processes were completed. This letter describes the scope, format, and content of the supplemental production now being transmitted and addresses several additional matters relevant to the ongoing dialogue between Cascade and the Division.
II. Description of Supplemental Production
Cascade is producing approximately 8,700 additional documents with this supplemental production (the "Second Production"). Combined with the approximately 12,400 documents produced to the Division on April 23, 2024 as part of the First Production, the cumulative production now totals approximately 21,100 documents. Cascade has endeavored to identify, collect, review, and produce responsive materials as expeditiously as practicable, consistent with the scope and complexity of the CID's requests.
The documents included in the Second Production are produced in the same format and subject to the same protocols established for the First Production, as set forth in our correspondence dated April 23, 2024. Specifically, documents are produced as single-page TIFF images accompanied by extracted or OCR text, load files compatible with standard litigation-review platforms, and native-format files where the document type so requires (e.g., spreadsheets and structured data exports). Metadata fields have been preserved and produced in accordance with the specifications agreed upon during the parties' pre-production discussions.
The documents included in this supplemental production were collected, processed, and produced with the assistance of Calderwood & Harkness's e-discovery vendor, Stormfield Document Solutions LLC, located in Portland, Oregon. Stormfield conducted de-duplication, de-NISTing, and quality-control checks consistent with industry-standard e-discovery protocols. The collection and processing methodologies employed by Stormfield have not changed from those described in our April 23, 2024 cover letter, and Cascade is prepared to provide additional information regarding those methodologies upon request.
III. Bates-Range Summary and Organization
The supplemental production bears Bates numbers sequentially continuing from the First Production. The First Production encompassed documents bearing Bates stamps CRH-CID-000001 through CRH-CID-012437. The Second Production encompasses documents bearing Bates stamps CRH-CID-012438 through CRH-CID-021109.
Consistent with the organizational methodology employed in the First Production, the documents in the Second Production are organized by CID request number corresponding to the 23 document requests and 14 interrogatories contained in the CID. A Bates-Range Index, enclosed with this letter as Enclosure 3, identifies the specific Bates ranges responsive to each individual CID request and cross-references documents that are responsive to more than one request.
The Second Production includes, among other materials, the following specific categories of documents:
(a) Internal Pricing-Methodology Documentation. Documents relating to the internal development, testing, approval, and implementation of the "Smart Price" promotional program launched by Cascade on October 15, 2023. These materials include internal strategy memoranda, pricing-model specifications, executive briefing presentations, post-launch performance analyses, and communications among members of the Smart Price project team. These documents are principally responsive to CID Document Requests Nos. 3, 4, 7, and 8.
(b) Communications with Praxton Analytics LLC. Communications between Cascade personnel and Praxton Analytics LLC, a third-party data analytics firm retained by Cascade in connection with the development and implementation of algorithmic reference-price models for ecommerce product listings on cascaderetail.com and in-store promotional signage across CRH's 187 retail locations in 14 western U.S. states. These materials include statements of work, technical specifications, pricing-algorithm design documents, model-validation reports, and correspondence between Praxton project leads and Cascade's Marketing & Pricing Strategy team. These documents are principally responsive to CID Document Requests Nos. 5, 6, 9, and 11.
(c) Supplemental Transactional Data. Supplemental transactional data covering the six product categories specifically identified in the CID: (i) women's apparel, (ii) men's footwear, (iii) home textiles, (iv) small kitchen appliances, (v) outdoor furniture, and (vi) consumer electronics accessories. These data productions include point-of-sale transaction records, promotional-price audit logs, reference-price change histories, and margin analyses for the relevant time periods specified in the CID. These documents are principally responsive to CID Document Requests Nos. 12 through 17 and Interrogatories Nos. 4, 5, and 9.
(d) Internal Compliance and Marketing Communications. Internal communications involving Raymond Soo, Vice President of Marketing & Pricing Strategy, and Terence Ashford, Chief Compliance Officer, relating to the development, review, and approval of pricing-related promotional materials and compliance assessments of Cascade's advertised reference-price practices. These materials include email correspondence, memoranda, meeting agendas and minutes, and compliance-review checklists. These documents are principally responsive to CID Document Requests Nos. 1, 2, 10, and 18 through 20.
(e) Consumer Complaint Response Records. Records corresponding to the 147 consumer complaints filed with the Division and with Cascade's internal customer service department between January 2023 and February 2024, as identified in the CID. These materials include complaint intake records, internal investigation files, consumer correspondence, refund or credit issuance records, and internal escalation documentation. These documents are principally responsive to CID Document Requests Nos. 21 through 23 and Interrogatories Nos. 10 through 14.
