1038-00006 · Calderwood & Harkness LLP · Pre-Litigation Correspondence

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP INTERNAL MEMORANDUM

TO: Bernard Crawford, Partner

FROM: James Underwood, Associate

DATE: March 1, 2025

RE: Analysis of Whitfield, Nygaard & Doyle LLP Response to Cease-and-Desist Letters on Behalf of the Rathore Group

MATTER: Cascade Retail Holdings Inc. v. Rathore et al.

MATTER NO.: 1038-00006

CC: Renata Vasquez; Devon Archer

I. Executive Summary

This memorandum analyzes the February 27, 2025 response letter received from Catherine Nygaard of Whitfield, Nygaard & Doyle LLP ("WND"), 1000 North Market Street, Suite 1500, Wilmington, Delaware 19801, to the cease-and-desist letters sent by this firm on February 25, 2025, on behalf of our client, Cascade Retail Holdings Inc. ("CRH"). WND's letter entered an appearance on behalf of all eight departing employees — Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson (collectively, the "Rathore Group") — and responded substantively to the demands set forth in our cease-and-desist correspondence.

As set forth in detail below, WND's response raises six principal arguments challenging the enforceability of the restrictive covenant provisions contained in each departing employee's respective employment agreement with CRH and disputing the factual basis for CRH's claims of trade secret misappropriation and breach of contract. Specifically, WND contends that: (1) the non-compete provisions are overbroad as to geographic scope; (2) the non-compete duration is excessive; (3) certain employees' agreements lack adequate independent consideration; (4) the functional scope of the covenants is unreasonably broad; (5) no misappropriation of trade secrets or confidential information has occurred; and (6) the Rathore Group reserves the right to assert counterclaims, including for declaratory judgment, tortious interference, and abuse of process.

This memorandum analyzes each of WND's arguments in turn, assesses the relative strength of each position, and recommends CRH's counterpositions as we prepare for the anticipated filing for a temporary restraining order and preliminary injunction ("TRO/PI") in the Delaware Court of Chancery, which we are targeting for March 5, 2025.

Our overall assessment is as follows: while WND's arguments have some surface appeal, particularly with respect to the overbreadth challenge to the nationwide geographic scope for the more junior departing employees, they are unlikely to prevail on balance given the weight of Delaware precedent, the senior level of the departing employees and their enterprise-wide responsibilities, their direct access to Project Ridgeline and other highly sensitive trade secrets, the coordinated and premeditated nature of the mass departure, and — most critically — the forensic evidence developed by Pinnacle Forensics LLC documenting the exfiltration of 14,327 files (approximately 2.8 GB) from CRH's proprietary systems to personal cloud storage accounts over a 26-day period immediately preceding the departures. WND's flat denial of any data exfiltration is directly contradicted by this forensic evidence and represents the weakest aspect of their position. CRH is well-positioned to pursue emergency injunctive relief and should proceed with the planned TRO/PI filing on schedule.

II. Background

A. The Cease-and-Desist Letters

On February 25, 2025, Calderwood & Harkness sent individually addressed cease-and-desist letters to each of the eight former CRH employees comprising the Rathore Group. Each letter was tailored to the specific restrictive covenant provisions in the recipient's employment agreement with CRH, though the letters shared a common substantive structure and set of demands.

The letters demanded: (1) immediate cessation of employment at Verdana Commerce Group, Inc. ("Verdana") in any merchandising, buying, category management, or retail strategy capacity, or in any other capacity that would violate the recipient's non-competition obligations; (2) the return of all CRH confidential information, proprietary materials, and trade secrets, whether in physical or electronic form, including any copies or derivative works; and (3) strict and immediate compliance with the non-competition, non-solicitation, and confidentiality obligations set forth in their respective employment agreements with CRH.

The letters specifically referenced the restrictive covenant provisions applicable to each employee, which vary by seniority level but generally include the following:

• Non-Competition: A post-termination non-competition period of twelve (12) to eighteen (18) months, with the longer period (18 months) applicable to the three most senior departing employees — Priya Rathore (Senior Vice President, Merchandising), Derek Linden (Vice President, Category Management), and Sonia Kaczmarek (Vice President, Vendor Relations). The remaining five employees — Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson — are subject to twelve-month (12-month) non-competition periods. All non-competition clauses specify a United States geographic scope.

• Non-Solicitation of Employees: Restrictions ranging from eighteen (18) to twenty-four (24) months post-termination, prohibiting the solicitation or inducement of CRH employees to leave CRH's employment.

• Non-Solicitation of Vendors: Restrictions ranging from eighteen (18) to twenty-four (24) months post-termination, prohibiting the solicitation of CRH's vendor and supplier relationships for the benefit of a competing business.

• Confidentiality Obligations: Perpetual obligations prohibiting the use or disclosure of CRH's confidential information, trade secrets, and proprietary business data.

All eight employment agreements are governed by Delaware law, with the Delaware Court of Chancery designated as the exclusive forum for disputes arising under or relating to the restrictive covenant provisions. Each agreement contains a provision acknowledging that breach of the restrictive covenants would cause irreparable harm to CRH and that CRH would be entitled to seek injunctive relief without the necessity of proving actual damages.

In addition to the letters sent to the individual departing employees, separate cease-and-desist letters were sent to Verdana Commerce Group, Inc., addressed to Helen Tsoi, General Counsel, at Verdana's headquarters in Austin, Texas, and to Greystone Capital Partners, LP, addressed to Elliot Westbrook, Managing Partner, at Greystone's offices in New York, New York. The letter to Verdana demanded that Verdana immediately cease employing the Rathore Group members in any capacity that would violate their restrictive covenants with CRH and placed Verdana on notice of its potential liability for tortious interference with contractual relations. The letter to Greystone — which is Verdana's controlling private equity sponsor and which we believe financed the coordinated recruitment of the Rathore Group — similarly placed Greystone on notice of its potential exposure.

B. WND's Response

On February 27, 2025, this firm received a letter from Catherine Nygaard, a named partner at Whitfield, Nygaard & Doyle LLP, entering her firm's appearance on behalf of all eight members of the Rathore Group and responding to CRH's cease-and-desist letters. The response was a single, consolidated letter addressing the demands made upon all eight individuals, rather than individual responses for each employee.

WND's letter declined to accede to any of CRH's demands. Ms. Nygaard characterized the restrictive covenant provisions as overbroad and unenforceable under applicable Delaware law, challenged the factual predicates of CRH's claims, and affirmatively asserted that the departing employees' conduct was lawful in all respects.

Specifically, WND's response took the following positions:

First, WND characterized the non-competition clauses as facially overbroad in both geographic scope and duration, asserting that a nationwide restriction is unreasonable and disproportionate to the legitimate business interests CRH seeks to protect.

Second, WND denied any misappropriation of trade secrets or confidential information by any member of the Rathore Group, asserting that all CRH-issued devices had been returned and that no CRH proprietary data had been retained or used by any departing employee.

Third, WND asserted that the departures were voluntary, lawful, and individually motivated by legitimate career advancement opportunities, rather than by any concerted effort to harm CRH or to misappropriate its intellectual property or business relationships.

Fourth, WND reserved all rights on behalf of the Rathore Group and threatened the assertion of counterclaims — including for declaratory judgment, tortious interference with prospective economic advantage, and malicious prosecution or abuse of process — in the event that CRH pursued litigation.

The specific arguments raised by WND, and our analysis of each, are set forth in Section III below.

III. Analysis of WND's Arguments

A. Argument 1: Non-Compete Provisions Are Overbroad as to Geographic Scope

WND's Position. WND contends that the non-competition clauses applicable to each of the eight departing employees are unreasonably overbroad because they restrict competitive employment throughout the entire United States. WND characterizes this nationwide scope as disproportionate to CRH's legitimate protectable business interests, emphasizing that CRH operates brick-and-mortar retail locations in only 34 states and that not all departing employees had responsibilities spanning the entirety of CRH's physical footprint. WND invokes the general Delaware reasonableness standard for restrictive covenants, citing the well-established principle that a post-employment restriction must be no broader than necessary to protect the employer's legitimate interests. In substance, WND argues that the geographic scope should be limited to the states in which CRH maintains physical retail operations, or perhaps further narrowed to the specific regions in which each individual employee had direct operational responsibility.

CRH Counterargument. WND's geographic-scope argument rests on a fundamental mischaracterization of CRH's business. CRH is not merely a brick-and-mortar retailer with operations in 34 states. CRH is an omnichannel retailer with a substantial and growing direct-to-consumer ecommerce platform that serves customers in all 50 states and generates approximately $680 million in annual online revenue. The relevant competitive market for CRH's merchandising, buying, and retail strategy functions is nationwide — and, indeed, increasingly national in scope as CRH's ecommerce penetration continues to grow. To characterize CRH's competitive footprint as limited to the 34 states in which it maintains physical stores would be to ignore the commercial reality of the modern retail industry, in which omnichannel capabilities and direct-to-consumer digital commerce are central to competitive positioning.

Delaware courts apply a totality-of-the-circumstances test when evaluating the reasonableness of a restrictive covenant's geographic scope, weighing the employee's role and responsibilities, the employee's access to confidential information, and the employer's legitimate business interests in protecting itself from competitive harm. Under this framework, the nationwide scope of CRH's non-competition provisions is well-supported. All eight departing employees held senior positions at the Vice President, Director, or Senior Manager level, with enterprise-wide responsibilities that were not limited to any particular geographic region. Priya Rathore, as Senior Vice President of Merchandising, had oversight responsibility for CRH's entire merchandising division, which generated approximately $2.3 billion in gross merchandise value across all channels and all geographic markets. Derek Linden, as Vice President of Category Management, and Sonia Kaczmarek, as Vice President of Vendor Relations, similarly held positions with nationwide scope. Even the more junior members of the group — including Nathan Tsao and Kira Johansson at the Senior Manager level — had access, through their participation in Project Ridgeline and cross-functional team meetings, to strategic information that pertained to CRH's national competitive positioning.

