CONFIDENTIAL — PREPARED IN ANTICIPATION OF LITIGATION
CALDERWOOD & HARKNESS LLP Attorneys at Law
1301 K Street NW, Suite 1200 Washington, DC 20005
Telephone: (202) 654-8800 Facsimile: (202) 654-8801 www.calderwoodharkness.com
Bernard Crawford Partner Direct: (202) 654-8837 bcrawford@calderwoodharkness.com
February 25, 2025
VIA OVERNIGHT COURIER AND EMAIL
Mr. Elliot Westbrook Managing Partner Greystone Capital Partners, LP 680 Park Avenue, 22nd Floor New York, NY 10065
Re: Cascade Retail Holdings Inc. — Demand to Cease Facilitation of Restrictive Covenant Violations and Misappropriation of Trade Secrets
Matter No.: 1038-00006
Dear Mr. Westbrook:
This firm represents Cascade Retail Holdings Inc. ("CRH"), a Delaware corporation publicly traded on the Nasdaq Stock Market under the ticker symbol CRHL, with its principal offices located at 2200 Elliott Avenue West, Suite 3400, Seattle, Washington 98119. We write to you in your capacity as Managing Partner of Greystone Capital Partners, LP ("Greystone") concerning Greystone's role as the majority equity holder of Verdana Commerce Group, Inc. ("Verdana"), a Delaware corporation headquartered at 400 Christiana Gateway, Suite 700, Wilmington, Delaware 19801.
As you are aware, Greystone, acting through Greystone Capital Fund VII, LP — a vintage 2022 fund with $8.5 billion in committed capital — acquired a majority equity stake in Verdana in the third quarter of 2023 for an enterprise value of approximately $2.4 billion. Greystone exercises significant control over Verdana's strategic direction, capitalization decisions, and senior management, including the appointment and compensation of its executive leadership team.
The purpose of this letter is to demand that Greystone take immediate and decisive action to ensure Verdana's compliance with applicable law and to cease facilitating the ongoing and deliberate violation of CRH's contractual rights and proprietary interests. The facts detailed below establish that Greystone was not a passive bystander to these violations but was, instead, an active and knowing participant in a coordinated scheme to raid CRH's senior merchandising leadership team, induce the breach of binding restrictive covenants, and misappropriate CRH's most competitively sensitive trade secrets and confidential information. Unless Greystone complies with the demands set forth herein, CRH will pursue all available legal remedies, including emergency injunctive relief, without further notice.
I. Background — Cascade Retail Holdings Inc.
CRH is a leading publicly traded omnichannel retail company operating at significant scale across the United States. For the fiscal year ended January 28, 2025 ("FY2024"), CRH reported consolidated revenue of approximately $6.82 billion and, as of the date of this letter, maintains an approximate market capitalization of $4.1 billion. CRH operates 387 brick-and-mortar retail locations across 34 states and maintains a robust direct-to-consumer ecommerce platform that has experienced double-digit growth in each of the last four fiscal years.
CRH's merchandising division is a core business unit and a primary driver of the company's competitive advantage and financial performance. In FY2024, CRH's merchandising division generated approximately $2.3 billion in gross merchandise value, representing a substantial portion of CRH's consolidated results. The division's strength is built upon years of investment in proprietary systems, data analytics, vendor relationships, private-label product development, seasonal buying strategies, and category management expertise. CRH's Chief Executive Officer is Marcus Langford, and its General Counsel is Theresa Yun-Park.
The merchandising division's competitive advantage is not accidental. It is the direct product of CRH's sustained investment in recruiting, training, retaining, and entrusting senior merchandising professionals with access to the company's most sensitive strategic, financial, and operational information. These investments — and the contractual protections CRH has implemented to safeguard them — are at the center of the events described in this letter.
II. The Coordinated Departure
On February 7, 2025, at approximately 4:47 PM Pacific Standard Time, eight senior employees of CRH's merchandising division submitted simultaneous resignation letters via email to CRH's Chief Human Resources Officer and General Counsel. Each resignation was effective immediately. The simultaneous nature and identical timing of these resignations — submitted within a span of minutes — made clear that the departures were coordinated in advance and executed in concert.
