MEMORANDUM

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is prepared at the direction of counsel in anticipation of litigation and is protected by the attorney-client privilege and the work product doctrine. This document should not be disclosed to any third party without the express authorization of Calderwood & Harkness LLP.
FROM: James Underwood and Devon Archer, Calderwood & Harkness LLP
TO: Bernard Crawford, Calderwood & Harkness LLP
DATE: February 22, 2025
RE: Summary of Restrictive Covenant Provisions — All Eight Departing Employees
MATTER: Cascade Retail Holdings Inc. v. Rathore et al. — Matter No. 1038-00006
CLIENT: Cascade Retail Holdings Inc.
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I. Purpose and Scope
This memorandum summarizes the restrictive covenant provisions contained in the employment agreements of the eight former Cascade Retail Holdings Inc. ("CRH" or the "Company") merchandising employees who resigned simultaneously on February 7, 2025, at 4:47 PM PST. The departures were coordinated and executed without advance notice to CRH management. Each of the eight individuals submitted a substantially identical resignation letter via email to CRH's Chief People Officer, Roland Ashby, and General Counsel, Theresa Yun-Park, within a ninety-second window. The timing, uniformity, and apparent pre-planning of these resignations strongly suggest a concerted effort orchestrated in advance of the departures.
The eight employees are collectively referred to herein as the "Rathore Group," after Priya Rathore, the former Senior Vice President of Merchandising, who served as the most senior member of the departing cohort and appears to have functioned as the group's principal coordinator. All eight individuals have accepted positions at Verdana Commerce Group, Inc. ("Verdana"), a direct competitor headquartered in Wilmington, Delaware. Verdana is a portfolio company of Greystone Capital Partners, LP ("Greystone"), a private equity firm that acquired a controlling interest in Verdana in September 2023 and has since pursued an aggressive expansion strategy targeting CRH's core product categories.
This memorandum is organized to provide a comprehensive, employee-by-employee analysis of the following categories of restrictive covenant obligations:
(a) Non-competition obligations;
(b) Non-solicitation of employee obligations;
(c) Non-solicitation of vendor and business relationship obligations;
(d) Confidentiality and non-disclosure obligations;
(e) Governing law and forum selection provisions; and
(f) Preliminary enforceability considerations under Delaware law.
The source documents reviewed in connection with this memorandum include the original executed employment agreements, and any amendments or amended and restated agreements, for each of the eight departing employees. These documents were provided to Calderwood & Harkness LLP by CRH General Counsel Theresa Yun-Park and Chief People Officer Roland Ashby on February 18, 2025, via secure file transfer. We have reviewed each agreement in its entirety and cross-referenced the restrictive covenant provisions across all eight documents to identify commonalities, variations, and potential enforceability issues. Where specific section numbers are referenced, they correspond to the executed agreements on file. Where agreements are noted as "on file," we have confirmed receipt and review of those documents.
This memorandum is intended to serve as a working reference for the litigation team and to inform the strategy for the forthcoming cease-and-desist correspondence, as well as the preparation of the Verified Complaint and Motion for Temporary Restraining Order and Preliminary Injunction to be filed in the Delaware Court of Chancery.
II. Overview of the Departing Employees
The following table identifies each of the eight departing employees, together with key employment details drawn from their respective employment agreements and CRH human resources records:
All eight employment agreements are governed by the laws of the State of Delaware, as discussed further in Section VII below. This is a material fact, as it establishes the legal framework under which the restrictive covenant provisions will be evaluated for enforceability.
With respect to Priya Rathore specifically, her operative agreement is the Amended and Restated Employment Agreement dated March 15, 2021 (the "Rathore A&R Agreement"), which superseded and replaced her original Employment Agreement dated June 3, 2019. The Rathore A&R Agreement was executed in connection with her promotion from Vice President, Merchandising Strategy to Senior Vice President, Merchandising, and included the following additional consideration beyond continued employment:
•  A one-time promotion bonus of $150,000, paid in a lump sum within thirty (30) days of the effective date of the Rathore A&R Agreement;
•  An enhanced restricted stock unit ("RSU") grant valued at $725,000, subject to a four-year ratable annual vesting schedule commencing on the effective date of the Rathore A&R Agreement (March 15, 2021); and
•  An increased target annual bonus of $290,000, representing sixty percent (60%) of her new base salary.
The enhanced consideration provided to Rathore in connection with the Rathore A&R Agreement is significant to the enforceability analysis, as it provides independent and substantial consideration for the restrictive covenants contained therein, beyond the continued employment that serves as the primary consideration for the remaining seven employees' agreements.
The remaining seven employees' agreements were executed at or near the time of their respective hire dates and have not been materially amended or restated. Each agreement was entered into as a condition of employment with CRH and, in all cases, the employee acknowledged receipt of adequate consideration in the form of the employment opportunity and associated compensation package, including base salary, annual bonus eligibility, equity awards, and employee benefits.
III. Non-Competition Provisions
Each of the eight departing employees is subject to a post-employment non-competition covenant. The specific terms of these provisions are summarized below on an employee-by-employee basis.
A. Priya Rathore
Duration: Eighteen (18) months following the date of termination of employment.
Commencement: From the date of termination, i.e., February 7, 2025. The non-competition period runs through approximately August 7, 2026.
Geographic Scope: The United States of America.
Activity Scope: The non-competition provision in Section 7(a) of the Rathore A&R Agreement prohibits Rathore from, directly or indirectly, being employed by, consulting for, providing services to, or otherwise engaging in any business activity on behalf of, any business entity that competes with CRH in the retail and ecommerce sector, in any capacity that is substantially similar to the role or roles held by Rathore at CRH during the final twenty-four (24) months of her employment. The provision defines "competes" broadly to encompass any entity engaged in the sale of consumer goods through retail, wholesale, or ecommerce channels in product categories in which CRH generated revenue during the applicable period.
Source: Amended and Restated Employment Agreement, dated March 15, 2021, Section 7(a) (Non-Competition).
