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ASSURANCE OF VOLUNTARY COMPLIANCE

Pursuant to the Washington Consumer Protection Act, RCW 19.86 *et seq.*

Between

THE STATE OF WASHINGTON Acting through its Attorney General Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104

and

CASCADE RETAIL HOLDINGS INC. A Delaware Corporation 4500 Overlake Boulevard, Suite 800 Bellevue, WA 98004

Date of Execution: August 20, 2024

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I. PARTIES

A. The State of Washington

The State of Washington ("the State"), acting through the Office of the Attorney General, Consumer Protection Division, with offices located at 800 Fifth Avenue, Suite 2000, Seattle, Washington 98104, is a party to this Assurance of Voluntary Compliance. The State is represented in this matter by Meredith Calloway-Voss, Lead Assistant Attorney General, and Jordan A. Kittridge, Investigating Assistant Attorney General, both of the Consumer Protection Division.

The Attorney General of the State of Washington is vested with authority under the Washington Consumer Protection Act, RCW 19.86 et seq., to protect the public interest and the interests of consumers in the State of Washington. Specifically, the Attorney General possesses the authority under RCW 19.86.080 to bring actions to restrain unfair or deceptive acts or practices in trade or commerce; the authority under RCW 19.86.110 to issue Civil Investigative Demands in connection with investigations of potential violations of the Consumer Protection Act; and the authority under RCW 19.86.085 to accept assurances of voluntary compliance from persons engaged in, or suspected of engaging in, acts or practices that may violate the Consumer Protection Act. This Assurance is entered into pursuant to the Attorney General's authority under RCW 19.86.085.

B. Cascade Retail Holdings Inc.

Cascade Retail Holdings Inc. ("Respondent," "Cascade," or "CRH") is a corporation organized and existing under the laws of the State of Delaware. Cascade's registered agent in Delaware is National Registered Agents of Delaware, Inc., located at 160 Greentree Drive, Suite 101, Dover, Delaware 19904. Cascade maintains its principal place of business at 4500 Overlake Boulevard, Suite 800, Bellevue, Washington 98004.

Cascade is a publicly traded company listed on the Nasdaq Stock Market under the ticker symbol CRHI. Cascade operates 187 retail store locations across fourteen (14) western United States, including numerous locations within the State of Washington, and maintains a national ecommerce platform accessible at cascaderetail.com. For the fiscal year ended December 31, 2023, Cascade reported revenue of approximately Three Billion Four Hundred Seventy Million Dollars ($3,470,000,000).

Cascade is represented in this matter by Calderwood & Harkness LLP, 1201 Third Avenue, Suite 4400, Seattle, Washington 98101.

II. RECITALS

The State and Cascade (collectively, "the Parties") recite as follows:

A. Background of the Investigation

On March 26, 2024, the State, acting through the Office of the Attorney General, Consumer Protection Division, issued a Civil Investigative Demand ("CID") to Cascade pursuant to RCW 19.86.110. The CID sought the production of documents, data, and information concerning Cascade's use of "compare-at," "original price," and "was/now" reference pricing displayed on Cascade's ecommerce platform located at cascaderetail.com and in in-store signage and shelf tags across Cascade's 187 retail store locations.

The State's investigation was initiated in response to one hundred forty-seven (147) consumer complaints received by the Consumer Protection Division between January 2023 and February 2024. These consumer complaints alleged, in substance, that Cascade displayed inflated "original" or "compare-at" prices that did not reflect prices at which the referenced merchandise was actually offered for sale in the regular course of Cascade's business. Multiple complainants alleged that the purported "original" prices displayed by Cascade were significantly higher than any price at which they had observed the merchandise offered for sale at Cascade's stores or on cascaderetail.com, creating a false impression of savings.

B. Smart Price Program

On or about October 15, 2023, Cascade launched its "Smart Price" promotional program. The Smart Price program utilized algorithmically generated reference prices produced by a proprietary pricing model developed by Praxton Analytics LLC ("Praxton"), a third-party pricing consultant engaged by Cascade to optimize its promotional pricing strategy. The Smart Price program generated "compare-at" and "original price" reference prices that were displayed on Cascade's ecommerce platform and on in-store signage, shelf tags, and promotional materials across Cascade's retail locations. These reference prices were intended to convey to consumers the savings available by purchasing merchandise at Cascade's advertised sale price relative to a purported higher price.

C. Product Categories at Issue

The State's inquiry focused on six product categories in which a significant concentration of consumer complaints was identified: (1) women's apparel; (2) men's footwear; (3) home textiles; (4) small kitchen appliances; (5) outdoor furniture; and (6) consumer electronics accessories (collectively, the "Product Categories"). These six Product Categories represent a substantial portion of Cascade's merchandise offerings and were among the first categories to be incorporated into the Smart Price program.

D. Preliminary Findings

Based on a review of a sample of two thousand three hundred forty (2,340) stock-keeping units ("SKUs") across the six Product Categories during the period January 1, 2024, through March 15, 2024, the State's preliminary analysis found that one thousand six hundred one (1,601) of those SKUs (approximately 68.4%) displayed a "compare-at" or "original" reference price that exceeded the highest price at which the item had actually been offered for sale by Cascade during the preceding ninety (90)-day period. The average overstatement of reference prices in the sample was approximately 37.2% above the actual highest offering price documented in the relevant lookback window.

Based on Cascade's sales data produced in response to the CID, the State estimates that approximately Two Hundred Fourteen Million Dollars ($214,000,000) in gross merchandise sales during the period from October 15, 2023 (the date of the Smart Price program launch), through March 15, 2024 (the end of the period covered by the State's sampling analysis), bore reference-price tags that were potentially misleading to consumers.

E. Cascade's Response and Cooperation

Cascade produced approximately twenty-one thousand one hundred (21,100) documents in response to the CID in two rolling productions. The first production, consisting of approximately twelve thousand four hundred (12,400) documents, was delivered on April 23, 2024. The second production, consisting of approximately eight thousand seven hundred (8,700) additional documents, was delivered on May 31, 2024. Cascade's document productions included pricing data, internal communications, vendor documentation, Praxton Analytics LLC's model specifications, and related records.

The Parties participated in a meet-and-confer on May 14, 2024, at which they discussed the scope and results of the State's preliminary analysis, Cascade's pricing practices, and the potential terms of a consensual resolution. Following the meet-and-confer, the Parties engaged in good-faith negotiations regarding the terms of this Assurance over the course of several weeks, including additional telephonic conferences and exchanges of draft terms.

F. Purpose. The State and Cascade enter into this Assurance of Voluntary Compliance ("AVC" or "Assurance") pursuant to RCW 19.86.085 for the purpose of resolving the State's inquiry into Cascade's reference-pricing practices without the necessity of filing an enforcement action in any court. The Parties agree that this consensual resolution serves the interests of consumers in the State of Washington and the public interest by securing prospective injunctive relief, consumer restitution, and enhanced compliance measures in a timely and efficient manner.

This Assurance shall not be construed as an adjudication on the merits of any claims or defenses that either Party might have asserted had the matter proceeded to litigation. Cascade's entry into this Assurance does not constitute an admission that Cascade has violated any provision of the Washington Consumer Protection Act, RCW 19.86 et seq., or any other federal, state, or local law, regulation, or ordinance.

III. NO ADMISSION OF LIABILITY

Cascade neither admits nor denies any violation of the Washington Consumer Protection Act, RCW 19.86 et seq., or any other federal, state, or local law, regulation, or ordinance, in connection with the conduct described in the Recitals set forth above or otherwise. This Assurance shall not be construed as evidence or an admission of any wrongdoing, liability, or violation of law by Cascade, and Cascade expressly reserves all defenses that would have been available to it had this matter been litigated.

Nothing in this Assurance shall be used as evidence in any other proceeding, whether judicial, administrative, or otherwise, except in a proceeding brought by the State to enforce the terms of this Assurance pursuant to Section XII or Section XIII.B hereof, or as otherwise permitted by applicable law. For the avoidance of doubt, the existence and terms of this Assurance may be disclosed to the extent required by applicable securities laws, regulations, or stock exchange rules to which Cascade is subject.

IV. DEFINITIONS

As used throughout this Assurance, the following terms shall have the meanings set forth below:

"Affected Period" means the period from October 15, 2023, through and including March 15, 2024.

"Assurance" means this Assurance of Voluntary Compliance, including all terms, conditions, and provisions set forth herein, together with any amendments hereto made in accordance with Section XIV.D.

"Bona Fide Offering Price" means the actual price at which merchandise was openly and actively offered for sale to consumers in the ordinary course of Cascade's business, at which merchandise was available for purchase by consumers, and at which the merchandise was offered for a reasonably substantial period of time. A price at which merchandise was offered for only an artificially brief period of time, or a price that was not genuinely available to consumers, shall not constitute a Bona Fide Offering Price.

"Business Day" means any day other than a Saturday, Sunday, or a day on which banks in the State of Washington are authorized or required to close.

"Compliance Period" means the period of twenty-four (24) months from and after the Effective Date, commencing on August 20, 2024, and ending on August 20, 2026.