The departing group (hereinafter, the "Rathore Group") was led by Priya Rathore, CRH's Senior Vice President of Merchandising, who had been employed at CRH from June 3, 2019 through February 7, 2025 — a tenure of nearly six years during which Ms. Rathore held the most senior merchandising role in the company and was entrusted with access to virtually all of CRH's proprietary merchandising strategies, financial data, and trade secrets. The remaining seven departing employees are:
1. Derek Linden, Vice President, Hardlines Merchandising — employed at CRH for approximately seven (7) years;
2. Sonia Kaczmarek, Vice President, Softlines Merchandising — employed at CRH for approximately five (5) years;
3. Amara Osei, Director, Private Label Strategy — employed at CRH for approximately four (4) years;
4. Brent Halvorsen, Director, Seasonal Planning & Analytics — employed at CRH for approximately six (6) years;
5. Lucia Fernandez-Gill, Director, Vendor Relations (Domestic) — employed at CRH for approximately five (5) years;
6. Nathan Tsao, Senior Manager, eCommerce Merchandising — employed at CRH for approximately three (3) years; and
7. Kira Johansson, Senior Manager, Category Analytics — employed at CRH for approximately four (4) years.
Collectively, the Rathore Group represents the entirety of CRH's senior merchandising leadership. These individuals, by virtue of their positions and responsibilities, possessed deep and comprehensive knowledge of CRH's most competitively sensitive proprietary information, including strategic category expansion plans, vendor pricing and negotiation strategies, private-label cost structures, customer segmentation models, seasonal buying algorithms, and ecommerce merchandising methodologies.
On February 14, 2025 — just seven days after the coordinated resignations — Verdana publicly announced the hiring of the entire Rathore Group in a press release titled "Verdana Commerce Welcomes Industry-Leading Merchandising Team to Accelerate Growth." The press release identified Ms. Rathore's new role at Verdana as President of Merchandising & Strategy, a newly created position of significant authority and responsibility. The press release further touted the hiring of the other seven members of the Rathore Group and characterized the mass hiring as a strategic initiative to "transform Verdana's merchandising capabilities."
The coordinated nature of this departure — eight senior employees from the same division, all resigning simultaneously to the minute, all joining the same direct competitor within days — was not coincidental. It was the result of deliberate, sustained, and well-resourced recruitment efforts in which Greystone directly participated, as set forth below.
III. Greystone's Direct Role in the Recruitment
CRH's investigation into the circumstances surrounding the Rathore Group's departure has revealed that Greystone's involvement in the recruitment effort was not that of a passive equity holder exercising ordinary oversight of a portfolio company. To the contrary, Greystone was a direct and active participant in the planning and execution of the coordinated hiring.
On January 6, 2025, Warren Dietrich, Chief Executive Officer of Verdana, and you, Elliot Westbrook, Managing Partner of Greystone, personally met with Priya Rathore at a private dinner in New York City. CRH has obtained information confirming this meeting, which took place approximately one month before the coordinated resignations and approximately three weeks before the wave of offer letters that followed. Your personal participation in this dinner — at which the recruitment of CRH's most senior merchandising executive was the evident purpose — demonstrates that Greystone was not merely informed of Verdana's recruitment plans but was actively driving them at the highest levels.
On January 27, 2025, Ms. Rathore signed an offer letter with Verdana providing the following compensation:
• Base salary of $650,000 per annum;
• Sign-on bonus of $1,500,000;
• Annual target bonus of $520,000 (representing 80% of base salary); and
• A grant of 1.5% of Verdana's fully diluted equity.
Between January 28 and February 4, 2025, the remaining seven members of the Rathore Group signed offer letters with Verdana. The aggregate sign-on bonuses paid or committed to the Rathore Group total approximately $6,200,000, consisting of the $1,500,000 sign-on bonus to Ms. Rathore and an aggregate of approximately $4,700,000 in sign-on bonuses to the other seven departing employees.
The scale of these financial inducements — funded ultimately by Greystone's capital and approved, on information and belief, through Greystone's exercise of its governance and investment approval rights over Verdana — demonstrates a deliberate, well-resourced, and carefully orchestrated campaign to extract CRH's entire senior merchandising leadership team. These were not organic, arms-length hiring decisions; they were the product of a targeted strategic offensive against a direct competitor, planned and funded at the private equity sponsor level.