Additionally, the nationwide scope is commensurate with the competitive threat posed by Verdana Commerce Group, which itself operates nationally as a direct competitor to CRH in the same retail categories. The purpose of the non-competition restriction is to prevent the departing employees from leveraging CRH's confidential strategic information in a competitive setting — and Verdana competes with CRH nationally, not on a state-by-state basis.

Assessment. We assess the geographic-scope argument as presenting moderate risk. Delaware courts do occasionally narrow the geographic scope of restrictive covenants that are deemed disproportionate to the employer's demonstrated protectable interests, and a court could potentially narrow the restriction for the more junior employees whose day-to-day responsibilities may have been more regionally focused. However, Delaware courts have upheld nationwide non-competition restrictions for senior executives with national responsibilities, particularly in industries where the employer's competitive market is national in scope. The omnichannel and ecommerce nature of CRH's business provides strong factual support for the nationwide restriction. Moreover, Delaware's blue-pencil doctrine permits courts to narrow an overbroad restriction rather than invalidating it entirely, which means that even if a court were to find the nationwide scope somewhat overbroad for certain employees, the likely remedy would be a narrowing of the geographic restriction rather than a wholesale invalidation of the covenant. This is a point CRH should be prepared to concede strategically, if necessary, while defending the core enforceability of the restriction.

B. Argument 2: Non-Compete Duration Is Excessive

WND's Position. WND argues that the non-competition periods — eighteen (18) months for Rathore, Linden, and Kaczmarek, and twelve (12) months for Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson — are unreasonably long. WND highlights the more junior members of the group, particularly Nathan Tsao (Senior Manager, Ecommerce Merchandising, with a base salary of $195,000 and approximately three years of tenure at CRH) and Kira Johansson (Senior Manager, Assortment Planning, with a base salary of $192,000 and approximately four years of tenure), arguing that the shorter tenures and lower seniority of these employees do not justify even a twelve-month restriction on their ability to earn a livelihood in their chosen field.

CRH Counterargument. WND's duration argument is undercut by the weight of Delaware authority. Delaware courts have routinely enforced twelve-month and eighteen-month non-competition periods for employees who had access to significant trade secrets and confidential business information. The twelve-month periods applicable to the five more junior members of the Rathore Group are at the shorter end of what Delaware courts have consistently found reasonable, and there is substantial precedent for upholding restrictions of this duration without modification.

The eighteen-month periods applicable to Rathore, Linden, and Kaczmarek are somewhat longer but remain well within the range that Delaware courts have sanctioned for senior executives. Notably, all three of these individuals had access to Project Ridgeline — a comprehensive five-year strategic category expansion plan that represents one of CRH's most sensitive and valuable pieces of competitive intelligence. A strategic plan with a five-year time horizon, by definition, has a long competitive shelf life. An eighteen-month non-competition period is a reasonable and proportionate restriction when measured against the duration of the competitive advantage that the misuse of a five-year strategic plan would confer upon a competitor.

Furthermore, the consideration provided to each departing employee was substantial. Base salaries for the Rathore Group ranged from $192,000 (Johansson) to $485,000 (Rathore), with additional annual performance bonuses and equity compensation. The compensation packages provided to these employees reflected, in part, the value of the confidential information and trade secrets to which they were given access, and the restrictive covenant periods are commensurate with the level of trust and access afforded to each individual.

Assessment. We assess the duration argument as presenting low-to-moderate risk for the twelve-month covenants and moderate risk for the eighteen-month covenants. A court could potentially reduce the eighteen-month restriction to twelve months for Rathore, Linden, or Kaczmarek if it concluded that eighteen months was longer than necessary to protect CRH's legitimate interests, although we believe the Project Ridgeline analysis provides strong justification for the longer period. Twelve-month non-competes for the remaining employees are squarely within the range of enforceability under Delaware law and should not present a significant obstacle to enforcement. On balance, the duration arguments are unlikely to result in the invalidation of any covenant; at most, a court might shorten the eighteen-month restrictions to twelve months through judicial modification.

C. Argument 3: Inadequacy of Consideration for Certain Employees

WND's Position. WND raises a consideration-based challenge to the enforceability of the restrictive covenants for certain members of the Rathore Group. Specifically, WND argues that for employees who signed their employment agreements containing restrictive covenants at the time of initial hire — rather than upon a subsequent promotion, amendment, or renegotiation — the continued employment alone may not constitute adequate independent consideration for the non-competition obligation under Delaware law. WND highlights Nathan Tsao and Kira Johansson, who signed their employment agreements at the time of hire and whose agreements have not been subsequently amended, as the employees most vulnerable to a consideration challenge. WND's position appears to be that the initial offer of employment, without more, is insufficient consideration for a restrictive covenant, particularly where the employee has relatively modest tenure and compensation.

CRH Counterargument. WND's consideration argument is the weakest of its six positions and is contrary to well-established Delaware law. Under Delaware law, the commencement of employment constitutes adequate consideration for a restrictive covenant that is entered into at the time of hire as a condition of employment. This principle has been affirmed repeatedly by the Delaware Court of Chancery and the Delaware Supreme Court. When an employee agrees to a restrictive covenant as part of the initial employment relationship — as each member of the Rathore Group did — the employment itself provides the requisite consideration.

Moreover, WND's argument ignores the ongoing consideration that each employee received throughout the course of employment. Each member of the Rathore Group received significant compensation packages that included base salary, annual performance bonuses, and equity awards in the form of restricted stock units. These compensation elements constitute ongoing consideration for the employment relationship, including the restrictive covenant obligations that are part of that relationship. For Tsao, total compensation over his three-year tenure at CRH exceeded $750,000; for Johansson, total compensation over her four-year tenure exceeded $1.05 million. To suggest that these employees received no adequate consideration for their restrictive covenants is not a credible position.

WND's argument also conflates two distinct legal questions: the timing of the covenant (at-hire versus mid-employment) and the adequacy of consideration. Delaware courts have held that the consideration analysis differs depending on when the covenant was executed, but they have consistently validated at-hire covenants where the covenant is a condition of initial employment. The consideration challenges that have succeeded in Delaware have involved mid-employment covenants imposed without any new consideration — a factual scenario that is not present here.

For Priya Rathore specifically, the consideration argument is entirely inapplicable. Rathore executed an Amended and Restated Employment Agreement on March 15, 2021, in connection with her promotion to Senior Vice President of Merchandising. That amendment included a $150,000 promotion bonus and an enhanced restricted stock unit grant valued at $725,000, both of which constitute fresh, independent consideration for the amended restrictive covenants. WND cannot credibly challenge the consideration supporting Rathore's covenants.

Assessment. We assess the consideration argument as presenting low risk. Delaware law is well-established on the point that commencement of employment is adequate consideration for an at-hire restrictive covenant. This is the weakest of WND's arguments, and it should not impede enforcement of any of the Rathore Group's covenants. The argument is likely raised as part of WND's strategy of asserting every available defense, but it lacks substantive merit under controlling Delaware precedent.

D. Argument 4: The Covenants Are Unreasonable in Functional Scope

WND's Position. WND contends that the functional scope of the non-competition clauses is unreasonably broad. WND focuses on the contract language restricting the departing employees from engaging in "any competitive business" or working in "any capacity related to merchandising, buying, or retail strategy" at a competing enterprise. WND argues that this language is functionally overbroad because it precludes the employees from assuming any role at a competitor — even one that does not involve or implicate CRH's confidential information — rather than limiting the restriction to specific functional roles or activities that are directly competitive with the work each employee performed at CRH.

WND makes this argument with particular emphasis on Nathan Tsao and Kira Johansson, asserting that these employees had specialized, narrow roles (Ecommerce Merchandising and Assortment Planning, respectively) that do not justify a blanket exclusion from all merchandising functions at a competing retailer. WND suggests that the covenants, as drafted, would prevent these employees from accepting positions at Verdana even in areas entirely unrelated to their work at CRH, such as store operations, logistics, or finance, so long as the employer is classified as a "competitive business."

CRH Counterargument. WND's functional-scope argument overstates the breadth of the restrictive covenants. Read in context, the non-competition clauses do not prohibit the departing employees from all employment at any competitor; rather, they restrict the employees from engaging in merchandising, buying, category management, and retail strategy functions at a competitive business. The functional scope of the covenants tracks the actual job duties and areas of expertise of each departing employee. All eight members of the Rathore Group worked within CRH's merchandising division, and the covenants restrict competitive merchandising activity specifically. An employee subject to these covenants would be free to accept employment at a competing retailer in a non-merchandising capacity — for example, in human resources, legal, finance, or supply chain logistics — provided the role did not involve merchandising, buying, or retail strategy functions.

Furthermore, WND's attempt to characterize Tsao and Johansson as having "specialized, narrow" roles that do not implicate broader merchandising functions ignores a critical fact: both Tsao and Johansson were active members of the Project Ridgeline working group and had direct access to CRH's most sensitive strategic planning information. Their participation in Project Ridgeline gave them access to enterprise-wide confidential information — including five-year category expansion plans, vendor negotiation strategies, private-label development roadmaps, and customer segmentation analyses — that extended far beyond the scope of their individual day-to-day responsibilities. Additionally, through cross-functional team meetings and shared data environments such as CRH's Aldermere Systems and Pinnacle Health IT platforms, Tsao and Johansson had access to confidential information pertaining to merchandising operations across all categories and channels.

It is also significant that Verdana has hired each member of the Rathore Group into merchandising and retail strategy roles — precisely the functional scope that the covenants are designed to protect. To the extent WND argues that the covenants are overbroad because they might hypothetically prevent the employees from accepting non-merchandising roles at a competitor, that hypothetical concern is not presented by the facts of this case, where the employees have been hired into the exact roles the covenants were designed to restrict.

