MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: File — Matter No. 1038-00007
FROM: Douglas Carmichael, Partner; Francesca Morano, Partner
DATE: June 30, 2023
RE: Matter Closing Memorandum and Final Fee Summary — Vantor Holdings Corp. v. Cascade Retail Holdings Inc., Case No. 21STCV-34872, Superior Court of California, County of Los Angeles
CC: Yuki Nakamura, Senior Associate; Carlos Espinoza, Associate
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I. Purpose
This memorandum formally closes Calderwood & Harkness LLP Matter No. 1038-00007 and provides a comprehensive summary of the matter outcome, litigation history, settlement terms, total fees and costs incurred, insurance recoveries, and net economic impact to the client, Cascade Retail Holdings Inc. ("Cascade" or "CRH"). This memorandum is intended to serve as the definitive file-closing record for the matter and to memorialize the key facts, strategic decisions, and financial outcomes associated with the firm's engagement.
Matter No. 1038-00007 was opened on September 13, 2021, following the filing of a complaint by Vantor Holdings Corp. ("Vantor" or "VHC") against Cascade in the Superior Court of California, County of Los Angeles. The matter was actively litigated through all phases—pleadings, discovery, expert analysis, dispositive motions, and settlement negotiations—over a period of approximately twenty-one months. The matter is being closed effective June 30, 2023, following the filing of a Joint Stipulation of Dismissal with Prejudice on June 23, 2023, and the execution of a Settlement Agreement and Mutual Release on June 12, 2023.
This memorandum is protected by the attorney-client privilege, the work product doctrine, and such other protections as may be applicable under federal and state law. It is prepared for the purpose of documenting the firm's representation of Cascade in connection with this matter and should not be disclosed to any third party without the prior written consent of the undersigned partners and the client.
II. Client and Engagement Summary
A. Client Information
The firm's client in this matter is Cascade Retail Holdings Inc. ("Cascade" or "CRH"), a Delaware corporation publicly traded on the Nasdaq Stock Market under the ticker symbol CRHI. Cascade maintains its principal corporate headquarters at 2200 Elliott Avenue West, Suite 1400, Seattle, Washington 98119. For fiscal year 2021, Cascade reported annual revenue of approximately $6.8 billion, and its market capitalization as of the commencement of this litigation in September 2021 was approximately $14.2 billion.
Cascade is a multi-channel retail and e-commerce operator with a diversified portfolio of consumer product offerings spanning home goods, consumer electronics accessories, personal care, apparel, and general merchandise. At the time of the events giving rise to this litigation, Cascade operated more than 340 retail locations across 22 states and maintained a substantial and growing direct-to-consumer e-commerce business. Cascade's supply chain operations are managed centrally from its Seattle headquarters, with regional distribution centers located in multiple markets across the United States.
The primary client contacts throughout the engagement were:
• David Pruitt, General Counsel & Corporate Secretary — Mr. Pruitt served as the firm's primary point of contact for all legal matters relating to this engagement and was the addressee of the original engagement letter. He supervised Cascade's in-house litigation team and coordinated with the firm on all substantive and strategic decisions.
• Margaret Prumvane, Chief Executive Officer & President — Ms. Prumvane was involved in key strategic decisions relating to the defense and settlement of this matter and participated in certain settlement discussions.
• Raj Subramanian, Chief Financial Officer — Mr. Subramanian provided oversight on the financial dimensions of the litigation, including insurance recovery strategy, budget management, and settlement valuation analysis.
B. Calderwood & Harkness Engagement Team
Calderwood & Harkness LLP was retained by Cascade to serve as lead defense counsel in connection with Vantor Holdings Corp. v. Cascade Retail Holdings Inc., Case No. 21STCV-34872, filed in the Superior Court of California, County of Los Angeles. The engagement was opened on September 13, 2021, and the firm's engagement letter was addressed to David Pruitt, General Counsel & Corporate Secretary of Cascade Retail Holdings Inc.
The Calderwood & Harkness engagement team for this matter consisted of the following professionals:
• Douglas Carmichael — Responsible Partner, Litigation (General). Mr. Carmichael served as the senior partner responsible for the overall strategic direction of the defense, client communications at the executive level, and supervision of the litigation team. Mr. Carmichael was the primary point of contact for settlement negotiations.
• Francesca Morano — Billing Partner, Litigation (General). Ms. Morano served as the billing partner and co-lead on the defense, with principal responsibility for day-to-day management of the litigation, including motions practice, expert coordination, and discovery strategy.
• Yuki Nakamura — Lead Associate, Litigation (General). Ms. Nakamura served as the lead associate on the engagement, with direct responsibility for drafting substantive motions and briefs, managing the expert discovery process, preparing and defending depositions, and coordinating with local counsel and vendors.
• Carlos Espinoza — Working Associate, Litigation (General). Mr. Espinoza served as the primary working associate, with responsibility for document review and analysis, discovery responses, deposition preparation, legal research, and coordination with the e-discovery vendor.
The engagement team operated out of the firm's Los Angeles office, located at 600 South Grand Avenue, Suite 3200, Los Angeles, California 90071. Additional timekeepers and support staff contributed to the matter as needed throughout the course of the litigation, as reflected in the fee summary set forth in Section VI below.
C. Adverse Party
The plaintiff in this action was Vantor Holdings Corp. ("Vantor" or "VHC"), a California corporation with its principal place of business at 18500 Von Karman Avenue, Suite 600, Irvine, California 92612. Vantor is a privately held company that reported annual revenue of approximately $1.1 billion for fiscal year 2021. Vantor operates primarily as a wholesale distribution and specialty retail company, maintaining approximately 85 retail locations across California, Arizona, Nevada, and Oregon, with a focus on home goods, consumer electronics accessories, and personal care products.
The following key personnel at Vantor were relevant to this litigation:
• Richard "Rick" Ellsworth — Founder & Chief Executive Officer. Mr. Ellsworth founded Vantor in 2004 and has served as its CEO since inception. He was deposed in this matter and served as the corporate representative on several topics.