The strategic context for this recruitment campaign is further illuminated by Verdana's public announcement in January 2025 of a "transformational growth initiative" targeting $4 billion in revenue by 2028. That announcement specifically cited expansion into CRH's strongest and most profitable product categories — namely, private-label home goods and seasonal décor — as key pillars of Verdana's growth strategy. The hiring of the Rathore Group was plainly intended to facilitate this competitive initiative by transplanting, wholesale, the very team responsible for building CRH's dominance in these categories, together with the proprietary knowledge, relationships, and strategies they developed at CRH.
IV. Restrictive Covenant Obligations
Each of the eight departing employees is bound by a written employment agreement with CRH containing restrictive covenant provisions, including non-competition, non-solicitation of employees, non-solicitation of vendors, and confidentiality obligations. All eight employment agreements are governed by the laws of the State of Delaware, which recognizes and enforces reasonable restrictive covenants entered into between employers and employees.
Ms. Rathore's Amended and Restated Employment Agreement, dated March 15, 2021, which she executed in connection with her promotion to Senior Vice President of Merchandising, contains the following restrictive covenant provisions, among others:
(a) An eighteen (18) month post-termination non-competition covenant prohibiting Ms. Rathore from engaging in, or being employed by, any business that competes with CRH's retail merchandising operations anywhere in the United States;
(b) A twenty-four (24) month post-termination non-solicitation covenant prohibiting Ms. Rathore from soliciting, recruiting, or inducing any CRH employee to leave CRH's employ, and from soliciting or diverting any CRH vendor or supplier relationship; and
(c) A perpetual confidentiality obligation prohibiting Ms. Rathore from disclosing, using, or otherwise exploiting CRH's confidential information and trade secrets for any purpose other than the performance of her duties at CRH.
The remaining seven members of the Rathore Group are subject to non-competition periods ranging from twelve (12) to eighteen (18) months and non-solicitation periods ranging from eighteen (18) to twenty-four (24) months, depending on their respective employment agreements and the dates of execution. Each of the seven also is subject to perpetual or long-duration confidentiality obligations substantially similar to those in Ms. Rathore's agreement.
These covenants were supported by substantial and independently adequate consideration. The eight departing employees received significant base compensation during their CRH employment, ranging from $192,000 to $485,000 per annum, as well as performance bonuses, restricted stock unit ("RSU") grants, and other benefits. In the case of Ms. Rathore specifically, in connection with her March 2021 promotion and execution of the Amended and Restated Employment Agreement, CRH provided a $150,000 promotion bonus and an RSU grant valued at approximately $725,000 at the time of grant, subject to a four-year vesting schedule. These covenants are reasonable in scope, duration, and geographic coverage, and are fully enforceable under Delaware law.
By hiring these individuals into merchandising roles at a direct competitor — and, indeed, by hiring them into roles that are substantively identical to or encompass the very functions prohibited by their CRH restrictive covenants — Verdana is knowingly inducing and facilitating the breach of these binding contractual obligations. Greystone, as the controlling equity holder that directly participated in the recruitment campaign and provided the financial resources to fund the extraordinary compensation packages designed to lure these employees away, is equally culpable.
V. Misappropriation of Trade Secrets and Confidential Information
CRH's investigation has revealed that the Rathore Group's departure was accompanied by the systematic exfiltration of CRH's confidential and proprietary information. Between January 10, 2025 and February 4, 2025, a total of 14,327 files, comprising approximately 2.8 gigabytes of data, were downloaded from CRH's Aldermere Systems and Pinnacle Health IT enterprise environments to personal cloud storage accounts controlled by members of the departing group. The timing of this data exfiltration — commencing just days after the January 6, 2025 dinner meeting and continuing through the period during which offer letters were being signed — is not coincidental.