Finally, even if a court were to find that certain aspects of the functional scope are somewhat broader than necessary, Delaware courts have the authority to blue-pencil overbroad language and narrow the restriction to a reasonable scope, rather than invalidating the covenant in its entirety. Blue-penciling is the standard remedy for overbreadth in Delaware, and it preserves the core enforceability of the restrictive covenant while addressing any marginal overreach.

Assessment. We assess the functional-scope argument as presenting moderate risk. A court could potentially narrow the scope of the restriction for certain employees, particularly if the court concludes that the language "any capacity related to merchandising, buying, or retail strategy" sweeps more broadly than is necessary to protect CRH's legitimate interests. However, the core restriction — prohibiting competitive merchandising employment at a direct competitor — is likely enforceable, and the blue-pencil doctrine provides a safety valve against invalidation of the entire covenant. The fact that the departing employees have actually been hired into merchandising and strategy roles at Verdana significantly mitigates the risk of a court finding the functional scope unreasonable as applied to the facts of this case.

E. Argument 5: No Misappropriation of Trade Secrets

WND's Position. WND categorically denies that any member of the Rathore Group downloaded, retained, or used any CRH confidential information or trade secrets. WND states that all CRH-issued devices — including laptops, mobile devices, and any other company-owned equipment — have been returned to CRH by each departing employee. WND further asserts that none of the departing employees have used any CRH proprietary data in their new roles at Verdana. WND characterizes CRH's allegations of data exfiltration as "speculative" and "unsupported by any evidence," and suggests that CRH's data security concerns are pretextual and designed to bolster an otherwise weak case for injunctive relief.

CRH Counterargument. WND's denial of data exfiltration is directly and unequivocally contradicted by the preliminary findings of Pinnacle Forensics LLC, CRH's retained forensic technology consulting firm. Dr. Rajiv Anand, the lead forensic analyst at Pinnacle, has documented through a systematic forensic audit of CRH's information systems that 14,327 files, totaling approximately 2.8 gigabytes (GB) of data, were downloaded from CRH's Aldermere Systems and Pinnacle Health IT environments to personal cloud storage accounts between January 10, 2025 and February 4, 2025 — a 26-day window that coincides precisely with the period during which the Rathore Group was planning and executing its coordinated departure.

The exfiltrated files include, among other materials:

• Project Ridgeline strategic presentations and financial models, including the five-year category expansion roadmap and associated revenue projections;

• Vendor negotiation term sheets reflecting CRH's pricing, margin, and rebate structures with key suppliers;

• Private-label product development cost models, including manufacturing cost data, landed cost analyses, and margin targets;

• Customer segmentation data and predictive analytics models developed by CRH's data science team; and

• Competitive intelligence reports and market positioning analyses.

Each of these categories of information constitutes trade secrets and confidential business information within the meaning of the Delaware Uniform Trade Secrets Act ("DUTSA"), 6 Del. C. §§ 2001-2009. The information derives independent economic value from not being generally known to or readily ascertainable by competitors, and CRH has taken reasonable measures to maintain its secrecy, including access controls, password protections, confidentiality agreements, and data classification protocols.

The forensic evidence further shows that the downloading was deliberate and systematic, occurring over a sustained 26-day period in a pattern that is inconsistent with normal business activity. The timeline of the data exfiltration correlates precisely with the timeline of the coordinated recruitment effort: the January 6, 2025 dinner between Warren Dietrich (CEO, Verdana), Elliot Westbrook (Managing Partner, Greystone Capital Partners), and Priya Rathore in New York preceded the commencement of data downloads by only four days, and encrypted messaging among members of the Rathore Group was identified between January 13 and January 24, 2025 — the period of heaviest download activity.

WND's assertion that all CRH-issued devices have been returned is not responsive to the data exfiltration concern. The forensic evidence indicates that the files were transferred from CRH's cloud-based systems (Aldermere Systems and Pinnacle Health IT) to personal cloud storage accounts that are outside CRH's possession and control. Returning CRH-issued hardware does not address the proprietary data that resides in personal cloud accounts, personal email accounts, or personal devices that were never CRH property.

The strength of the forensic evidence on this point cannot be overstated. WND's categorical denial — asserted without qualification or nuance — risks undermining their credibility with the court on all other issues. If Dr. Anand's forensic findings are presented to the court through a sworn declaration, as we recommend, WND will face the difficult task of explaining how their clients' blanket denial can be reconciled with documented evidence of 14,327 file transfers to personal accounts during the precise window of the coordinated departure.

Assessment. We assess the trade secret denial as presenting very low risk for WND. The forensic evidence is strong, specific, and directly contradicts WND's categorical denial. This is the weakest of WND's arguments and, if handled effectively in the TRO/PI briefing, may actually undermine WND's credibility on other points where their arguments have somewhat greater force. CRH should lead with this evidence in the TRO papers to establish the urgency and seriousness of the situation and to frame the overall narrative of a coordinated and premeditated effort to misappropriate CRH's most sensitive competitive intelligence.

F. Argument 6: Threatened Counterclaims

WND's Position. WND's letter reserves the right to assert counterclaims on behalf of the Rathore Group in the event that CRH initiates litigation. The threatened counterclaims include: (i) a declaratory judgment action seeking a judicial determination that the restrictive covenants are unenforceable; (ii) a claim for tortious interference with prospective economic advantage, alleging that CRH's enforcement efforts are interfering with the Rathore Group members' new employment relationships with Verdana; and (iii) claims for malicious prosecution and/or abuse of process, alleging that any litigation filed by CRH would be brought without probable cause and for the improper purpose of harassing the departing employees and chilling their legitimate employment opportunities.

CRH Counterargument. Each of the threatened counterclaims lacks merit and appears to be raised primarily as a tactical measure designed to deter CRH from filing suit.

Declaratory Judgment. A counterclaim for declaratory judgment that the restrictive covenants are unenforceable is a standard defensive posture in restrictive covenant litigation. It does not change the substantive analysis of enforceability in any respect — it merely mirrors, from the defendants' perspective, the same issues that CRH will present affirmatively in its complaint and TRO motion. CRH should not be deterred by a declaratory judgment counterclaim, which is procedurally routine and substantively duplicative of the defenses WND would raise in any event.

Tortious Interference with Prospective Economic Advantage. This counterclaim is extremely weak under Delaware law. An employer's enforcement of valid restrictive covenants through legitimate legal process is privileged conduct and does not constitute tortious interference with the employees' prospective economic relationships. Delaware courts have consistently held that the lawful enforcement of contractual rights — including through the filing of a lawsuit and the pursuit of injunctive relief — is not actionable as tortious interference. To hold otherwise would effectively render unenforceable any restrictive covenant, because any effort by an employer to enforce such a covenant would expose the employer to a tortious interference counterclaim. The law does not compel such an absurd result. CRH's actions in sending cease-and-desist letters and pursuing litigation are quintessential exercises of contractual and legal rights, and they are insulated from tortious interference liability as a matter of law.

Malicious Prosecution / Abuse of Process. These counterclaims are similarly without merit. The threshold element of a malicious prosecution claim is the absence of probable cause — that is, the plaintiff must demonstrate that the underlying action was commenced without any reasonable basis in law or fact. Here, CRH has a strong factual and legal basis for its claims, supported by forensic evidence of data exfiltration, well-drafted contractual provisions that are consistent with Delaware enforceability standards, and a pattern of coordinated conduct that supports claims for tortious interference and breach of fiduciary duty against various defendants. The standard for malicious prosecution requires not merely that the plaintiff ultimately failed to prevail, but that the underlying action was commenced without any arguable basis — a standard that is plainly not met here. An abuse of process claim, which requires a showing that legal process was used for an ulterior purpose beyond the legitimate objectives of the litigation, is equally unsupported by the facts.

Assessment. We assess the counterclaim threats as presenting negligible risk. These threatened counterclaims are posturing — a standard component of the defense-side playbook in restrictive covenant disputes — and should not influence CRH's litigation strategy or timeline. The declaratory judgment counterclaim is procedurally routine, the tortious interference counterclaim is barred by privilege, and the malicious prosecution and abuse of process claims are meritless given the strong factual and legal foundation for CRH's case. CRH should proceed with its planned filing without regard to these threats.

IV. Additional Observations

A. WND Does Not Address Verdana's Conduct

A notable omission in WND's response letter is the absence of any discussion of Verdana Commerce Group's role in the coordinated recruitment and departure of the Rathore Group. WND's letter focuses exclusively on defending the individual departing employees and does not address — or even acknowledge — the allegation that Verdana actively orchestrated and facilitated the mass departure, with financial backing from Greystone Capital Partners, LP.

The letter does not mention the January 6, 2025 dinner meeting at which Warren Dietrich (CEO of Verdana) and Elliot Westbrook (Managing Partner of Greystone Capital Partners) met with Priya Rathore in New York City. This meeting, which was identified through the investigative work of Aurelian Investigations Group Inc. (Sandra Fielding, lead investigator), appears to have been the catalyst for the coordinated recruitment effort. It is possible — and, we believe, likely — that WND is not yet aware that CRH has identified this meeting and its participants. If so, the forensic and investigative evidence of this meeting will be particularly impactful when presented to the court in the TRO papers.

WND's silence on Verdana's conduct may reflect a deliberate strategy to distance the Rathore Group from Verdana's tortious interference exposure. If the individual departing employees can be characterized as innocent job-seekers who responded to legitimate recruitment overtures, their defense is stronger than if they are cast as willing participants in a coordinated raid orchestrated by a competitor. WND's decision to avoid any discussion of Verdana's conduct is consistent with this strategic posture.

