CONFIDENTIAL MEDIATION STATEMENT OF CASCADE RETAIL HOLDINGS INC.
FOR THE MEDIATOR'S EYES ONLY — NOT TO BE SHARED WITH ANY OTHER PARTY
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
C.A. No. 2025-0198-MTZ
Cascade Retail Holdings Inc.,
Plaintiff,
v.
Priya Rathore, Derek Linden, Sonia Kaczmarek, Amara Osei, Brent Halvorsen, Lucia Fernandez-Gill, Nathan Tsao, Kira Johansson, and Verdana Commerce Group, Inc.,
Defendants.
Submitted to: The Honorable Philip Ashford (Ret.), Mediator Through Meridian ADR Services LLC Mediation Reference: Meridian-2025-0318-CRH
Mediation Session Date: March 18, 2025 Date of Submission: March 17, 2025
Submitted by:
CALDERWOOD & HARKNESS LLP Counsel for Cascade Retail Holdings Inc.
Bernard Crawford, Responsible Partner 1301 K Street NW, Suite 1200 Washington, DC 20005 Tel: (202) 555-7100
Fax: (202) 555-7199
bcrawford@calderwoodharkness.com
Matter Number: 1038-00006
NOTICE: This Confidential Mediation Statement is submitted solely for the use of the Honorable Philip Ashford (Ret.) in his capacity as Mediator in connection with the mediation session scheduled for March 18, 2025, through Meridian ADR Services LLC (Reference: Meridian-2025-0318-CRH). This statement contains attorney work product, settlement communications, and confidential business information of Cascade Retail Holdings Inc. This statement is protected from disclosure under Delaware Uniform Rule of Evidence 408, Delaware Court of Chancery Rule 174, and the Mediation Agreement executed by all parties on March 10, 2025. This statement is not to be shared with any other party, counsel, or person, and may not be used for any purpose other than the facilitation of the mediation. Unauthorized disclosure is strictly prohibited.
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I. INTRODUCTION AND PURPOSE OF THIS STATEMENT
Cascade Retail Holdings Inc. ("CRH" or the "Company") respectfully submits this Confidential Mediation Statement to the Honorable Philip Ashford (Ret.) in advance of the mediation session scheduled for March 18, 2025. This statement is intended solely for Judge Ashford's review and is submitted through Meridian ADR Services LLC in accordance with the Mediation Agreement executed by all parties on March 10, 2025. It is not to be shared with any other party to this proceeding.
This statement sets forth CRH's factual position, the strength of its legal claims, the evidence supporting those claims, and CRH's settlement objectives. It is organized to give Judge Ashford a comprehensive understanding of the dispute, the parties' respective positions, and the terms upon which CRH believes a fair and durable resolution can be achieved.
CRH is a publicly traded omnichannel retail company, listed on the Nasdaq Global Select Market under the ticker symbol "CRHL," and headquartered in Seattle, Washington. The Company is incorporated in the State of Delaware. For fiscal year 2024, CRH reported total revenue of approximately $6.82 billion, and as of February 2025, the Company's market capitalization stood at approximately $4.1 billion. CRH operates 387 brick-and-mortar retail locations across 34 states, complemented by a rapidly growing direct-to-consumer ecommerce platform that serves customers nationwide. The Company's merchandising division is its core revenue engine, generating approximately $2.3 billion in gross merchandise value ("GMV") in FY2024 across a portfolio of proprietary and third-party product categories that includes home goods, seasonal décor, private-label apparel, and hardlines.
CRH brings this action — styled Cascade Retail Holdings Inc. v. Priya Rathore, et al., C.A. No. 2025-0198-MTZ, pending in the Court of Chancery of the State of Delaware before Vice Chancellor Margaret T. Zhao — to enforce restrictive covenant obligations, protect trade secrets, and recover damages arising from a coordinated scheme by eight former senior merchandising employees (collectively, the "Rathore Group") to defect en masse to Verdana Commerce Group, Inc. ("Verdana"), a direct competitor, while misappropriating CRH's most sensitive proprietary information. The evidence — detailed at length in the sections that follow — demonstrates that the Rathore Group, in concert with Verdana and its private equity sponsor, Greystone Capital Partners, LP, orchestrated a premeditated plan to strip CRH of its merchandising leadership, exfiltrate thousands of confidential files containing CRH's most closely guarded strategic plans and competitive data, and deploy that stolen intelligence to accelerate Verdana's expansion into CRH's strongest product categories.
CRH has strong claims and a willingness to litigate to judgment. The Company has already obtained an ex parte temporary restraining order from Vice Chancellor Zhao, has engaged top-tier forensic, investigative, and economic experts, and has marshaled compelling evidence that will be presented at the preliminary injunction hearing currently scheduled for March 21, 2025. At the same time, CRH recognizes the value of a negotiated resolution that can be implemented swiftly to protect its business interests during the critical spring and fall buying seasons, when merchandising decisions made in the coming weeks and months will determine competitive outcomes for the remainder of the year and beyond. CRH approaches this mediation in good faith, with specific and reasonable settlement parameters, and with the hope that Judge Ashford's experience and facilitation can produce a comprehensive, enforceable resolution that serves all parties' interests.
II. THE PARTIES
A. Cascade Retail Holdings Inc.
Cascade Retail Holdings Inc. is a Delaware corporation with its principal executive offices located at 2200 Elliott Avenue West, Suite 3400, Seattle, Washington 98119. The Company's common stock is listed on the Nasdaq Global Select Market under the ticker symbol "CRHL." CRH's Delaware registered agent is Capitol Registered Agents LLC, located at 1209 Orange Street, Wilmington, Delaware 19801. The Company's Employer Identification Number is 91-2847351.
CRH is led by Chief Executive Officer Marcus Langford, who has served in that capacity since 2018. Theresa Yun-Park serves as the Company's General Counsel and Corporate Secretary, and Roland Ashby serves as Chief People Officer. Each of these individuals has been directly involved in CRH's response to the events giving rise to this litigation.
CRH's merchandising operations are central to the Company's competitive positioning and financial performance. The merchandising division — which, as noted, generated approximately $2.3 billion in GMV in FY2024 — is responsible for all buying, vendor management, private-label development, seasonal planning, assortment strategy, and category analytics across the Company's brick-and-mortar and ecommerce channels. The division is the heart of CRH's value proposition and the primary driver of the Company's margin structure. It is this division that the Rathore Group led, and it is this division's proprietary information, strategic plans, and vendor relationships that the Rathore Group took with them when they departed.