The exfiltrated files include, but are not limited to, the following categories of highly sensitive proprietary information:
(a) Materials from Project Ridgeline, CRH's proprietary five-year strategic category expansion plan completed in October 2024, which sets forth CRH's confidential plans for category growth, market entry, product assortment optimization, private-label development, and competitive positioning through 2029;
(b) Vendor negotiation term sheets reflecting CRH's confidential pricing, volume commitments, rebate structures, and other terms negotiated with key domestic and international suppliers;
(c) Private-label cost models detailing CRH's proprietary product cost structures, margin targets, sourcing strategies, and supplier relationships for CRH's private-label product lines;
(d) Customer segmentation data derived from CRH's proprietary analytics platform, including customer purchasing behavior, lifetime value models, and targeted marketing strategies;
(e) Proprietary vendor negotiation playbooks containing CRH's confidential negotiation strategies, tactics, and position analysis for vendor contract renewals and new vendor acquisitions; and
(f) Seasonal buying algorithms developed by CRH's analytics team over multiple years, which represent proprietary methodologies for forecasting demand, optimizing inventory allocation, and timing seasonal purchases to maximize profitability.
Each of these categories of information constitutes trade secrets within the meaning of the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq. ("DUTSA"). CRH has taken reasonable measures to maintain the secrecy of this information, including through the use of access controls, encryption, employee confidentiality agreements, and internal policies governing the handling and dissemination of sensitive business information. This information derives independent economic value from not being generally known to or readily ascertainable by CRH's competitors, including Verdana.
CRH has engaged Pinnacle Forensics LLC, a nationally recognized forensic technology firm, to conduct forensic imaging and analysis of CRH-issued devices and cloud access logs associated with the departing employees. Pinnacle Forensics' preliminary findings confirm the data exfiltration described above, including the identification of specific files downloaded, the accounts to which they were transferred, and the dates and times of the transfers. CRH is prepared to present this evidence in any judicial proceeding.
Verdana directly competes with CRH in at least twenty-eight (28) overlapping product categories, including, critically, the private-label home goods and seasonal décor categories that are the focal points of Verdana's publicly announced "transformational growth initiative." The misappropriated information, if deployed by Verdana in connection with its competitive strategy, would cause severe and irreparable competitive harm to CRH. Project Ridgeline alone represents the culmination of more than eighteen months of strategic planning involving CRH's most senior leadership and an investment of millions of dollars in consulting, analytics, and market research. Its disclosure to a direct competitor would effectively negate CRH's first-mover advantages and undermine its five-year strategic roadmap.
As Verdana's majority equity holder and as the entity that provided the financial resources and strategic direction enabling this recruitment campaign, Greystone bears direct responsibility for ensuring that these materials are not used, disclosed, disseminated, or otherwise exploited by Verdana or any of its employees, agents, or affiliates.
VI. Legal Claims and Greystone's Exposure
Based on the foregoing facts, CRH intends to pursue all available legal remedies against the responsible parties, including but not limited to the following claims:
(a) Breach of restrictive covenants against each of the eight departing employees for their violation of the non-competition, non-solicitation, and related provisions of their respective employment agreements with CRH;
(b) Breach of confidentiality obligations against each of the eight departing employees for their unauthorized disclosure, use, and exfiltration of CRH's confidential information in violation of the confidentiality provisions of their respective employment agreements;
(c) Misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001 et seq., against the individual defendants and Verdana Commerce Group, Inc., for the acquisition, disclosure, and use of CRH's trade secrets through improper means;
(d) Tortious interference with contractual relations against Verdana Commerce Group, Inc., for knowingly inducing and facilitating the breach of the departing employees' binding restrictive covenant and confidentiality obligations to CRH; and
(e) Civil conspiracy against all defendants and Verdana for their concerted and coordinated actions in planning and executing the scheme to extract CRH's senior merchandising team, misappropriate CRH's trade secrets, and breach the departing employees' contractual obligations.
We draw your particular attention to Greystone's own potential exposure. As Verdana's controlling equity holder, and as a direct participant in the recruitment through your personal involvement in the January 6, 2025 dinner meeting with Ms. Rathore and Mr. Dietrich, Greystone faces potential liability on multiple grounds, including:
(a) Aiding and abetting tortious interference with contractual relations, based on Greystone's knowledge of the departing employees' restrictive covenant obligations and its active participation in and substantial assistance to the recruitment effort;
(b) Civil conspiracy, based on Greystone's agreement with and participation in the coordinated scheme to recruit the Rathore Group in breach of their contractual obligations to CRH; and
(c) Potential piercing of the corporate veil, to the extent that Greystone exercised such dominion and control over Verdana's decision-making in connection with the recruitment as to render the corporate form a mere instrumentality of Greystone's objectives.