It is also significant that Verdana has retained separate counsel — Blackhall & Soren LLP, with Gavin Blackhall as lead partner and Meredith Lau as senior associate — who entered an appearance on Verdana's behalf on February 27, 2025, the same day WND responded on behalf of the Rathore Group. However, Blackhall & Soren has not yet responded substantively to CRH's cease-and-desist letter addressed to Verdana. CRH should anticipate that Blackhall & Soren's eventual response will present a separate set of arguments regarding Verdana's alleged tortious interference, and those arguments may or may not be consistent with the positions taken by WND on behalf of the individual employees.

B. WND Represents All Eight Individuals Jointly

WND's decision to represent all eight members of the Rathore Group jointly through a single firm warrants attention. While joint representation is not per se improper in this context, there are potential conflicts of interest among the eight individual defendants that may become more apparent as the litigation develops.

Most significantly, there is a potential divergence of interests between Priya Rathore — who, as the most senior departing employee, appears to have been the primary contact for Verdana's recruitment effort and who is subject to the longest and most restrictive covenant provisions — and the more junior members of the group, particularly Tsao and Johansson, whose involvement in the coordination appears to have been more limited and who may have stronger arguments for the unenforceability of their individual covenants. As the litigation progresses and the facts regarding each individual's level of involvement in the coordinated departure, data exfiltration, and recruitment planning become more fully developed, the interests of the more senior and more junior members of the group may diverge. The more junior employees may have an interest in distancing themselves from the conduct of Rathore and the other senior leaders, while Rathore may have an interest in characterizing the departures as individually motivated rather than centrally coordinated.

We should monitor this situation as the litigation develops and consider whether it may be appropriate, at the right time, to raise WND's joint representation as a potential conflict issue — either through a motion or through informal channels — if we believe that the joint representation is prejudicing any individual defendant's interests or is being used to present a unified front that obscures meaningful differences in culpability among the group members.

C. Implications for TRO/PI Filing Strategy

WND's response letter provides a valuable preview of the arguments that the Rathore Group is likely to advance in opposition to CRH's anticipated TRO/PI motion. CRH should prepare to address each of these arguments head-on in the Memorandum of Law in Support of the TRO, rather than waiting for WND to raise them in opposition briefing. By proactively addressing the overbreadth and reasonableness arguments, CRH can frame the court's analysis favorably and demonstrate the strength of its position.

The TRO papers should emphasize four key themes:

1. Senior Positions and Enterprise-Wide Responsibilities. All eight departing employees held senior positions with enterprise-wide responsibilities that justify the scope and duration of their restrictive covenants. The court should understand that these are not rank-and-file employees subject to boilerplate non-competes; they are senior leaders with access to CRH's most sensitive strategic and competitive information.

2. Direct Access to Project Ridgeline. The Rathore Group had direct access to Project Ridgeline, CRH's five-year strategic category expansion plan, which represents one of the company's most valuable and competitively sensitive trade secrets. The five-year time horizon of this plan underscores the reasonableness of the twelve-to-eighteen-month non-competition periods.

3. Forensic Evidence of Data Exfiltration. The forensic evidence developed by Pinnacle Forensics LLC — documenting the systematic exfiltration of 14,327 files (~2.8 GB) to personal cloud storage — directly contradicts WND's denial of any misappropriation and establishes both the urgency of injunctive relief and the irreparable nature of the harm to CRH.

4. Coordinated and Premeditated Departure. The evidence of a coordinated, premeditated departure — financed by Greystone Capital Partners with approximately $6,200,000 in aggregate sign-on bonuses — transforms this case from a routine single-employee non-compete dispute into a case involving a systematic raid on CRH's merchandising leadership team. The coordinated nature of the departure magnifies the competitive harm and supports the inference that the departures were motivated not by individual career advancement but by a deliberate effort to transplant CRH's merchandising capabilities, personnel, and trade secrets to a direct competitor.

The forensic report from Pinnacle Forensics LLC will be critical to the TRO filing. We recommend including a detailed declaration from Dr. Rajiv Anand setting forth the methodology, findings, and conclusions of the forensic analysis, with supporting exhibits documenting the specific files transferred, the dates and times of each transfer, and the personal cloud accounts to which the files were sent. Dr. Anand's declaration should be prepared in advance and finalized before the filing date.

We also recommend including supporting declarations from Theresa Yun-Park, General Counsel of CRH, and Roland Ashby, Chief People Officer of CRH, to establish the factual record regarding the employment relationships, the restrictive covenant agreements, the circumstances of each employee's departure, the nature and scope of Project Ridgeline, and the competitive harm resulting from the mass departure. These declarations will provide the court with the contextual framework necessary to evaluate the enforceability of the covenants and the irreparable nature of the harm.

V. Recommended Next Steps

Based on the foregoing analysis, we recommend the following next steps:

1. Finalize TRO/PI Motion Papers. Complete the Verified Complaint, Memorandum of Law in Support of Temporary Restraining Order and Preliminary Injunction, and all supporting declarations and exhibits. The briefing should incorporate affirmative responses to each of WND's anticipated arguments as identified in this memorandum. Target filing date: March 5, 2025, in the Delaware Court of Chancery.

2. Complete Pinnacle Forensics Preliminary Report. Coordinate with Dr. Rajiv Anand at Pinnacle Forensics LLC to finalize the preliminary forensic report and prepare Dr. Anand's sworn declaration for inclusion with the TRO filing. The forensic evidence of 14,327 files (~2.8 GB) exfiltrated to personal cloud storage is the strongest single piece of evidence in CRH's case and must be presented in a clear, compelling, and forensically rigorous manner.

3. Continue Coordination with Aurelian Investigations. Continue working with Aurelian Investigations Group Inc. (Sandra Fielding, lead investigator) to further develop the recruitment timeline and evidence of Verdana's and Greystone's involvement in the coordinated departure. Priority items include: additional documentation of the January 6, 2025 dinner meeting (restaurant records, travel records, credit card records); identification of any additional communications between Dietrich, Westbrook, and Rathore Group members; and further analysis of the encrypted messaging activity among the Rathore Group between January 13 and January 24, 2025.

4. Engage Economic Damages Expert. Engage Veltrano Consulting Group LLC (Dr. Franklin Oberg, lead consultant) as CRH's economic damages expert to begin quantifying the competitive harm resulting from the mass departure and trade secret misappropriation. The engagement is scheduled to commence on March 3, 2025. While a fully developed damages analysis will not be necessary for the TRO stage, an early engagement will position CRH to present damages evidence at the preliminary injunction stage and will support the irreparable harm analysis.

5. Prepare for Blackhall & Soren Response. Anticipate that Blackhall & Soren LLP will respond separately on behalf of Verdana Commerce Group, Inc. with its own set of arguments regarding CRH's tortious interference claims against Verdana. Blackhall & Soren may attempt to characterize Verdana's recruitment of the Rathore Group as lawful competition and may challenge the scope of CRH's restrictive covenants from Verdana's perspective as a third party. We should be prepared to address these arguments in the TRO briefing or in a supplemental filing.

6. Brief Bernard Crawford and Renata Vasquez. Schedule a meeting to brief Bernard Crawford and Renata Vasquez on the analysis set forth in this memorandum and to prepare for client communication to Theresa Yun-Park, General Counsel of CRH. Ms. Yun-Park should be apprised of the content of WND's response, our assessment of the arguments raised, and our recommended litigation strategy, so that she can brief CRH's executive leadership team and board, as appropriate.

7. Monitor Joint Representation / Conflict Issues. Continue to monitor WND's joint representation of all eight members of the Rathore Group for potential conflict-of-interest issues. Consider whether and when it may be strategically advantageous to raise the conflict issue — for example, if discovery reveals significant differences in the level of involvement of the more junior employees (Tsao, Johansson) relative to the senior leaders (Rathore, Linden, Kaczmarek) in the coordination of the departure and the data exfiltration.

VI. Conclusion

WND's response to CRH's cease-and-desist letters presents arguments that are, on balance, largely predictable and not persuasive given the strength of the underlying facts and the applicable Delaware precedent.

The strongest argument WND has advanced is the overbreadth challenge to the nationwide geographic scope of the non-competition provisions, particularly as applied to the more junior members of the Rathore Group whose day-to-day responsibilities may not have spanned all 50 states. This is a point on which CRH should be prepared to make a robust factual showing regarding the national scope of its omnichannel business and, if necessary, to accept a judicial narrowing of the geographic restriction through blue-pencil doctrine rather than risk invalidation of the covenant.

The weakest argument WND has advanced is the categorical denial of any data exfiltration or trade secret misappropriation. This denial is flatly contradicted by the forensic evidence developed by Pinnacle Forensics LLC, which documents the systematic transfer of 14,327 files (~2.8 GB) from CRH's systems to personal cloud storage accounts during the precise window of the coordinated departure. WND's unqualified denial on this point may ultimately undermine their credibility with the court on other issues.

CRH's position is strong on the merits. The coordinated mass departure of eight senior merchandising professionals, combined with confirmed data exfiltration of highly sensitive trade secrets (including Project Ridgeline materials), high-profile competitive recruitment orchestrated by Verdana and financed by Greystone Capital Partners, LP (with approximately $6,200,000 in aggregate sign-on bonuses), and well-drafted restrictive covenants governed by Delaware law, presents a compelling case for emergency injunctive relief. We recommend proceeding with the TRO/PI filing in the Delaware Court of Chancery on schedule, with a target filing date of March 5, 2025.

I am available to discuss this analysis at your convenience and will begin preparing the TRO/PI motion papers immediately upon your direction.