B. The Rathore Group (Individual Defendants)
The eight individual defendants in this action are former senior employees of CRH's merchandising division who resigned simultaneously on February 7, 2025, and accepted employment at Verdana Commerce Group, Inc. They are as follows:
Priya Rathore served as CRH's Senior Vice President of Merchandising from the date of her promotion on March 15, 2021, until her resignation on February 7, 2025. Ms. Rathore was originally hired by CRH on June 3, 2019, as Vice President of Merchandising Strategy, and was elevated to the SVP role approximately twenty-one months later. In FY2024, Ms. Rathore's base salary was $485,000, with a target annual bonus of $290,000 (representing 60% of her base salary). In connection with her March 2021 promotion, Ms. Rathore received a restricted stock unit ("RSU") grant valued at $725,000, subject to four-year ratable vesting commencing on the promotion date. Ms. Rathore's Amended and Restated Employment Agreement, dated March 15, 2021, contains an 18-month post-termination non-compete, a 24-month employee and vendor non-solicitation, and perpetual confidentiality obligations. The consideration for the amended agreement included a $150,000 promotion bonus and the $725,000 RSU grant. Ms. Rathore has accepted the position of President, Merchandising & Strategy at Verdana, with a base salary of $650,000, a sign-on bonus of $1,500,000, a target bonus of 80% of base ($520,000), and a grant of 1.5% of Verdana's fully diluted equity.
Derek Linden served as Vice President, Hardlines Merchandising at CRH for approximately seven years prior to his resignation. Mr. Linden's FY2024 base salary was $340,000. His employment agreement contains an 18-month post-termination non-compete, along with non-solicitation and confidentiality provisions consistent with those applicable to other senior merchandising leaders.
Sonia Kaczmarek served as Vice President, Softlines Merchandising at CRH for approximately five years prior to her resignation. Ms. Kaczmarek's FY2024 base salary was $325,000. Her employment agreement contains an 18-month post-termination non-compete, together with non-solicitation and confidentiality provisions.
Amara Osei served as Director, Private Label Strategy at CRH for approximately four years prior to her resignation. Ms. Osei's FY2024 base salary was $265,000. Her employment agreement contains a 12-month post-termination non-compete, together with non-solicitation and confidentiality provisions.
Brent Halvorsen served as Director, Seasonal Planning & Analytics at CRH for approximately six years prior to his resignation. Mr. Halvorsen's FY2024 base salary was $258,000. His employment agreement contains a 12-month post-termination non-compete, together with non-solicitation and confidentiality provisions.
Lucia Fernandez-Gill served as Director, Vendor Relations (Domestic) at CRH for approximately five years prior to her resignation. Ms. Fernandez-Gill's FY2024 base salary was $248,000. Her employment agreement contains a 12-month post-termination non-compete, together with non-solicitation and confidentiality provisions.
Nathan Tsao served as Senior Manager, eCommerce Merchandising at CRH for approximately three years prior to his resignation. Mr. Tsao's FY2024 base salary was $195,000. His employment agreement contains a 12-month post-termination non-compete, together with non-solicitation and confidentiality provisions.
Kira Johansson served as Senior Manager, Category Analytics at CRH for approximately four years prior to her resignation. Ms. Johansson's FY2024 base salary was $192,000. Her employment agreement contains a 12-month post-termination non-compete, together with non-solicitation and confidentiality provisions.
The eight individual defendants are represented in this action by Catherine Nygaard and Travis Beaumont of Whitfield, Nygaard & Doyle LLP, located at 1000 North Market Street, Suite 1500, Wilmington, Delaware 19801.
C. Verdana Commerce Group, Inc.
Verdana Commerce Group, Inc. is a Delaware corporation with its principal offices at 400 Christiana Gateway, Suite 700, Wilmington, Delaware 19801. Verdana is a privately held omnichannel retailer that directly competes with CRH in 28 overlapping product categories, with particularly aggressive overlap in the home goods, seasonal décor, and private-label apparel segments — which are, not coincidentally, the very categories in which CRH's merchandising division generates its highest margins and where Project Ridgeline charts the Company's five-year growth path.
Verdana's Chief Executive Officer is Warren Dietrich; its General Counsel is Helen Tsoi. For fiscal year 2024, Verdana's estimated revenue was approximately $1.9 billion. Although significantly smaller than CRH, Verdana is well-capitalized and aggressively pursuing growth, backed by its majority private equity owner, Greystone Capital Partners, LP.
Greystone Capital Partners acquired its majority stake in Verdana in the third quarter of 2023 in a transaction valuing the company at $2.4 billion in enterprise value. The acquisition was executed through Greystone Capital Fund VII, LP, which has $8.5 billion in committed capital and is managed by Greystone's Managing Partner, Elliot Westbrook. As detailed below, Mr. Westbrook personally participated in the January 6, 2025 dinner meeting with Verdana CEO Dietrich and Ms. Rathore that launched the coordinated recruitment scheme.
In January 2025, Verdana publicly announced what it described as a "transformational growth initiative" targeting $4 billion in annual revenue by 2028. The announcement specifically cited expansion into CRH's strongest product categories as a key pillar of that strategy. The timing and substance of this announcement — coming just weeks after the January 6 dinner meeting and coinciding with the period during which the Rathore Group was being recruited — confirm that the hiring of CRH's merchandising leadership was central to Verdana's growth strategy.
Verdana is represented in this action by Gavin Blackhall and Meredith Lau of Blackhall & Soren LLP, located at 300 Delaware Avenue, Suite 900, Wilmington, Delaware 19801.
A critical fact for this mediation: Verdana funded aggregate sign-on bonuses of $6,200,000 for the Rathore Group — $1,500,000 for Ms. Rathore personally, and $4,700,000 in aggregate for the remaining seven employees. The magnitude of these payments, offered to an entire team simultaneously, is powerful evidence of a premeditated, well-financed raiding campaign designed to strip CRH of its merchandising leadership and to acquire, by proxy, the proprietary knowledge and trade secrets those individuals carry.
III. FACTUAL BACKGROUND
A. CRH's Merchandising Division and Proprietary Information
The merchandising division is the beating heart of CRH's business. In FY2024, the division generated $2.3 billion in gross merchandise value, representing the Company's single most important competitive asset. The division's success is built on decades of accumulated expertise, proprietary data, and carefully cultivated vendor relationships that are not replicable in the market.