"Covered Channels" means (a) Cascade's ecommerce platform located at cascaderetail.com, including any mobile applications or mobile-optimized versions thereof, and (b) all Cascade Retail Holdings Inc. brick-and-mortar retail store locations, wherever situated.

"Effective Date" means August 20, 2024, the date of the last signature affixed to this Assurance.

"Lookback Window" means the one hundred twenty (120)-day period immediately preceding the date on which a Reference Price is first displayed to consumers.

"Monitor" means the independent compliance reviewer engaged pursuant to Section VI of this Assurance, initially Ridgepoint Compliance Solutions Inc.

"Product Categories" means the six product categories that were the focus of the State's investigation: (1) women's apparel; (2) men's footwear; (3) home textiles; (4) small kitchen appliances; (5) outdoor furniture; and (6) consumer electronics accessories.

"Reference Price" means any "compare-at," "original price," "was," "list price," "regular price," "retail price," or similar price representation displayed in connection with the offer, advertisement, or sale of merchandise, whether displayed online, in-store, or through any other medium, that is intended to or has the effect of conveying to consumers a comparison between the advertised selling price and a higher price.

"Restitution Fund" means the consumer-restitution fund established pursuant to Section VII of this Assurance.

"SKU" means stock-keeping unit, a unique identifier assigned to a specific item of merchandise for purposes of inventory tracking and sales reporting.

"State" means the State of Washington, acting through the Office of the Attorney General, Consumer Protection Division.

V. INJUNCTIVE AND PROSPECTIVE RELIEF — PRICING STANDARDS

A. Reference-Price Substantiation Requirement

From and after the Effective Date, Cascade shall ensure that all Reference Prices displayed in connection with the offer, advertisement, or sale of any merchandise through any Covered Channel reflect the actual, Bona Fide Offering Price at which the item was offered for sale in the ordinary course of Cascade's business for a reasonably substantial period during the immediately preceding one hundred twenty (120)-day Lookback Window. A Reference Price shall be deemed substantiated only if the merchandise bearing such Reference Price was actually offered for sale at the stated Reference Price for a reasonably substantial period of time during the Lookback Window, and the Reference Price was a genuine price at which the merchandise was available for purchase by consumers.

For purposes of this Section, a "reasonably substantial period" shall mean, at a minimum, that the merchandise was offered at the Reference Price for not fewer than twenty-eight (28) of the one hundred twenty (120) days within the Lookback Window, unless Cascade can demonstrate that a shorter period was reasonable under the circumstances (e.g., for seasonal merchandise with inherently limited offering windows), provided that in no event shall the offering period be fewer than fourteen (14) days.

The one hundred twenty (120)-day Lookback Window and the substantiation requirements set forth in this Section V.A shall apply to all merchandise in all product categories offered by Cascade through any Covered Channel, and shall not be limited to the six Product Categories identified in the State's investigation.

B. Prohibition on Artificially Inflated Reference Prices

Cascade shall not display any Reference Price that is fictitious, fabricated, or that does not reflect a genuine prior Bona Fide Offering Price. Without limiting the generality of the foregoing, Cascade shall not:

1. Display a Reference Price that has never been the actual offering price for the item at any Covered Channel;

2. Display a Reference Price derived solely from a manufacturer's suggested retail price ("MSRP") or a competitor's price unless the Reference Price is clearly and conspicuously identified as such (e.g., "MSRP: $XX.XX") and is not presented in a manner that suggests it was Cascade's own prior offering price;

3. Inflate, fabricate, or artificially generate Reference Prices for the purpose of creating a false impression of consumer savings; or

4. Use algorithmic or automated pricing tools, including but not limited to the pricing model developed by Praxton Analytics LLC or any successor or replacement pricing model, to generate Reference Prices unless the outputs of such tools are validated against actual historical transaction and offering data within the one hundred twenty (120)-day Lookback Window prior to display to consumers.

In the event that Cascade utilizes any algorithmic or automated pricing tool to generate or recommend Reference Prices, Cascade shall implement a validation process that compares each algorithmically generated Reference Price against actual historical offering-price data maintained in Cascade's records before the Reference Price is displayed to any consumer. Any algorithmically generated Reference Price that cannot be validated against actual historical offering-price data within the Lookback Window shall not be displayed.

C. Documentation and Record-Keeping

Cascade shall maintain records sufficient to substantiate every Reference Price displayed in any Covered Channel for a minimum period of three (3) years from the date on which the Reference Price was last displayed to consumers. Such records shall include, at a minimum, the following information for each Reference Price:

1. The SKU or other product identifier for the merchandise to which the Reference Price relates;

2. The Reference Price displayed;

3. The dates on which the Reference Price was first and last displayed to consumers, and the Covered Channel(s) on which it was displayed;

4. The historical offering-price data used to substantiate the Reference Price, including the dates and Covered Channel(s) at which the merchandise was offered at the Reference Price and documentation of the actual offering;

5. Any algorithmic or model outputs, including outputs from the Praxton Analytics LLC pricing model or any successor or replacement model, used in generating or recommending the Reference Price; and

6. Documentation of the validation process applied to any algorithmically generated Reference Price, including the identity of the person or automated system that performed the validation and the date on which validation was completed.

Cascade shall organize and maintain these records in a manner that permits efficient retrieval and review by the Monitor and by the State upon reasonable request.

D. Training and Internal Controls

Within sixty (60) days of the Effective Date (i.e., by October 19, 2024), Cascade shall develop and implement a comprehensive training program for all employees, contractors, and agents involved in pricing, merchandising, and marketing decisions at Cascade. The training program shall cover, at a minimum:

1. The requirements of this Assurance, including the Reference-Price substantiation requirements, the Lookback Window, the prohibition on artificially inflated Reference Prices, and the documentation and record-keeping obligations;

2. The applicable provisions of the Washington Consumer Protection Act, RCW 19.86, as they relate to reference-price advertising and deceptive pricing practices;

3. Cascade's internal policies and procedures for generating, validating, displaying, and documenting Reference Prices; and

4. The roles and responsibilities of employees involved in the pricing process, including the process for escalating questions or concerns regarding Reference Price compliance.

The training program shall be provided to all relevant employees within sixty (60) days of the Effective Date and shall be provided to all new employees in relevant roles within thirty (30) days of their commencement of employment. Cascade shall conduct annual refresher training for all relevant employees during the Compliance Period.

In addition to the training program, Cascade shall establish and maintain internal compliance controls designed to ensure ongoing compliance with the pricing standards set forth in this Section V. Such internal compliance controls shall include, at a minimum, periodic internal audits of Reference Price accuracy conducted no less frequently than quarterly, with the results of such audits documented in writing and retained for the duration of the Compliance Period plus one (1) year. Cascade shall designate a senior officer or employee with responsibility for overseeing compliance with this Assurance and shall communicate the identity of such designee to the State within thirty (30) days of the Effective Date.

VI. INDEPENDENT COMPLIANCE REVIEW

A. Appointment of Monitor

Within thirty (30) days of the Effective Date (i.e., by September 19, 2024), Cascade shall formally engage Ridgepoint Compliance Solutions Inc. ("Ridgepoint"), located at 700 Stewart Street, Suite 1500, Seattle, Washington 98101, as the independent compliance reviewer (the "Monitor") to audit Cascade's pricing practices during the Compliance Period. The engagement partner at Ridgepoint responsible for the monitoring engagement shall be Harold Sung.

The Monitor shall be independent of Cascade and shall not serve as an advisor, consultant, or service provider to Cascade on operational pricing decisions, pricing strategy, or any other business matter outside the scope of the monitoring engagement. The Monitor shall owe no duty of loyalty to Cascade other than the obligation to conduct its engagement in a professional and competent manner. The Monitor shall have the authority to exercise independent judgment in connection with the audits conducted pursuant to this Section VI.

In the event that Ridgepoint becomes unable or unwilling to serve as Monitor, or if the State reasonably determines that Ridgepoint has a conflict of interest or has failed to perform its duties competently, Cascade shall, within thirty (30) days of receiving notice from the State, propose an alternative Monitor for the State's approval. The State's approval of any alternative Monitor shall not be unreasonably withheld.

B. Scope of Quarterly Audits

The Monitor shall conduct audits on a quarterly basis, with four (4) audits per year, during the twenty-four (24)-month Compliance Period, for a total of eight (8) quarterly audits. Each quarterly audit shall be completed within forty-five (45) days following the close of the applicable quarter.

Each quarterly audit shall review a statistically significant random sample of SKUs across all Covered Channels and all product categories, including but not limited to the six Product Categories identified in the State's investigation. The sample size and selection methodology shall be determined by the Monitor using generally accepted statistical sampling techniques and shall be designed to provide a confidence level of not less than ninety-five percent (95%) with a margin of error of not more than five percent (5%).