Consideration: Continued employment, promotion to Senior Vice President of Merchandising, $150,000 promotion bonus, $725,000 RSU grant (four-year ratable annual vest from March 15, 2021), target annual bonus of $290,000 (representing 60% of base salary), and all associated benefits of employment. As noted above, the Rathore A&R Agreement is supported by particularly robust consideration, which strengthens the enforceability of the covenant.
B. Derek Linden
Duration: Eighteen (18) months following the date of termination of employment. The non-competition period runs through approximately August 7, 2026.
Geographic Scope: The United States of America.
Activity Scope: The non-competition provision in Linden's employment agreement contains substantially similar language to the corresponding provision in the Rathore A&R Agreement. It prohibits Linden from, directly or indirectly, accepting employment with, consulting for, or providing services to any business that competes with CRH in the retail and ecommerce sector in a capacity substantially similar to the role or roles held by Linden at CRH. The "look-back" period for determining relevant roles is the final twenty-four (24) months of employment, consistent with the Rathore A&R Agreement.
Consideration: Continued employment and compensation package, including base salary of $340,000, annual bonus eligibility, equity award participation, and all associated employee benefits.
C. Sonia Kaczmarek
Duration: Eighteen (18) months following the date of termination of employment. The non-competition period runs through approximately August 7, 2026.
Geographic Scope: The United States of America.
Activity Scope: The non-competition provision in Kaczmarek's employment agreement is comparable to those in the Rathore and Linden agreements. It prohibits employment with, consulting for, or providing services to any competing business in a substantially similar capacity. The relevant comparison period for determining the scope of restricted roles is the final twenty-four (24) months of employment.
Consideration: Continued employment and compensation package, including base salary of $325,000, annual bonus eligibility, equity award participation, and all associated employee benefits.
D. Amara Osei
Duration: Twelve (12) months following the date of termination of employment. The non-competition period runs through approximately February 7, 2026.
Geographic Scope: The United States of America.
Activity Scope: Osei's employment agreement contains comparable restrictive covenant language prohibiting employment with, consulting for, or providing services to a competing business in a substantially similar capacity. The definition of "competing business" tracks the language used in the VP-level agreements. The role-comparison look-back period is the final twelve (12) months of employment, which is narrower than the twenty-four month look-back applicable to the VP-level and above employees.
Consideration: Continued employment and compensation package, including base salary of $265,000, annual bonus eligibility, and all associated employee benefits.
E. Brent Halvorsen
Duration: Twelve (12) months following the date of termination of employment. The non-competition period runs through approximately February 7, 2026.
Geographic Scope: The United States of America.
Activity Scope: Halvorsen's employment agreement contains comparable restrictive covenant language. The non-competition provision prohibits competitive employment in a substantially similar capacity to the role or roles held during the final twelve (12) months of employment. The activity scope and definition of competitive business are consistent with the Director-level template used by CRH.
Consideration: Continued employment and compensation package, including base salary of $258,000, annual bonus eligibility, and all associated employee benefits.
F. Lucia Fernandez-Gill
Duration: Twelve (12) months following the date of termination of employment. The non-competition period runs through approximately February 7, 2026.
Geographic Scope: The United States of America.
Activity Scope: Fernandez-Gill's employment agreement contains comparable restrictive covenant language. Given her role as Director, Vendor Relations (Domestic), the "substantially similar capacity" language is particularly noteworthy — any role at Verdana involving vendor relationship management, vendor negotiation, or supplier engagement would likely fall within the scope of the non-competition restriction.
Consideration: Continued employment and compensation package, including base salary of $248,000, annual bonus eligibility, and all associated employee benefits.
G. Nathan Tsao
Duration: Twelve (12) months following the date of termination of employment. The non-competition period runs through approximately February 7, 2026.
Geographic Scope: The United States of America.
Activity Scope: Tsao's employment agreement contains comparable restrictive covenant language. The non-competition provision prohibits competitive employment in a substantially similar capacity to the role or roles held during the final twelve (12) months of employment. Tsao's role as Senior Manager, eCommerce Merchandising would likely capture any comparable ecommerce merchandising or digital commerce role at a competing retailer.
Consideration: Continued employment and compensation package, including base salary of $195,000, annual bonus eligibility, and all associated employee benefits.
Note: Tsao has the shortest tenure among the Rathore Group, having been employed at CRH for approximately three (3) years at the time of his resignation. While we believe the non-competition provision in his agreement is enforceable under Delaware law, the adequacy of consideration — particularly the quantum of compensation relative to the restraint imposed — may be subject to closer scrutiny by the Court. We note, however, that a base salary of $195,000, together with annual bonus eligibility and equity participation, represents substantial compensation and should satisfy the consideration requirement under Delaware precedent. Nevertheless, defendants' counsel may target Tsao's covenant as the weakest link in the chain if they choose to mount a consideration-based challenge.
H. Kira Johansson
Duration: Twelve (12) months following the date of termination of employment. The non-competition period runs through approximately February 7, 2026.
Geographic Scope: The United States of America.
Activity Scope: Johansson's employment agreement contains comparable restrictive covenant language. Her role as Senior Manager, Category Analytics encompassed the development and application of proprietary analytical models for merchandise category performance, and any substantially similar analytics role at Verdana would likely be captured by the covenant.
Consideration: Continued employment and compensation package, including base salary of $192,000, annual bonus eligibility, and all associated employee benefits.
I. Summary Table — Non-Competition
The following table provides a consolidated summary of the non-competition provisions across all eight departing employees:
As reflected in the table above, the non-competition provisions bifurcate into two tiers: (i) the three VP-level and above employees (Rathore, Linden, and Kaczmarek) are subject to eighteen-month non-competition periods, and (ii) the five Director- and Senior Manager-level employees (Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson) are subject to twelve-month non-competition periods. All eight covenants apply across the entire United States, which is consistent with CRH's nationwide retail and ecommerce footprint.