• Patricia Sung — Chief Operating Officer. Ms. Sung was responsible for overseeing Vantor's retail operations and was involved in supplier management at the executive level.
• Thomas Brennecke — Vice President, Supplier Relations. Mr. Brennecke was the principal Vantor executive responsible for managing supplier relationships, including the negotiation and administration of the exclusive supply agreements at the center of this litigation. He was deposed on October 26, 2022.
• Deborah Marcelino — Chief Financial Officer. Ms. Marcelino provided financial data and projections relevant to Vantor's damages claims.
D. Opposing Counsel
Vantor was represented throughout this litigation by the law firm of Kessler, Brandt & Whitfield LLP ("KBW"), located at 1999 Avenue of the Stars, Suite 2800, Los Angeles, California 90067. The opposing counsel team consisted of the following attorneys:
• Martin Kessler — Senior Partner, Lead Trial Attorney. Mr. Kessler served as the lead attorney for Vantor and was the primary strategist and advocate on all substantive motions and settlement discussions.
• Natalie Whitfield — Partner, Co-Lead. Ms. Whitfield served as co-lead counsel with primary responsibility for the discovery phase, including management of the motion to compel and coordination of the deposition schedule.
• Jason Okafor — Senior Associate. Mr. Okafor served as the primary working associate for KBW, handling day-to-day discovery matters, deposition preparation, and briefing support.
E. Other Key Engagements / Vendors
In addition to the core Calderwood & Harkness engagement team, the following external counsel, vendors, and entities played significant roles in the defense of this matter:
Local Counsel — Wortham & Adair LLP. Diana Prescott, Partner, served as California local counsel for Cascade. Ms. Prescott's firm is located at 611 West Sixth Street, Suite 2400, Los Angeles, California 90017. Wortham & Adair provided supplemental litigation support, including assistance with California-specific procedural requirements, coordination with the court clerk's office, and appearances at routine status conferences and hearings.
E-discovery Vendor — Krane Investigations LLC. Samuel Byrd, Project Manager, oversaw all e-discovery services for the matter, including document collection from Cascade custodians, data processing, hosting of the review platform, production, and ongoing technical support. Krane Investigations is located at 333 South Hope Street, Suite 1600, Los Angeles, California 90071.
Defense Expert — Archer & Colvin Consulting Group. Dr. Vivian Ostrowski, Principal, served as the defense's damages and economics expert. Dr. Ostrowski's firm is located at 701 Fifth Avenue, Suite 4100, Seattle, Washington 98104. Dr. Ostrowski prepared a rebuttal expert report, was deposed by Vantor's counsel, and provided ongoing consulting support to the defense team on damages theory and valuation issues.
Insurer — Pinnacle National Insurance Co. Leonard Furman, Senior Claims Adjuster, administered the insurance claim under Cascade's commercial general liability policy, Policy No. PNG-CGL-2021-04487. Pinnacle National Insurance Co. is located at 120 Broadway, Suite 3500, New York, New York 10271. Pinnacle provided both a settlement contribution and a defense cost reimbursement, as further described in Sections V and VIII below.
Cascade Outside Auditors (Discovery Participant) — Granville & Associates, P.C. Arthur Granville, Managing Partner, at 1201 Third Avenue, Suite 5000, Seattle, Washington 98101, participated in certain aspects of the discovery process to the extent that financial records and audit work papers were implicated by Vantor's document requests. Granville & Associates cooperated with the document production process and provided custodial information as needed.
III. Case Summary
A. Claims Alleged
On September 7, 2021, Vantor Holdings Corp. filed a complaint against Cascade Retail Holdings Inc. in the Superior Court of California, County of Los Angeles, Case No. 21STCV-34872. The complaint asserted three causes of action arising from Cascade's entry into supply agreements with three suppliers that had previously maintained exclusive supply agreements with Vantor. The three causes of action were as follows:
First Cause of Action — Tortious Interference with Contractual Relations. Vantor alleged that Cascade knowingly and intentionally induced three suppliers—Hemsworth Consumer Products LLC, Tridale Manufacturing Inc., and Orion Lifestyle Brands Corp.—to breach their respective exclusive supply agreements with Vantor by entering into new, competing supply agreements with Cascade. Vantor alleged that Cascade was aware of the existing exclusivity provisions at the time it solicited the suppliers and executed new supply agreements with each of them.
Second Cause of Action — Tortious Interference with Prospective Economic Advantage. Vantor alleged that Cascade disrupted Vantor's reasonable expectation of renewed and expanded supply relationships with Hemsworth, Tridale, and Orion beyond the initial contract terms of the existing exclusive supply agreements. Vantor contended that, but for Cascade's interference, each supplier relationship would have been renewed and expanded, resulting in substantial additional revenue to Vantor over projected five- to six-year periods.
Third Cause of Action — Unfair Business Practices (Cal. Bus. & Prof. Code § 17200). Vantor alleged that Cascade's systematic supplier-poaching campaign—which Vantor characterized as a deliberate strategy to identify and recruit Vantor's key suppliers—constituted unfair or unlawful business practices within the meaning of California's Unfair Competition Law, Business and Professions Code Section 17200. Vantor sought injunctive relief and restitution under this cause of action.
The total damages claimed by Vantor across all three causes of action were $87.4 million, broken down as follows: $34.2 million attributable to the Hemsworth relationship, $22.8 million attributable to the Tridale relationship, and $30.4 million attributable to the Orion relationship. These figures were based on projected lost revenue streams over extended time horizons, discounted at a rate of 8.5%, as set forth in the expert report of Dr. Harold Pryce.
B. The Three Supplier Relationships at Issue
The core factual dispute in this litigation centered on Cascade's entry into supply agreements with three suppliers that had been under exclusive supply arrangements with Vantor. Each supplier relationship is described in detail below.
1. Hemsworth Consumer Products LLC. Hemsworth Consumer Products LLC ("Hemsworth") is an Oregon limited liability company with its principal place of business at 4720 NW Yeon Avenue, Portland, Oregon 97210. Hemsworth's Chief Executive Officer is Janet Kohler. Hemsworth specializes in the manufacturing and distribution of home goods and kitchen accessories, including cookware, storage solutions, and kitchen utensils.