The Monitor shall assess whether Cascade's displayed Reference Prices comply with the substantiation requirements set forth in Section V of this Assurance, including but not limited to:

1. Whether each Reference Price in the sample reflects a Bona Fide Offering Price within the one hundred twenty (120)-day Lookback Window;

2. Whether the merchandise was offered at the Reference Price for a reasonably substantial period within the Lookback Window, as defined in Section V.A;

3. Whether Cascade has maintained adequate records to substantiate each Reference Price, as required by Section V.C;

4. Whether any algorithmically generated Reference Prices, including outputs from Praxton Analytics LLC's pricing model or any successor or replacement model, have been validated against actual historical offering-price data within the Lookback Window prior to display; and

5. Whether Cascade's internal compliance controls, including training and internal audits, are functioning effectively.

C. Monitor Reports

The Monitor shall prepare a detailed written report following each quarterly audit and shall submit such report to both Cascade and the State within thirty (30) days of the completion of each audit. Each report shall include, at a minimum:

1. A description of the methodology used, including the sample size, selection criteria, and statistical parameters;

2. A summary of findings of compliance and non-compliance, including the number and percentage of SKUs in the sample that were found to be in compliance and non-compliance with the requirements of Section V;

3. A detailed description of any instances of non-compliance identified, including the SKU(s) at issue, the nature and extent of the non-compliance, and the Covered Channel(s) affected;

4. An assessment of whether any identified non-compliance is isolated or systemic in nature;

5. Recommendations for corrective action, if applicable; and

6. An assessment of Cascade's implementation of any corrective actions recommended in prior reports.

The Monitor's reports shall be treated as confidential between the Parties and the Monitor, except to the extent disclosure is required by applicable law or is necessary in connection with any enforcement proceeding related to this Assurance.

D. Access and Cooperation

Cascade shall provide the Monitor with full, timely, and unrestricted access to all pricing data, transaction data, pricing systems, algorithmic models (including the Praxton Analytics LLC model and any successor or replacement models), documentation, records, and personnel necessary to conduct the quarterly audits. Cascade shall not interfere with, obstruct, or unduly delay the Monitor's activities in any manner. Cascade shall respond to the Monitor's requests for information and access within ten (10) Business Days of receipt of such requests, unless a shorter timeframe is reasonably required and specified by the Monitor.

Cascade shall designate a liaison or point of contact to facilitate communications between Cascade and the Monitor and shall communicate the identity of such liaison to the Monitor and the State within ten (10) Business Days of the Monitor's engagement.

E. Costs. All costs and expenses associated with the Monitor's engagement, including but not limited to professional fees, travel expenses, data analysis costs, and any other expenses reasonably incurred by the Monitor in connection with the quarterly audits and the preparation of reports, shall be borne solely by Cascade. Cascade's obligation to bear such costs shall not be contingent upon the findings of any audit and shall continue throughout the Compliance Period.

VII. CONSUMER RESTITUTION

A. Establishment of Restitution Fund

Within forty-five (45) days of the Effective Date (i.e., by October 4, 2024), Cascade shall establish a consumer-restitution fund in the amount of Two Million Eight Hundred Fifty Thousand Dollars ($2,850,000) (the "Restitution Fund"). The Restitution Fund shall be deposited into a separate, interest-bearing account at a federally insured financial institution. Any interest earned on the Restitution Fund shall be added to and become part of the Restitution Fund and shall be used solely for the purposes described in this Section VII.

The Restitution Fund shall be used exclusively to provide refunds or store credits to consumers who purchased merchandise bearing materially inflated Reference Prices during the Affected Period (October 15, 2023, through March 15, 2024). For purposes of this Section, a Reference Price shall be considered "materially inflated" if it exceeded the highest Bona Fide Offering Price for the merchandise during the ninety (90)-day period preceding the date of the consumer's purchase by more than ten percent (10%).

B. Administration. Cascade shall administer the Restitution Fund and complete all distributions to eligible consumers within twelve (12) months of the Effective Date (i.e., by August 20, 2025). Cascade shall develop a detailed claims process and restitution plan, which shall be submitted to the State for review and approval within sixty (60) days of the Effective Date. The State shall review the proposed claims process and restitution plan and shall approve, reject, or request modifications to the plan within thirty (30) days of receipt. Cascade shall implement any modifications reasonably requested by the State.

The claims process shall provide affected consumers with a reasonable and accessible mechanism to request and receive restitution. The claims process shall, at a minimum:

1. Allow consumers to submit claims online through a dedicated page on cascaderetail.com, by mail, or by telephone;

2. Require consumers to provide reasonable verification of their purchases, which may include order confirmation numbers, receipts, credit card statements, or other documentation, provided that Cascade shall not impose unreasonable documentation requirements that would deter eligible consumers from submitting claims;

3. Provide for a claims period of no fewer than one hundred eighty (180) days from the date on which notice is first provided to consumers; and

4. Include a process for Cascade to evaluate claims and issue restitution payments within a reasonable timeframe following the submission of a complete claim.

Notice of the Restitution Fund and the claims process shall be provided to potentially affected consumers through the following channels:

1. Email Notice: Cascade shall send email notice to all consumers for whom Cascade has email addresses on file from transaction records during the Affected Period. Such email notice shall be sent within thirty (30) days of the State's approval of the claims process;

2. Website Notice: Cascade shall display a clear and prominent notice regarding the Restitution Fund and the claims process on the homepage of cascaderetail.com for a minimum period of ninety (90) consecutive days following the State's approval of the claims process; and

3. In-Store Signage: Cascade shall post clear and prominent signage regarding the Restitution Fund and the claims process in a location visible to consumers at or near the point of sale in all one hundred eighty-seven (187) retail locations for a minimum period of ninety (90) consecutive days following the State's approval of the claims process.

The form and content of all notices shall be subject to the State's prior review and approval.

C. Form of Restitution

Restitution may be provided in the form of cash refunds (by check or electronic transfer), payment card credits to the original form of payment, or store credits, at the election of the consumer. Consumers shall be informed of all available forms of restitution at the time they submit a claim and shall be given a meaningful opportunity to select their preferred form of restitution.

Store credits issued as restitution under this Section VII shall have no expiration date and shall carry no fees, conditions, or restrictions beyond those applicable to ordinary merchandise purchased at Cascade. Store credits shall be redeemable at any Covered Channel, including cascaderetail.com and all brick-and-mortar retail locations.

D. Residual Funds

Any portion of the Restitution Fund, including accrued interest, that has not been distributed to consumers within twelve (12) months of the Effective Date (i.e., by August 20, 2025) shall be remitted to the State of Washington Consumer Protection Account within thirty (30) days following the close of the twelve (12)-month administration period (i.e., by September 19, 2025). Cascade shall provide the State with a final accounting of the Restitution Fund, including the total amount deposited, the total amount distributed to consumers, the number of claims received and paid, and the amount of any residual funds, within thirty (30) days following the close of the twelve (12)-month administration period.

VIII. CIVIL PENALTY

Cascade shall pay a civil penalty of Seven Hundred Fifty Thousand Dollars ($750,000) to the State of Washington Consumer Protection Account. Payment shall be made within thirty (30) days of the Effective Date (i.e., by September 19, 2024). Payment shall be made by electronic wire transfer or certified check, payable to the "State of Washington Consumer Protection Account," and delivered or transmitted to an account designated in writing by the State.

This payment constitutes a civil penalty within the meaning of RCW 19.86.140 and is intended to serve as a deterrent against future violations of the Washington Consumer Protection Act. This civil penalty payment is not tax-deductible as a business expense under applicable federal or state tax law, and Cascade shall not claim or seek any tax deduction, credit, or other tax benefit in connection with this payment.

IX. REIMBURSEMENT OF INVESTIGATIVE COSTS

Cascade shall reimburse the State in the amount of One Hundred Eighty-Five Thousand Dollars ($185,000) for the State's reasonable investigative costs and attorneys' fees incurred in connection with this matter, including costs associated with the issuance and enforcement of the Civil Investigative Demand, the review and analysis of documents produced by Cascade, the statistical analysis of Cascade's pricing data, and the negotiation and drafting of this Assurance.

Payment shall be made within thirty (30) days of the Effective Date (i.e., by September 19, 2024). Payment shall be made in the same manner as the civil penalty described in Section VIII, by electronic wire transfer or certified check, payable to the "State of Washington Consumer Protection Account," and delivered or transmitted to an account designated in writing by the State.

X. TOTAL FINANCIAL COMMITMENT

The total financial commitment of Cascade under this Assurance is Three Million Seven Hundred Eighty-Five Thousand Dollars ($3,785,000), consisting of the following components:

The foregoing amounts do not include costs and expenses that Cascade will incur in connection with the engagement of the Monitor (Section VI), the implementation of training and internal compliance controls (Section V.D), or the administration of the Restitution Fund (Section VII), all of which shall be borne by Cascade as separate obligations.

XI. COMPLIANCE REPORTING

A. Semi-Annual Reports

Cascade shall submit semi-annual compliance reports to the State's Consumer Protection Division during the twenty-four (24)-month Compliance Period. Each semi-annual report shall describe Cascade's compliance with each provision of this Assurance in reasonable detail, and shall include, at a minimum, the following:

1. The status of the Restitution Fund, including the total amount deposited, the total amount distributed to date, the number of claims received and processed, the number of claims paid and denied, and the balance remaining in the Fund;

2. A description of any changes to Cascade's reference-pricing practices, pricing systems, or algorithmic pricing models since the prior report;

3. A summary of training conducted pursuant to Section V.D, including the number of employees trained, the dates of training sessions, and any updates to training materials;

4. The results of internal audits of Reference Price accuracy conducted pursuant to Section V.D, including the number of SKUs audited, the compliance rate, and any corrective actions taken;

5. A summary of any consumer complaints received by Cascade regarding reference pricing during the reporting period, including the number of complaints, the nature of the complaints, and the disposition of each complaint; and

6. A certification by a senior officer of Cascade that, to the best of such officer's knowledge and belief, Cascade is in compliance with all provisions of this Assurance.