The eight members of the Rathore Group, by virtue of their senior positions in the merchandising hierarchy, had direct and extensive access to the full range of CRH's proprietary merchandising information. This included, without limitation:
• CRH's proprietary vendor negotiation playbooks, which detail the Company's negotiating strategies, cost structures, margin targets, volume commitments, and relationship dynamics with hundreds of domestic and international vendors across all product categories;
• CRH's seasonal buying algorithms, which are proprietary quantitative models that forecast demand, optimize inventory allocation across 387 stores and the ecommerce platform, and guide purchasing decisions worth hundreds of millions of dollars annually;
• CRH's private-label sourcing strategies, including supplier identities, cost-of-goods details, quality specifications, margin structures, and product development timelines for the Company's private-label portfolio, which is a key differentiator and a high-margin revenue stream;
• CRH's customer segmentation data, which provides granular, proprietary insight into purchasing patterns, demographic profiles, geographic preferences, and lifetime value metrics for millions of CRH customers; and
• CRH's ecommerce assortment algorithms, which drive the Company's online product selection, pricing, and promotional strategies.
In October 2024, the merchandising division completed a comprehensive strategic initiative known internally as "Project Ridgeline." Project Ridgeline was a confidential five-year category expansion roadmap that represented months of intensive analysis, strategic planning, and cross-functional collaboration among the division's senior leaders. The Project Ridgeline materials encompass proprietary vendor terms, private-label margin targets, product category expansion plans, ecommerce assortment algorithms, and competitive positioning analyses for each of CRH's core and growth categories over the 2025–2029 planning horizon.
All eight members of the Rathore Group had full and unrestricted access to the Project Ridgeline materials. Indeed, several of them — including Ms. Rathore, Mr. Linden, Ms. Kaczmarek, and Mr. Halvorsen — were principal architects of the Ridgeline strategy. These materials represent years of investment, reflect the Company's most forward-looking and competitively sensitive strategic thinking, are not publicly available in any form, and constitute trade secrets under the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001, et seq. ("DUTSA").
The competitive significance of this information cannot be overstated. If deployed by a direct competitor — particularly one, like Verdana, that has publicly announced its intention to expand into CRH's strongest categories — the Project Ridgeline materials and related proprietary information would provide a devastating head-start advantage, enabling that competitor to replicate years of CRH's strategic work in a fraction of the time and at a fraction of the cost.
B. The Restrictive Covenant Framework
Each of the eight departing employees signed an employment agreement containing restrictive covenant provisions — including non-compete, non-solicitation, and confidentiality obligations — all of which are expressly governed by Delaware law. These agreements were a condition of employment (or, in several cases, of promotion and the receipt of enhanced compensation), and each employee acknowledged and consented to the restrictions in writing.
Priya Rathore's Amended and Restated Employment Agreement, dated March 15, 2021 (the "A&R Employment Agreement"), was executed in connection with her promotion from Vice President of Merchandising Strategy to Senior Vice President of Merchandising. The A&R Employment Agreement contains the following restrictive provisions:
• An 18-month post-termination non-compete with United States-wide geographic scope, prohibiting Ms. Rathore from accepting employment in a merchandising or merchandising-strategy role with any direct competitor of CRH;
• A 24-month employee non-solicitation, prohibiting Ms. Rathore from soliciting, recruiting, or inducing any CRH employee to leave the Company;
• A 24-month vendor non-solicitation, prohibiting Ms. Rathore from soliciting or diverting any CRH vendor or supplier; and
• Perpetual confidentiality obligations covering all proprietary business information, trade secrets, strategic plans, vendor terms, customer data, and other confidential information to which Ms. Rathore had access during her employment.
The A&R Employment Agreement was supported by substantial independent consideration, including a $150,000 promotion bonus and the $725,000 RSU grant described above. The consideration was specifically bargained for and accepted by Ms. Rathore as adequate for the restrictions imposed.
The remaining seven employees signed employment agreements containing similar restrictive provisions, with non-compete periods ranging from 12 to 18 months (depending on the employee's seniority and the date of execution), non-solicitation periods of 18 to 24 months, and perpetual confidentiality obligations. In each case, the agreements were supported by adequate consideration — whether in the form of initial employment, promotions, enhanced compensation, participation in annual bonus programs, or equity grants. In particular, Mr. Linden and Ms. Kaczmarek each signed amended agreements during their employment in connection with promotions to VP-level roles, with independent consideration in the form of increased compensation and equity awards.
All of the restrictive covenants are narrowly tailored under Delaware's well-established reasonableness standard. They are limited in temporal scope (12–18 months, well within the range routinely enforced by Delaware courts), defined in activity restriction (limited to competing merchandising roles at direct competitors), and supported by CRH's legitimate and compelling business interests in protecting its trade secrets, proprietary strategies, vendor relationships, and workforce stability.
C. The Coordinated Departure Scheme — Chronology
The evidence assembled to date — through forensic analysis, private investigation, and expedited discovery — reveals a carefully orchestrated scheme to strip CRH of its merchandising leadership and transfer that capability, along with CRH's most sensitive proprietary information, to Verdana. The chronology is as follows:
January 6, 2025: Verdana CEO Warren Dietrich and Greystone Capital Partners Managing Partner Elliot Westbrook meet privately with Priya Rathore at a dinner at a restaurant in New York City. This meeting was identified and confirmed through the investigation conducted by Aurelian Investigations Group Inc. (lead investigator: Sandra Fielding), which was engaged by CRH on February 21, 2025. The participation of Greystone's Managing Partner — the individual principally responsible for Greystone's $2.4 billion investment in Verdana — underscores the strategic significance that Verdana and its sponsor placed on recruiting CRH's merchandising leadership. This was not an ordinary hiring discussion; it was a PE-orchestrated talent raid designed to accelerate a portfolio company's growth strategy at CRH's expense.
January 10, 2025: Data exfiltration from CRH's systems begins. According to the forensic analysis conducted by Pinnacle Forensics LLC (lead analyst: Dr. Rajiv Anand, engaged February 20, 2025), the first unauthorized downloads of CRH files to personal cloud storage accounts occurred on this date — just four days after the Dietrich-Westbrook-Rathore dinner. The timing strongly suggests that the data theft was initiated in contemplation of the move to Verdana and was intended to ensure that CRH's proprietary information would be available for use at the competitor.