Hemsworth had an exclusive supply agreement with Vantor, executed on March 15, 2019, for a three-year term expiring on March 14, 2022. Under the terms of that agreement, Hemsworth agreed to supply its products exclusively to Vantor for resale, subject to a minimum annual purchase commitment by Vantor of $12.5 million. The agreement contained a 90-day termination-for-convenience provision, which permitted either party to terminate the agreement without cause upon 90 days' prior written notice to the other party.
On June 1, 2021—approximately nine months before the expiration of the Hemsworth-Vantor exclusive supply agreement—Hemsworth entered into a new supply agreement with Cascade. The Cascade-Hemsworth agreement provided for a five-year term and an annual purchase commitment of $28.0 million, representing a significant increase over Vantor's annual commitment. Hemsworth subsequently provided notice of termination of its exclusive supply agreement with Vantor.
Vantor claimed lost profits of $34.2 million in connection with the Hemsworth relationship, based on a projected five-year revenue stream discounted at an 8.5% rate. Vantor's damages calculation assumed that the Hemsworth exclusive supply agreement would have been renewed at its expiration and that the relationship would have continued and expanded for at least five years beyond the initial term. The defense expert, Dr. Vivian Ostrowski, opined that provable damages attributable to the Hemsworth relationship were in the range of $2.8 million to $4.9 million, reflecting approximately nine months of remaining exclusivity at the time of the alleged breach, after accounting for Vantor's failure to mitigate and the presence of the termination-for-convenience clause.
2. Tridale Manufacturing Inc. Tridale Manufacturing Inc. ("Tridale") is a Nevada corporation with its principal office at 6300 South Pecos Road, Suite 210, Las Vegas, Nevada 89120. Tridale's President is Gregory Fontaine. Tridale manufactures and distributes consumer electronics accessories, including cables, chargers, and protective cases for smartphones, tablets, and other consumer electronics devices.
Tridale had an exclusive supply agreement with Vantor, executed on January 10, 2020, for a two-year term expiring on January 9, 2022. The agreement required Vantor to make minimum annual purchases of $8.3 million from Tridale and included a 60-day termination-for-convenience provision.
On August 15, 2021—approximately five months before the expiration of the Tridale-Vantor exclusive supply agreement—Tridale entered into a new supply agreement with Cascade. The Cascade-Tridale agreement provided for a three-year term with an annual purchase commitment of $19.5 million. Tridale exercised its termination-for-convenience rights under the Vantor agreement prior to the commencement of deliveries under the Cascade agreement.
Vantor claimed lost profits of $22.8 million in connection with the Tridale relationship, based on a projected four-year revenue stream discounted at an 8.5% rate. This projection similarly assumed renewal and expansion of the relationship. Dr. Ostrowski's defense analysis limited provable damages to a range of $1.4 million to $2.7 million, reflecting approximately five months of remaining exclusivity and reductions for failure to mitigate.
3. Orion Lifestyle Brands Corp. Orion Lifestyle Brands Corp. ("Orion") is a California corporation with its principal office at 1900 Avenue of the Stars, Suite 1050, Los Angeles, California 90067. Orion's Chief Executive Officer is Simone Alvarez. Orion manufactures and distributes personal care and wellness products, including skincare, haircare, bath products, and wellness supplements.
Orion had an exclusive supply agreement with Vantor, executed on July 1, 2018, for a four-year term expiring on June 30, 2022. The agreement required Vantor to make minimum annual purchases of $14.6 million from Orion and included a 120-day termination-for-convenience provision.
On May 10, 2021—approximately thirteen months before the expiration of the Orion-Vantor exclusive supply agreement—Orion entered into a new supply agreement with Cascade. The Cascade-Orion agreement provided for a four-year term with an annual purchase commitment of $31.0 million. Orion subsequently exercised its termination-for-convenience rights under its agreement with Vantor, providing the required 120-day notice.
Vantor claimed lost profits of $30.4 million in connection with the Orion relationship, based on a projected six-year revenue stream discounted at an 8.5% rate. Dr. Ostrowski's defense analysis limited provable damages to a range of $1.9 million to $3.7 million, reflecting approximately thirteen months of remaining exclusivity at the time of the alleged breach and applying appropriate reductions for mitigation failures and the contractual right to terminate for convenience.
C. Key Defense Theories
Throughout the litigation, the defense strategy advanced by Calderwood & Harkness on behalf of Cascade was organized around the following five principal theories:
1. Absence of Actual Knowledge. Cascade did not have actual knowledge of the specific exclusivity provisions contained in Vantor's supply agreements with Hemsworth, Tridale, or Orion at the time the new supply agreements were negotiated and executed. While Cascade's sourcing team, through Project Atlas, was aware that each supplier had existing business relationships with other retailers (including Vantor), the evidence demonstrated that Cascade's personnel did not know the terms or conditions of those agreements, including the existence or scope of exclusivity clauses. This theory was essential to defeating the first cause of action for tortious interference with contractual relations, which requires proof that the defendant had knowledge of the existing contract.
2. Independent Supplier Decision-Making. Each of the three suppliers—Hemsworth, Tridale, and Orion—independently chose to enter into supply agreements with Cascade based on the superior commercial terms offered by Cascade, including significantly higher annual purchase commitments, longer contract terms, and enhanced distribution reach through Cascade's national retail network. No evidence of inducement, coercion, or improper means was presented by Vantor.
3. Termination-for-Convenience Clauses. Each of the Vantor exclusive supply agreements contained a termination-for-convenience provision (90 days for Hemsworth, 60 days for Tridale, and 120 days for Orion) that permitted either party to terminate the agreement without cause upon the specified notice period. Each supplier exercised its termination-for-convenience right prior to commencing deliveries under its new agreement with Cascade. The presence of these termination provisions fundamentally limited the scope of Vantor's recoverable damages, because Vantor could not claim lost profits for periods beyond what the suppliers could have unilaterally terminated at will.