B. Schedule. Semi-annual compliance reports shall be due on the following dates:

1. First Report: February 20, 2025 (six months after the Effective Date);

2. Second Report: August 20, 2025 (twelve months after the Effective Date);

3. Third Report: February 20, 2026 (eighteen months after the Effective Date); and

4. Fourth and Final Report: August 20, 2026 (twenty-four months after the Effective Date, coinciding with the end of the Compliance Period).

Reports shall be submitted in writing to the State at the address specified in Section XIV.G, with a copy transmitted via electronic mail to an email address designated by the State.

C. Monitor Reports Incorporated

The quarterly reports of the Monitor prepared pursuant to Section VI.C shall be appended to, or incorporated by reference in, the corresponding semi-annual compliance report. To the extent a quarterly Monitor report is not yet completed at the time a semi-annual compliance report is due, Cascade shall append or incorporate the most recently completed Monitor report and shall supplement the semi-annual report with any outstanding Monitor reports within fifteen (15) days of receipt.

XII. STIPULATED PENALTIES FOR BREACH

A. Amount. In the event of a material breach of any term or provision of this Assurance by Cascade, Cascade shall pay stipulated penalties of Ten Thousand Dollars ($10,000) per day for each day that such material breach continues, subject to the notice and cure provisions set forth in Section XII.B below. For purposes of this Section, a "material breach" shall mean a failure to comply with any substantive obligation set forth in this Assurance that is not de minimis in nature and that has a meaningful impact on the purposes of this Assurance or on the protections afforded to consumers hereunder.

B. Cure Period

Before stipulated penalties begin to accrue, the State shall provide Cascade with written notice specifying the nature of the alleged breach in reasonable detail. Cascade shall have thirty (30) calendar days from the date of its receipt of such written notice to cure the breach (the "Cure Period"). If the breach is of a nature that cannot reasonably be cured within thirty (30) calendar days, the Cure Period shall be extended for such additional time as is reasonably necessary to complete the cure, provided that Cascade commences curative action within the initial thirty (30)-day period and thereafter diligently and continuously pursues the cure to completion.

Stipulated penalties shall begin to accrue on the thirty-first (31st) day following Cascade's receipt of written notice if the breach has not been cured and no extension of the Cure Period is applicable, and shall continue to accrue for each day thereafter until the breach is fully cured.

C. Payment. Stipulated penalties accruing under this Section XII shall be payable to the State of Washington Consumer Protection Account. The State shall provide Cascade with a written demand specifying the total amount of stipulated penalties due, and Cascade shall remit payment within thirty (30) days of receipt of such demand.

The State's right to seek stipulated penalties under this Section XII shall be in addition to, and not in lieu of, any other remedy available to the State under RCW 19.86 et seq. or other applicable law, including but not limited to the right to seek injunctive relief, civil penalties, or other equitable or legal remedies in any court of competent jurisdiction.

XIII. RELEASE AND SCOPE OF ASSURANCE

A. Release. Upon Cascade's full and timely compliance with all terms and provisions of this Assurance, the State hereby releases and forever discharges Cascade, its officers, directors, employees, agents, subsidiaries, and affiliates from any and all civil claims, causes of action, or demands arising under the Washington Consumer Protection Act, RCW 19.86 et seq., based on the specific reference-pricing practices investigated by the State in this matter during the Affected Period (October 15, 2023, through March 15, 2024).

This release is expressly conditioned upon Cascade's full and timely compliance with all terms and provisions of this Assurance. In the event that Cascade materially breaches this Assurance and fails to cure such breach within the applicable Cure Period, the State's release shall be void and of no further force or effect, and the State shall be free to pursue any and all available remedies.

This release does not extend to any conduct by Cascade occurring after March 15, 2024, or to any conduct by Cascade that is not encompassed by the scope of the State's investigation as described in the Recitals set forth in Section II above. This release does not extend to any claims by the State against Praxton Analytics LLC or any other third party.

B. Reservation of Rights

The State expressly reserves its right to investigate and take enforcement action regarding any future violations of the Washington Consumer Protection Act, RCW 19.86 et seq., or any other applicable federal, state, or local law by Cascade, including but not limited to any reference-pricing practices engaged in by Cascade after March 15, 2024.

The State further reserves its right to enforce the terms and provisions of this Assurance, including through an action filed in any court of competent jurisdiction pursuant to RCW 19.86.085, and to seek any and all remedies available under applicable law in connection with any breach of this Assurance by Cascade.

C. No Third-Party Beneficiaries

This Assurance is entered into solely between the State and Cascade and is not intended to create, and does not create, any rights, claims, or benefits in any third party, including but not limited to any individual consumer, class of consumers, competitor, or other entity. No third party may enforce any term or provision of this Assurance.

Provided, however, that nothing in this Assurance shall be construed to limit, waive, or otherwise affect the rights of individual consumers to bring private actions under RCW 19.86.090 or any other applicable law. This Assurance does not release or discharge Cascade from any liability to individual consumers under RCW 19.86.090 or otherwise.

XIV. GENERAL PROVISIONS

A. Governing Law

This Assurance shall be governed by, and construed and interpreted in accordance with, the laws of the State of Washington, without regard to its conflict of laws principles.

B. Jurisdiction and Venue

Any action to enforce this Assurance, or any dispute arising out of or relating to this Assurance, may be brought in the Superior Court of the State of Washington for King County or in any other court of competent jurisdiction. Cascade hereby consents to the personal jurisdiction of the Superior Court of the State of Washington for King County for purposes of any such action and waives any objection to venue in such court.

C. Entire Agreement

This Assurance constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, discussions, representations, understandings, and agreements, whether oral or written, between the Parties relating to the subject matter hereof. No representations, warranties, or inducements have been made by either Party except as expressly set forth in this Assurance.

D. Amendments. This Assurance may not be amended, modified, supplemented, or waived except by a written instrument duly executed by authorized representatives of both Parties. No oral agreement, course of dealing, or course of performance shall operate to amend or modify any term or provision of this Assurance.

E. Severability. If any provision of this Assurance, or the application thereof to any person or circumstance, is found by a court of competent jurisdiction to be invalid, illegal, or unenforceable, such finding shall not affect the validity, legality, or enforceability of the remaining provisions of this Assurance, which shall continue in full force and effect. In the event that any provision is found to be invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to replace such provision with a valid, legal, and enforceable provision that, to the greatest extent possible, achieves the intended purpose of the original provision.

F. Binding Effect

This Assurance shall be binding upon and inure to the benefit of the Parties and their respective successors, assigns, heirs, and legal representatives. Cascade shall not assign or transfer its obligations under this Assurance without the prior written consent of the State. In the event of any merger, acquisition, reorganization, or other change in corporate structure involving Cascade, the surviving or successor entity shall be bound by all terms and provisions of this Assurance.

G. Notices. All notices, reports, communications, and other documents required or permitted under this Assurance shall be in writing and shall be deemed duly given when delivered personally, when sent by certified or registered mail (return receipt requested, postage prepaid), or when sent by nationally recognized overnight courier service, addressed as follows:

For the State:

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

For Cascade:

Diana Prescott-Levy General Counsel Cascade Retail Holdings Inc. 4500 Overlake Boulevard, Suite 800 Bellevue, Washington 98004

With a copy to:

Alan Ngo Partner Calderwood & Harkness LLP 1201 Third Avenue, Suite 4400 Seattle, Washington 98101

Either Party may change its address for purposes of notices under this Assurance by providing written notice of such change to the other Party in accordance with this Section XIV.G.

H. Counterparts. This Assurance may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Execution by facsimile or electronic signature (including PDF transmitted by email) shall be deemed equivalent to original signature for all purposes.

I. Effective Date

This Assurance shall be effective as of the date of the last signature affixed below (the "Effective Date"), which the Parties acknowledge and agree is August 20, 2024.

XV. SIGNATURES

IN WITNESS WHEREOF, the Parties have executed this Assurance of Voluntary Compliance as of the date set forth below.