Respectfully submitted,

James Underwood Associate Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Direct: (202) 555-4187 junderwood@calderwoodharkness.com

Matter No. 1038-00006

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It is intended solely for the use of the addressee and designated recipients. Any disclosure, copying, distribution, or use of this memorandum or its contents by any person other than the intended recipients is strictly prohibited.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP INTERNAL MEMORANDUM
TO: Bernard Crawford, Partner
FROM: James Underwood, Associate
DATE: March 1, 2025
RE: Analysis of Whitfield, Nygaard & Doyle LLP Response to Cease-and-Desist Letters on Behalf of the Rathore Group
MATTER: Cascade Retail Holdings Inc. v. Rathore et al.
MATTER NO.: 1038-00006
CC: Renata Vasquez; Devon Archer
I. Executive Summary
This memorandum analyzes the February 27, 2025 response letter received from Catherine Nygaard of Whitfield, Nygaard & Doyle LLP ("WND"), 1000 North Market Street, Suite 1500, Wilmington, Delaware 19801, to the cease-and-desist letters sent by this firm on February 25, 2025, on behalf of our client, Cascade Retail Holdings Inc. ("CRH"). WND's letter entered an appearance on behalf of all eight departing employees — Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson (collectively, the "Rathore Group") — and responded substantively to the demands set forth in our cease-and-desist correspondence.
As set forth in detail below, WND's response raises six principal arguments challenging the enforceability of the restrictive covenant provisions contained in each departing employee's respective employment agreement with CRH and disputing the factual basis for CRH's claims of trade secret misappropriation and breach of contract. Specifically, WND contends that: (1) the non-compete provisions are overbroad as to geographic scope; (2) the non-compete duration is excessive; (3) certain employees' agreements lack adequate independent consideration; (4) the functional scope of the covenants is unreasonably broad; (5) no misappropriation of trade secrets or confidential information has occurred; and (6) the Rathore Group reserves the right to assert counterclaims, including for declaratory judgment, tortious interference, and abuse of process.
This memorandum analyzes each of WND's arguments in turn, assesses the relative strength of each position, and recommends CRH's counterpositions as we prepare for the anticipated filing for a temporary restraining order and preliminary injunction ("TRO/PI") in the Delaware Court of Chancery, which we are targeting for March 5, 2025.
Our overall assessment is as follows: while WND's arguments have some surface appeal, particularly with respect to the overbreadth challenge to the nationwide geographic scope for the more junior departing employees, they are unlikely to prevail on balance given the weight of Delaware precedent, the senior level of the departing employees and their enterprise-wide responsibilities, their direct access to Project Ridgeline and other highly sensitive trade secrets, the coordinated and premeditated nature of the mass departure, and — most critically — the forensic evidence developed by Pinnacle Forensics LLC documenting the exfiltration of 14,327 files (approximately 2.8 GB) from CRH's proprietary systems to personal cloud storage accounts over a 26-day period immediately preceding the departures. WND's flat denial of any data exfiltration is directly contradicted by this forensic evidence and represents the weakest aspect of their position. CRH is well-positioned to pursue emergency injunctive relief and should proceed with the planned TRO/PI filing on schedule.
II. Background
A. The Cease-and-Desist Letters
On February 25, 2025, Calderwood & Harkness sent individually addressed cease-and-desist letters to each of the eight former CRH employees comprising the Rathore Group. Each letter was tailored to the specific restrictive covenant provisions in the recipient's employment agreement with CRH, though the letters shared a common substantive structure and set of demands.
The letters demanded: (1) immediate cessation of employment at Verdana Commerce Group, Inc. ("Verdana") in any merchandising, buying, category management, or retail strategy capacity, or in any other capacity that would violate the recipient's non-competition obligations; (2) the return of all CRH confidential information, proprietary materials, and trade secrets, whether in physical or electronic form, including any copies or derivative works; and (3) strict and immediate compliance with the non-competition, non-solicitation, and confidentiality obligations set forth in their respective employment agreements with CRH.
The letters specifically referenced the restrictive covenant provisions applicable to each employee, which vary by seniority level but generally include the following:
• Non-Competition: A post-termination non-competition period of twelve (12) to eighteen (18) months, with the longer period (18 months) applicable to the three most senior departing employees — Priya Rathore (Senior Vice President, Merchandising), Derek Linden (Vice President, Category Management), and Sonia Kaczmarek (Vice President, Vendor Relations). The remaining five employees — Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, and Kira Johansson — are subject to twelve-month (12-month) non-competition periods. All non-competition clauses specify a United States geographic scope.
• Non-Solicitation of Employees: Restrictions ranging from eighteen (18) to twenty-four (24) months post-termination, prohibiting the solicitation or inducement of CRH employees to leave CRH's employment.
• Non-Solicitation of Vendors: Restrictions ranging from eighteen (18) to twenty-four (24) months post-termination, prohibiting the solicitation of CRH's vendor and supplier relationships for the benefit of a competing business.
• Confidentiality Obligations: Perpetual obligations prohibiting the use or disclosure of CRH's confidential information, trade secrets, and proprietary business data.
All eight employment agreements are governed by Delaware law, with the Delaware Court of Chancery designated as the exclusive forum for disputes arising under or relating to the restrictive covenant provisions. Each agreement contains a provision acknowledging that breach of the restrictive covenants would cause irreparable harm to CRH and that CRH would be entitled to seek injunctive relief without the necessity of proving actual damages.
In addition to the letters sent to the individual departing employees, separate cease-and-desist letters were sent to Verdana Commerce Group, Inc., addressed to Helen Tsoi, General Counsel, at Verdana's headquarters in Austin, Texas, and to Greystone Capital Partners, LP, addressed to Elliot Westbrook, Managing Partner, at Greystone's offices in New York, New York. The letter to Verdana demanded that Verdana immediately cease employing the Rathore Group members in any capacity that would violate their restrictive covenants with CRH and placed Verdana on notice of its potential liability for tortious interference with contractual relations. The letter to Greystone — which is Verdana's controlling private equity sponsor and which we believe financed the coordinated recruitment of the Rathore Group — similarly placed Greystone on notice of its potential exposure.
B. WND's Response
On February 27, 2025, this firm received a letter from Catherine Nygaard, a named partner at Whitfield, Nygaard & Doyle LLP, entering her firm's appearance on behalf of all eight members of the Rathore Group and responding to CRH's cease-and-desist letters. The response was a single, consolidated letter addressing the demands made upon all eight individuals, rather than individual responses for each employee.
WND's letter declined to accede to any of CRH's demands. Ms. Nygaard characterized the restrictive covenant provisions as overbroad and unenforceable under applicable Delaware law, challenged the factual predicates of CRH's claims, and affirmatively asserted that the departing employees' conduct was lawful in all respects.
Specifically, WND's response took the following positions:
First, WND characterized the non-competition clauses as facially overbroad in both geographic scope and duration, asserting that a nationwide restriction is unreasonable and disproportionate to the legitimate business interests CRH seeks to protect.
Second, WND denied any misappropriation of trade secrets or confidential information by any member of the Rathore Group, asserting that all CRH-issued devices had been returned and that no CRH proprietary data had been retained or used by any departing employee.
Third, WND asserted that the departures were voluntary, lawful, and individually motivated by legitimate career advancement opportunities, rather than by any concerted effort to harm CRH or to misappropriate its intellectual property or business relationships.
Fourth, WND reserved all rights on behalf of the Rathore Group and threatened the assertion of counterclaims — including for declaratory judgment, tortious interference with prospective economic advantage, and malicious prosecution or abuse of process — in the event that CRH pursued litigation.
The specific arguments raised by WND, and our analysis of each, are set forth in Section III below.
III. Analysis of WND's Arguments
A. Argument 1: Non-Compete Provisions Are Overbroad as to Geographic Scope
WND's Position. WND contends that the non-competition clauses applicable to each of the eight departing employees are unreasonably overbroad because they restrict competitive employment throughout the entire United States. WND characterizes this nationwide scope as disproportionate to CRH's legitimate protectable business interests, emphasizing that CRH operates brick-and-mortar retail locations in only 34 states and that not all departing employees had responsibilities spanning the entirety of CRH's physical footprint. WND invokes the general Delaware reasonableness standard for restrictive covenants, citing the well-established principle that a post-employment restriction must be no broader than necessary to protect the employer's legitimate interests. In substance, WND argues that the geographic scope should be limited to the states in which CRH maintains physical retail operations, or perhaps further narrowed to the specific regions in which each individual employee had direct operational responsibility.
CRH Counterargument. WND's geographic-scope argument rests on a fundamental mischaracterization of CRH's business. CRH is not merely a brick-and-mortar retailer with operations in 34 states. CRH is an omnichannel retailer with a substantial and growing direct-to-consumer ecommerce platform that serves customers in all 50 states and generates approximately $680 million in annual online revenue. The relevant competitive market for CRH's merchandising, buying, and retail strategy functions is nationwide — and, indeed, increasingly national in scope as CRH's ecommerce penetration continues to grow. To characterize CRH's competitive footprint as limited to the 34 states in which it maintains physical stores would be to ignore the commercial reality of the modern retail industry, in which omnichannel capabilities and direct-to-consumer digital commerce are central to competitive positioning.
Delaware courts apply a totality-of-the-circumstances test when evaluating the reasonableness of a restrictive covenant's geographic scope, weighing the employee's role and responsibilities, the employee's access to confidential information, and the employer's legitimate business interests in protecting itself from competitive harm. Under this framework, the nationwide scope of CRH's non-competition provisions is well-supported. All eight departing employees held senior positions at the Vice President, Director, or Senior Manager level, with enterprise-wide responsibilities that were not limited to any particular geographic region. Priya Rathore, as Senior Vice President of Merchandising, had oversight responsibility for CRH's entire merchandising division, which generated approximately $2.3 billion in gross merchandise value across all channels and all geographic markets. Derek Linden, as Vice President of Category Management, and Sonia Kaczmarek, as Vice President of Vendor Relations, similarly held positions with nationwide scope. Even the more junior members of the group — including Nathan Tsao and Kira Johansson at the Senior Manager level — had access, through their participation in Project Ridgeline and cross-functional team meetings, to strategic information that pertained to CRH's national competitive positioning.