4. Failure to Mitigate and Absence of Cognizable Damages. Vantor suffered no cognizable damages—or, at a minimum, substantially less than the claimed $87.4 million—because the exclusive supply agreements were terminable at will, Vantor failed to take reasonable steps to identify and secure alternative suppliers following the termination of each relationship, and Vantor's damages projections were based on speculative assumptions regarding renewal and expansion of the supplier relationships.
5. Preemption of § 17200 Claim. The unfair business practices claim under California Business and Professions Code Section 17200 was preempted by and duplicative of the tortious interference claims. The alleged "unfair" and "unlawful" conduct underlying the Section 17200 claim was identical to the conduct forming the basis of the common-law tortious interference causes of action, and the Section 17200 claim did not allege any independent wrongful conduct. This theory was ultimately vindicated by the court's grant of summary judgment on the Section 17200 claim.
D. Project Atlas
Project Atlas was an internal Cascade initiative launched in February 2021 to identify and onboard new suppliers across several product categories, including home goods, consumer electronics accessories, and personal care. The initiative was driven by Cascade's strategic objective to diversify and strengthen its supply chain, reduce dependence on a small number of existing suppliers, and secure competitive pricing and product exclusivity for its expanding retail and e-commerce operations.
Project Atlas was led by Annika Bergström, Vice President of Strategic Sourcing, who reported to Lena Torvik, Senior Vice President of Supply Chain & Procurement. The initiative was budgeted at $4.2 million in supplier transition costs and had a target of onboarding 25 new suppliers during fiscal year 2021.
Project Atlas was a central focus of discovery in this litigation. Vantor contended that Project Atlas was a deliberate supplier-poaching campaign specifically designed to target Vantor's key suppliers and disrupt its supply chain. The defense countered that Project Atlas was a broad-based, category-wide supplier diversification initiative that was not directed at Vantor or its suppliers and that the inclusion of Hemsworth, Tridale, and Orion on the supplier prospect list was the result of standard market research, not targeted interference.
During the course of discovery, 2,847 internal emails relating to Project Atlas were identified, reviewed, and analyzed. Of these, 14 emails specifically referenced Vantor's existing supplier relationships. These 14 emails were among the most critical documents in the case, and the defense team conducted an exhaustive analysis of their content and context. The analysis concluded that none of the 14 emails demonstrated actual knowledge on the part of Cascade personnel of the specific exclusivity terms in Vantor's supplier agreements. Rather, the references to Vantor were made in the context of general competitive intelligence—acknowledging that certain suppliers had existing relationships with various retailers—without identifying or discussing the terms of any particular agreement.
The 14 emails nonetheless presented a meaningful litigation risk, as they could have been used by Vantor at trial to create an impression before a jury that Cascade's sourcing team was aware of Vantor's exclusive arrangements, even if the emails did not, on their own, establish knowledge of the specific exclusivity provisions. This risk factor was a significant consideration in the defense team's settlement recommendation, as discussed in Section IX below.
IV. Procedural History and Key Litigation Events
A. Pre-Litigation and Pleadings Phase (September–November 2021)
The pre-litigation and pleadings phase of this matter proceeded as follows:
• September 7, 2021: Vantor Holdings Corp. filed its complaint against Cascade Retail Holdings Inc. in the Superior Court of California, County of Los Angeles, Case No. 21STCV-34872, asserting three causes of action: (1) tortious interference with contractual relations, (2) tortious interference with prospective economic advantage, and (3) unfair business practices under California Business and Professions Code Section 17200. The complaint sought compensatory damages of $87.4 million, injunctive relief, restitution, and attorneys' fees.
• September 13, 2021: Calderwood & Harkness LLP was retained by Cascade to serve as lead defense counsel. Matter No. 1038-00007 was opened in the firm's case management system. The engagement letter, addressed to David Pruitt, General Counsel & Corporate Secretary of Cascade, was executed on this date, and a conflicts check was completed.
• September 20, 2021: A coverage notification letter was sent by Calderwood & Harkness, on behalf of Cascade, to Pinnacle National Insurance Co. (Policy No. PNG-CGL-2021-04487), advising Pinnacle of the filing of the Vantor complaint and tendering the claim for defense and indemnity coverage under the applicable commercial general liability policy. The letter was addressed to Leonard Furman, Senior Claims Adjuster, at Pinnacle's New York office.
• September 28, 2021: Cascade was formally served with the summons and complaint.
• October 18, 2021: Cascade, through Calderwood & Harkness, filed its answer to the complaint, asserting a comprehensive set of affirmative defenses including, among others, failure to state a claim, lack of knowledge, independent supplier decision-making, failure to mitigate damages, preemption and duplicative claims, unclean hands, and the termination-for-convenience defense.
• November 5, 2021: The initial case management conference was held before the Honorable Patricia Sandoval, Department 37, of the Los Angeles County Superior Court. The court set a discovery plan schedule and a trial date.
B. Discovery Phase (December 2021–November 2022)
The discovery phase of this matter was extensive, spanning approximately twelve months, and involved significant document collection, review, and production, as well as the deposition of fourteen witnesses.
• December 10, 2021: Litigation hold notices were issued to all identified Cascade custodians, including Annika Bergström, Lena Torvik, David Pruitt, Margaret Prumvane, Raj Subramanian, and additional members of the strategic sourcing and supply chain teams. Cascade's IT department was directed to preserve all potentially relevant electronic data, including email, instant messaging, shared drive files, and enterprise system records.
• January 14, 2022: The court entered a joint discovery plan and scheduling order, establishing deadlines for fact discovery, expert discovery, and dispositive motions.
• March 15, 2022: Cascade served its first set of requests for production and interrogatories on Vantor, seeking documents and information relating to Vantor's exclusive supply agreements, supplier relationships, damages calculations, communications with Hemsworth, Tridale, and Orion, and Vantor's mitigation efforts.
• March 2022 – August 2022: The core document discovery period encompassed the collection, review, and production of a substantial volume of documents from both parties and third-party sources. In total, 452,316 documents were collected from Cascade custodians and data sources. Of these, 198,740 documents were reviewed by the Calderwood & Harkness team using the Krane Investigations e-discovery platform. Following review for relevance and privilege, 78,412 documents were produced by Cascade. Vantor, for its part, produced 41,308 documents during this period.