FOR THE STATE OF WASHINGTON:

OFFICE OF THE ATTORNEY GENERAL STATE OF WASHINGTON

By: ________

Name: Meredith Calloway-Voss

Title: Lead Assistant Attorney General

ASSURANCE OF VOLUNTARY COMPLIANCE
Pursuant to the Washington Consumer Protection Act, RCW 19.86 *et seq.*
Between
THE STATE OF WASHINGTON Acting through its Attorney General Consumer Protection Division 800 Fifth Avenue, Suite 2000 Seattle, WA 98104
and
CASCADE RETAIL HOLDINGS INC. A Delaware Corporation 4500 Overlake Boulevard, Suite 800 Bellevue, WA 98004
Date of Execution: August 20, 2024
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I. PARTIES
A. The State of Washington
The State of Washington ("the State"), acting through the Office of the Attorney General, Consumer Protection Division, with offices located at 800 Fifth Avenue, Suite 2000, Seattle, Washington 98104, is a party to this Assurance of Voluntary Compliance. The State is represented in this matter by Meredith Calloway-Voss, Lead Assistant Attorney General, and Jordan A. Kittridge, Investigating Assistant Attorney General, both of the Consumer Protection Division.
The Attorney General of the State of Washington is vested with authority under the Washington Consumer Protection Act, RCW 19.86 et seq., to protect the public interest and the interests of consumers in the State of Washington. Specifically, the Attorney General possesses the authority under RCW 19.86.080 to bring actions to restrain unfair or deceptive acts or practices in trade or commerce; the authority under RCW 19.86.110 to issue Civil Investigative Demands in connection with investigations of potential violations of the Consumer Protection Act; and the authority under RCW 19.86.085 to accept assurances of voluntary compliance from persons engaged in, or suspected of engaging in, acts or practices that may violate the Consumer Protection Act. This Assurance is entered into pursuant to the Attorney General's authority under RCW 19.86.085.
B. Cascade Retail Holdings Inc.
Cascade Retail Holdings Inc. ("Respondent," "Cascade," or "CRH") is a corporation organized and existing under the laws of the State of Delaware. Cascade's registered agent in Delaware is National Registered Agents of Delaware, Inc., located at 160 Greentree Drive, Suite 101, Dover, Delaware 19904. Cascade maintains its principal place of business at 4500 Overlake Boulevard, Suite 800, Bellevue, Washington 98004.
Cascade is a publicly traded company listed on the Nasdaq Stock Market under the ticker symbol CRHI. Cascade operates 187 retail store locations across fourteen (14) western United States, including numerous locations within the State of Washington, and maintains a national ecommerce platform accessible at cascaderetail.com. For the fiscal year ended December 31, 2023, Cascade reported revenue of approximately Three Billion Four Hundred Seventy Million Dollars ($3,470,000,000).
Cascade is represented in this matter by Calderwood & Harkness LLP, 1201 Third Avenue, Suite 4400, Seattle, Washington 98101.
II. RECITALS
The State and Cascade (collectively, "the Parties") recite as follows:
A. Background of the Investigation
On March 26, 2024, the State, acting through the Office of the Attorney General, Consumer Protection Division, issued a Civil Investigative Demand ("CID") to Cascade pursuant to RCW 19.86.110. The CID sought the production of documents, data, and information concerning Cascade's use of "compare-at," "original price," and "was/now" reference pricing displayed on Cascade's ecommerce platform located at cascaderetail.com and in in-store signage and shelf tags across Cascade's 187 retail store locations.
The State's investigation was initiated in response to one hundred forty-seven (147) consumer complaints received by the Consumer Protection Division between January 2023 and February 2024. These consumer complaints alleged, in substance, that Cascade displayed inflated "original" or "compare-at" prices that did not reflect prices at which the referenced merchandise was actually offered for sale in the regular course of Cascade's business. Multiple complainants alleged that the purported "original" prices displayed by Cascade were significantly higher than any price at which they had observed the merchandise offered for sale at Cascade's stores or on cascaderetail.com, creating a false impression of savings.
B. Smart Price Program
On or about October 15, 2023, Cascade launched its "Smart Price" promotional program. The Smart Price program utilized algorithmically generated reference prices produced by a proprietary pricing model developed by Praxton Analytics LLC ("Praxton"), a third-party pricing consultant engaged by Cascade to optimize its promotional pricing strategy. The Smart Price program generated "compare-at" and "original price" reference prices that were displayed on Cascade's ecommerce platform and on in-store signage, shelf tags, and promotional materials across Cascade's retail locations. These reference prices were intended to convey to consumers the savings available by purchasing merchandise at Cascade's advertised sale price relative to a purported higher price.
C. Product Categories at Issue
The State's inquiry focused on six product categories in which a significant concentration of consumer complaints was identified: (1) women's apparel; (2) men's footwear; (3) home textiles; (4) small kitchen appliances; (5) outdoor furniture; and (6) consumer electronics accessories (collectively, the "Product Categories"). These six Product Categories represent a substantial portion of Cascade's merchandise offerings and were among the first categories to be incorporated into the Smart Price program.
D. Preliminary Findings
Based on a review of a sample of two thousand three hundred forty (2,340) stock-keeping units ("SKUs") across the six Product Categories during the period January 1, 2024, through March 15, 2024, the State's preliminary analysis found that one thousand six hundred one (1,601) of those SKUs (approximately 68.4%) displayed a "compare-at" or "original" reference price that exceeded the highest price at which the item had actually been offered for sale by Cascade during the preceding ninety (90)-day period. The average overstatement of reference prices in the sample was approximately 37.2% above the actual highest offering price documented in the relevant lookback window.
Based on Cascade's sales data produced in response to the CID, the State estimates that approximately Two Hundred Fourteen Million Dollars ($214,000,000) in gross merchandise sales during the period from October 15, 2023 (the date of the Smart Price program launch), through March 15, 2024 (the end of the period covered by the State's sampling analysis), bore reference-price tags that were potentially misleading to consumers.
E. Cascade's Response and Cooperation
Cascade produced approximately twenty-one thousand one hundred (21,100) documents in response to the CID in two rolling productions. The first production, consisting of approximately twelve thousand four hundred (12,400) documents, was delivered on April 23, 2024. The second production, consisting of approximately eight thousand seven hundred (8,700) additional documents, was delivered on May 31, 2024. Cascade's document productions included pricing data, internal communications, vendor documentation, Praxton Analytics LLC's model specifications, and related records.
The Parties participated in a meet-and-confer on May 14, 2024, at which they discussed the scope and results of the State's preliminary analysis, Cascade's pricing practices, and the potential terms of a consensual resolution. Following the meet-and-confer, the Parties engaged in good-faith negotiations regarding the terms of this Assurance over the course of several weeks, including additional telephonic conferences and exchanges of draft terms.
F. Purpose.  The State and Cascade enter into this Assurance of Voluntary Compliance ("AVC" or "Assurance") pursuant to RCW 19.86.085 for the purpose of resolving the State's inquiry into Cascade's reference-pricing practices without the necessity of filing an enforcement action in any court. The Parties agree that this consensual resolution serves the interests of consumers in the State of Washington and the public interest by securing prospective injunctive relief, consumer restitution, and enhanced compliance measures in a timely and efficient manner.
This Assurance shall not be construed as an adjudication on the merits of any claims or defenses that either Party might have asserted had the matter proceeded to litigation. Cascade's entry into this Assurance does not constitute an admission that Cascade has violated any provision of the Washington Consumer Protection Act, RCW 19.86 et seq., or any other federal, state, or local law, regulation, or ordinance.
III. NO ADMISSION OF LIABILITY
Cascade neither admits nor denies any violation of the Washington Consumer Protection Act, RCW 19.86 et seq., or any other federal, state, or local law, regulation, or ordinance, in connection with the conduct described in the Recitals set forth above or otherwise. This Assurance shall not be construed as evidence or an admission of any wrongdoing, liability, or violation of law by Cascade, and Cascade expressly reserves all defenses that would have been available to it had this matter been litigated.
Nothing in this Assurance shall be used as evidence in any other proceeding, whether judicial, administrative, or otherwise, except in a proceeding brought by the State to enforce the terms of this Assurance pursuant to Section XII or Section XIII.B hereof, or as otherwise permitted by applicable law. For the avoidance of doubt, the existence and terms of this Assurance may be disclosed to the extent required by applicable securities laws, regulations, or stock exchange rules to which Cascade is subject.
IV. DEFINITIONS
As used throughout this Assurance, the following terms shall have the meanings set forth below:
"Affected Period" means the period from October 15, 2023, through and including March 15, 2024.
"Assurance" means this Assurance of Voluntary Compliance, including all terms, conditions, and provisions set forth herein, together with any amendments hereto made in accordance with Section XIV.D.
"Bona Fide Offering Price" means the actual price at which merchandise was openly and actively offered for sale to consumers in the ordinary course of Cascade's business, at which merchandise was available for purchase by consumers, and at which the merchandise was offered for a reasonably substantial period of time. A price at which merchandise was offered for only an artificially brief period of time, or a price that was not genuinely available to consumers, shall not constitute a Bona Fide Offering Price.
"Business Day" means any day other than a Saturday, Sunday, or a day on which banks in the State of Washington are authorized or required to close.
"Compliance Period" means the period of twenty-four (24) months from and after the Effective Date, commencing on August 20, 2024, and ending on August 20, 2026.
"Covered Channels" means (a) Cascade's ecommerce platform located at cascaderetail.com, including any mobile applications or mobile-optimized versions thereof, and (b) all Cascade Retail Holdings Inc. brick-and-mortar retail store locations, wherever situated.
"Effective Date" means August 20, 2024, the date of the last signature affixed to this Assurance.