IV. Non-Solicitation of Employees Provisions
A. Overview
All eight employment agreements contain a non-solicitation of employees clause prohibiting the departing employee from, directly or indirectly, soliciting, recruiting, hiring, inducing, or encouraging any CRH employee to leave CRH's employment or to accept employment with another entity. The provisions are broadly drafted to capture not only direct solicitation by the departing employee but also indirect solicitation, including directing or encouraging a third party (such as a recruiter or new employer) to solicit CRH employees on the departing employee's behalf.
The employee non-solicitation provisions in each agreement apply to the solicitation of any person who was an employee of CRH at any time during the specified look-back period, regardless of whether the departing employee had a direct working relationship with the individual solicited. This breadth is significant, as it potentially encompasses the solicitation of CRH employees outside the merchandising division.
B. Duration by Employee
The non-solicitation of employees provisions vary in duration based on the employee's level within CRH's organizational structure:
Priya Rathore: Twenty-four (24) months following the date of termination of employment, running through approximately February 7, 2027.
Derek Linden: Twenty-four (24) months following the date of termination of employment, running through approximately February 7, 2027.
Sonia Kaczmarek: Twenty-four (24) months following the date of termination of employment, running through approximately February 7, 2027.
Amara Osei: Eighteen (18) months following the date of termination of employment, running through approximately August 7, 2026.
Brent Halvorsen: Eighteen (18) months following the date of termination of employment, running through approximately August 7, 2026.
Lucia Fernandez-Gill: Eighteen (18) months following the date of termination of employment, running through approximately August 7, 2026.
Nathan Tsao: Eighteen (18) months following the date of termination of employment, running through approximately August 7, 2026.
Kira Johansson: Eighteen (18) months following the date of termination of employment, running through approximately August 7, 2026.
C. Scope
Each agreement defines the scope of the employee non-solicitation restriction by reference to a look-back period. Specifically, each provision prohibits the solicitation or inducement of any person who was an employee of CRH at any time during the final twelve (12) months of the departing employee's tenure with CRH. This look-back period captures all CRH employees who were on CRH's payroll between approximately February 7, 2024 and February 7, 2025.
It is important to flag an issue that merits separate, more detailed legal analysis: given that the coordinated departure itself involved eight employees who resigned simultaneously and appear to have communicated extensively about the planned departure in advance, there is a legitimate question as to whether the Rathore Group's internal coordination to resign and join Verdana constitutes a violation of the employee non-solicitation provisions as among the group members themselves. If, for example, Rathore solicited or induced Linden, Kaczmarek, or any of the other five employees to leave CRH and accept positions at Verdana, that conduct may independently constitute a breach of Rathore's non-solicitation obligation, even though the solicitation occurred while Rathore herself was still employed at CRH. The encrypted messaging evidence — discussed further in Section VIII below — suggests that Rathore played a central role in recruiting the other seven employees to join her at Verdana. This issue should be addressed in a separate memorandum analyzing the pre-departure solicitation theory.
D. Summary Table — Employee Non-Solicitation
V. Non-Solicitation of Vendors / Business Relationships Provisions
A. Overview
All eight employment agreements contain prohibitions on soliciting, diverting, or interfering with CRH's vendor, supplier, and business partner relationships. These provisions are designed to protect CRH's established commercial relationships and to prevent departing employees from leveraging relationships developed during their CRH tenure for the benefit of a competitor.
The scope of the vendor non-solicitation provisions varies based on the employee's seniority level within CRH:
•  VP-Level and Above (Rathore, Linden, Kaczmarek): The three VP-level and above employees are subject to broader vendor non-solicitation provisions that cover any vendor, supplier, or business partner with whom they had "material contact" during the final twenty-four (24) months of their employment with CRH. "Material contact" is defined in each agreement to include direct interaction, negotiation, oversight of the business relationship, or access to confidential information regarding the vendor relationship. Given the senior roles held by these three employees, the scope of their vendor non-solicitation obligations is extensive and encompasses the vast majority of CRH's significant vendor and supplier relationships in the merchandising division.
•  Director and Senior Manager Level (Osei, Halvorsen, Fernandez-Gill, Tsao, Johansson): The five Director- and Senior Manager-level employees are subject to vendor non-solicitation provisions that are limited to vendors, suppliers, and business partners with whom they had "direct personal dealings" during the applicable look-back period. "Direct personal dealings" is a somewhat narrower standard than "material contact," though the practical distinction may be modest given the hands-on roles these employees held within the merchandising organization.
B. Duration by Employee
The vendor non-solicitation provisions track the same tiered structure as the employee non-solicitation provisions:
Priya Rathore: Twenty-four (24) months following the date of termination of employment.
Derek Linden: Twenty-four (24) months following the date of termination of employment.
Sonia Kaczmarek: Twenty-four (24) months following the date of termination of employment.
Amara Osei: Eighteen (18) months following the date of termination of employment.
Brent Halvorsen: Eighteen (18) months following the date of termination of employment.
Lucia Fernandez-Gill: Eighteen (18) months following the date of termination of employment. Fernandez-Gill's vendor non-solicitation provision is of particular significance given her title and role as Director, Vendor Relations (Domestic). In this capacity, she maintained direct, ongoing relationships with a substantial number of CRH's domestic vendors and suppliers and had detailed knowledge of pricing terms, volume commitments, exclusivity arrangements, and relationship dynamics. Any effort by Verdana to leverage Fernandez-Gill's vendor relationships would likely constitute a direct violation of this provision.
Nathan Tsao: Eighteen (18) months following the date of termination of employment.
Kira Johansson: Eighteen (18) months following the date of termination of employment.
C. Significance
The vendor non-solicitation provisions are of critical importance in this case for several reasons:
First, CRH's merchandising division generated approximately $2.3 billion in gross merchandise value ("GMV") in FY2024. The vendor and supplier relationships that support this revenue stream are among CRH's most valuable commercial assets, and the terms negotiated with key vendors represent the product of years of relationship building, strategic investment, and proprietary analysis.
Second, the Rathore Group collectively had direct access to CRH's proprietary vendor negotiation playbooks, which contain detailed strategies, historical term sheets, pricing models, volume discount structures, and competitive positioning data used by CRH in vendor negotiations. These playbooks are treated as highly confidential within CRH and are subject to restricted access controls.