January 13–24, 2025: A series of encrypted messaging exchanges takes place between Ms. Rathore and the other seven members of the Rathore Group. The investigation by Aurelian Investigations has confirmed that these communications discussed departure timing, coordination of resignations, and logistics of the transition to Verdana. The use of encrypted messaging platforms — rather than CRH's corporate communication systems — demonstrates consciousness of guilt and an effort to conceal the conspiracy from CRH.
January 27, 2025: Ms. Rathore signs her Verdana offer letter, accepting the position of President, Merchandising & Strategy, with a base salary of $650,000, a sign-on bonus of $1,500,000, a target annual bonus of 80% of base salary ($520,000), and a grant of 1.5% of Verdana's fully diluted equity.
January 28 – February 4, 2025: The remaining seven employees sign their respective Verdana offer letters during this one-week period. The aggregate sign-on bonuses for the group total $6,200,000 — a staggering sum that reflects the value Verdana and Greystone placed on acquiring not just the talent, but the knowledge and trade secrets these individuals possessed.
January 10 – February 4, 2025 (ongoing): During the same period in which the Rathore Group members are signing Verdana offer letters and coordinating their departure, the data exfiltration continues. In total, 14,327 files — approximately 2.8 gigabytes of data — are downloaded from CRH's Aldermere Systems and Pinnacle Health IT environments to personal cloud storage accounts. The exfiltrated materials include Project Ridgeline strategic presentations, vendor negotiation term sheets, private-label cost models, ecommerce assortment algorithms, and customer segmentation data. This is not incidental or accidental; it is a systematic harvest of CRH's most competitively sensitive information, conducted by individuals who knew precisely which files had the greatest strategic value.
February 7, 2025 (Friday, 4:47 PM PST): All eight members of the Rathore Group submit simultaneous resignation letters via email, effective immediately. The timing — late on a Friday afternoon, Pacific time — was plainly calculated to maximize disruption and minimize CRH's ability to respond before the following business week. The simultaneity of the resignations — eight emails sent at the same minute — is itself powerful evidence of coordination and premeditation.
February 10, 2025 (Monday): CRH Chief People Officer Roland Ashby, upon reviewing the resignation emails on the first business day following the mass departure, immediately alerts General Counsel Theresa Yun-Park to the scope and nature of the departures.
February 12, 2025: CRH's in-house legal team confirms the restrictive covenant provisions in each of the eight employment agreements and, in coordination with the Company's information technology department, identifies anomalous data access and download activity associated with the departing employees' accounts, confirming the data exfiltration.
February 14, 2025: Verdana issues a press release titled "Verdana Commerce Welcomes Industry-Leading Merchandising Team to Accelerate Growth," publicly announcing the hiring of all eight former CRH employees. The press release specifically touts the team's "deep expertise in omnichannel merchandising strategy" and their role in Verdana's "transformational growth initiative." The brazenness of this announcement — issued while the ink was barely dry on the simultaneous resignations and with full knowledge of the departing employees' restrictive covenant obligations — speaks volumes about Verdana's disregard for CRH's contractual rights.
D. CRH's Response
CRH acted swiftly and decisively upon discovering the scope of the coordinated departure and data theft:
February 18, 2025: CRH retains Calderwood & Harkness LLP as outside litigation counsel. The engagement was opened under matter number 1038-00006, with Bernard Crawford designated as the responsible partner.
February 20, 2025: Pinnacle Forensics LLC, a nationally recognized digital forensics firm, is engaged to conduct forensic imaging of CRH-issued devices returned by the departing employees and to perform cloud access log analysis to quantify and characterize the data exfiltration. Dr. Rajiv Anand leads the forensic investigation.
February 21, 2025: Aurelian Investigations Group Inc. is engaged to conduct a private investigation into the recruitment circumstances, including the timeline and nature of the contacts between the Rathore Group, Verdana, and Greystone Capital Partners. Sandra Fielding, a former senior investigator with the FBI's Economic Espionage Unit, leads the investigation.
February 25, 2025: Cease-and-desist letters are sent to all eight departing employees individually, to Verdana Commerce Group, Inc., and to Greystone Capital Partners, LP, demanding immediate cessation of all activities in violation of the restrictive covenants, return of all CRH proprietary information, and preservation of all relevant documents and communications.
February 27, 2025: Whitfield, Nygaard & Doyle LLP enters its appearance on behalf of the Rathore Group (all eight individual defendants). Blackhall & Soren LLP enters its appearance on behalf of Verdana Commerce Group, Inc.
March 3, 2025: Veltrano Consulting Group LLC, an economic consulting firm, is engaged to prepare a preliminary economic damages assessment. Dr. Franklin Oberg, a recognized expert in competition economics and trade-secret valuation, leads the engagement.
March 5, 2025: CRH files its Verified Complaint and Motion for Temporary Restraining Order and Preliminary Injunction in the Court of Chancery of the State of Delaware, initiating C.A. No. 2025-0198-MTZ before Vice Chancellor Margaret T. Zhao. The Verified Complaint asserts five counts, as detailed in Section IV below.
IV. PROCEDURAL HISTORY
On March 5, 2025, CRH filed its five-count Verified Complaint in the Court of Chancery of the State of Delaware, together with a Motion for Temporary Restraining Order and Preliminary Injunction. The Verified Complaint asserts the following claims:
Count I — Breach of Restrictive Covenant (against all eight individual defendants): CRH alleges that each of the eight individual defendants has breached the non-compete provisions of his or her employment agreement by accepting and commencing (or preparing to commence) employment at Verdana Commerce Group, Inc. in directly competing merchandising roles, within the restricted period and within the restricted geographic scope.
Count II — Breach of Confidentiality Obligations (against all eight individual defendants): CRH alleges that each of the eight individual defendants has breached the confidentiality provisions of his or her employment agreement by exfiltrating 14,327 files containing CRH proprietary and trade-secret information to personal cloud storage accounts and by making or intending to make such information available to Verdana.
Count III — Misappropriation of Trade Secrets Under DUTSA (against all eight individual defendants and Verdana): CRH alleges that the defendants have misappropriated CRH's trade secrets — including Project Ridgeline materials, vendor negotiation playbooks, seasonal buying algorithms, private-label sourcing strategies, and customer segmentation data — through improper acquisition, disclosure, and use, in violation of the Delaware Uniform Trade Secrets Act, 6 Del. C. § 2001, et seq.