• April 2022: Third-party subpoenas duces tecum were served on Hemsworth Consumer Products LLC, Tridale Manufacturing Inc., and Orion Lifestyle Brands Corp. The three suppliers collectively produced 23,567 documents in response to the subpoenas, including correspondence with both Vantor and Cascade, internal supplier communications relating to the decision to enter new supply agreements, and copies of the relevant supply agreements.
• April 22, 2022: Vantor served its first set of interrogatories on Cascade, consisting of 25 interrogatories, seeking detailed information regarding Cascade's knowledge of Vantor's supplier agreements, the Project Atlas initiative, the decision-making process for entering into agreements with Hemsworth, Tridale, and Orion, and Cascade's competitive intelligence practices.
• May 20, 2022: Cascade served its responses to Vantor's first set of interrogatories and its responses to Vantor's first set of requests for production.
• June 2, 2022: Calderwood & Harkness sent a meet-and-confer letter to Kessler, Brandt & Whitfield LLP regarding several discovery disputes, including the scope of Vantor's document requests, the adequacy of Vantor's privilege log, and certain objections raised by Vantor to Cascade's interrogatory responses.
• June 15, 2022: Vantor filed a motion to compel, seeking what the defense characterized as "class-certification-style" consolidated discovery across all of Cascade's supplier relationships—not merely the three suppliers at issue in the litigation. Vantor argued that Cascade's Project Atlas initiative was a systematic campaign that implicated a broader pattern of supplier poaching, and that discovery regarding all 25 targeted suppliers was necessary to establish the scope and intent of Cascade's conduct.
• July 18, 2022: Cascade filed its opposition to Vantor's motion to compel, arguing that the requested discovery was overbroad, unduly burdensome, and disproportionate to the needs of the case, and that information regarding the 22 supplier relationships not at issue in the complaint was irrelevant and not reasonably calculated to lead to the discovery of admissible evidence.
• July 29, 2022: Cascade filed its reply in support of its opposition to the motion to compel.
• August 3, 2022: The court issued its ruling on Vantor's motion to compel, granting the motion in part and denying it in part. The court limited expanded discovery to 15 additional supplier relationships (18 total, including the three at issue), finding that a limited expansion of discovery was warranted to allow Vantor to explore the scope and methodology of the Project Atlas initiative, but declining to order the full production demanded by Vantor. The court's ruling was an important development in the case, as it broadened the scope of discoverable materials while still imposing meaningful limits on Vantor's discovery demands.
• August 15, 2022: Cascade served its privilege log, containing 3,214 entries. The privilege log was subsequently updated and supplemented on December 1, 2022.
• September – November 2022: The expanded supplier discovery phase was completed, and depositions of key party and supplier witnesses were taken. The deposition schedule during this period was intensive, with depositions conducted in Los Angeles, Seattle, Portland, and Las Vegas.
• October 12, 2022: Deposition of Annika Bergström, Cascade Vice President of Strategic Sourcing and the operational lead of the Project Atlas initiative. Ms. Bergström testified regarding the genesis, scope, and execution of Project Atlas, the supplier evaluation and selection process, and her knowledge (or lack thereof) of Vantor's exclusive supply agreements.
• October 26, 2022: Deposition of Thomas Brennecke, Vantor Vice President of Supplier Relations. Mr. Brennecke testified regarding Vantor's supplier management practices, the negotiation and administration of the exclusive supply agreements with Hemsworth, Tridale, and Orion, and Vantor's efforts (or lack thereof) to mitigate its losses following the termination of those agreements.
• November 18, 2022: Deposition of Lena Torvik, Cascade Senior Vice President of Supply Chain & Procurement. Ms. Torvik testified regarding the strategic rationale for the Project Atlas initiative, Cascade's supply chain objectives, and her oversight role in the supplier onboarding process.
In total, fourteen depositions were taken during the course of this litigation—eight by Vantor and six by Cascade. The deponents included party representatives, supplier executives, and other fact witnesses. A complete deposition log is maintained in the case file.
C. Expert Phase (December 2022–February 2023)
The expert phase of this litigation addressed the critical question of damages quantification. Both parties retained damages and economics experts who offered substantially divergent opinions on the scope and magnitude of Vantor's provable losses.
• September 2022: Dr. Vivian Ostrowski of Archer & Colvin Consulting Group was formally retained as the defense's damages and economics expert. Dr. Ostrowski was engaged to analyze and critique Vantor's damages claims, prepare a rebuttal expert report, and provide expert testimony. The estimated fees for Dr. Ostrowski's engagement were $485,000, covering report preparation, deposition, and consulting time.
• December 9, 2022: Dr. Harold Pryce of Meridian Forensic Economics LLC, located at 2049 Century Park East, Suite 1200, Los Angeles, California 90067, issued the plaintiff's damages expert report. Dr. Pryce opined that Vantor's total damages across the three supplier relationships were $87.4 million, based on projected lost revenue streams extending five to six years beyond the expiration dates of the existing exclusive supply agreements, discounted at a rate of 8.5%. Dr. Pryce's methodology assumed that each supplier relationship would have been renewed and expanded absent Cascade's interference, and that Vantor would have realized substantial profits from those extended relationships.
• December 22, 2022: Dr. Vivian Ostrowski issued the defense's rebuttal expert report. Dr. Ostrowski's analysis challenged Dr. Pryce's methodology on multiple grounds, including the speculative nature of the renewal and expansion assumptions, the failure to account for the termination-for-convenience provisions in each supply agreement, and Vantor's failure to take reasonable steps to mitigate its losses by securing alternative suppliers. Dr. Ostrowski concluded that provable damages were limited to a range of $6.1 million to $11.3 million, reflecting damages attributable only to the remaining exclusive contract terms at the time of each supplier's breach, with a further 40% to 55% reduction applied to account for Vantor's failure to mitigate.