"Lookback Window" means the one hundred twenty (120)-day period immediately preceding the date on which a Reference Price is first displayed to consumers.
"Monitor" means the independent compliance reviewer engaged pursuant to Section VI of this Assurance, initially Ridgepoint Compliance Solutions Inc.
"Product Categories" means the six product categories that were the focus of the State's investigation: (1) women's apparel; (2) men's footwear; (3) home textiles; (4) small kitchen appliances; (5) outdoor furniture; and (6) consumer electronics accessories.
"Reference Price" means any "compare-at," "original price," "was," "list price," "regular price," "retail price," or similar price representation displayed in connection with the offer, advertisement, or sale of merchandise, whether displayed online, in-store, or through any other medium, that is intended to or has the effect of conveying to consumers a comparison between the advertised selling price and a higher price.
"Restitution Fund" means the consumer-restitution fund established pursuant to Section VII of this Assurance.
"SKU" means stock-keeping unit, a unique identifier assigned to a specific item of merchandise for purposes of inventory tracking and sales reporting.
"State" means the State of Washington, acting through the Office of the Attorney General, Consumer Protection Division.
V. INJUNCTIVE AND PROSPECTIVE RELIEF — PRICING STANDARDS
A. Reference-Price Substantiation Requirement
From and after the Effective Date, Cascade shall ensure that all Reference Prices displayed in connection with the offer, advertisement, or sale of any merchandise through any Covered Channel reflect the actual, Bona Fide Offering Price at which the item was offered for sale in the ordinary course of Cascade's business for a reasonably substantial period during the immediately preceding one hundred twenty (120)-day Lookback Window. A Reference Price shall be deemed substantiated only if the merchandise bearing such Reference Price was actually offered for sale at the stated Reference Price for a reasonably substantial period of time during the Lookback Window, and the Reference Price was a genuine price at which the merchandise was available for purchase by consumers.
For purposes of this Section, a "reasonably substantial period" shall mean, at a minimum, that the merchandise was offered at the Reference Price for not fewer than twenty-eight (28) of the one hundred twenty (120) days within the Lookback Window, unless Cascade can demonstrate that a shorter period was reasonable under the circumstances (e.g., for seasonal merchandise with inherently limited offering windows), provided that in no event shall the offering period be fewer than fourteen (14) days.
The one hundred twenty (120)-day Lookback Window and the substantiation requirements set forth in this Section V.A shall apply to all merchandise in all product categories offered by Cascade through any Covered Channel, and shall not be limited to the six Product Categories identified in the State's investigation.
B. Prohibition on Artificially Inflated Reference Prices
Cascade shall not display any Reference Price that is fictitious, fabricated, or that does not reflect a genuine prior Bona Fide Offering Price. Without limiting the generality of the foregoing, Cascade shall not:
1.  Display a Reference Price that has never been the actual offering price for the item at any Covered Channel;
2.  Display a Reference Price derived solely from a manufacturer's suggested retail price ("MSRP") or a competitor's price unless the Reference Price is clearly and conspicuously identified as such (e.g., "MSRP: $XX.XX") and is not presented in a manner that suggests it was Cascade's own prior offering price;
3.  Inflate, fabricate, or artificially generate Reference Prices for the purpose of creating a false impression of consumer savings; or
4.  Use algorithmic or automated pricing tools, including but not limited to the pricing model developed by Praxton Analytics LLC or any successor or replacement pricing model, to generate Reference Prices unless the outputs of such tools are validated against actual historical transaction and offering data within the one hundred twenty (120)-day Lookback Window prior to display to consumers.
In the event that Cascade utilizes any algorithmic or automated pricing tool to generate or recommend Reference Prices, Cascade shall implement a validation process that compares each algorithmically generated Reference Price against actual historical offering-price data maintained in Cascade's records before the Reference Price is displayed to any consumer. Any algorithmically generated Reference Price that cannot be validated against actual historical offering-price data within the Lookback Window shall not be displayed.
C. Documentation and Record-Keeping
Cascade shall maintain records sufficient to substantiate every Reference Price displayed in any Covered Channel for a minimum period of three (3) years from the date on which the Reference Price was last displayed to consumers. Such records shall include, at a minimum, the following information for each Reference Price:
1.  The SKU or other product identifier for the merchandise to which the Reference Price relates;
2.  The Reference Price displayed;
3.  The dates on which the Reference Price was first and last displayed to consumers, and the Covered Channel(s) on which it was displayed;
4.  The historical offering-price data used to substantiate the Reference Price, including the dates and Covered Channel(s) at which the merchandise was offered at the Reference Price and documentation of the actual offering;
5.  Any algorithmic or model outputs, including outputs from the Praxton Analytics LLC pricing model or any successor or replacement model, used in generating or recommending the Reference Price; and
6.  Documentation of the validation process applied to any algorithmically generated Reference Price, including the identity of the person or automated system that performed the validation and the date on which validation was completed.
Cascade shall organize and maintain these records in a manner that permits efficient retrieval and review by the Monitor and by the State upon reasonable request.
D. Training and Internal Controls
Within sixty (60) days of the Effective Date (i.e., by October 19, 2024), Cascade shall develop and implement a comprehensive training program for all employees, contractors, and agents involved in pricing, merchandising, and marketing decisions at Cascade. The training program shall cover, at a minimum:
1.  The requirements of this Assurance, including the Reference-Price substantiation requirements, the Lookback Window, the prohibition on artificially inflated Reference Prices, and the documentation and record-keeping obligations;
2.  The applicable provisions of the Washington Consumer Protection Act, RCW 19.86, as they relate to reference-price advertising and deceptive pricing practices;
3.  Cascade's internal policies and procedures for generating, validating, displaying, and documenting Reference Prices; and
4.  The roles and responsibilities of employees involved in the pricing process, including the process for escalating questions or concerns regarding Reference Price compliance.
The training program shall be provided to all relevant employees within sixty (60) days of the Effective Date and shall be provided to all new employees in relevant roles within thirty (30) days of their commencement of employment. Cascade shall conduct annual refresher training for all relevant employees during the Compliance Period.
In addition to the training program, Cascade shall establish and maintain internal compliance controls designed to ensure ongoing compliance with the pricing standards set forth in this Section V. Such internal compliance controls shall include, at a minimum, periodic internal audits of Reference Price accuracy conducted no less frequently than quarterly, with the results of such audits documented in writing and retained for the duration of the Compliance Period plus one (1) year. Cascade shall designate a senior officer or employee with responsibility for overseeing compliance with this Assurance and shall communicate the identity of such designee to the State within thirty (30) days of the Effective Date.
VI. INDEPENDENT COMPLIANCE REVIEW
A. Appointment of Monitor
Within thirty (30) days of the Effective Date (i.e., by September 19, 2024), Cascade shall formally engage Ridgepoint Compliance Solutions Inc. ("Ridgepoint"), located at 700 Stewart Street, Suite 1500, Seattle, Washington 98101, as the independent compliance reviewer (the "Monitor") to audit Cascade's pricing practices during the Compliance Period. The engagement partner at Ridgepoint responsible for the monitoring engagement shall be Harold Sung.
The Monitor shall be independent of Cascade and shall not serve as an advisor, consultant, or service provider to Cascade on operational pricing decisions, pricing strategy, or any other business matter outside the scope of the monitoring engagement. The Monitor shall owe no duty of loyalty to Cascade other than the obligation to conduct its engagement in a professional and competent manner. The Monitor shall have the authority to exercise independent judgment in connection with the audits conducted pursuant to this Section VI.
In the event that Ridgepoint becomes unable or unwilling to serve as Monitor, or if the State reasonably determines that Ridgepoint has a conflict of interest or has failed to perform its duties competently, Cascade shall, within thirty (30) days of receiving notice from the State, propose an alternative Monitor for the State's approval. The State's approval of any alternative Monitor shall not be unreasonably withheld.
B. Scope of Quarterly Audits
The Monitor shall conduct audits on a quarterly basis, with four (4) audits per year, during the twenty-four (24)-month Compliance Period, for a total of eight (8) quarterly audits. Each quarterly audit shall be completed within forty-five (45) days following the close of the applicable quarter.
Each quarterly audit shall review a statistically significant random sample of SKUs across all Covered Channels and all product categories, including but not limited to the six Product Categories identified in the State's investigation. The sample size and selection methodology shall be determined by the Monitor using generally accepted statistical sampling techniques and shall be designed to provide a confidence level of not less than ninety-five percent (95%) with a margin of error of not more than five percent (5%).
The Monitor shall assess whether Cascade's displayed Reference Prices comply with the substantiation requirements set forth in Section V of this Assurance, including but not limited to:
1.  Whether each Reference Price in the sample reflects a Bona Fide Offering Price within the one hundred twenty (120)-day Lookback Window;
2.  Whether the merchandise was offered at the Reference Price for a reasonably substantial period within the Lookback Window, as defined in Section V.A;
3.  Whether Cascade has maintained adequate records to substantiate each Reference Price, as required by Section V.C;
4.  Whether any algorithmically generated Reference Prices, including outputs from Praxton Analytics LLC's pricing model or any successor or replacement model, have been validated against actual historical offering-price data within the Lookback Window prior to display; and