Third, the Rathore Group had access to CRH's private-label sourcing strategies, including cost models, supplier identification and qualification data, margin structures, quality specifications, and production timelines for CRH's portfolio of private-label product lines.
Fourth, Verdana competes directly with CRH in twenty-eight (28) overlapping product categories. Moreover, Verdana has publicly announced a "transformational growth initiative" targeting $4 billion in annual revenue by 2028. Verdana's public filings and press releases specifically cite planned expansion into CRH's strongest categories, including private-label home goods and seasonal décor — the precise categories in which the Rathore Group possessed the deepest expertise and the most sensitive proprietary knowledge. The convergence of Verdana's stated strategic priorities with the specific competencies and knowledge base of the departing employees is not coincidental and underscores the competitive threat posed by the Rathore Group's coordinated departure.
VI. Confidentiality and Non-Disclosure Obligations
A. Scope
All eight employment agreements contain broad confidentiality and non-disclosure provisions that impose obligations on the departing employees with respect to CRH's proprietary and confidential information. The confidentiality provisions are independent of, and supplementary to, the non-competition and non-solicitation covenants discussed in Sections III through V above.
"Confidential Information" is defined in each agreement to include, without limitation:
•  Proprietary business strategies and strategic plans;
•  Vendor terms, pricing, and negotiation strategies;
•  Customer data, customer lists, and customer relationship information;
•  Product development plans and product roadmaps;
•  Sourcing arrangements, supplier identification, and supplier qualification data;
•  Financial projections, budgets, and financial models;
•  Algorithms, analytical models, and proprietary software systems;
•  Marketing plans, promotional strategies, and brand positioning data;
•  Employee compensation data and organizational information; and
•  Any information designated as confidential by CRH, whether in written, electronic, oral, or other form.
Each agreement further specifies that Confidential Information includes information developed by the employee during the course of employment as well as information made accessible to the employee by virtue of the employee's position at CRH. This language is significant because it captures not only pre-existing CRH information to which the employee was given access, but also new information, analyses, and strategies that the employee helped to create while employed at CRH.
B. Duration
All eight employees: The confidentiality and non-disclosure obligations are perpetual and indefinite — they survive termination of employment without time limitation. This is consistent with standard practice for confidentiality provisions in employment agreements and reflects the principle that confidential and proprietary information retains its protected character regardless of the passage of time, so long as the information has not entered the public domain.
Each agreement contains standard carve-outs from the definition of Confidential Information for:
(i) Information that becomes publicly available through no fault of the employee, provided that the information was not made public as a result of a breach by the employee or any person acting on the employee's behalf;
(ii) Information that was known to the employee prior to the commencement of employment with CRH, as demonstrated by the employee's contemporaneous written records, provided that such information was obtained from a source that was not bound by a confidentiality obligation to CRH; and
(iii) Information that is independently developed by the employee after the termination of employment without use of, reference to, or reliance upon CRH Confidential Information.
C. Specific Confidential Information at Issue
Based on our review of the employment agreements, CRH's organizational structure, and the preliminary information provided by CRH management, the following categories of Confidential Information are of particular relevance in this matter:
Project Ridgeline. Project Ridgeline is CRH's five-year strategic category expansion plan, completed in October 2024 under Rathore's leadership. Project Ridgeline encompasses proprietary vendor terms and pricing analyses, private-label margin targets, ecommerce assortment algorithms, geographic expansion models, and detailed competitive positioning data. All eight members of the Rathore Group had full access to Project Ridgeline materials, including the final strategic plan, supporting analytical models, and underlying data sets. Project Ridgeline represents the culmination of approximately eighteen months of strategic planning work and is among CRH's most sensitive current strategic assets.
Vendor Negotiation Playbooks. CRH maintains proprietary vendor negotiation playbooks that contain detailed negotiation strategies, historical term sheets, pricing models, volume discount structures, rebate schedules, cooperative advertising terms, and competitive positioning data used by CRH in negotiations with its major vendors and suppliers. These playbooks are maintained on a restricted-access basis within CRH's Aldermere Systems environment and are classified as "Highly Confidential" under CRH's information security policy. The Rathore Group had access to these materials as part of their merchandising responsibilities.
Private-Label Sourcing Strategies. CRH's private-label product lines are a significant driver of margins and competitive differentiation. The private-label sourcing strategies include cost models, supplier identification and qualification data, margin structures, quality specifications, production timelines, and exclusivity arrangements with manufacturing partners. Amara Osei, as Director of Private Label Strategy, had primary responsibility for these strategies, but the other members of the Rathore Group also had access through cross-functional planning processes and the Project Ridgeline initiative.
Seasonal Buying Algorithms. CRH has developed proprietary analytical tools and models for seasonal merchandise planning, including demand forecasting algorithms, inventory optimization models, and markdown scheduling tools. Brent Halvorsen, as Director of Seasonal Planning & Analytics, was directly responsible for the development and maintenance of these tools, and Kira Johansson, as Senior Manager of Category Analytics, contributed analytical support to the seasonal planning function.
Customer Segmentation Data. CRH maintains proprietary customer data and segmentation analytics used across its omnichannel retail platform. This data includes customer purchase histories, demographic profiles, behavioral segmentation models, lifetime value calculations, and targeted marketing algorithms. Nathan Tsao, as Senior Manager of eCommerce Merchandising, had access to customer segmentation data as part of his responsibilities for ecommerce merchandising optimization.
D. Data Exfiltration Concern
CRH's Information Technology department conducted an internal audit beginning on February 12, 2025, five days after the coordinated resignations. The audit was prompted by the unusual circumstances of the departures and CRH's concern that the Rathore Group may have removed proprietary information prior to their resignations. The internal IT audit identified potential data exfiltration activity involving the accounts of several members of the Rathore Group.