• January 20, 2023: Dr. Harold Pryce was deposed by Calderwood & Harkness. The deposition focused on the foundational assumptions underlying Dr. Pryce's damages model, his treatment of the termination-for-convenience provisions, and his basis for projecting renewal and expansion of the supplier relationships.
• February 3, 2023: Dr. Vivian Ostrowski was deposed by Kessler, Brandt & Whitfield. The deposition addressed Dr. Ostrowski's rebuttal methodology, her mitigation analysis, and her basis for limiting provable damages to the remaining exclusive contract terms.
D. Dispositive Motions (February–April 2023)
Following the close of the expert phase, Cascade filed a motion for partial summary judgment targeting two of Vantor's three causes of action.
• February 28, 2023: Cascade filed its motion for partial summary judgment, seeking dismissal of the third cause of action (unfair business practices under California Business and Professions Code Section 17200) and the second cause of action (tortious interference with prospective economic advantage). The motion was supported by a memorandum of points and authorities, a separate statement of undisputed material facts, and supporting declarations and exhibits. The motion argued that the Section 17200 claim was preempted by and duplicative of the common-law tortious interference claims, as the alleged "unfair" conduct was identical to the conduct underlying the tort claims and no independent wrongful act was alleged. With respect to the prospective economic advantage claim, the motion argued that Vantor had failed to present evidence of independently wrongful conduct and that Vantor's speculative projections of renewed and expanded supplier relationships were insufficient to sustain the claim as a matter of law.
• April 4, 2023: Cascade filed its reply in support of the motion for partial summary judgment, responding to Vantor's opposition and addressing the arguments raised by KBW.
• April 14, 2023: The court issued its ruling on Cascade's motion for partial summary judgment. The court granted summary judgment on the Section 17200 claim (third cause of action), finding that the claim was duplicative of the tortious interference causes of action and that Vantor had failed to allege any independent unfair or unlawful conduct apart from the conduct underlying the tort claims. The court denied summary judgment on the tortious interference with prospective economic advantage claim (second cause of action), finding that genuine issues of material fact existed as to whether Cascade engaged in independently wrongful conduct sufficient to support the claim and whether Vantor had a reasonable expectation of continued business relationships with the three suppliers. As a result, two causes of action—the first (tortious interference with contractual relations) and the second (tortious interference with prospective economic advantage)—survived for trial.
E. Settlement Phase (April–June 2023)
Following the court's ruling on the partial summary judgment motion, the parties engaged in settlement negotiations that culminated in the resolution of the matter.
• April 28, 2023: A mandatory settlement conference was held before a retired judge serving as a settlement officer. Both parties participated with full authority, and the conference served as the catalyst for substantive settlement discussions.
• May 15, 2023: The parties reached an agreement in principle to settle the case for $14.75 million, subject to the execution of a definitive settlement agreement and mutual release.
• June 12, 2023: The Settlement Agreement and Mutual Release was executed by all parties. The agreement was drafted by Calderwood & Harkness LLP and negotiated with Kessler, Brandt & Whitfield LLP. The material terms of the settlement are summarized in Section V below.
• June 23, 2023: The Joint Stipulation of Dismissal with Prejudice was filed with the Superior Court of California, County of Los Angeles, resulting in the dismissal of all claims and counterclaims with prejudice.
• June 30, 2023: Matter No. 1038-00007 was formally closed.
V. Settlement Terms Summary
The Settlement Agreement and Mutual Release executed on June 12, 2023 contains the following material terms:
• Settlement Payment: Cascade Retail Holdings Inc. shall pay to Vantor Holdings Corp. the sum of $14,750,000.00 in full and final settlement of all claims asserted in the action.
• Insurance Contribution Toward Settlement: Pinnacle National Insurance Co. shall contribute $6,250,000.00 toward the settlement payment under CGL Policy No. PNG-CGL-2021-04487. Accordingly, Cascade's net share of the settlement payment is $8,500,000.00 ($14,750,000.00 minus $6,250,000.00), to be paid from Cascade's operating funds.
• Non-Admission of Liability: The settlement agreement contains an express provision confirming that Cascade does not admit to any liability, wrongdoing, or violation of law in connection with the claims asserted by Vantor. The settlement is entered into solely to avoid the burden, expense, and uncertainty of continued litigation.
• Mutual Release of All Claims: Both parties have executed a mutual general release of all claims, demands, actions, and causes of action, known or unknown, arising out of or related to the facts and circumstances alleged in the complaint, including any claims that could have been asserted in the action.
• Confidentiality of Settlement Terms: The terms of the settlement, including the settlement amount, are confidential and may not be disclosed by either party, their counsel, or their agents, except as required by law, regulation, or applicable disclosure requirements (including Cascade's obligations as a publicly traded company under SEC rules).
• Mutual Non-Disparagement: Both parties agree to refrain from making any public statements disparaging the other party, its officers, directors, employees, or business operations in connection with the subject matter of the litigation.
• No Injunctive Relief: The settlement does not include any injunctive relief, equitable restrictions, or limitations on Cascade's business operations.
• No Restrictions on Supplier Relationships: The settlement does not impose any restrictions on Cascade's current or future supplier relationships, sourcing strategies, or procurement activities, including the Project Atlas initiative or any successor programs. This was a critical negotiation point for the defense team, as Vantor had initially sought a provision in the settlement agreement restricting Cascade's ability to solicit Vantor's current suppliers.
The settlement agreement was drafted by Calderwood & Harkness LLP and negotiated with Kessler, Brandt & Whitfield LLP over the course of approximately four weeks following the May 15, 2023 agreement in principle. Multiple drafts were exchanged, and all material terms were agreed upon prior to execution.
VI. Final Fee and Cost Summary
A. Calderwood & Harkness LLP Professional Fees
The following table sets forth the total professional fees billed by Calderwood & Harkness LLP for Matter No. 1038-00007, broken down by timekeeper:
Reconciliation: $358,800 + $511,350 + $1,334,000 + $1,503,625 + $679,725 = $4,387,500.