5.  Whether Cascade's internal compliance controls, including training and internal audits, are functioning effectively.
C. Monitor Reports
The Monitor shall prepare a detailed written report following each quarterly audit and shall submit such report to both Cascade and the State within thirty (30) days of the completion of each audit. Each report shall include, at a minimum:
1.  A description of the methodology used, including the sample size, selection criteria, and statistical parameters;
2.  A summary of findings of compliance and non-compliance, including the number and percentage of SKUs in the sample that were found to be in compliance and non-compliance with the requirements of Section V;
3.  A detailed description of any instances of non-compliance identified, including the SKU(s) at issue, the nature and extent of the non-compliance, and the Covered Channel(s) affected;
4.  An assessment of whether any identified non-compliance is isolated or systemic in nature;
5.  Recommendations for corrective action, if applicable; and
6.  An assessment of Cascade's implementation of any corrective actions recommended in prior reports.
The Monitor's reports shall be treated as confidential between the Parties and the Monitor, except to the extent disclosure is required by applicable law or is necessary in connection with any enforcement proceeding related to this Assurance.
D. Access and Cooperation
Cascade shall provide the Monitor with full, timely, and unrestricted access to all pricing data, transaction data, pricing systems, algorithmic models (including the Praxton Analytics LLC model and any successor or replacement models), documentation, records, and personnel necessary to conduct the quarterly audits. Cascade shall not interfere with, obstruct, or unduly delay the Monitor's activities in any manner. Cascade shall respond to the Monitor's requests for information and access within ten (10) Business Days of receipt of such requests, unless a shorter timeframe is reasonably required and specified by the Monitor.
Cascade shall designate a liaison or point of contact to facilitate communications between Cascade and the Monitor and shall communicate the identity of such liaison to the Monitor and the State within ten (10) Business Days of the Monitor's engagement.
E. Costs.  All costs and expenses associated with the Monitor's engagement, including but not limited to professional fees, travel expenses, data analysis costs, and any other expenses reasonably incurred by the Monitor in connection with the quarterly audits and the preparation of reports, shall be borne solely by Cascade. Cascade's obligation to bear such costs shall not be contingent upon the findings of any audit and shall continue throughout the Compliance Period.
VII. CONSUMER RESTITUTION
A. Establishment of Restitution Fund
Within forty-five (45) days of the Effective Date (i.e., by October 4, 2024), Cascade shall establish a consumer-restitution fund in the amount of Two Million Eight Hundred Fifty Thousand Dollars ($2,850,000) (the "Restitution Fund"). The Restitution Fund shall be deposited into a separate, interest-bearing account at a federally insured financial institution. Any interest earned on the Restitution Fund shall be added to and become part of the Restitution Fund and shall be used solely for the purposes described in this Section VII.
The Restitution Fund shall be used exclusively to provide refunds or store credits to consumers who purchased merchandise bearing materially inflated Reference Prices during the Affected Period (October 15, 2023, through March 15, 2024). For purposes of this Section, a Reference Price shall be considered "materially inflated" if it exceeded the highest Bona Fide Offering Price for the merchandise during the ninety (90)-day period preceding the date of the consumer's purchase by more than ten percent (10%).
B. Administration.  Cascade shall administer the Restitution Fund and complete all distributions to eligible consumers within twelve (12) months of the Effective Date (i.e., by August 20, 2025). Cascade shall develop a detailed claims process and restitution plan, which shall be submitted to the State for review and approval within sixty (60) days of the Effective Date. The State shall review the proposed claims process and restitution plan and shall approve, reject, or request modifications to the plan within thirty (30) days of receipt. Cascade shall implement any modifications reasonably requested by the State.
The claims process shall provide affected consumers with a reasonable and accessible mechanism to request and receive restitution. The claims process shall, at a minimum:
1.  Allow consumers to submit claims online through a dedicated page on cascaderetail.com, by mail, or by telephone;
2.  Require consumers to provide reasonable verification of their purchases, which may include order confirmation numbers, receipts, credit card statements, or other documentation, provided that Cascade shall not impose unreasonable documentation requirements that would deter eligible consumers from submitting claims;
3.  Provide for a claims period of no fewer than one hundred eighty (180) days from the date on which notice is first provided to consumers; and
4.  Include a process for Cascade to evaluate claims and issue restitution payments within a reasonable timeframe following the submission of a complete claim.
Notice of the Restitution Fund and the claims process shall be provided to potentially affected consumers through the following channels:
1.  Email Notice: Cascade shall send email notice to all consumers for whom Cascade has email addresses on file from transaction records during the Affected Period. Such email notice shall be sent within thirty (30) days of the State's approval of the claims process;
2.  Website Notice: Cascade shall display a clear and prominent notice regarding the Restitution Fund and the claims process on the homepage of cascaderetail.com for a minimum period of ninety (90) consecutive days following the State's approval of the claims process; and
3.  In-Store Signage: Cascade shall post clear and prominent signage regarding the Restitution Fund and the claims process in a location visible to consumers at or near the point of sale in all one hundred eighty-seven (187) retail locations for a minimum period of ninety (90) consecutive days following the State's approval of the claims process.
The form and content of all notices shall be subject to the State's prior review and approval.
C. Form of Restitution
Restitution may be provided in the form of cash refunds (by check or electronic transfer), payment card credits to the original form of payment, or store credits, at the election of the consumer. Consumers shall be informed of all available forms of restitution at the time they submit a claim and shall be given a meaningful opportunity to select their preferred form of restitution.
Store credits issued as restitution under this Section VII shall have no expiration date and shall carry no fees, conditions, or restrictions beyond those applicable to ordinary merchandise purchased at Cascade. Store credits shall be redeemable at any Covered Channel, including cascaderetail.com and all brick-and-mortar retail locations.
D. Residual Funds
Any portion of the Restitution Fund, including accrued interest, that has not been distributed to consumers within twelve (12) months of the Effective Date (i.e., by August 20, 2025) shall be remitted to the State of Washington Consumer Protection Account within thirty (30) days following the close of the twelve (12)-month administration period (i.e., by September 19, 2025). Cascade shall provide the State with a final accounting of the Restitution Fund, including the total amount deposited, the total amount distributed to consumers, the number of claims received and paid, and the amount of any residual funds, within thirty (30) days following the close of the twelve (12)-month administration period.
VIII. CIVIL PENALTY
Cascade shall pay a civil penalty of Seven Hundred Fifty Thousand Dollars ($750,000) to the State of Washington Consumer Protection Account. Payment shall be made within thirty (30) days of the Effective Date (i.e., by September 19, 2024). Payment shall be made by electronic wire transfer or certified check, payable to the "State of Washington Consumer Protection Account," and delivered or transmitted to an account designated in writing by the State.
This payment constitutes a civil penalty within the meaning of RCW 19.86.140 and is intended to serve as a deterrent against future violations of the Washington Consumer Protection Act. This civil penalty payment is not tax-deductible as a business expense under applicable federal or state tax law, and Cascade shall not claim or seek any tax deduction, credit, or other tax benefit in connection with this payment.
IX. REIMBURSEMENT OF INVESTIGATIVE COSTS
Cascade shall reimburse the State in the amount of One Hundred Eighty-Five Thousand Dollars ($185,000) for the State's reasonable investigative costs and attorneys' fees incurred in connection with this matter, including costs associated with the issuance and enforcement of the Civil Investigative Demand, the review and analysis of documents produced by Cascade, the statistical analysis of Cascade's pricing data, and the negotiation and drafting of this Assurance.
Payment shall be made within thirty (30) days of the Effective Date (i.e., by September 19, 2024). Payment shall be made in the same manner as the civil penalty described in Section VIII, by electronic wire transfer or certified check, payable to the "State of Washington Consumer Protection Account," and delivered or transmitted to an account designated in writing by the State.
X. TOTAL FINANCIAL COMMITMENT
The total financial commitment of Cascade under this Assurance is Three Million Seven Hundred Eighty-Five Thousand Dollars ($3,785,000), consisting of the following components:
The foregoing amounts do not include costs and expenses that Cascade will incur in connection with the engagement of the Monitor (Section VI), the implementation of training and internal compliance controls (Section V.D), or the administration of the Restitution Fund (Section VII), all of which shall be borne by Cascade as separate obligations.
XI. COMPLIANCE REPORTING
A. Semi-Annual Reports
Cascade shall submit semi-annual compliance reports to the State's Consumer Protection Division during the twenty-four (24)-month Compliance Period. Each semi-annual report shall describe Cascade's compliance with each provision of this Assurance in reasonable detail, and shall include, at a minimum, the following:
1.  The status of the Restitution Fund, including the total amount deposited, the total amount distributed to date, the number of claims received and processed, the number of claims paid and denied, and the balance remaining in the Fund;
2.  A description of any changes to Cascade's reference-pricing practices, pricing systems, or algorithmic pricing models since the prior report;
3.  A summary of training conducted pursuant to Section V.D, including the number of employees trained, the dates of training sessions, and any updates to training materials;
4.  The results of internal audits of Reference Price accuracy conducted pursuant to Section V.D, including the number of SKUs audited, the compliance rate, and any corrective actions taken;