Greystone's financial facilitation of the approximately $6,200,000 in aggregate sign-on bonuses — compensation packages of extraordinary magnitude plainly designed to overcome the departing employees' contractual obligations to CRH — and its direct involvement in orchestrating the departure at the most senior levels of Greystone's own partnership, further support CRH's claims and Greystone's potential liability. CRH will not hesitate to pursue these claims to the fullest extent permitted by law.
VII. Demands
In light of the foregoing, CRH hereby demands that Greystone Capital Partners, LP take the following actions immediately, and in no event later than five (5) business days from receipt of this letter:
1. Cessation of Covenant-Violating Employment. Direct Verdana Commerce Group, Inc. to immediately cease employing any of the eight departing employees — Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson — in any role that involves merchandising, buying, vendor relations, private-label strategy, category analytics, seasonal planning, ecommerce merchandising, or any other function or responsibility that would cause or facilitate a breach of the departing employees' respective restrictive covenant obligations to CRH. This demand extends to any subsidiary, affiliate, division, or business unit of Verdana.
2. Return of Confidential Information and Trade Secrets. Direct Verdana to immediately identify, preserve, and return to CRH all confidential information, trade secrets, proprietary data, and documents belonging to CRH that are in Verdana's possession, custody, or control, whether in physical or electronic form, including any and all copies, summaries, extracts, analyses, compilations, or derivative works thereof. This includes, without limitation, all materials associated with Project Ridgeline, vendor negotiation term sheets, private-label cost models, customer segmentation data, vendor negotiation playbooks, and seasonal buying algorithms.
3. Implementation of Litigation Hold. Direct Verdana to immediately implement a comprehensive litigation hold on all documents, communications, and electronically stored information relating to: (a) the recruitment or hiring of any current or former CRH employee; (b) any communications with any member of the Rathore Group, whether before or after February 7, 2025; and (c) any CRH confidential information or trade secrets. This litigation hold must extend to all custodians, repositories, and systems where responsive information may reside, and must be communicated in writing to all relevant personnel at Verdana.
4. Confirmation of Compliance. Provide written confirmation to this firm that Greystone has taken, and will continue to take, all steps within its power as majority equity holder of Verdana to ensure Verdana's full and prompt compliance with each of the demands set forth in this letter.
5. No Alternative Employment or Engagement. Confirm in writing that neither Greystone nor any of its affiliates, portfolio companies, managed funds, general partners, or related entities will directly or indirectly employ, engage, retain, or otherwise provide compensation or consideration to any of the eight departing employees in any capacity — including as employees, independent contractors, consultants, or advisors — during the applicable restrictive covenant periods set forth in their respective CRH employment agreements.
VIII. Consequences of Non-Compliance
CRH wishes to be unambiguous regarding the consequences of Greystone's failure to comply with the demands set forth herein. In the event that Greystone fails to comply fully and promptly with these demands, CRH will pursue emergency injunctive relief, including applications for temporary restraining orders and preliminary injunctions, in the Delaware Court of Chancery, together with claims for compensatory damages, consequential damages, disgorgement of profits, exemplary damages where available, attorneys' fees, and such other relief as the Court deems just and appropriate.
CRH's economic damages expert has been engaged and is prepared to quantify the substantial harm to CRH's merchandising business resulting from the coordinated departure, the breach of restrictive covenants, and the misappropriation of trade secrets. CRH's preliminary assessment indicates that the harm to its merchandising division alone could reach into the hundreds of millions of dollars, taking into account the competitive advantage conferred by the misappropriated information, the loss of key vendor relationships, the disruption to CRH's strategic category expansion plans, and the market share erosion that would result from Verdana's use of CRH's proprietary strategies.
CRH expressly reserves all rights and remedies available to it at law and in equity, whether or not specifically referenced in this letter.
IX. Preservation Notice
This letter also serves as a formal preservation notice directed to Greystone Capital Partners, LP, its general partners, officers, employees, agents, and representatives.
