CALDERWOOD & HARKNESS LLP Attorneys at Law
1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-7400 Facsimile: (202) 555-7401
April 14, 2025
Via Hand Delivery and File & ServeXpress
The Honorable Vice Chancellor Margaret T. Zhao Delaware Court of Chancery Leonard L. Williams Justice Center 500 North King Street Wilmington, Delaware 19801
Re: C.A. No. 2025-0198-MTZ
Cascade Retail Holdings Inc. v. Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, Kira Johansson, and Verdana Commerce Group, Inc.
Dear Vice Chancellor Zhao:
This is a joint letter submitted on behalf of all parties to the above-captioned action. We write jointly as follows: Calderwood & Harkness LLP, counsel for Plaintiff Cascade Retail Holdings Inc. ("CRH" or "Plaintiff"); Whitfield, Nygaard & Doyle LLP, counsel for Individual Defendants Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson (collectively, the "Individual Defendants"); and Blackhall & Soren LLP, counsel for Defendant Verdana Commerce Group, Inc. ("Verdana" and, together with the Individual Defendants, the "Defendants" and, collectively with CRH, the "Parties").
The purpose of this letter is to respectfully transmit the Parties' fully executed Stipulation of Settlement, together with the incorporated Standstill and Settlement Agreement and all exhibits thereto, and the proposed Consent Order Incorporating Modified Restrictive Covenants (the "Proposed Consent Order") for the Court's consideration and entry. The Parties believe that the settlement reflected in the enclosed documents represents a fair, reasonable, and comprehensive resolution of all claims asserted in this action, and they respectfully request that the Court enter the Proposed Consent Order at its earliest convenience.
I. Background and Procedural History
CRH commenced this action by filing its Verified Complaint and accompanying Motion for Temporary Restraining Order and Preliminary Injunction on March 5, 2025. The Verified Complaint asserted the following claims against the Defendants:
(1) Breach of restrictive covenant agreements against all eight Individual Defendants, arising from each Individual Defendant's execution of an Employment Agreement containing post-termination non-competition and non-solicitation covenants;
(2) Breach of confidentiality obligations against all eight Individual Defendants, based on the confidentiality and proprietary information provisions contained in their respective Employment Agreements and CRH's Confidential Information and intellectual Property Assignment Agreement;
(3) Misappropriation of trade secrets in violation of the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq. ("DUTSA"), against all Individual Defendants and Verdana, arising from the alleged exfiltration and use of CRH's confidential merchandising strategies, vendor pricing data, and proprietary demand-forecasting models;
(4) Tortious interference with contractual relations against Verdana, based on Verdana's alleged knowing inducement of the Individual Defendants to breach their restrictive covenant and confidentiality obligations to CRH; and
(5) Civil conspiracy against all Individual Defendants and Verdana, arising from the alleged coordinated departure of the eight Individual Defendants and their collective plan to misappropriate CRH's trade secrets and proprietary information for the competitive benefit of Verdana.
On March 7, 2025, following an emergency telephonic hearing, the Court granted CRH's application for a Temporary Restraining Order (the "TRO"). The TRO restrained all eight Individual Defendants from commencing employment in any merchandising, buying, sourcing, or product-development role at Verdana Commerce Group, Inc. or any of its subsidiaries or affiliates for a period of fourteen (14) days. In connection with the entry of the TRO, CRH posted an injunction bond in the amount of $2,500,000 through Broadview Surety Corp., Bond No. BSC-2025-TRO-04419, in accordance with Court of Chancery Rule 65(c).
A hearing on CRH's Motion for Preliminary Injunction was originally scheduled for March 21, 2025. However, as the Parties had by that date commenced meaningful settlement discussions, the Parties jointly presented a Consent Interim Order to the Court on March 21, 2025, which the Court entered by stipulation of all Parties. The Consent Interim Order adjourned the preliminary injunction hearing sine die and maintained the status quo, including the restraints imposed by the TRO, during the period in which the Parties were engaged in the documentation of definitive settlement terms.