Count IV — Tortious Interference with Contractual Relations (against Verdana): CRH alleges that Verdana, with actual knowledge of the employment agreements and restrictive covenants binding the Rathore Group, intentionally and without justification induced each of the eight individual defendants to breach those agreements by offering employment, substantial financial incentives, and coordination support.
Count V — Civil Conspiracy (against all defendants, including Verdana): CRH alleges that all defendants, acting in concert and pursuant to a common plan, conspired to breach the restrictive covenants, misappropriate CRH's trade secrets, and transfer CRH's proprietary competitive intelligence to Verdana, and that each defendant committed or substantially assisted in the commission of one or more overt acts in furtherance of the conspiracy.
On March 7, 2025, Vice Chancellor Zhao granted CRH's application for an ex parte temporary restraining order. The TRO restrains all eight individual defendants from commencing employment in merchandising or merchandising-strategy roles at Verdana Commerce Group, Inc. for a period of fourteen days. In connection with the TRO, CRH posted an injunction bond in the amount of $2,500,000 through Broadview Surety Corp. (Bond No. BSC-2025-TRO-04419). The Court's willingness to grant the TRO on an ex parte basis reflects its preliminary assessment that CRH has demonstrated a likelihood of success on the merits and that irreparable harm is imminent.
On March 10, 2025, the Court scheduled the preliminary injunction hearing for March 21, 2025, and ordered expedited discovery in advance of that hearing.
From March 12 through March 18, 2025, the parties have conducted expedited discovery. Among other things, Pinnacle Forensics LLC has produced its forensic report confirming the exfiltration of 14,327 files (approximately 2.8 GB) from CRH systems to personal cloud storage accounts during the period from January 10 through February 4, 2025. CRH has also obtained, through expedited document production, copies of the Verdana offer letters extended to all eight members of the Rathore Group.
On March 15, 2025, the defendants filed their opposition to CRH's motion for a preliminary injunction. The opposition primarily argues that CRH's restrictive covenants are overbroad and unenforceable under Delaware's reasonableness standard. CRH addresses the weakness of these arguments in Section V below.
CRH's reply memorandum in support of its preliminary injunction motion, together with supporting declarations from Sandra Fielding (Aurelian Investigations) and Dr. Franklin Oberg (Veltrano Consulting), are being filed concurrently with the submission of this mediation statement on March 17, 2025.
The current posture of the case is as follows: the TRO remains in effect; the preliminary injunction hearing is set for March 21, 2025; and the parties have agreed to mediate on March 18, 2025, in a final effort to resolve the dispute before the preliminary injunction hearing.
V. STRENGTH OF CRH'S LEGAL CLAIMS
CRH respectfully submits that its legal claims are strong across all five counts and that it is highly likely to prevail at the preliminary injunction hearing and, ultimately, at trial. The following assessment addresses each count in turn and responds to the defenses raised in the defendants' March 15 opposition.
A. Breach of Restrictive Covenant (Count I)
Each of the eight departing employees signed an employment agreement containing a clear, unambiguous non-compete prohibition. The language of these agreements is straightforward: each employee agreed that for a specified period following the termination of employment (12 months for director-level and senior-manager-level employees; 18 months for VP-level and SVP-level employees), he or she would not accept employment in a merchandising or merchandising-strategy role with any direct competitor of CRH within the United States.
The covenants are supported by adequate consideration in every instance. For five of the eight employees — Ms. Osei, Mr. Halvorsen, Ms. Fernandez-Gill, Mr. Tsao, and Ms. Johansson — the restrictive covenants were signed at the time of initial employment, and the offer of employment itself constitutes adequate consideration under Delaware law. For the remaining three — Ms. Rathore, Mr. Linden, and Ms. Kaczmarek — the covenants were contained in amended agreements executed during the course of employment, each supported by independent consideration in the form of promotions, enhanced compensation, and equity grants. Ms. Rathore's A&R Employment Agreement, dated March 15, 2021, was accompanied by a $150,000 promotion bonus and a $725,000 RSU grant as independent consideration — a combined value of $875,000 for an 18-month non-compete. No court applying Delaware law would find this consideration inadequate.
Under well-settled Delaware precedent, restrictive covenants are enforceable when they are reasonable in three respects: temporal scope, geographic scope, and scope of activity restriction, and when they are supported by a legitimate business interest. See, e.g., Cent. Mortgage Co. v. Drayton Securities Mortgage Capital Holdings LLC, 2012 WL 3201139 (Del. Ch. Aug. 7, 2012); Kan-Di-Ki, LLC v. Susi, 2015 WL 4503210 (Del. Ch. July 22, 2015). CRH's covenants satisfy all three prongs:
• Temporal scope: The 12-to-18-month durations are well within the range that Delaware courts routinely enforce for senior executives and employees with access to trade secrets. Courts have upheld non-competes of up to 24 months in analogous circumstances.
• Geographic scope: The United States-wide geographic scope is commensurate with CRH's national operations — 387 stores across 34 states and a nationwide ecommerce platform. A narrower geographic restriction would be meaningless given that CRH competes with Verdana across the entire country, and the competitive harm from misuse of CRH's trade secrets is not confined to any particular region.
• Activity restriction: The restrictions are limited to competing merchandising and merchandising-strategy roles at direct competitors. The defendants are not prohibited from all employment, or even from employment in the retail industry generally. They are prohibited only from performing the specific functions — and deploying the specific knowledge — that pose a direct competitive threat to CRH.
The defendants' primary argument, advanced in their March 15 opposition, is that the covenants are overbroad and unenforceable under Delaware's reasonableness standard. This argument lacks merit. As noted, Delaware courts have consistently enforced non-competes of 12 to 24 months for senior executives with access to trade secrets. The covenants at issue are at the lower end of that range. Moreover, even if the Court were to find any particular provision slightly overbroad — which CRH does not concede — Delaware's blue-pencil doctrine permits the Court to reform the covenant to render it reasonable and enforceable, rather than striking it altogether. See FP UC Holdings, LLC v. Hamilton, 2020 WL 1492783 (Del. Ch. Mar. 27, 2020).