CRH demands that Greystone immediately take all steps necessary to identify, locate, and preserve all documents, communications, and electronically stored information in Greystone's possession, custody, or control relating to the following subjects:
(a) Any and all communications with Verdana Commerce Group, Inc., its officers, directors, employees, or agents regarding the recruitment, solicitation, or hiring of any current or former CRH employee, including but not limited to any member of the Rathore Group;
(b) Mr. Elliot Westbrook's January 6, 2025 dinner meeting with Priya Rathore and Warren Dietrich, including all communications preceding, during, and following that meeting;
(c) Any discussions, presentations, memoranda, or analyses regarding Verdana's "transformational growth initiative," including any plans to expand into CRH's product categories, such as private-label home goods and seasonal décor;
(d) The approval, authorization, budgeting, or funding of sign-on bonuses, equity grants, or other compensation packages for any member of the Rathore Group, including any investment committee materials, approval memoranda, or board resolutions;
(e) Any CRH confidential information or trade secrets in Greystone's possession, custody, or control, including any materials received from Verdana, any member of the Rathore Group, or any other source; and
(f) Any communications with legal counsel regarding the matters described in this letter.
This preservation obligation extends to all forms and media, including but not limited to emails, text messages, instant messages, voicemails, documents (whether in hard copy or electronic form), presentations, spreadsheets, databases, calendar entries, notes, and any other electronically stored information. Greystone must take affirmative steps to prevent the routine or intentional destruction, alteration, or modification of any potentially responsive materials, including by suspending all document retention policies and auto-delete functions that could affect the preservation of such materials.
CRH places Greystone on notice that the destruction, alteration, concealment, or spoliation of relevant evidence may result in the imposition of adverse inferences, evidentiary sanctions, monetary penalties, and such other remedial measures as a court of competent jurisdiction may deem appropriate.
X. Reservation of Rights and No Waiver
Nothing in this letter shall be construed as a waiver, relinquishment, or limitation of any of CRH's rights, claims, causes of action, or remedies, all of which are expressly and fully reserved. CRH's enumeration of specific claims and legal theories herein is not intended to be exhaustive, and CRH reserves the right to assert additional claims and theories as the facts warrant.
CRH's decision to send this letter rather than immediately commencing litigation against Greystone should not be interpreted as any indication that CRH's claims lack merit, that CRH's damages are limited, or that CRH will not pursue its claims vigorously and to the fullest extent of the law. CRH sends this letter in the interest of providing Greystone with an opportunity to mitigate its exposure by complying promptly with the demands set forth herein, but CRH will not delay in seeking judicial intervention if Greystone fails to act.
For the avoidance of doubt, separate cease-and-desist letters have been sent to each of the eight departing employees individually and to Verdana Commerce Group, Inc. CRH's communications with Greystone are without prejudice to, and independent of, those separate demands and the claims CRH intends to pursue against those parties.
XI. Request for Response
CRH requests a written response from Greystone Capital Partners, LP within five (5) business days of receipt of this letter, confirming Greystone's compliance with each of the demands set forth in Section VII above. Greystone's response should address each demand individually and describe the specific steps Greystone has taken or will take to ensure compliance.
Please direct all communications regarding this matter to the undersigned:
Bernard Crawford, Partner Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 654-8837
Email: bcrawford@calderwoodharkness.com
CRH trusts that Greystone will treat this matter with the urgency and seriousness it warrants. The continued employment of the Rathore Group at Verdana in any capacity that implicates their restrictive covenant obligations, and the continued possession or use of CRH's trade secrets and confidential information by Verdana, cause ongoing and escalating harm to CRH with each passing day.
We await your prompt response.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Bernard Crawford Partner
1301 K Street NW, Suite 1200 Washington, DC 20005 Telephone: (202) 654-8837 Facsimile: (202) 654-8801
Email: bcrawford@calderwoodharkness.com
cc: Theresa Yun-Park, General Counsel, Cascade Retail Holdings Inc. cc: Renata Vasquez, Partner, Calderwood & Harkness LLP cc: James Underwood, Associate, Calderwood & Harkness LLP
CONFIDENTIAL — PREPARED IN ANTICIPATION OF LITIGATION