Additionally, the nationwide scope is commensurate with the competitive threat posed by Verdana Commerce Group, which itself operates nationally as a direct competitor to CRH in the same retail categories. The purpose of the non-competition restriction is to prevent the departing employees from leveraging CRH's confidential strategic information in a competitive setting — and Verdana competes with CRH nationally, not on a state-by-state basis.
Assessment. We assess the geographic-scope argument as presenting moderate risk. Delaware courts do occasionally narrow the geographic scope of restrictive covenants that are deemed disproportionate to the employer's demonstrated protectable interests, and a court could potentially narrow the restriction for the more junior employees whose day-to-day responsibilities may have been more regionally focused. However, Delaware courts have upheld nationwide non-competition restrictions for senior executives with national responsibilities, particularly in industries where the employer's competitive market is national in scope. The omnichannel and ecommerce nature of CRH's business provides strong factual support for the nationwide restriction. Moreover, Delaware's blue-pencil doctrine permits courts to narrow an overbroad restriction rather than invalidating it entirely, which means that even if a court were to find the nationwide scope somewhat overbroad for certain employees, the likely remedy would be a narrowing of the geographic restriction rather than a wholesale invalidation of the covenant. This is a point CRH should be prepared to concede strategically, if necessary, while defending the core enforceability of the restriction.
B. Argument 2: Non-Compete Duration Is Excessive
WND's Position. WND argues that the non-competition periods — eighteen (18) months for Rathore, Linden, and Kaczmarek, and twelve (12) months for Osei, Halvorsen, Fernandez-Gill, Tsao, and Johansson — are unreasonably long. WND highlights the more junior members of the group, particularly Nathan Tsao (Senior Manager, Ecommerce Merchandising, with a base salary of $195,000 and approximately three years of tenure at CRH) and Kira Johansson (Senior Manager, Assortment Planning, with a base salary of $192,000 and approximately four years of tenure), arguing that the shorter tenures and lower seniority of these employees do not justify even a twelve-month restriction on their ability to earn a livelihood in their chosen field.
CRH Counterargument. WND's duration argument is undercut by the weight of Delaware authority. Delaware courts have routinely enforced twelve-month and eighteen-month non-competition periods for employees who had access to significant trade secrets and confidential business information. The twelve-month periods applicable to the five more junior members of the Rathore Group are at the shorter end of what Delaware courts have consistently found reasonable, and there is substantial precedent for upholding restrictions of this duration without modification.
The eighteen-month periods applicable to Rathore, Linden, and Kaczmarek are somewhat longer but remain well within the range that Delaware courts have sanctioned for senior executives. Notably, all three of these individuals had access to Project Ridgeline — a comprehensive five-year strategic category expansion plan that represents one of CRH's most sensitive and valuable pieces of competitive intelligence. A strategic plan with a five-year time horizon, by definition, has a long competitive shelf life. An eighteen-month non-competition period is a reasonable and proportionate restriction when measured against the duration of the competitive advantage that the misuse of a five-year strategic plan would confer upon a competitor.
Furthermore, the consideration provided to each departing employee was substantial. Base salaries for the Rathore Group ranged from $192,000 (Johansson) to $485,000 (Rathore), with additional annual performance bonuses and equity compensation. The compensation packages provided to these employees reflected, in part, the value of the confidential information and trade secrets to which they were given access, and the restrictive covenant periods are commensurate with the level of trust and access afforded to each individual.
Assessment. We assess the duration argument as presenting low-to-moderate risk for the twelve-month covenants and moderate risk for the eighteen-month covenants. A court could potentially reduce the eighteen-month restriction to twelve months for Rathore, Linden, or Kaczmarek if it concluded that eighteen months was longer than necessary to protect CRH's legitimate interests, although we believe the Project Ridgeline analysis provides strong justification for the longer period. Twelve-month non-competes for the remaining employees are squarely within the range of enforceability under Delaware law and should not present a significant obstacle to enforcement. On balance, the duration arguments are unlikely to result in the invalidation of any covenant; at most, a court might shorten the eighteen-month restrictions to twelve months through judicial modification.
C. Argument 3: Inadequacy of Consideration for Certain Employees
WND's Position. WND raises a consideration-based challenge to the enforceability of the restrictive covenants for certain members of the Rathore Group. Specifically, WND argues that for employees who signed their employment agreements containing restrictive covenants at the time of initial hire — rather than upon a subsequent promotion, amendment, or renegotiation — the continued employment alone may not constitute adequate independent consideration for the non-competition obligation under Delaware law. WND highlights Nathan Tsao and Kira Johansson, who signed their employment agreements at the time of hire and whose agreements have not been subsequently amended, as the employees most vulnerable to a consideration challenge. WND's position appears to be that the initial offer of employment, without more, is insufficient consideration for a restrictive covenant, particularly where the employee has relatively modest tenure and compensation.
CRH Counterargument. WND's consideration argument is the weakest of its six positions and is contrary to well-established Delaware law. Under Delaware law, the commencement of employment constitutes adequate consideration for a restrictive covenant that is entered into at the time of hire as a condition of employment. This principle has been affirmed repeatedly by the Delaware Court of Chancery and the Delaware Supreme Court. When an employee agrees to a restrictive covenant as part of the initial employment relationship — as each member of the Rathore Group did — the employment itself provides the requisite consideration.
Moreover, WND's argument ignores the ongoing consideration that each employee received throughout the course of employment. Each member of the Rathore Group received significant compensation packages that included base salary, annual performance bonuses, and equity awards in the form of restricted stock units. These compensation elements constitute ongoing consideration for the employment relationship, including the restrictive covenant obligations that are part of that relationship. For Tsao, total compensation over his three-year tenure at CRH exceeded $750,000; for Johansson, total compensation over her four-year tenure exceeded $1.05 million. To suggest that these employees received no adequate consideration for their restrictive covenants is not a credible position.
WND's argument also conflates two distinct legal questions: the timing of the covenant (at-hire versus mid-employment) and the adequacy of consideration. Delaware courts have held that the consideration analysis differs depending on when the covenant was executed, but they have consistently validated at-hire covenants where the covenant is a condition of initial employment. The consideration challenges that have succeeded in Delaware have involved mid-employment covenants imposed without any new consideration — a factual scenario that is not present here.
For Priya Rathore specifically, the consideration argument is entirely inapplicable. Rathore executed an Amended and Restated Employment Agreement on March 15, 2021, in connection with her promotion to Senior Vice President of Merchandising. That amendment included a $150,000 promotion bonus and an enhanced restricted stock unit grant valued at $725,000, both of which constitute fresh, independent consideration for the amended restrictive covenants. WND cannot credibly challenge the consideration supporting Rathore's covenants.
Assessment. We assess the consideration argument as presenting low risk. Delaware law is well-established on the point that commencement of employment is adequate consideration for an at-hire restrictive covenant. This is the weakest of WND's arguments, and it should not impede enforcement of any of the Rathore Group's covenants. The argument is likely raised as part of WND's strategy of asserting every available defense, but it lacks substantive merit under controlling Delaware precedent.
D. Argument 4: The Covenants Are Unreasonable in Functional Scope
WND's Position. WND contends that the functional scope of the non-competition clauses is unreasonably broad. WND focuses on the contract language restricting the departing employees from engaging in "any competitive business" or working in "any capacity related to merchandising, buying, or retail strategy" at a competing enterprise. WND argues that this language is functionally overbroad because it precludes the employees from assuming any role at a competitor — even one that does not involve or implicate CRH's confidential information — rather than limiting the restriction to specific functional roles or activities that are directly competitive with the work each employee performed at CRH.
WND makes this argument with particular emphasis on Nathan Tsao and Kira Johansson, asserting that these employees had specialized, narrow roles (Ecommerce Merchandising and Assortment Planning, respectively) that do not justify a blanket exclusion from all merchandising functions at a competing retailer. WND suggests that the covenants, as drafted, would prevent these employees from accepting positions at Verdana even in areas entirely unrelated to their work at CRH, such as store operations, logistics, or finance, so long as the employer is classified as a "competitive business."
CRH Counterargument. WND's functional-scope argument overstates the breadth of the restrictive covenants. Read in context, the non-competition clauses do not prohibit the departing employees from all employment at any competitor; rather, they restrict the employees from engaging in merchandising, buying, category management, and retail strategy functions at a competitive business. The functional scope of the covenants tracks the actual job duties and areas of expertise of each departing employee. All eight members of the Rathore Group worked within CRH's merchandising division, and the covenants restrict competitive merchandising activity specifically. An employee subject to these covenants would be free to accept employment at a competing retailer in a non-merchandising capacity — for example, in human resources, legal, finance, or supply chain logistics — provided the role did not involve merchandising, buying, or retail strategy functions.
Furthermore, WND's attempt to characterize Tsao and Johansson as having "specialized, narrow" roles that do not implicate broader merchandising functions ignores a critical fact: both Tsao and Johansson were active members of the Project Ridgeline working group and had direct access to CRH's most sensitive strategic planning information. Their participation in Project Ridgeline gave them access to enterprise-wide confidential information — including five-year category expansion plans, vendor negotiation strategies, private-label development roadmaps, and customer segmentation analyses — that extended far beyond the scope of their individual day-to-day responsibilities. Additionally, through cross-functional team meetings and shared data environments such as CRH's Aldermere Systems and Pinnacle Health IT platforms, Tsao and Johansson had access to confidential information pertaining to merchandising operations across all categories and channels.