Each of the eight defendants is currently employed at, or has accepted employment at, Verdana Commerce Group, Inc. in a directly competing merchandising role. Ms. Rathore's acceptance of the role of President, Merchandising & Strategy at Verdana is a paradigmatic breach of her 18-month non-compete. The breaches by the remaining seven defendants are equally clear. There is no genuine dispute on this point.
B. Breach of Confidentiality Obligations (Count II)
All eight employment agreements contain perpetual confidentiality obligations that cover, without limitation, all proprietary business information, trade secrets, vendor terms, strategic plans, customer data, and other confidential information to which the employee had access during his or her tenure at CRH. These obligations survive the termination of employment indefinitely.
The forensic evidence compiled by Pinnacle Forensics LLC confirms that 14,327 files — approximately 2.8 gigabytes of data — were exfiltrated from CRH's Aldermere Systems and Pinnacle Health IT environments to the departing employees' personal cloud storage accounts during the period from January 10 through February 4, 2025. This exfiltration occurred while each individual was still a CRH employee — but critically, after each had either signed a Verdana offer letter or was in active discussions with Verdana about doing so. The files were not downloaded for any legitimate CRH business purpose; they were downloaded in contemplation of, and for use in connection with, the defendants' transition to a direct competitor.
The exfiltrated materials include Project Ridgeline presentations, vendor negotiation term sheets, private-label cost models, ecommerce assortment algorithms, and customer segmentation data — every one of which falls squarely within the broad and clearly defined scope of the confidentiality obligations in the employment agreements. The breach is established by uncontroverted forensic evidence and is, frankly, beyond reasonable dispute.
C. Misappropriation of Trade Secrets Under DUTSA (Count III)
CRH's DUTSA claims are supported by each of the statutory elements required under 6 Del. C. § 2001, et seq.
Trade secret status. The Project Ridgeline materials, vendor negotiation playbooks, seasonal buying algorithms, private-label sourcing strategies, and customer segmentation data all qualify as trade secrets under DUTSA. They derive independent economic value from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from their disclosure or use. These materials reflect years of investment, proprietary analysis, and strategic development, and they provide CRH with a significant competitive advantage precisely because competitors do not have access to them.
Reasonable measures to protect secrecy. CRH maintained comprehensive measures to protect the secrecy of these materials. Access was restricted to employees with a demonstrable need to know. All employees with access were required to sign confidentiality agreements. The information was stored on password-protected, access-controlled systems (Aldermere Systems and Pinnacle Health IT) with audit logging. Distribution of Project Ridgeline materials was limited to senior merchandising leaders, and the materials were marked as confidential and proprietary.
Improper acquisition. The defendants acquired the trade secret information through improper means — specifically, by downloading 14,327 files to personal cloud storage accounts while still employed by CRH, for the purpose of using that information at a direct competitor. This conduct constitutes both a breach of the duty of loyalty owed by employees to their employer during the course of employment and a misappropriation by improper means under DUTSA.
Verdana's liability. Verdana is liable under DUTSA as a knowing recipient of misappropriated trade secrets. Verdana hired the entire Rathore Group with full knowledge that each member was bound by restrictive covenants and confidentiality obligations, and with full knowledge — or at minimum, reason to know — that the team possessed CRH's most sensitive proprietary information. Verdana provided $6.2 million in aggregate sign-on bonuses to induce the departure, an extraordinary sum that can only be explained by the value Verdana expected to derive from the team's knowledge of CRH's trade secrets. Under DUTSA, a party that acquires a trade secret knowing or having reason to know that it was acquired by improper means is liable for misappropriation. 6 Del. C. § 2001(2).
D. Tortious Interference with Contractual Relations (Count IV — Verdana)
CRH's tortious interference claim against Verdana is supported by compelling evidence on each element.
Knowledge of the agreements. Verdana had actual knowledge of the employment agreements and restrictive covenants binding each member of the Rathore Group. The existence of non-compete agreements for CRH's senior merchandising leadership was referenced in CRH's public proxy filings, which are readily accessible. Moreover, any competent counsel would have — and Verdana's counsel at Blackhall & Soren LLP undoubtedly did — conduct diligence on the covenant exposure associated with hiring an entire team from a competitor. Verdana cannot claim ignorance.
Intentional and unjustified interference. Verdana did not passively receive applications from dissatisfied employees. Verdana actively recruited the Rathore Group through a deliberate, top-down strategy initiated by its CEO and the Managing Partner of its PE sponsor. The January 6, 2025 dinner meeting — attended by Warren Dietrich and Elliot Westbrook personally — was the opening act. The cascade of offer letters that followed (January 27 through February 4) and the aggregate $6.2 million in sign-on bonuses were the instruments of inducement. There is no legitimate justification for this conduct.
Damages. CRH has suffered, and continues to suffer, substantial harm as a direct and proximate result of Verdana's tortious interference, including the loss of its entire senior merchandising leadership team, the compromise of its trade secrets, the disruption of its operations during the critical buying season, and the competitive harm arising from Verdana's anticipated use of CRH's proprietary information.
Verdana's February 14, 2025 press release — publicly celebrating the hires and explicitly linking them to Verdana's "transformational growth initiative" — confirms Verdana's brazen disregard for CRH's contractual rights and removes any doubt about the intentionality and purpose of the interference.
E. Civil Conspiracy (Count V)
The hallmarks of a civil conspiracy are present on these facts. The coordinated, simultaneous resignation of all eight employees — submitted at the same minute (4:47 PM PST on February 7, 2025) — is not a coincidence. It was the culmination of a plan that began no later than January 6, 2025, when Verdana CEO Dietrich and Greystone Managing Partner Westbrook met privately with Ms. Rathore, and that unfolded over the following month through:
• Encrypted messaging among the Rathore Group members (January 13–24, 2025) to discuss and coordinate the departure;
• Pre-arranged signing of Verdana offer letters by all eight members over a one-week period (January 27 – February 4, 2025);
• Systematic data exfiltration of 14,327 files (January 10 – February 4, 2025); and
• A simultaneous mass resignation timed for maximum disruption (Friday, 4:47 PM PST, February 7, 2025).
Verdana facilitated and participated in the conspiracy by providing the financial incentives ($6.2 million in sign-on bonuses), employment offers, and coordination necessary to execute the plan. Greystone Capital Partners — Verdana's majority owner — was directly involved through Elliot Westbrook's participation in the January 6 dinner meeting that initiated the scheme.