IV. Updated Privilege Log
An updated privilege log accompanies this production and is enclosed herewith. The privilege log identifies all documents that have been withheld in full or redacted in part on the basis of attorney-client privilege, the work-product doctrine, or both.
The updated privilege log includes, in addition to entries carried forward from the First Production privilege log, entries reflecting communications between Cascade personnel and Dunlap, Mercer & Fosse LLP, Cascade's prior regulatory counsel. The relevant communications were authored by or directed to Nora Chisholm, a partner at Dunlap, Mercer & Fosse, and pre-date Calderwood & Harkness's engagement in this matter. These communications relate to CRH's earlier consultations regarding compliance with Federal Trade Commission pricing guidance, including the FTC's Guides Against Deceptive Pricing (16 C.F.R. Part 233), during 2022, as well as Dunlap, Mercer & Fosse's early-stage assessment of the Division's inquiry prior to the issuance of the CID. These communications were made for the purpose of seeking or providing legal advice and are protected by the attorney-client privilege. Certain of these materials also reflect counsel's mental impressions, conclusions, and legal theories and are independently protected as attorney work product.
The updated privilege log also includes entries reflecting communications between Cascade personnel and Calderwood & Harkness LLP from the date of Calderwood & Harkness's engagement (April 9, 2024) forward. These communications were made in connection with Calderwood & Harkness's representation of Cascade in this matter and are protected by the attorney-client privilege and, where applicable, the work-product doctrine.
All entries on the privilege log contain the following information for each withheld or redacted document: (i) the date of the document or communication; (ii) the author or sender; (iii) the recipient or recipients, including any individuals copied; (iv) a general description of the subject matter sufficient to assess the privilege claim without revealing privileged content; and (v) the specific basis or bases for withholding, whether attorney-client privilege, work-product doctrine, or both. The privilege log has been prepared in a manner consistent with applicable Washington procedural requirements, including the standards set forth under CR 26(b)(5) and relevant case law of the Washington courts.
Cascade has endeavored to assert privilege claims narrowly and in good faith. To the extent the Division has questions regarding any specific privilege log entry or wishes to discuss any particular privilege assertion, Cascade is prepared to address those inquiries promptly.
V. Reference to May 14, 2024 Meet-and-Confer
Cascade acknowledges the productive meet-and-confer conference held on May 14, 2024, between representatives of Calderwood & Harkness — specifically, Alan Ngo (responsible partner) and Patrick Gallagher (lead associate) — and representatives of the Division — specifically, Meredith Calloway-Voss (Lead Assistant Attorney General), Jordan A. Kittridge (Investigating Assistant Attorney General), and Sandra Pietsch (Investigator). Cascade appreciates the Division's willingness to engage in a constructive dialogue regarding the matters addressed during that conference.
During the May 14 meet-and-confer, the parties discussed the scope of remaining CID requests, including certain requests for which Cascade had indicated, in its initial production cover letter, that additional time would be needed to collect and review responsive materials. The parties also discussed the Division's preliminary findings regarding its pricing-sample review for the period of January 1, 2024 through March 15, 2024, and the Division's preliminary assessment of certain reference-price discrepancies identified during that review. Cascade appreciates the Division's transparency in sharing its preliminary observations during that conference.
Additionally, Cascade acknowledges that during the May 14 meet-and-confer, the Division signaled its willingness to explore the possibility of resolving this matter through an Assurance of Voluntary Compliance ("AVC") pursuant to RCW 19.86.100, rather than pursuing a formal enforcement action. Cascade views this signal as a positive development and is grateful for the Division's consideration of a cooperative resolution pathway.
VI. Cascade's Willingness to Negotiate an Assurance of Voluntary Compliance
Cascade hereby confirms its willingness to engage in good-faith negotiation of an Assurance of Voluntary Compliance ("AVC") as discussed during the May 14, 2024 meet-and-confer conference. Cascade takes the concerns raised by the Division seriously and is committed to maintaining pricing practices that comply fully with the Washington Consumer Protection Act, RCW 19.86 et seq., and all applicable federal and state regulations governing advertised reference pricing and promotional discounting.
Since the Division's inquiry commenced, Cascade has undertaken a comprehensive internal review of its pricing policies and procedures, including the reference-price methodologies employed in connection with the Smart Price promotional program. Cascade is committed to ensuring that its pricing practices are transparent, accurate, and consistent with consumer expectations.