In response, CRH engaged Pinnacle Forensics LLC on February 20, 2025, to conduct a comprehensive digital forensics investigation. The engagement is being led by Dr. Rajiv Anand, a senior forensic examiner at Pinnacle Forensics with extensive experience in corporate data exfiltration and trade secret matters. While Pinnacle Forensics' formal report remains pending, preliminary findings communicated to our team indicate the following:
•  Approximately 14,327 files, comprising approximately 2.8 gigabytes of data, were downloaded from CRH's Aldermere Systems and Pinnacle Health IT environments to personal cloud storage accounts (including personal Hollowell Health IT and Larkspur Technologies accounts) between January 10, 2025 and February 4, 2025.
•  The downloaded files reportedly include Project Ridgeline presentations and supporting data, vendor negotiation term sheets and pricing analyses, private-label cost models and sourcing data, and customer segmentation data exports.
•  The downloads were concentrated in the period between January 10, 2025 — four days after the January 6, 2025 dinner meeting between Verdana CEO Warren Dietrich, Verdana COO Elliot Westbrook, and Priya Rathore in New York — and February 4, 2025, three days before the coordinated resignations.
This evidence will be critical to both the breach of confidentiality claim and the trade secret misappropriation claim under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq. ("DUTSA"). The timing and scope of the downloads strongly suggest that the data exfiltration was planned and executed in connection with the Rathore Group's transition to Verdana.
E. Return of Property / Materials Obligations
Each of the eight employment agreements requires the employee to return all CRH property, documents, and materials — including all electronic copies, regardless of format or storage medium — upon termination of employment. The return-of-property obligations are broadly drafted to encompass physical documents, electronic files, copies, extracts, summaries, and any materials derived from or incorporating CRH Confidential Information.
The simultaneous resignation of all eight employees without advance notice on February 7, 2025, raises significant questions about compliance with the return-of-property obligations. Following the resignations, CRH requested the immediate return of all Company-issued devices, including laptops, mobile phones, and access badges. CRH-issued devices were subsequently returned by all eight employees between February 10 and February 14, 2025. However, the personal cloud storage accounts to which CRH files were apparently transferred have not yet been addressed, and there is no indication that the Rathore Group has taken steps to delete or return the files stored on personal accounts. The Pinnacle Forensics investigation will provide additional detail on this issue, and the forthcoming cease-and-desist letters will demand the immediate identification, preservation, and return of all CRH materials in the possession, custody, or control of each departing employee.
VII. Governing Law, Forum Selection, and Remedial Provisions
A. Governing Law
All eight employment agreements are governed by the laws of the State of Delaware, without regard to principles of conflicts of law. This governing law provision was included in each agreement as executed and was acknowledged by each employee at the time of hire (or, in Rathore's case, at the time of execution of the Rathore A&R Agreement).
The selection of Delaware law is significant because the eight employees were based in or worked primarily from CRH's headquarters in Seattle, Washington. CRH is a Delaware corporation with its principal executive offices in Seattle. Notwithstanding the Washington-based work location of the employees, Delaware law governs the contractual provisions by express election of the parties, and Delaware courts will generally honor the parties' contractual choice of law. This is favorable to CRH, as Delaware has a well-developed body of law supporting the enforceability of reasonable restrictive covenants, and Delaware courts have consistently applied a balanced but enforcement-oriented framework in evaluating such provisions.
B. Forum Selection / Consent to Jurisdiction
Each of the eight employment agreements contains a consent to jurisdiction clause providing that the parties submit to the exclusive jurisdiction of the courts of the State of Delaware, including the Delaware Court of Chancery, for the resolution of any disputes arising under or in connection with the employment agreement. Each employee expressly waived any objection to venue in Delaware and any defense based on inconvenient forum.
This forum selection provision supports CRH's filing in the Delaware Court of Chancery. The case has been assigned Docket No. C.A. No. 2025-0198-MTZ and assigned to Vice Chancellor Margaret T. Zhao. The Court of Chancery is a particularly appropriate forum for this dispute given its expertise in equitable remedies, including injunctive relief, and its familiarity with restrictive covenant disputes arising under Delaware law.
C. Injunctive Relief
Each of the eight employment agreements contains an express acknowledgment by the employee that a breach of the restrictive covenant provisions (including the non-competition, non-solicitation, and confidentiality provisions) would cause irreparable harm to CRH that would not be adequately compensable by monetary damages alone. This contractual acknowledgment is significant because it reinforces CRH's position in seeking injunctive relief, although Delaware courts retain discretion to independently evaluate the existence of irreparable harm.
Each agreement further provides that CRH shall be entitled to seek injunctive relief, including temporary restraining orders and preliminary injunctions, to enforce the restrictive covenant provisions, without the necessity of proving actual damages or posting a bond. We note, however, that while the contractual waiver of a bond requirement is generally enforceable, the Court of Chancery retains discretion to require a bond or security in connection with the issuance of injunctive relief, depending on the circumstances. The express contractual language nonetheless strengthens CRH's position in arguing that a bond should not be required or, in the alternative, should be set at a nominal amount.
D. Severability / Blue-Pencil Provisions
Each of the eight employment agreements contains a severability clause providing that if any provision of the agreement is found to be unenforceable, the remaining provisions shall continue in full force and effect. Additionally, the agreements of the three VP-level and above employees contain enhanced judicial modification provisions:
•  Rathore (A&R Agreement), Linden, and Kaczmarek: These three agreements contain an explicit "blue-pencil" provision that expressly authorizes a court to modify any overbroad restrictive covenant to the minimum extent necessary to render it enforceable under applicable law. The blue-pencil language provides that if a court determines that any restriction is unreasonable in duration, geographic scope, or activity scope, the court shall have the authority to reform the restriction to the maximum extent that would be enforceable, rather than striking the provision entirely.
•  Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson: The employment agreements for the five Director- and Senior Manager-level employees contain standard severability clauses but do not include express blue-pencil or judicial modification language. Under Delaware law, however, courts retain equitable authority to modify restrictive covenants to render them reasonable and enforceable even in the absence of express blue-pencil provisions, although the presence of such language is a factor that courts consider favorably. The lack of express blue-pencil language in these five agreements is not fatal to enforceability, but it may require additional briefing to persuade the Court to exercise its inherent equitable authority to reform any provision found to be overbroad.