F. Assessment of Defendants' Defenses
CRH has carefully reviewed the arguments raised in the defendants' March 15 opposition to CRH's motion for a preliminary injunction and does not believe they present a credible defense to CRH's claims.
Overbreadth/unreasonableness. As discussed above, Delaware courts have consistently enforced non-competes of 12 to 24 months for senior executives with trade-secret access. CRH's covenants fall squarely within this range and are narrowly tailored in temporal scope, geographic scope, and activity restriction. Even if any aspect were found slightly overbroad, Delaware's blue-pencil doctrine would permit judicial reformation rather than wholesale invalidation.
Adequacy of consideration. Any argument that the covenants for shorter-tenure employees lack adequate consideration is weak. For employees who signed at the time of initial hire, the offer of employment is itself adequate consideration. For employees who signed amended agreements during employment, the consideration — promotions, enhanced compensation, and equity grants — is independently sufficient. Delaware courts do not require dollar-for-dollar proportionality between the consideration provided and the scope of the restriction imposed.
Equitable defenses. The data exfiltration evidence substantially undermines any equitable defense the defendants might raise. A party who steals 14,327 confidential files from an employer's systems — while simultaneously negotiating to join a competitor — is in no position to seek the Court's equitable protection. The defendants' unclean hands vitiate any claim to equitable relief or sympathy.
In sum, CRH assesses the likelihood of success on the merits at the preliminary injunction hearing as strong. The covenant language is clear. The consideration is adequate. The forensic evidence of data exfiltration is uncontroverted. The timeline of coordination is compelling. And the competitive harm is immediate and irreparable.
VI. EVIDENCE SUMMARY
CRH has compiled a substantial evidentiary record in support of its claims, including documentary, forensic, investigative, and expert evidence. The principal categories of evidence are summarized below.
A. Documentary Evidence
CRH's documentary evidence includes, but is not limited to, the following:
• Employment agreements (original and amended) for all eight individual defendants, each containing restrictive covenant, non-solicitation, and confidentiality provisions governed by Delaware law. These agreements are clear and unambiguous in their terms and were executed by each employee with the benefit of legal advice (or the opportunity to obtain it).
• Priya Rathore's Amended and Restated Employment Agreement, dated March 15, 2021, which contains the most extensive set of restrictive covenants (18-month non-compete, 24-month non-solicitation, perpetual confidentiality) and was supported by $875,000 in independent consideration ($150,000 promotion bonus and $725,000 RSU grant).
• Verdana offer letters for all eight individual defendants, obtained through expedited discovery. These documents confirm the positions, compensation, sign-on bonuses, and equity grants extended by Verdana, and provide direct evidence of the magnitude of Verdana's investment in recruiting CRH's merchandising leadership.
• Verdana's press release, dated February 14, 2025, titled "Verdana Commerce Welcomes Industry-Leading Merchandising Team to Accelerate Growth." This document is an admission against interest, confirming Verdana's knowing and intentional hiring of the entire Rathore Group and linking the hires directly to Verdana's competitive strategy targeting CRH's strongest categories.
B. Forensic Evidence (Pinnacle Forensics LLC — Dr. Rajiv Anand)
CRH engaged Pinnacle Forensics LLC on February 20, 2025, to conduct a comprehensive forensic analysis of the data exfiltration. Dr. Rajiv Anand, a recognized expert in digital forensics and electronic evidence, led the investigation. Pinnacle's work has included:
• Forensic imaging of all CRH-issued devices (laptops, tablets, mobile phones) returned by the eight departing employees, preserving the contents in their exact state as of the date of return.
• Cloud access log analysis of CRH's Aldermere Systems and Pinnacle Health IT environments, confirming that 14,327 files — approximately 2.8 gigabytes of data — were downloaded to personal cloud storage accounts associated with the departing employees between January 10 and February 4, 2025.
• File inventory and categorization, identifying the exfiltrated files as including: Project Ridgeline strategic presentations (47 files), vendor negotiation term sheets (312 files), private-label cost models (89 files), ecommerce assortment algorithms and supporting data (1,247 files), customer segmentation data (2,831 files), and thousands of additional files containing proprietary merchandising data, vendor correspondence, and strategic planning materials.
• Forensic report, produced during the expedited discovery period (March 12–18, 2025), setting forth the methodology, findings, and conclusions of Pinnacle's analysis. The report has been provided to the Court and to opposing counsel.
C. Investigative Findings (Aurelian Investigations Group Inc. — Sandra Fielding)
CRH engaged Aurelian Investigations Group Inc. on February 21, 2025, to investigate the circumstances surrounding the recruitment of the Rathore Group by Verdana and Greystone Capital Partners. Sandra Fielding, a former senior investigator with the FBI's Economic Espionage Unit and a recognized expert in corporate intelligence matters, led the investigation. Key findings include:
• Confirmation of the January 6, 2025 private dinner meeting in New York City between Verdana CEO Warren Dietrich, Greystone Capital Partners Managing Partner Elliot Westbrook, and Priya Rathore. The investigation identified the location, confirmed the attendees through independent sources, and established the meeting as the initiating event of the recruitment scheme.
• Confirmation of pre-resignation encrypted messaging exchanges among the eight members of the Rathore Group, conducted through an encrypted messaging platform from January 13 through January 24, 2025. The investigation has established that these communications concerned the timing and coordination of the group's departure from CRH and transition to Verdana.
• Timeline reconstruction demonstrating that the departure was pre-planned over a period of at least one month before the simultaneous resignations on February 7, 2025 — and that the planning was coordinated at every level, from the initial recruitment dinner with Verdana and Greystone leadership to the final, synchronized submission of resignation letters.
D. Damages Analysis (Veltrano Consulting Group LLC — Dr. Franklin Oberg)
CRH engaged Veltrano Consulting Group LLC on March 3, 2025, to prepare a preliminary economic damages assessment. Dr. Franklin Oberg, a recognized expert in competition economics and trade-secret valuation with extensive experience testifying in Delaware Chancery Court proceedings, leads the engagement. Key aspects of the damages analysis include:
• CRH's merchandising division generated $2.3 billion in GMV in FY2024, and the competitive harm from the misuse of the division's trade secrets is measured against this revenue base.