It is also significant that Verdana has hired each member of the Rathore Group into merchandising and retail strategy roles — precisely the functional scope that the covenants are designed to protect. To the extent WND argues that the covenants are overbroad because they might hypothetically prevent the employees from accepting non-merchandising roles at a competitor, that hypothetical concern is not presented by the facts of this case, where the employees have been hired into the exact roles the covenants were designed to restrict.
Finally, even if a court were to find that certain aspects of the functional scope are somewhat broader than necessary, Delaware courts have the authority to blue-pencil overbroad language and narrow the restriction to a reasonable scope, rather than invalidating the covenant in its entirety. Blue-penciling is the standard remedy for overbreadth in Delaware, and it preserves the core enforceability of the restrictive covenant while addressing any marginal overreach.
Assessment. We assess the functional-scope argument as presenting moderate risk. A court could potentially narrow the scope of the restriction for certain employees, particularly if the court concludes that the language "any capacity related to merchandising, buying, or retail strategy" sweeps more broadly than is necessary to protect CRH's legitimate interests. However, the core restriction — prohibiting competitive merchandising employment at a direct competitor — is likely enforceable, and the blue-pencil doctrine provides a safety valve against invalidation of the entire covenant. The fact that the departing employees have actually been hired into merchandising and strategy roles at Verdana significantly mitigates the risk of a court finding the functional scope unreasonable as applied to the facts of this case.
E. Argument 5: No Misappropriation of Trade Secrets
WND's Position. WND categorically denies that any member of the Rathore Group downloaded, retained, or used any CRH confidential information or trade secrets. WND states that all CRH-issued devices — including laptops, mobile devices, and any other company-owned equipment — have been returned to CRH by each departing employee. WND further asserts that none of the departing employees have used any CRH proprietary data in their new roles at Verdana. WND characterizes CRH's allegations of data exfiltration as "speculative" and "unsupported by any evidence," and suggests that CRH's data security concerns are pretextual and designed to bolster an otherwise weak case for injunctive relief.
CRH Counterargument. WND's denial of data exfiltration is directly and unequivocally contradicted by the preliminary findings of Pinnacle Forensics LLC, CRH's retained forensic technology consulting firm. Dr. Rajiv Anand, the lead forensic analyst at Pinnacle, has documented through a systematic forensic audit of CRH's information systems that 14,327 files, totaling approximately 2.8 gigabytes (GB) of data, were downloaded from CRH's Aldermere Systems and Pinnacle Health IT environments to personal cloud storage accounts between January 10, 2025 and February 4, 2025 — a 26-day window that coincides precisely with the period during which the Rathore Group was planning and executing its coordinated departure.
The exfiltrated files include, among other materials:
• Project Ridgeline strategic presentations and financial models, including the five-year category expansion roadmap and associated revenue projections;
• Vendor negotiation term sheets reflecting CRH's pricing, margin, and rebate structures with key suppliers;
• Private-label product development cost models, including manufacturing cost data, landed cost analyses, and margin targets;
• Customer segmentation data and predictive analytics models developed by CRH's data science team; and
• Competitive intelligence reports and market positioning analyses.
Each of these categories of information constitutes trade secrets and confidential business information within the meaning of the Delaware Uniform Trade Secrets Act ("DUTSA"), 6 Del. C. §§ 2001-2009. The information derives independent economic value from not being generally known to or readily ascertainable by competitors, and CRH has taken reasonable measures to maintain its secrecy, including access controls, password protections, confidentiality agreements, and data classification protocols.
The forensic evidence further shows that the downloading was deliberate and systematic, occurring over a sustained 26-day period in a pattern that is inconsistent with normal business activity. The timeline of the data exfiltration correlates precisely with the timeline of the coordinated recruitment effort: the January 6, 2025 dinner between Warren Dietrich (CEO, Verdana), Elliot Westbrook (Managing Partner, Greystone Capital Partners), and Priya Rathore in New York preceded the commencement of data downloads by only four days, and encrypted messaging among members of the Rathore Group was identified between January 13 and January 24, 2025 — the period of heaviest download activity.
WND's assertion that all CRH-issued devices have been returned is not responsive to the data exfiltration concern. The forensic evidence indicates that the files were transferred from CRH's cloud-based systems (Aldermere Systems and Pinnacle Health IT) to personal cloud storage accounts that are outside CRH's possession and control. Returning CRH-issued hardware does not address the proprietary data that resides in personal cloud accounts, personal email accounts, or personal devices that were never CRH property.
The strength of the forensic evidence on this point cannot be overstated. WND's categorical denial — asserted without qualification or nuance — risks undermining their credibility with the court on all other issues. If Dr. Anand's forensic findings are presented to the court through a sworn declaration, as we recommend, WND will face the difficult task of explaining how their clients' blanket denial can be reconciled with documented evidence of 14,327 file transfers to personal accounts during the precise window of the coordinated departure.
Assessment. We assess the trade secret denial as presenting very low risk for WND. The forensic evidence is strong, specific, and directly contradicts WND's categorical denial. This is the weakest of WND's arguments and, if handled effectively in the TRO/PI briefing, may actually undermine WND's credibility on other points where their arguments have somewhat greater force. CRH should lead with this evidence in the TRO papers to establish the urgency and seriousness of the situation and to frame the overall narrative of a coordinated and premeditated effort to misappropriate CRH's most sensitive competitive intelligence.
F. Argument 6: Threatened Counterclaims
WND's Position. WND's letter reserves the right to assert counterclaims on behalf of the Rathore Group in the event that CRH initiates litigation. The threatened counterclaims include: (i) a declaratory judgment action seeking a judicial determination that the restrictive covenants are unenforceable; (ii) a claim for tortious interference with prospective economic advantage, alleging that CRH's enforcement efforts are interfering with the Rathore Group members' new employment relationships with Verdana; and (iii) claims for malicious prosecution and/or abuse of process, alleging that any litigation filed by CRH would be brought without probable cause and for the improper purpose of harassing the departing employees and chilling their legitimate employment opportunities.
CRH Counterargument. Each of the threatened counterclaims lacks merit and appears to be raised primarily as a tactical measure designed to deter CRH from filing suit.
Declaratory Judgment. A counterclaim for declaratory judgment that the restrictive covenants are unenforceable is a standard defensive posture in restrictive covenant litigation. It does not change the substantive analysis of enforceability in any respect — it merely mirrors, from the defendants' perspective, the same issues that CRH will present affirmatively in its complaint and TRO motion. CRH should not be deterred by a declaratory judgment counterclaim, which is procedurally routine and substantively duplicative of the defenses WND would raise in any event.
Tortious Interference with Prospective Economic Advantage. This counterclaim is extremely weak under Delaware law. An employer's enforcement of valid restrictive covenants through legitimate legal process is privileged conduct and does not constitute tortious interference with the employees' prospective economic relationships. Delaware courts have consistently held that the lawful enforcement of contractual rights — including through the filing of a lawsuit and the pursuit of injunctive relief — is not actionable as tortious interference. To hold otherwise would effectively render unenforceable any restrictive covenant, because any effort by an employer to enforce such a covenant would expose the employer to a tortious interference counterclaim. The law does not compel such an absurd result. CRH's actions in sending cease-and-desist letters and pursuing litigation are quintessential exercises of contractual and legal rights, and they are insulated from tortious interference liability as a matter of law.
Malicious Prosecution / Abuse of Process. These counterclaims are similarly without merit. The threshold element of a malicious prosecution claim is the absence of probable cause — that is, the plaintiff must demonstrate that the underlying action was commenced without any reasonable basis in law or fact. Here, CRH has a strong factual and legal basis for its claims, supported by forensic evidence of data exfiltration, well-drafted contractual provisions that are consistent with Delaware enforceability standards, and a pattern of coordinated conduct that supports claims for tortious interference and breach of fiduciary duty against various defendants. The standard for malicious prosecution requires not merely that the plaintiff ultimately failed to prevail, but that the underlying action was commenced without any arguable basis — a standard that is plainly not met here. An abuse of process claim, which requires a showing that legal process was used for an ulterior purpose beyond the legitimate objectives of the litigation, is equally unsupported by the facts.
Assessment. We assess the counterclaim threats as presenting negligible risk. These threatened counterclaims are posturing — a standard component of the defense-side playbook in restrictive covenant disputes — and should not influence CRH's litigation strategy or timeline. The declaratory judgment counterclaim is procedurally routine, the tortious interference counterclaim is barred by privilege, and the malicious prosecution and abuse of process claims are meritless given the strong factual and legal foundation for CRH's case. CRH should proceed with its planned filing without regard to these threats.
IV. Additional Observations
A. WND Does Not Address Verdana's Conduct
A notable omission in WND's response letter is the absence of any discussion of Verdana Commerce Group's role in the coordinated recruitment and departure of the Rathore Group. WND's letter focuses exclusively on defending the individual departing employees and does not address — or even acknowledge — the allegation that Verdana actively orchestrated and facilitated the mass departure, with financial backing from Greystone Capital Partners, LP.
The letter does not mention the January 6, 2025 dinner meeting at which Warren Dietrich (CEO of Verdana) and Elliot Westbrook (Managing Partner of Greystone Capital Partners) met with Priya Rathore in New York City. This meeting, which was identified through the investigative work of Aurelian Investigations Group Inc. (Sandra Fielding, lead investigator), appears to have been the catalyst for the coordinated recruitment effort. It is possible — and, we believe, likely — that WND is not yet aware that CRH has identified this meeting and its participants. If so, the forensic and investigative evidence of this meeting will be particularly impactful when presented to the court in the TRO papers.
WND's silence on Verdana's conduct may reflect a deliberate strategy to distance the Rathore Group from Verdana's tortious interference exposure. If the individual departing employees can be characterized as innocent job-seekers who responded to legitimate recruitment overtures, their defense is stronger than if they are cast as willing participants in a coordinated raid orchestrated by a competitor. WND's decision to avoid any discussion of Verdana's conduct is consistent with this strategic posture.