E. Attorneys' Fees
The employment agreements present a split with respect to attorneys' fee provisions:
•  Rathore, Linden, and Kaczmarek: These three agreements contain prevailing-party attorneys' fee provisions specifically applicable to the enforcement of restrictive covenant obligations. Under these provisions, the prevailing party in any action to enforce the restrictive covenants shall be entitled to recover its reasonable attorneys' fees and costs from the non-prevailing party. This is a meaningful provision that, if CRH prevails, would allow the recovery of the legal fees incurred in bringing enforcement proceedings against these three employees.
•  Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson: The remaining five agreements are silent on attorneys' fees. In the absence of a contractual fee-shifting provision, the American Rule applies, meaning each party bears its own attorneys' fees unless a court orders otherwise. This is relevant to the overall cost-benefit analysis of enforcement proceedings against the Director- and Senior Manager-level employees, although the availability of fees against the three VP-level employees may partially offset this concern.
VIII. Enforceability Analysis — Preliminary Observations
The following preliminary observations regarding the enforceability of the restrictive covenant provisions are offered to inform the litigation team's strategy. A more detailed enforceability analysis will be provided in a separate memorandum once we have completed our review of all relevant Delaware precedent and have the benefit of Pinnacle Forensics' full report.
A. Delaware Standard
Under Delaware law, post-employment restrictive covenants are enforceable if they satisfy a three-part test. Specifically, the covenant must be: (1) supported by adequate consideration; (2) reasonable in scope, duration, and geographic reach; and (3) necessary to protect a legitimate business interest of the employer. Recognized legitimate business interests include, among others, trade secrets, confidential information, customer and vendor relationships, and the goodwill of the business. See, e.g., Kan-Di-Ki, LLC v. Susi, 2015 WL 4503210 (Del. Ch. July 22, 2015); All Pro Maids, Inc. v. Layton, 2004 WL 1878784 (Del. Ch. Aug. 9, 2004).
The party seeking to enforce a restrictive covenant — here, CRH — bears the initial burden of demonstrating the existence and reasonableness of the covenant. Once that burden is met, the burden shifts to the employee to establish a valid defense to enforcement.
B. Strengths
CRH's position on enforceability is supported by several significant factors:
Consideration. All eight employees received substantial compensation in exchange for their employment and the restrictive covenants contained in their respective agreements. Base salaries range from $192,000 (Johansson) to $485,000 (Rathore), and each employee was eligible for annual bonuses, equity award grants, and comprehensive employee benefits. Rathore received additional, independent consideration for the Rathore A&R Agreement in the form of a $150,000 promotion bonus and a $725,000 RSU grant. Under Delaware law, continued employment and the associated compensation package generally constitute adequate consideration for post-employment restrictive covenants, particularly where, as here, the compensation is substantial.
Protectable Interests. CRH has strong and readily identifiable protectable business interests that the restrictive covenants are designed to protect. These interests include: (i) CRH's proprietary vendor negotiation strategies and playbooks; (ii) the Project Ridgeline strategic plan and associated proprietary analyses; (iii) private-label sourcing data, cost models, and supplier relationships; (iv) seasonal buying algorithms and analytical models; (v) customer segmentation data and analytics; and (vi) the goodwill associated with CRH's established vendor and supplier relationships. The merchandising division generated approximately $2.3 billion in GMV in FY2024, underscoring the substantial economic value of the information and relationships that the covenants are designed to protect.
Coordinated Nature of Departure. The simultaneous resignation of all eight employees, combined with evidence of pre-departure coordination, significantly strengthens the case for enforcement. Specifically, CRH has identified evidence of encrypted messaging among the Rathore Group during the period of January 13 through January 24, 2025, which appears to reflect detailed planning of the coordinated departure and discussions regarding the transition to Verdana. The data exfiltration evidence — 14,327 files downloaded to personal cloud storage accounts between January 10 and February 4, 2025 — further demonstrates that the departures were not spontaneous but were carefully planned and executed as part of a concerted effort to transfer CRH's proprietary information and human capital to a direct competitor. This pattern of conduct strengthens the equitable case for injunctive relief and undermines any defense that the covenants are unnecessary to protect CRH's interests.
Clear Contract Language. The restrictive covenant provisions across all eight agreements are clearly drafted, with defined terms, specific durations, explicit geographic scope limitations, and well-delineated activity restrictions. This clarity reduces the risk that a court will decline to enforce the covenants on the basis of vagueness or ambiguity.
Forum and Governing Law. Delaware courts regularly enforce well-drafted restrictive covenants that satisfy the three-part test described above. The Delaware Court of Chancery, in particular, has extensive experience with restrictive covenant disputes and is well-equipped to evaluate the enforceability of the provisions at issue. The parties' contractual choice of Delaware law and the Delaware Court of Chancery as the exclusive forum is favorable to CRH and eliminates potential complications that might arise from litigation in Washington or another jurisdiction.
C. Potential Weaknesses / Counterarguments
We have identified the following potential weaknesses and counterarguments that defendants are likely to raise:
Overbreadth Arguments. Defendants are likely to argue that the non-competition provisions are overbroad because they apply to the entire United States and encompass all retail and ecommerce competition, rather than being limited to specific product categories, geographic markets, or identified competitors. Delaware courts apply a "reasonableness" standard in evaluating the geographic and activity scope of non-competition provisions, and courts have, in some cases, narrowed the scope of covenants that are deemed to extend beyond what is reasonably necessary to protect the employer's legitimate interests. However, given CRH's nationwide retail and ecommerce operations and the Rathore Group's exposure to enterprise-level strategic information (particularly Project Ridgeline), a nationwide scope is defensible. Moreover, the blue-pencil provisions in the Rathore, Linden, and Kaczmarek agreements provide a backstop that authorizes judicial modification rather than invalidation.