On March 28, 2025, undersigned counsel from Calderwood & Harkness submitted a letter to the Court on behalf of all Parties providing a status update on the progress of settlement negotiations. That letter informed the Court that the Parties had reached a framework for resolution and anticipated completing definitive documentation within approximately two weeks.
II. Settlement Negotiations and Mediation Process
On March 18, 2025, the Parties participated in a full-day mediation session before the Honorable Philip Ashford (Ret.), conducted through Meridian ADR Services LLC, Reference No. Meridian-2025-0318-CRH. Judge Ashford's mediation was instrumental in narrowing the Parties' differences on a number of key issues, including the scope and duration of the modified restrictive covenant terms, the framework for data return and destruction, and the principal monetary terms of the settlement.
Following additional arm's-length discussions facilitated by Judge Ashford, the Parties reached agreement on the essential terms of a settlement framework on March 20, 2025. From March 24 through April 11, 2025, the Parties and their respective counsel engaged in intensive, good-faith negotiation and documentation of the definitive settlement terms, including the resolution of certain technical issues relating to the scope of the restricted product categories, the forensic audit protocol, the compliance monitoring engagement, and the mechanics for equity forfeiture and settlement payment.
The Standstill and Settlement Agreement (the "Settlement Agreement") was fully executed as of April 14, 2025, by all Parties: Cascade Retail Holdings Inc.; the eight Individual Defendants — Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson; and Verdana Commerce Group, Inc.
III. Summary of Key Settlement Terms
The Settlement Agreement and the Proposed Consent Order reflect a comprehensive resolution of all claims in this action. The principal terms of the settlement are summarized below for the Court's convenience.
A. Modified Restrictive Covenants
The Parties have agreed to modify the scope and duration of the post-termination restrictive covenants originally contained in the Individual Defendants' Employment Agreements with CRH. The modifications reflect a negotiated compromise between CRH's interest in protecting its legitimate business interests and the Individual Defendants' interest in pursuing their careers in the retail industry. The modified terms are as follows:
Non-Competition. Defendant Priya Rathore shall be subject to a non-competition restriction for a period of twelve (12) months, running from her February 7, 2025 resignation date through and including February 6, 2026. This restriction is limited to three specific product categories: (i) home goods, (ii) seasonal décor, and (iii) private-label apparel. This represents a reduction from the original eighteen (18) month term covering all retail product categories that was contained in Ms. Rathore's Employment Agreement.
The remaining seven Individual Defendants — Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson — shall each be subject to a non-competition restriction for a period of nine (9) months, running from February 7, 2025 through and including November 6, 2025, in the same three product categories (home goods, seasonal décor, and private-label apparel). This represents a reduction from the original twelve (12) month or eighteen (18) month terms, as applicable, covering all retail product categories that were contained in their respective Employment Agreements.
Non-Solicitation of Employees. All eight Individual Defendants shall be subject to a non-solicitation covenant prohibiting each of them from directly or indirectly soliciting, recruiting, hiring, or inducing the departure of any employee of CRH for a period of eighteen (18) months, running from February 7, 2025 through and including August 6, 2026.
Non-Solicitation of Vendors. All eight Individual Defendants shall be subject to a non-solicitation covenant prohibiting each of them from directly or indirectly soliciting, diverting, or interfering with CRH's business relationships with CRH's top fifty (50) vendors by spend (as identified in the confidential vendor list attached as Exhibit C to the Settlement Agreement) for a period of twelve (12) months, running from February 7, 2025 through and including February 6, 2026.
B. Data Return and Destruction
The Settlement Agreement imposes comprehensive data return and destruction obligations on all Individual Defendants and on Verdana. All data exfiltrated from CRH's systems, networks, devices, or proprietary platforms — including but not limited to CRH's vendor pricing databases, demand-forecasting algorithms, merchandising playbooks, and internal strategic plans — shall be returned to CRH or certified as permanently destroyed within ten (10) business days of the execution of the Settlement Agreement.