5.  A summary of any consumer complaints received by Cascade regarding reference pricing during the reporting period, including the number of complaints, the nature of the complaints, and the disposition of each complaint; and
6.  A certification by a senior officer of Cascade that, to the best of such officer's knowledge and belief, Cascade is in compliance with all provisions of this Assurance.
B. Schedule.  Semi-annual compliance reports shall be due on the following dates:
1.  First Report: February 20, 2025 (six months after the Effective Date);
2.  Second Report: August 20, 2025 (twelve months after the Effective Date);
3.  Third Report: February 20, 2026 (eighteen months after the Effective Date); and
4.  Fourth and Final Report: August 20, 2026 (twenty-four months after the Effective Date, coinciding with the end of the Compliance Period).
Reports shall be submitted in writing to the State at the address specified in Section XIV.G, with a copy transmitted via electronic mail to an email address designated by the State.
C. Monitor Reports Incorporated
The quarterly reports of the Monitor prepared pursuant to Section VI.C shall be appended to, or incorporated by reference in, the corresponding semi-annual compliance report. To the extent a quarterly Monitor report is not yet completed at the time a semi-annual compliance report is due, Cascade shall append or incorporate the most recently completed Monitor report and shall supplement the semi-annual report with any outstanding Monitor reports within fifteen (15) days of receipt.
XII. STIPULATED PENALTIES FOR BREACH
A. Amount.  In the event of a material breach of any term or provision of this Assurance by Cascade, Cascade shall pay stipulated penalties of Ten Thousand Dollars ($10,000) per day for each day that such material breach continues, subject to the notice and cure provisions set forth in Section XII.B below. For purposes of this Section, a "material breach" shall mean a failure to comply with any substantive obligation set forth in this Assurance that is not de minimis in nature and that has a meaningful impact on the purposes of this Assurance or on the protections afforded to consumers hereunder.
B. Cure Period
Before stipulated penalties begin to accrue, the State shall provide Cascade with written notice specifying the nature of the alleged breach in reasonable detail. Cascade shall have thirty (30) calendar days from the date of its receipt of such written notice to cure the breach (the "Cure Period"). If the breach is of a nature that cannot reasonably be cured within thirty (30) calendar days, the Cure Period shall be extended for such additional time as is reasonably necessary to complete the cure, provided that Cascade commences curative action within the initial thirty (30)-day period and thereafter diligently and continuously pursues the cure to completion.
Stipulated penalties shall begin to accrue on the thirty-first (31st) day following Cascade's receipt of written notice if the breach has not been cured and no extension of the Cure Period is applicable, and shall continue to accrue for each day thereafter until the breach is fully cured.
C. Payment.  Stipulated penalties accruing under this Section XII shall be payable to the State of Washington Consumer Protection Account. The State shall provide Cascade with a written demand specifying the total amount of stipulated penalties due, and Cascade shall remit payment within thirty (30) days of receipt of such demand.
The State's right to seek stipulated penalties under this Section XII shall be in addition to, and not in lieu of, any other remedy available to the State under RCW 19.86 et seq. or other applicable law, including but not limited to the right to seek injunctive relief, civil penalties, or other equitable or legal remedies in any court of competent jurisdiction.
XIII. RELEASE AND SCOPE OF ASSURANCE
A. Release.  Upon Cascade's full and timely compliance with all terms and provisions of this Assurance, the State hereby releases and forever discharges Cascade, its officers, directors, employees, agents, subsidiaries, and affiliates from any and all civil claims, causes of action, or demands arising under the Washington Consumer Protection Act, RCW 19.86 et seq., based on the specific reference-pricing practices investigated by the State in this matter during the Affected Period (October 15, 2023, through March 15, 2024).
This release is expressly conditioned upon Cascade's full and timely compliance with all terms and provisions of this Assurance. In the event that Cascade materially breaches this Assurance and fails to cure such breach within the applicable Cure Period, the State's release shall be void and of no further force or effect, and the State shall be free to pursue any and all available remedies.
This release does not extend to any conduct by Cascade occurring after March 15, 2024, or to any conduct by Cascade that is not encompassed by the scope of the State's investigation as described in the Recitals set forth in Section II above. This release does not extend to any claims by the State against Praxton Analytics LLC or any other third party.
B. Reservation of Rights
The State expressly reserves its right to investigate and take enforcement action regarding any future violations of the Washington Consumer Protection Act, RCW 19.86 et seq., or any other applicable federal, state, or local law by Cascade, including but not limited to any reference-pricing practices engaged in by Cascade after March 15, 2024.
The State further reserves its right to enforce the terms and provisions of this Assurance, including through an action filed in any court of competent jurisdiction pursuant to RCW 19.86.085, and to seek any and all remedies available under applicable law in connection with any breach of this Assurance by Cascade.
C. No Third-Party Beneficiaries
This Assurance is entered into solely between the State and Cascade and is not intended to create, and does not create, any rights, claims, or benefits in any third party, including but not limited to any individual consumer, class of consumers, competitor, or other entity. No third party may enforce any term or provision of this Assurance.
Provided, however, that nothing in this Assurance shall be construed to limit, waive, or otherwise affect the rights of individual consumers to bring private actions under RCW 19.86.090 or any other applicable law. This Assurance does not release or discharge Cascade from any liability to individual consumers under RCW 19.86.090 or otherwise.
XIV. GENERAL PROVISIONS
A. Governing Law
This Assurance shall be governed by, and construed and interpreted in accordance with, the laws of the State of Washington, without regard to its conflict of laws principles.
B. Jurisdiction and Venue
Any action to enforce this Assurance, or any dispute arising out of or relating to this Assurance, may be brought in the Superior Court of the State of Washington for King County or in any other court of competent jurisdiction. Cascade hereby consents to the personal jurisdiction of the Superior Court of the State of Washington for King County for purposes of any such action and waives any objection to venue in such court.
C. Entire Agreement
This Assurance constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, discussions, representations, understandings, and agreements, whether oral or written, between the Parties relating to the subject matter hereof. No representations, warranties, or inducements have been made by either Party except as expressly set forth in this Assurance.
D. Amendments.  This Assurance may not be amended, modified, supplemented, or waived except by a written instrument duly executed by authorized representatives of both Parties. No oral agreement, course of dealing, or course of performance shall operate to amend or modify any term or provision of this Assurance.
E. Severability.  If any provision of this Assurance, or the application thereof to any person or circumstance, is found by a court of competent jurisdiction to be invalid, illegal, or unenforceable, such finding shall not affect the validity, legality, or enforceability of the remaining provisions of this Assurance, which shall continue in full force and effect. In the event that any provision is found to be invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to replace such provision with a valid, legal, and enforceable provision that, to the greatest extent possible, achieves the intended purpose of the original provision.
F. Binding Effect
This Assurance shall be binding upon and inure to the benefit of the Parties and their respective successors, assigns, heirs, and legal representatives. Cascade shall not assign or transfer its obligations under this Assurance without the prior written consent of the State. In the event of any merger, acquisition, reorganization, or other change in corporate structure involving Cascade, the surviving or successor entity shall be bound by all terms and provisions of this Assurance.
G. Notices.  All notices, reports, communications, and other documents required or permitted under this Assurance shall be in writing and shall be deemed duly given when delivered personally, when sent by certified or registered mail (return receipt requested, postage prepaid), or when sent by nationally recognized overnight courier service, addressed as follows:
For the State:
Meredith Calloway-Voss Lead Assistant Attorney General Consumer Protection Division Office of the Attorney General of the State of Washington 800 Fifth Avenue, Suite 2000 Seattle, Washington 98104
For Cascade:
Diana Prescott-Levy General Counsel Cascade Retail Holdings Inc. 4500 Overlake Boulevard, Suite 800 Bellevue, Washington 98004
With a copy to:
Alan Ngo Partner Calderwood & Harkness LLP 1201 Third Avenue, Suite 4400 Seattle, Washington 98101
Either Party may change its address for purposes of notices under this Assurance by providing written notice of such change to the other Party in accordance with this Section XIV.G.
H. Counterparts.  This Assurance may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Execution by facsimile or electronic signature (including PDF transmitted by email) shall be deemed equivalent to original signature for all purposes.
I. Effective Date
This Assurance shall be effective as of the date of the last signature affixed below (the "Effective Date"), which the Parties acknowledge and agree is August 20, 2024.
XV. SIGNATURES
IN WITNESS WHEREOF, the Parties have executed this Assurance of Voluntary Compliance as of the date set forth below.
FOR THE STATE OF WASHINGTON:
OFFICE OF THE ATTORNEY GENERAL STATE OF WASHINGTON
By: ________
Name: Meredith Calloway-Voss
Title: Lead Assistant Attorney General
Consumer Protection Division Office of the Attorney General of the State of Washington
Date: August 20, 2024
FOR CASCADE RETAIL HOLDINGS INC.:
CASCADE RETAIL HOLDINGS INC.
By: ________
Name: Diana Prescott-Levy
Title: General Counsel
Cascade Retail Holdings Inc.
Date: August 20, 2024
APPROVED AS TO FORM FOR RESPONDENT:
CALDERWOOD & HARKNESS LLP
By: ________
Name: Alan Ngo
Title: Partner
Calderwood & Harkness LLP Counsel for Cascade Retail Holdings Inc.
Date: August 20, 2024
Component | Amount
Consumer Restitution Fund (Section VII) | $2,850,000
Civil Penalty (Section VIII) | $750,000
Investigative Costs Reimbursement (Section IX) | $185,000
Total | $3,785,000