Adequacy of Consideration for Shorter-Tenure Employees. Employees with shorter tenures at CRH — particularly Nathan Tsao (approximately 3 years) and Kira Johansson (approximately 4 years) — and commensurately lower compensation levels may have stronger arguments that the restrictive covenants are disproportionate to the consideration provided. While Delaware law generally recognizes continued employment and associated compensation as adequate consideration for post-employment restrictive covenants, courts have given closer scrutiny to covenants imposed on lower-level employees with shorter tenures and less access to truly sensitive information. We note, however, that both Tsao and Johansson received annual base salaries in excess of $190,000 and had access to Project Ridgeline and other highly sensitive strategic information. This access, combined with their compensation, should be sufficient to satisfy the consideration requirement.
At-Will Employment Argument. Depending on the specific language of each agreement, defendants may argue that continued at-will employment, standing alone, is insufficient consideration for post-employment restrictive covenants. This argument has had limited success in Delaware, where courts have generally held that continued employment — particularly when accompanied by substantial compensation, bonus eligibility, and equity awards — constitutes adequate consideration. See, e.g., Research & Trading Corp. v. Powell, 468 A.2d 1301 (Del. Ch. 1983). Moreover, in Rathore's case, the additional consideration provided in connection with the Rathore A&R Agreement eliminates this argument entirely.
Unclean Hands / Employer Conduct. Defendants may attempt to raise equitable defenses related to CRH's own conduct, including arguments that CRH failed to adequately protect its confidential information, treated employees unfairly, or otherwise engaged in conduct that should preclude equitable relief. Based on the facts currently available to us, no information suggests that such a defense would have merit. CRH maintained appropriate information security controls, provided competitive compensation and benefits, and appears to have acted in good faith with respect to its employment relationships. However, we should remain vigilant for any facts that might support such a defense and should proactively address this issue with CRH management.
IX. Comparative Summary Chart
The following table provides a comprehensive consolidated summary of the restrictive covenant terms across all eight departing employees:
As reflected in the table above, the restrictive covenant framework is structured in two tiers. The three VP-level and above employees (Rathore, Linden, and Kaczmarek) are subject to longer non-competition, non-solicitation, and vendor non-solicitation periods and benefit from (from CRH's enforcement perspective) blue-pencil provisions and attorneys' fee clauses. The five Director- and Senior Manager-level employees (Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson) are subject to shorter but still substantial restrictive periods and standard severability provisions. All eight employees are subject to perpetual confidentiality obligations and Delaware governing law and forum selection provisions.
X. Recommendations and Next Steps
Based on our review of the employment agreements and the facts currently available, we recommend the following next steps:
1. Cease-and-Desist Correspondence. We recommend proceeding with cease-and-desist letters to all eight departing employees, to be sent no later than February 25, 2025. Separate cease-and-desist letters should also be sent to Verdana Commerce Group, Inc. and Greystone Capital Partners, LP, putting all parties on notice of CRH's intent to enforce the restrictive covenant provisions and demanding immediate compliance with the non-competition, non-solicitation, confidentiality, and return-of-property obligations. The letters should specifically demand the identification, preservation, and return of all CRH Confidential Information in the possession, custody, or control of each departing employee, and should instruct Verdana and Greystone to refrain from onboarding the Rathore Group into roles that would involve competitive activity within the scope of the non-competition provisions. Draft letters will be circulated for review by the end of business on February 24, 2025.
2. Pinnacle Forensics Report. We should await the completion of Pinnacle Forensics LLC's full forensic report, which is expected in early March 2025, to confirm the scope and extent of data exfiltration and to develop a complete evidentiary record for the trade secret misappropriation claims under DUTSA. Dr. Rajiv Anand has indicated that preliminary findings will be supplemented with metadata analysis, file-by-file classification, and a detailed timeline of download activity. This report will be essential to the trade secret claims and will also support the confidentiality breach claims.
3. Investigative Work. We should coordinate with Aurelian Investigations Group Inc. (Sandra Fielding, who was engaged on February 21, 2025) to complete the investigation of the timeline of Verdana's recruitment activities and the Rathore Group's pre-departure planning. Of particular importance is the January 6, 2025 dinner meeting between Verdana CEO Warren Dietrich, Verdana COO Elliot Westbrook, and Priya Rathore at a restaurant in New York City, which appears to have been the initiating event in the coordinated recruitment. Additional investigative priorities include identifying the encrypted messaging platform used by the Rathore Group during January 13–24, 2025, determining whether any CRH employees beyond the eight named defendants were solicited or approached, and obtaining any publicly available information regarding the Rathore Group's anticipated roles at Verdana.
4. Verified Complaint and Injunctive Relief Motion. We should prepare a Verified Complaint and Motion for Temporary Restraining Order and Preliminary Injunction for filing in the Delaware Court of Chancery. The restrictive covenant provisions, data exfiltration evidence, and the coordinated nature of the departure provide strong grounds for emergency relief. The Verified Complaint should assert claims for: (i) breach of the non-competition provisions; (ii) breach of the non-solicitation of employees provisions; (iii) breach of the non-solicitation of vendors provisions; (iv) breach of the confidentiality and non-disclosure provisions; (v) misappropriation of trade secrets under DUTSA; and (vi) tortious interference with contract (against Verdana and Greystone). The Motion for TRO and Preliminary Injunction should seek an order enjoining the Rathore Group from commencing employment at Verdana in any capacity that violates the non-competition provisions, prohibiting any further use or disclosure of CRH Confidential Information, requiring the immediate return of all CRH materials, and enjoining Verdana from onboarding or utilizing the Rathore Group in competitive roles pending resolution of the dispute.
5. Economic Damages Expert. We recommend engaging an economic damages expert to quantify the potential harm to CRH from breach of the restrictive covenants and misuse of trade secrets. We have subsequently engaged Veltrano Consulting Group LLC, led by Dr. Franklin Oberg, effective March 3, 2025. Dr. Oberg's team will develop a damages model addressing: (i) the competitive harm to CRH resulting from the Rathore Group's employment at Verdana during the restricted period; (ii) the economic value of the proprietary information allegedly exfiltrated; and (iii) the prospective harm from the diversion of vendor relationships and the compromise of CRH's strategic plans.