In addition, Verdana has agreed to permit an independent forensic audit of its information technology systems, including all devices issued to or used by any of the Individual Defendants in connection with their employment at Verdana, to be conducted by Pinnacle Forensics LLC. The forensic audit shall be conducted at Verdana's sole expense, subject to a cost cap of $175,000. The audit is intended to verify the completeness of data return and destruction and to confirm that no copies, derivatives, or residual traces of CRH's proprietary information remain in Verdana's possession, custody, or control.
C. Monetary Terms
The monetary components of the settlement are as follows:
Settlement Payment. Verdana Commerce Group, Inc. shall pay to CRH the sum of $8,750,000 as a lump-sum settlement payment, due and payable within thirty (30) calendar days of the execution of the Settlement Agreement.
Equity Forfeitures. The departing employees shall forfeit unvested equity awards previously granted by CRH in a total aggregate amount of $849,500. Of this amount, $362,500 shall be forfeited by Priya Rathore, and $487,000 shall be forfeited in the aggregate by the remaining seven Individual Defendants, in the individual amounts specified in the Settlement Agreement.
Litigation Cost Reimbursement. Verdana shall reimburse CRH in the amount of $425,000 as a contribution toward CRH's litigation costs incurred in connection with the prosecution of this action, including costs associated with the emergency TRO proceedings and the forensic investigation of data exfiltration.
Fees and Costs. Except as expressly set forth above, each Party shall bear its own attorneys' fees and costs incurred in connection with this action and the settlement thereof.
D. Compliance Monitor
The Settlement Agreement provides for the appointment of Aldwyn Compliance Solutions LLC, based in Philadelphia, Pennsylvania, as an independent compliance monitor (the "Monitor") for a term of twelve (12) months commencing upon the entry of the Proposed Consent Order. The Monitor shall be responsible for conducting quarterly verification of compliance by all Individual Defendants and by Verdana with the modified non-competition, non-solicitation, and data-destruction obligations set forth in the Settlement Agreement and the Proposed Consent Order.
The estimated total cost of the compliance monitoring engagement is $360,000, to be shared as follows: sixty percent (60%) by Verdana, in the amount of $216,000, and forty percent (40%) by CRH, in the amount of $144,000. The form of the engagement letter with Aldwyn Compliance Solutions LLC is attached as Exhibit D to the Settlement Agreement.
E. Mutual Non-Disparagement
The Settlement Agreement includes standard mutual non-disparagement obligations among all Parties. No Party, nor any of its officers, directors, employees, agents, or representatives, shall make or publish any statement, whether oral, written, or electronic, that disparages, defames, or casts in a negative light any other Party to the Settlement Agreement. The non-disparagement obligations are subject to customary carve-outs, including for truthful testimony or disclosures compelled by law, legal process, or governmental investigation.
IV. Enclosed Documents
The following documents are being transmitted to the Court with this letter for the Court's consideration:
1. Fully Executed Stipulation of Settlement, incorporating the Standstill and Settlement Agreement and all exhibits thereto, as follows:
• Exhibit A — Modified Restrictive Covenant Terms
• Exhibit B — Data Return and Destruction Protocol
• Exhibit C — List of Top 50 CRH Vendors (Submitted Under Seal)
• Exhibit D — Form of Compliance Monitor Engagement Letter (Aldwyn Compliance Solutions LLC)
• Exhibit E — Mutual Non-Disparagement Provisions
2. Proposed Consent Order Incorporating Modified Restrictive Covenants, submitted for the Court's review and signature.
The Parties respectfully note that Exhibit C (List of Top 50 CRH Vendors) is being submitted under seal, pursuant to Court of Chancery Rule 5.1, due to the confidential and commercially sensitive nature of the vendor information contained therein. The vendor list includes proprietary data concerning CRH's supplier relationships and annual vendor spend, the public disclosure of which would cause competitive harm to CRH. A proposed order authorizing the filing of Exhibit C under seal accompanies this submission.
V. Request for Entry of the Proposed Consent Order
The Parties respectfully request that the Court enter the enclosed Proposed Consent Order. The Proposed Consent Order incorporates the modified restrictive covenant terms and data-destruction obligations set forth in the Settlement Agreement by reference, thereby making those obligations enforceable as orders of this Court.