The "Other timekeepers / staff" category includes contributions from paralegals, research attorneys, litigation support specialists, and other professional staff who assisted with the matter at various stages, including document review, deposition preparation, legal research, cite-checking, and administrative support. A detailed breakdown of hours and fees for each individual timekeeper within this category is maintained in the billing records for the matter and is available upon request.
B. Third-Party Costs and Vendor Fees
The following table sets forth the total third-party costs and vendor fees incurred in connection with the defense of this matter:
All vendor invoices have been received and reconciled unless otherwise noted in Section XI below. The e-discovery costs incurred through Krane Investigations reflect the substantial volume of document collection and review required in this matter, including the collection and processing of 452,316 documents from Cascade custodians and the hosting of the review platform over an approximately twelve-month period.
C. Total Defense Costs
The total defense costs incurred in connection with this matter are calculated as follows:
Reconciliation: $4,387,500 + $892,400 + $485,000 + $127,500 = $5,892,400.
D. Insurance Reimbursement of Defense Costs
Pinnacle National Insurance Co. has agreed to reimburse Cascade for a portion of the defense costs incurred in this matter, as follows:
• Insurer: Pinnacle National Insurance Co.
• Policy No.: PNG-CGL-2021-04487
• Reimbursement Amount: $2,150,000
The reimbursement amount represents Pinnacle's share of covered defense costs under the applicable commercial general liability policy, as negotiated with Leonard Furman, Senior Claims Adjuster. A post-settlement insurance recovery letter was sent on June 15, 2023 to Mr. Furman requesting payment of the defense cost reimbursement. The status of this payment is addressed in Section XI below.
E. Net Defense Costs to Cascade
The net defense costs borne by Cascade after application of the insurance reimbursement are calculated as follows:
VII. Total Economic Impact to Cascade
The total economic impact of this matter to Cascade Retail Holdings Inc. is set forth in the following table:
Reconciliation: The total economic impact of $18,492,400 comprises the gross settlement payment of $14,750,000 plus net defense costs of $3,742,400, less total insurance recoveries of $8,400,000 (consisting of $6,250,000 in settlement contribution and $2,150,000 in defense cost reimbursement). However, because the insurance recoveries are already netted against the respective settlement and defense cost components, the total economic impact figure of $18,492,400 reflects the sum of the net settlement cost ($8,500,000) and net defense costs ($3,742,400), plus the gross insurance-covered portions that were paid on behalf of Cascade.
From an alternative perspective, Cascade's total out-of-pocket expenditure is $12,242,400, calculated as $8,500,000 (Cascade's share of the settlement) plus $3,742,400 (net defense costs). The total insurance recovery of $8,400,000 ($6,250,000 + $2,150,000) offset the total gross cost of $20,642,400 ($14,750,000 + $5,892,400) to yield the out-of-pocket amount.
The total economic impact of $18,492,400 represents approximately 0.27% of Cascade's fiscal year 2021 annual revenue of $6.8 billion.
VIII. Insurance Recovery Summary
The following table summarizes the total insurance recovery obtained from Pinnacle National Insurance Co. in connection with this matter:
All amounts are recoverable under CGL Policy No. PNG-CGL-2021-04487, issued by Pinnacle National Insurance Co. Coverage was tendered on September 20, 2021, and Pinnacle accepted coverage subject to a reservation of rights. The settlement contribution of $6,250,000 was negotiated as part of the overall settlement process, with Pinnacle's participation coordinated through Leonard Furman, Senior Claims Adjuster.
A post-settlement insurance recovery letter dated June 15, 2023 was submitted to Leonard Furman, Senior Claims Adjuster, at Pinnacle National Insurance Co., 120 Broadway, Suite 3500, New York, New York 10271, requesting payment of both the settlement contribution and the defense cost reimbursement. The status of receipt is being tracked and is addressed in Section XI below.
IX. Assessment of Outcome
The resolution of this matter represents a favorable outcome for Cascade Retail Holdings Inc., evaluated against the following benchmarks and considerations:
Comparison to Damages Demand. Vantor's initial damages demand, as set forth in the complaint and supported by the expert report of Dr. Harold Pryce, was $87.4 million. The settlement was achieved at $14.75 million, which represents approximately 16.9% of the claimed amount. This significant reduction reflects the strength of the defense's factual and legal positions, the impact of the defense expert's rebuttal analysis, and the court's favorable ruling on the Section 17200 claim.
Comparison to Defense Expert Range. Dr. Vivian Ostrowski's rebuttal analysis supported a provable damages range of $6.1 million to $11.3 million, based on the remaining exclusive contract terms at the time of each supplier's breach and after applying reductions of 40% to 55% for Vantor's failure to mitigate. The settlement of $14.75 million represents a modest premium above the high end of the expert range. This premium was justified by the residual risks of proceeding to trial, including the risk of an adverse jury determination on the surviving causes of action.
Impact of Dispositive Motions. The court's grant of summary judgment on the Section 17200 claim (third cause of action) eliminated one of Vantor's three causes of action and removed the threat of injunctive relief and restitution under the Unfair Competition Law. However, the court's denial of summary judgment on the tortious interference with prospective economic advantage claim (second cause of action) left two causes of action—the first and second—for trial, creating residual risk for the defense.
Key Risk Factors. The following risk factors influenced the defense team's settlement recommendation and were communicated to the client:
(a) The 14 Project Atlas emails referencing Vantor's supplier relationships, which, while not demonstrating actual knowledge of specific exclusivity terms, could have been used by Vantor at trial to create an unfavorable impression before a jury and to argue circumstantially that Cascade was aware of the exclusive supply arrangements;
(b) The survival of the prospective economic advantage claim following the court's denial of summary judgment, which meant that Vantor retained the ability to present its speculative damages theory (renewal and expansion of supplier relationships) to a jury on at least one cause of action;
(c) The projected defense costs through trial, including the costs of trial preparation, jury selection, expert testimony, and a trial estimated to last three to four weeks, which were projected to add an additional $1.5 million to $2.5 million in defense costs; and
(d) The inherent unpredictability of jury determinations in complex commercial litigation involving sympathetic narratives about competitive injury.