6. Equity Forfeiture and Clawback Analysis. We should separately analyze the equity forfeiture and clawback provisions in the departing employees' equity award agreements. This analysis is particularly important with respect to Rathore's $725,000 RSU grant, which was subject to a four-year ratable annual vesting schedule commencing on March 15, 2021. As of the date of Rathore's resignation (February 7, 2025), approximately 75% of the RSU grant had vested (covering the first three annual vesting tranches on March 15, 2022, March 15, 2023, and March 15, 2024), with the remaining 25% (approximately $181,250) remaining unvested and subject to forfeiture upon termination. Additionally, the vested tranches may be subject to clawback under for-cause provisions that are triggered by a breach of restrictive covenants during the post-employment restricted period. The equity forfeiture and clawback analysis should be addressed in a separate memorandum and coordinated with CRH's equity plan administrator.
XI. Appendices Referenced
The following appendices are referenced in this memorandum:
Appendix 1: Copies of all eight employment agreements, including the Amended and Restated Employment Agreement for Priya Rathore dated March 15, 2021, and the original employment agreements for Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson. These documents are maintained in the matter file for 1038-00006 and are not attached to this memorandum due to their volume and sensitivity. Hard copies and electronic copies are available in the Calderwood & Harkness LLP document management system.
Appendix 2: Comparative Covenant Chart. A detailed comparative chart consolidating all restrictive covenant terms, definitions, and key provisions across all eight employment agreements is to be prepared as a separate Excel-format document for ready reference by the litigation team. This document will be circulated upon completion.
This memorandum is a privileged and confidential attorney work product prepared in anticipation of litigation. It reflects preliminary analysis based on the documents and information available as of the date hereof and is subject to revision as additional facts are developed. This memorandum is not intended as, and should not be construed as, legal advice to any person or entity other than Calderwood & Harkness LLP attorneys working on the referenced matter.
CALDERWOOD & HARKNESS LLP
By: ________
James Underwood Partner
By: ________
Devon Archer Associate
Date: February 22, 2025
# | Name | Former Title | Hire Date | Agreement Date(s) | Base Salary (FY2024)
1 | Priya Rathore | SVP, Merchandising | June 3, 2019 | Original: June 3, 2019; Amended & Restated: March 15, 2021 | $485,000
2 | Derek Linden | VP, Hardlines Merchandising | January 14, 2018 (~7 years at CRH) | Employment Agreement on file | $340,000
3 | Sonia Kaczmarek | VP, Softlines Merchandising | March 2, 2020 (~5 years at CRH) | Employment Agreement on file | $325,000
4 | Amara Osei | Director, Private Label Strategy | September 13, 2021 (~4 years at CRH) | Employment Agreement on file | $265,000
5 | Brent Halvorsen | Director, Seasonal Planning & Analytics | August 19, 2019 (~6 years at CRH) | Employment Agreement on file | $258,000
6 | Lucia Fernandez-Gill | Director, Vendor Relations (Domestic) | April 6, 2020 (~5 years at CRH) | Employment Agreement on file | $248,000
7 | Nathan Tsao | Senior Manager, eCommerce Merchandising | November 7, 2022 (~3 years at CRH) | Employment Agreement on file | $195,000
8 | Kira Johansson | Senior Manager, Category Analytics | October 18, 2021 (~4 years at CRH) | Employment Agreement on file | $192,000
Employee | Duration | Geographic Scope | Agreement Date | Expiration (Approx.)
Priya Rathore | 18 months | United States | March 15, 2021 (A&R) | August 7, 2026
Derek Linden | 18 months | United States | On file | August 7, 2026
Sonia Kaczmarek | 18 months | United States | On file | August 7, 2026
Amara Osei | 12 months | United States | On file | February 7, 2026
Brent Halvorsen | 12 months | United States | On file | February 7, 2026
Lucia Fernandez-Gill | 12 months | United States | On file | February 7, 2026
Nathan Tsao | 12 months | United States | On file | February 7, 2026
Kira Johansson | 12 months | United States | On file | February 7, 2026
Employee | Duration | Expiration (Approx.)
Priya Rathore | 24 months | February 7, 2027
Derek Linden | 24 months | February 7, 2027
Sonia Kaczmarek | 24 months | February 7, 2027
Amara Osei | 18 months | August 7, 2026
Brent Halvorsen | 18 months | August 7, 2026
Lucia Fernandez-Gill | 18 months | August 7, 2026
Nathan Tsao | 18 months | August 7, 2026
Kira Johansson | 18 months | August 7, 2026
Employee | Title | Non-Compete Duration | Non-Compete Geo. | Employee Non-Solicit Duration | Vendor Non-Solicit Duration | Confidentiality Duration | Blue-Pencil Clause | Atty Fee Provision | Governing Law
Priya Rathore | SVP, Merchandising | 18 months | United States | 24 months | 24 months | Perpetual | Yes | Yes | Delaware
Derek Linden | VP, Hardlines Merch. | 18 months | United States | 24 months | 24 months | Perpetual | Yes | Yes | Delaware
Sonia Kaczmarek | VP, Softlines Merch. | 18 months | United States | 24 months | 24 months | Perpetual | Yes | Yes | Delaware
Amara Osei | Dir., Private Label Strategy | 12 months | United States | 18 months | 18 months | Perpetual | No (sev. only) | No | Delaware
Brent Halvorsen | Dir., Seasonal Planning & Analytics | 12 months | United States | 18 months | 18 months | Perpetual | No (sev. only) | No | Delaware
Lucia Fernandez-Gill | Dir., Vendor Relations (Domestic) | 12 months | United States | 18 months | 18 months | Perpetual | No (sev. only) | No | Delaware
Nathan Tsao | Sr. Mgr., eComm. Merch. | 12 months | United States | 18 months | 18 months | Perpetual | No (sev. only) | No | Delaware
Kira Johansson | Sr. Mgr., Category Analytics | 12 months | United States | 18 months | 18 months | Perpetual |