The Proposed Consent Order retains the Court's continuing jurisdiction over the Parties for purposes of enforcement, including the availability of contempt remedies for any violations of the modified non-competition covenants, non-solicitation covenants, or data-destruction obligations during the applicable restrictive periods. The Parties believe that the retention of the Court's enforcement jurisdiction provides a meaningful and efficient mechanism for ensuring compliance with the settlement terms and protecting the interests of all Parties.
The Proposed Consent Order further provides that, at the conclusion of the twelve (12) month compliance monitor period, and contingent upon a finding by the Monitor that all Parties have achieved full compliance with the terms of the Settlement Agreement and the Consent Order, the Parties shall file a Stipulation for Dismissal with Prejudice of all claims and counterclaims in this action, pursuant to Court of Chancery Rule 41(a)(1)(ii). Until such time, the action shall remain on the Court's docket in an administratively closed status.
VI. Companion Filings
The Parties wish to bring to the Court's attention the following companion filings being made contemporaneously with this letter:
First, Calderwood & Harkness LLP, on behalf of CRH, is filing a Motion to Dissolve the Temporary Restraining Order entered by the Court on March 7, 2025, conditioned upon the entry of the Proposed Consent Order. The dissolution of the TRO is appropriate because the Proposed Consent Order will supersede the TRO's restraints and replace them with the Parties' agreed-upon modified restrictive covenant terms, which are both narrower in scope and longer in duration than the restraints imposed by the TRO.
Second, upon entry of the Proposed Consent Order and dissolution of the TRO, CRH will promptly seek discharge of the $2,500,000 injunction bond (Bond No. BSC-2025-TRO-04419) from Broadview Surety Corp., as the bond will no longer be required to secure the Individual Defendants against any damages wrongfully sustained by reason of the TRO.
VII. Confirmation of Unanimous Consent
All counsel of record in this action have reviewed and approved this letter and its contents. The Stipulation of Settlement and the Proposed Consent Order are submitted with the unanimous consent of all Parties: Cascade Retail Holdings Inc.; the eight Individual Defendants — Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson; and Verdana Commerce Group, Inc. The submission of these documents reflects the good-faith resolution of all claims asserted in CRH's Verified Complaint, as well as any potential counterclaims or affirmative defenses, and represents the Parties' considered judgment that the settlement serves the interests of all concerned.
VIII. Closing
The Parties express their sincere appreciation for the Court's attention to this matter and for the Court's patience during the settlement documentation period. The Parties recognize that the Court's entry of the Consent Interim Order on March 21, 2025, was instrumental in providing the Parties the time and stability necessary to negotiate and finalize the comprehensive settlement reflected in the enclosed documents.
Counsel for all Parties remain available to address any questions the Court may have regarding the terms of the Settlement Agreement, the Proposed Consent Order, or any other aspect of the enclosed documents. Should the Court desire further discussion or clarification before entering the Proposed Consent Order, the Parties respectfully offer to appear for a conference at the Court's convenience, either in person or by telephone or videoconference.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Bernard Crawford 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 555-7400 bcrawford@calderwoodharkness.com
Counsel for Plaintiff Cascade Retail Holdings Inc.
WHITFIELD, NYGAARD & DOYLE LLP
By: ________
Catherine Nygaard 1000 North Market Street, Suite 1500 Wilmington, DE 19801 Telephone: (302) 555-2200 cnygaard@wndlaw.com
Counsel for Individual Defendants Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson
BLACKHALL & SOREN LLP
By: ________
Gavin Blackhall 300 Delaware Avenue, Suite 900 Wilmington, DE 19801 Telephone: (302) 555-3100 gblackhall@blackhallsoren.com
Counsel for Defendant Verdana Commerce Group, Inc.
cc: (via email)
Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc.
Helen Tsoi, General Counsel, Verdana Commerce Group, Inc.
Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson (via counsel, Whitfield, Nygaard & Doyle LLP)
Register in Chancery
Enclosures:
1. Fully Executed Stipulation of Settlement, incorporating the Standstill and Settlement Agreement and Exhibits A through E thereto
2. Proposed Consent Order Incorporating Modified Restrictive Covenants