It is also significant that Verdana has retained separate counsel — Blackhall & Soren LLP, with Gavin Blackhall as lead partner and Meredith Lau as senior associate — who entered an appearance on Verdana's behalf on February 27, 2025, the same day WND responded on behalf of the Rathore Group. However, Blackhall & Soren has not yet responded substantively to CRH's cease-and-desist letter addressed to Verdana. CRH should anticipate that Blackhall & Soren's eventual response will present a separate set of arguments regarding Verdana's alleged tortious interference, and those arguments may or may not be consistent with the positions taken by WND on behalf of the individual employees.
B. WND Represents All Eight Individuals Jointly
WND's decision to represent all eight members of the Rathore Group jointly through a single firm warrants attention. While joint representation is not per se improper in this context, there are potential conflicts of interest among the eight individual defendants that may become more apparent as the litigation develops.
Most significantly, there is a potential divergence of interests between Priya Rathore — who, as the most senior departing employee, appears to have been the primary contact for Verdana's recruitment effort and who is subject to the longest and most restrictive covenant provisions — and the more junior members of the group, particularly Tsao and Johansson, whose involvement in the coordination appears to have been more limited and who may have stronger arguments for the unenforceability of their individual covenants. As the litigation progresses and the facts regarding each individual's level of involvement in the coordinated departure, data exfiltration, and recruitment planning become more fully developed, the interests of the more senior and more junior members of the group may diverge. The more junior employees may have an interest in distancing themselves from the conduct of Rathore and the other senior leaders, while Rathore may have an interest in characterizing the departures as individually motivated rather than centrally coordinated.
We should monitor this situation as the litigation develops and consider whether it may be appropriate, at the right time, to raise WND's joint representation as a potential conflict issue — either through a motion or through informal channels — if we believe that the joint representation is prejudicing any individual defendant's interests or is being used to present a unified front that obscures meaningful differences in culpability among the group members.
C. Implications for TRO/PI Filing Strategy
WND's response letter provides a valuable preview of the arguments that the Rathore Group is likely to advance in opposition to CRH's anticipated TRO/PI motion. CRH should prepare to address each of these arguments head-on in the Memorandum of Law in Support of the TRO, rather than waiting for WND to raise them in opposition briefing. By proactively addressing the overbreadth and reasonableness arguments, CRH can frame the court's analysis favorably and demonstrate the strength of its position.
The TRO papers should emphasize four key themes:
1. Senior Positions and Enterprise-Wide Responsibilities. All eight departing employees held senior positions with enterprise-wide responsibilities that justify the scope and duration of their restrictive covenants. The court should understand that these are not rank-and-file employees subject to boilerplate non-competes; they are senior leaders with access to CRH's most sensitive strategic and competitive information.
2. Direct Access to Project Ridgeline. The Rathore Group had direct access to Project Ridgeline, CRH's five-year strategic category expansion plan, which represents one of the company's most valuable and competitively sensitive trade secrets. The five-year time horizon of this plan underscores the reasonableness of the twelve-to-eighteen-month non-competition periods.
3. Forensic Evidence of Data Exfiltration. The forensic evidence developed by Pinnacle Forensics LLC — documenting the systematic exfiltration of 14,327 files (~2.8 GB) to personal cloud storage — directly contradicts WND's denial of any misappropriation and establishes both the urgency of injunctive relief and the irreparable nature of the harm to CRH.
4. Coordinated and Premeditated Departure. The evidence of a coordinated, premeditated departure — financed by Greystone Capital Partners with approximately $6,200,000 in aggregate sign-on bonuses — transforms this case from a routine single-employee non-compete dispute into a case involving a systematic raid on CRH's merchandising leadership team. The coordinated nature of the departure magnifies the competitive harm and supports the inference that the departures were motivated not by individual career advancement but by a deliberate effort to transplant CRH's merchandising capabilities, personnel, and trade secrets to a direct competitor.
The forensic report from Pinnacle Forensics LLC will be critical to the TRO filing. We recommend including a detailed declaration from Dr. Rajiv Anand setting forth the methodology, findings, and conclusions of the forensic analysis, with supporting exhibits documenting the specific files transferred, the dates and times of each transfer, and the personal cloud accounts to which the files were sent. Dr. Anand's declaration should be prepared in advance and finalized before the filing date.
We also recommend including supporting declarations from Theresa Yun-Park, General Counsel of CRH, and Roland Ashby, Chief People Officer of CRH, to establish the factual record regarding the employment relationships, the restrictive covenant agreements, the circumstances of each employee's departure, the nature and scope of Project Ridgeline, and the competitive harm resulting from the mass departure. These declarations will provide the court with the contextual framework necessary to evaluate the enforceability of the covenants and the irreparable nature of the harm.
V. Recommended Next Steps
Based on the foregoing analysis, we recommend the following next steps:
1. Finalize TRO/PI Motion Papers. Complete the Verified Complaint, Memorandum of Law in Support of Temporary Restraining Order and Preliminary Injunction, and all supporting declarations and exhibits. The briefing should incorporate affirmative responses to each of WND's anticipated arguments as identified in this memorandum. Target filing date: March 5, 2025, in the Delaware Court of Chancery.
2. Complete Pinnacle Forensics Preliminary Report. Coordinate with Dr. Rajiv Anand at Pinnacle Forensics LLC to finalize the preliminary forensic report and prepare Dr. Anand's sworn declaration for inclusion with the TRO filing. The forensic evidence of 14,327 files (~2.8 GB) exfiltrated to personal cloud storage is the strongest single piece of evidence in CRH's case and must be presented in a clear, compelling, and forensically rigorous manner.
3. Continue Coordination with Aurelian Investigations. Continue working with Aurelian Investigations Group Inc. (Sandra Fielding, lead investigator) to further develop the recruitment timeline and evidence of Verdana's and Greystone's involvement in the coordinated departure. Priority items include: additional documentation of the January 6, 2025 dinner meeting (restaurant records, travel records, credit card records); identification of any additional communications between Dietrich, Westbrook, and Rathore Group members; and further analysis of the encrypted messaging activity among the Rathore Group between January 13 and January 24, 2025.
4. Engage Economic Damages Expert. Engage Veltrano Consulting Group LLC (Dr. Franklin Oberg, lead consultant) as CRH's economic damages expert to begin quantifying the competitive harm resulting from the mass departure and trade secret misappropriation. The engagement is scheduled to commence on March 3, 2025. While a fully developed damages analysis will not be necessary for the TRO stage, an early engagement will position CRH to present damages evidence at the preliminary injunction stage and will support the irreparable harm analysis.
5. Prepare for Blackhall & Soren Response. Anticipate that Blackhall & Soren LLP will respond separately on behalf of Verdana Commerce Group, Inc. with its own set of arguments regarding CRH's tortious interference claims against Verdana. Blackhall & Soren may attempt to characterize Verdana's recruitment of the Rathore Group as lawful competition and may challenge the scope of CRH's restrictive covenants from Verdana's perspective as a third party. We should be prepared to address these arguments in the TRO briefing or in a supplemental filing.
6. Brief Bernard Crawford and Renata Vasquez. Schedule a meeting to brief Bernard Crawford and Renata Vasquez on the analysis set forth in this memorandum and to prepare for client communication to Theresa Yun-Park, General Counsel of CRH. Ms. Yun-Park should be apprised of the content of WND's response, our assessment of the arguments raised, and our recommended litigation strategy, so that she can brief CRH's executive leadership team and board, as appropriate.
7. Monitor Joint Representation / Conflict Issues. Continue to monitor WND's joint representation of all eight members of the Rathore Group for potential conflict-of-interest issues. Consider whether and when it may be strategically advantageous to raise the conflict issue — for example, if discovery reveals significant differences in the level of involvement of the more junior employees (Tsao, Johansson) relative to the senior leaders (Rathore, Linden, Kaczmarek) in the coordination of the departure and the data exfiltration.
VI. Conclusion
WND's response to CRH's cease-and-desist letters presents arguments that are, on balance, largely predictable and not persuasive given the strength of the underlying facts and the applicable Delaware precedent.
The strongest argument WND has advanced is the overbreadth challenge to the nationwide geographic scope of the non-competition provisions, particularly as applied to the more junior members of the Rathore Group whose day-to-day responsibilities may not have spanned all 50 states. This is a point on which CRH should be prepared to make a robust factual showing regarding the national scope of its omnichannel business and, if necessary, to accept a judicial narrowing of the geographic restriction through blue-pencil doctrine rather than risk invalidation of the covenant.
The weakest argument WND has advanced is the categorical denial of any data exfiltration or trade secret misappropriation. This denial is flatly contradicted by the forensic evidence developed by Pinnacle Forensics LLC, which documents the systematic transfer of 14,327 files (~2.8 GB) from CRH's systems to personal cloud storage accounts during the precise window of the coordinated departure. WND's unqualified denial on this point may ultimately undermine their credibility with the court on other issues.
CRH's position is strong on the merits. The coordinated mass departure of eight senior merchandising professionals, combined with confirmed data exfiltration of highly sensitive trade secrets (including Project Ridgeline materials), high-profile competitive recruitment orchestrated by Verdana and financed by Greystone Capital Partners, LP (with approximately $6,200,000 in aggregate sign-on bonuses), and well-drafted restrictive covenants governed by Delaware law, presents a compelling case for emergency injunctive relief. We recommend proceeding with the TRO/PI filing in the Delaware Court of Chancery on schedule, with a target filing date of March 5, 2025.
I am available to discuss this analysis at your convenience and will begin preparing the TRO/PI motion papers immediately upon your direction.
Respectfully submitted,
James Underwood Associate Calderwood & Harkness LLP 1301 K Street NW, Suite 1200 Washington, DC 20005 Direct: (202) 555-4187 junderwood@calderwoodharkness.com
Matter No. 1038-00006
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It is intended solely for the use of the addressee and designated recipients. Any disclosure, copying, distribution, or use of this memorandum or its contents by any person other than the intended recipients is strictly prohibited.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP INTERNAL MEMORANDUM

MATTER NO.: 1038-00006

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