Settlement Terms. The settlement terms are favorable to Cascade in several important respects. The non-admission of liability protects Cascade from any adverse precedential or reputational consequences. The absence of injunctive relief or restrictions on Cascade's future supplier relationships preserves Cascade's full operational flexibility, including the ability to continue and expand its supplier diversification efforts. The mutual release eliminates any risk of future claims by Vantor arising from the same facts and circumstances. The confidentiality and non-disparagement provisions limit the potential for adverse publicity.
Proportionality. The total economic impact of $18,492,400 (or $12,242,400 out-of-pocket to Cascade) represents approximately 0.27% of Cascade's fiscal year 2021 annual revenue of $6.8 billion. While the matter involved substantial litigation costs and a meaningful settlement payment, the overall financial impact to Cascade is proportionate and manageable in the context of the company's financial position and market capitalization.
X. Document Retention and File Disposition
All matter files, including client correspondence, pleadings, discovery materials, expert reports, internal memoranda, work product, privilege logs, settlement documents, billing records, and related materials, are to be retained in accordance with Calderwood & Harkness LLP's standard document retention policy for closed litigation matters. The firm's standard policy requires retention of closed litigation files for a minimum of seven years from the date of matter closure, subject to any longer retention periods mandated by applicable law, regulation, or client instruction.
The e-discovery platform and document database maintained by Krane Investigations LLC—including all collected, processed, and reviewed documents, as well as work product coding and production sets—shall be preserved for a period consistent with the firm's retention policy and any applicable regulatory requirements. Yuki Nakamura shall coordinate with Samuel Byrd at Krane Investigations to arrange for the archival of all e-discovery data in a cost-effective format and to confirm that the data will remain accessible for the required retention period.
All hard-copy files associated with this matter, including original pleadings, correspondence, expert reports, and internal work product, shall be transferred to the firm's designated off-site storage facility. An inventory of all hard-copy files transferred to off-site storage shall be prepared and maintained in the electronic case file.
The litigation hold notices that were issued to Cascade custodians on December 10, 2021 should now be released, as the matter has been resolved and dismissed with prejudice. Carlos Espinoza shall coordinate with David Pruitt, General Counsel of Cascade, to issue a formal hold-release memorandum to all identified custodians, including Annika Bergström, Lena Torvik, David Pruitt, Margaret Prumvane, Raj Subramanian, and all other custodians who received hold notices during the course of the litigation. The hold-release memorandum should instruct custodians that the litigation hold is no longer in effect and that documents may be managed in accordance with Cascade's standard document retention and destruction policies.
XI. Outstanding Items and Final Actions
The following items remain outstanding as of the date of this memorandum and require follow-up action by the identified responsible parties:
1. Confirm Receipt of Insurance Payments. Confirm receipt of Pinnacle National Insurance Co.'s payment of $6,250,000 (settlement contribution) and $2,150,000 (defense cost reimbursement), totaling $8,400,000. The post-settlement insurance recovery letter was submitted on June 15, 2023. If payment is not received within 30 days of the date of this memorandum (i.e., by July 30, 2023), Francesca Morano shall follow up directly with Leonard Furman, Senior Claims Adjuster, at Pinnacle National Insurance Co. to confirm the status and expected timing of payment.
2. Final Invoice to Cascade. Prepare and submit a final invoice to Cascade Retail Holdings Inc. for any remaining unbilled time and costs through the date of matter closure. The final invoice should be reviewed by Francesca Morano prior to submission and should be accompanied by a closing letter to David Pruitt confirming the closure of the engagement.
3. Close Billing Records. Close all billing records for Matter No. 1038-00007 in the firm's accounting system. No further time or cost entries should be posted to this matter number after the date of this memorandum, except for administrative time associated with the file closure process.
4. Notify Local Counsel of Matter Closure. Notify Diana Prescott of Wortham & Adair LLP of the closure of this matter and confirm that all outstanding invoices from Wortham & Adair have been received and paid.
5. Notify Defense Expert of Matter Closure. Notify Dr. Vivian Ostrowski of Archer & Colvin Consulting Group of the closure of this matter and confirm that the final invoice from Archer & Colvin has been received and paid in full.
6. Reconcile E-discovery Vendor Final Invoice. Confirm final invoice reconciliation with Samuel Byrd at Krane Investigations LLC, including verification that all project costs have been accurately invoiced and that no additional charges are outstanding.
7. Update Firm Conflicts Database. Update the firm's conflicts database to reflect the closure of Matter No. 1038-00007 and to include the final and complete party/entity list for the matter, including all parties, witnesses, experts, vendors, and other entities identified during the course of the engagement.
8. Issue Litigation Hold Release. As described in Section X above, coordinate with David Pruitt to issue the formal hold-release memorandum to all Cascade custodians.
XII. Conclusion
The defense of Cascade Retail Holdings Inc. in Vantor Holdings Corp. v. Cascade Retail Holdings Inc., Case No. 21STCV-34872, Superior Court of California, County of Los Angeles, has been resolved on terms favorable to the client. The settlement of $14.75 million represents a significant reduction from Vantor's initial damages demand of $87.4 million—a reduction of approximately 83.1%—and the settlement terms protect Cascade's ongoing business operations and supplier relationships without any admission of liability, injunctive relief, or operational restrictions.
The defense team's strategy of focusing on the absence of actual knowledge of the exclusivity provisions, the independent decision-making of the suppliers, the availability of the termination-for-convenience clauses, and Vantor's failure to mitigate proved effective in narrowing the scope of the case, securing the dismissal of the Section 17200 claim on summary judgment, and establishing a strong negotiating position for settlement. The insurance recovery of $8,400,000 from Pinnacle National Insurance Co. substantially offset the total costs of defense and settlement, reducing Cascade's out-of-pocket exposure to $12,242,400.
The engagement team wishes to acknowledge the cooperation and responsiveness of David Pruitt and the entire Cascade in-house legal team, whose prompt attention to discovery obligations, custodian coordination, and strategic input materially contributed to the successful resolution of this matter.
Matter No. 1038-00007 is hereby closed effective June 30, 2023.