In that spirit, Cascade is prepared to discuss the framework and terms of a potential AVC, including but not limited to the following areas: (i) prospective pricing-disclosure standards for both ecommerce and brick-and-mortar retail channels; (ii) compliance-monitoring mechanisms, which may include periodic internal auditing, third-party compliance reviews, and reporting obligations to the Division; and (iii) appropriate remedial measures to address the Division's concerns, including any consumer restitution, prospective corrective actions, or other relief the Division deems appropriate. Cascade is open to discussing the duration and scope of any such AVC and is prepared to engage with the Division's proposed terms in a constructive and timely manner.
Cascade respectfully requests that the Division provide a draft AVC at its earliest convenience so that Cascade may review the proposed terms and respond promptly. Cascade believes that an efficient exchange of proposals will best serve the interests of all parties and facilitate a timely resolution of this matter.
VII. Completeness of Production and Continuing Obligations
Cascade believes that this supplemental production, together with the April 23, 2024 initial production, substantially completes its document-production obligations under the CID. Cascade has conducted a thorough and diligent search for responsive documents across all relevant custodians, departments, and data repositories identified in the CID's specifications, including email systems, network shared drives, cloud-based collaboration platforms, and physical records.
Notwithstanding the foregoing, Cascade acknowledges its continuing obligation under the CID and applicable law to supplement the production should additional responsive, non-privileged documents be identified during the course of Cascade's ongoing operations or through further investigation. Cascade will promptly notify the Division in writing if any such supplemental materials are located and will produce them in accordance with the protocols established for this matter.
To the extent the Division identifies specific gaps in the production or has questions regarding the completeness of Cascade's response to any particular CID request or interrogatory, Cascade is prepared to address those inquiries and to work cooperatively with the Division to ensure that all legitimate informational needs are met.
VIII. Reservation of Rights
This production is made without waiver of any objections to the CID's scope, relevance, burden, or proportionality that Cascade may have raised in its initial response to the CID, or that Cascade may raise in the future. Cascade expressly preserves and does not waive any such objections by making this production.
The production of documents in response to the CID does not constitute, and shall not be construed as, an admission by Cascade regarding the truth, accuracy, authenticity, or relevance of any document produced, or regarding any factual or legal contention that may be at issue in this matter. Cascade further reserves all rights, claims, and defenses available to it under the Washington Consumer Protection Act, the Washington Rules of Civil Procedure, and any other applicable state or federal law. Nothing in this letter or in the accompanying production shall be deemed a waiver of any such rights, claims, or defenses.
IX. Contact Information and Closing
We invite the Division to direct any questions regarding this production, the accompanying privilege log, or any other aspect of Cascade's response to the CID to the undersigned, Patrick Gallagher, or to Alan Ngo, the responsible partner on this matter, at the contact information provided below:
Patrick Gallagher, Associate Calderwood & Harkness LLP 1201 Third Avenue, Suite 4400 Seattle, WA 98101 Direct: (206) 448-7238
Email: pgallagher@calderwoodharkness.com
Alan Ngo, Partner Calderwood & Harkness LLP 1201 Third Avenue, Suite 4400 Seattle, WA 98101 Direct: (206) 448-7215
Email: ango@calderwoodharkness.com
Please note that copies of this letter and the accompanying production materials are being provided simultaneously to Jordan A. Kittridge, Investigating Assistant Attorney General, Consumer Protection Division.
We wish to express our appreciation for the professionalism and cooperative approach that the Division has demonstrated throughout this matter. Cascade remains committed to working constructively with the Division to address the issues raised by the CID and to achieve an efficient and mutually satisfactory resolution.
Thank you for your continued attention to this matter. We look forward to our continued dialogue.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Patrick Gallagher Associate Calderwood & Harkness LLP 1201 Third Avenue, Suite 4400 Seattle, WA 98101
Enclosures:
1. Supplemental Document Production (approximately 8,700 documents; Bates Nos. CRH-CID-012438 through CRH-CID-021109)
2. Updated Privilege Log
3. Bates-Range Index by CID Request Number
cc: Alan Ngo, Partner, Calderwood & Harkness LLP (responsible partner)
cc: Diana Prescott-Levy, General Counsel, Cascade Retail Holdings Inc.
cc: Jordan A. Kittridge, Investigating Assistant Attorney General, Consumer Protection Division, Office of the Attorney General, State of Washington