• The damages analysis considers four principal categories of harm: (a) the head-start advantage gained by Verdana through access to Project Ridgeline and proprietary vendor terms, quantified as the cost Verdana would have incurred to develop equivalent strategic intelligence independently; (b) potential vendor diversion in the 28 overlapping product categories, based on vendor concentration analysis and switching cost models; (c) competitive harm from Verdana's accelerated entry into CRH's strongest categories (home goods, seasonal décor, and private-label apparel), measured by projected market share erosion and margin compression; and (d) employee recruitment costs and operational disruption, including the cost of replacing eight senior merchandising professionals and the lost productivity during the transition period.
• A preliminary damages range has been developed and is available for Judge Ashford's review upon request. CRH has not included the specific figures in this statement due to their sensitivity, but CRH's counsel is prepared to discuss the damages analysis in detail during the mediation session.
E. Declarations Filed and To Be Filed
CRH's evidentiary record is supported by the following sworn declarations:
• Declaration of Theresa Yun-Park (CRH General Counsel) — filed March 5, 2025, in support of the Verified Complaint and TRO motion. Ms. Yun-Park's declaration establishes the factual basis for CRH's claims, the nature and scope of the restrictive covenants, and the irreparable harm to CRH.
• Declaration of Roland Ashby (CRH Chief People Officer) — filed March 5, 2025, in support of the Verified Complaint and TRO motion. Mr. Ashby's declaration addresses the circumstances of the simultaneous resignations, the operational impact on CRH's merchandising division, and the Company's efforts to mitigate the harm.
• Declaration of Dr. Rajiv Anand (Pinnacle Forensics LLC) — filed March 5, 2025, in support of the TRO motion. Dr. Anand's declaration presents the preliminary forensic findings regarding data exfiltration, including the number of files, the volume of data, and the categories of information downloaded.
• Declaration of Sandra Fielding (Aurelian Investigations Group Inc.) — being filed March 17, 2025, in support of CRH's reply memorandum on the preliminary injunction motion. Ms. Fielding's declaration details the investigative findings regarding the January 6 dinner meeting, the encrypted messaging exchanges, and the timeline of the coordinated recruitment scheme.
• Declaration of Dr. Franklin Oberg (Veltrano Consulting Group LLC) — being filed March 17, 2025, in support of CRH's reply memorandum on the preliminary injunction motion. Dr. Oberg's declaration presents his preliminary damages analysis and methodology.
VII. IRREPARABLE HARM
CRH's irreparable harm showing is both compelling and urgent. The harm arises from several distinct but reinforcing sources and is intensifying with each passing day.
The Rathore Group's departure represents the loss of the entire senior merchandising leadership team in a single, coordinated event. This is not a case of one or two employees leaving for a competitor — a regrettable but ordinary occurrence in any industry. This is the wholesale extraction of the leadership of CRH's most important operating division, executed simultaneously and by design. The institutional knowledge, vendor relationships, strategic expertise, and operational continuity embodied in this eight-person team cannot be replaced quickly or easily.
Each of these individuals possesses intimate, granular knowledge of CRH's most sensitive strategies, vendor relationships, and forward-looking plans. Priya Rathore, as SVP of Merchandising, was the architect and custodian of the division's overall strategic direction. Derek Linden and Sonia Kaczmarek, as VPs of Hardlines and Softlines respectively, had deep knowledge of CRH's category-specific strategies and vendor economics. Amara Osei led the Company's private-label strategy — a high-margin, proprietary competitive advantage. Brent Halvorsen directed seasonal planning and analytics, with access to CRH's proprietary demand forecasting models and inventory optimization algorithms. Lucia Fernandez-Gill managed the Company's domestic vendor relationships, with detailed knowledge of pricing, volume commitments, and relationship dynamics with hundreds of suppliers. Nathan Tsao and Kira Johansson led the ecommerce merchandising and category analytics functions, respectively, with access to the proprietary digital assortment and customer segmentation intelligence that drives CRH's online business. And all eight had full access to the Project Ridgeline materials, which chart CRH's five-year category expansion strategy.
The harm is compounding daily. Every day the Rathore Group works at Verdana — even in the absence of deliberate trade-secret disclosure — CRH's proprietary knowledge is at risk of being deployed, consciously or unconsciously, for a direct competitor's benefit. The individuals cannot compartmentalize or forget what they know. The strategic insights, vendor economics, and competitive intelligence they carry in their heads — quite apart from the 14,327 files they downloaded — will inevitably inform their work at Verdana. And with every passing day, Verdana moves closer to executing its publicly stated strategy of expanding into CRH's strongest product categories.
That strategy — Verdana's "transformational growth initiative" targeting $4 billion in revenue by 2028 — specifically targets the home goods, seasonal décor, and private-label apparel categories in which CRH generates its highest margins. The recruitment of CRH's merchandising leadership is not an incidental step in this plan; it is the central enabler. With the Rathore Group in place, Verdana gains the ability to replicate CRH's competitive strategy at a fraction of the time and cost it would take to develop equivalent capability independently. The competitive harm to CRH is immediate, direct, and potentially devastating.
Money damages cannot make CRH whole. The competitive advantage embedded in the Project Ridgeline materials and the proprietary vendor playbooks cannot be quantified with precision, and once disclosed to a competitor, it cannot be restored. A dollar award — however large — cannot un-ring the bell. CRH's five-year category expansion strategy, once known to Verdana, will be permanently compromised. The vendor relationships that CRH has cultivated over decades, once approached by Verdana armed with CRH's proprietary terms, will be permanently altered. The customer segmentation insights that drive CRH's marketing and assortment decisions, once in Verdana's hands, will permanently erode CRH's competitive advantage. This is precisely the type of harm that equity was designed to prevent.
In the interim, CRH's merchandising division is being managed on an acting basis by Martin Cho, who has been designated as interim Vice President of Merchandising. Mr. Cho is a capable executive, but he was not a member of the senior merchandising leadership team and was not involved in the development of Project Ridgeline. The loss of institutional knowledge, team continuity, and strategic leadership is causing ongoing operational harm, particularly as the division enters the critical spring buying season.
Finally, it is significant that the Court has already confirmed CRH's showing of irreparable harm. Vice Chancellor Zhao's grant of the ex parte TRO on March 7, 2025, reflects the Court's preliminary assessment that CRH has demonstrated a likelihood of irreparable harm sufficient to justify extraordinary interim relief. CRH is confident that this assessment will be reinforced at the preliminary injunction hearing on March 21.
VIII. CRH'S SETTLEMENT OBJECTIVES
CRH approaches this mediation with a ge