CALDERWOOD & HARKNESS LLP Attorneys at Law
600 South Grand Avenue, Suite 3200 Los Angeles, California 90071 Telephone: (213) 555-7800
September 13, 2021
VIA ELECTRONIC MAIL AND OVERNIGHT COURIER
David Pruitt, Esq. General Counsel & Corporate Secretary Cascade Retail Holdings Inc. 2200 Elliott Avenue West, Suite 1400 Seattle, WA 98119
Re: Retention of Calderwood & Harkness LLP — Defense of Vantor Holdings Corp. v. Cascade Retail Holdings Inc., Case No. 21STCV-34872, Superior Court of the State of California, County of Los Angeles
Calderwood & Harkness Matter No. 1038-00007
Dear Mr. Pruitt:
We appreciate the confidence that Cascade Retail Holdings Inc. has placed in Calderwood & Harkness LLP. This letter sets forth the terms and conditions under which the firm will represent Cascade in the above-referenced matter. We ask that you review this letter carefully, and we encourage you to contact us with any questions before countersigning. Upon execution by both parties, this letter will constitute our mutual agreement governing the engagement.
1. Purpose and Confirmation of Engagement
This letter confirms that Calderwood & Harkness LLP ("Calderwood & Harkness," "the firm," or "we") has been engaged by Cascade Retail Holdings Inc. ("Cascade," "CRH," or "you"), a Delaware corporation whose shares of common stock are publicly traded on the Nasdaq Stock Market under the ticker symbol CRHI, to serve as outside defense counsel in the above-referenced litigation pending in the Superior Court of the State of California, County of Los Angeles.
On September 7, 2021, Vantor Holdings Corp. ("Vantor"), a California corporation, filed a verified complaint against Cascade initiating Case No. 21STCV-34872 (the "Action"). The complaint asserts three causes of action: (1) tortious interference with contractual relations; (2) tortious interference with prospective economic advantage; and (3) unfair business practices in violation of California Business and Professions Code Section 17200 et seq. (the "UCL Claim"). Collectively, these claims arise from Cascade's entry into supply agreements with three suppliers — Hemsworth Consumer Products LLC ("Hemsworth"), Tridale Manufacturing Inc. ("Tridale"), and Orion Lifestyle Brands Corp. ("Orion") — that Vantor alleges were, at the time of Cascade's contracting, subject to exclusive supply agreements between those suppliers and Vantor. Vantor alleges that Cascade knew or should have known of the existence of these exclusive arrangements and that Cascade's conduct in procuring the supply agreements caused Vantor to lose the benefit of its exclusive contracts and suffer competitive harm.
The complaint seeks compensatory damages in the approximate amount of Eighty-Seven Million Four Hundred Thousand Dollars ($87,400,000), together with disgorgement and restitution under the UCL, injunctive relief, punitive damages, prejudgment interest, attorneys' fees and costs, and such other and further relief as the court deems just and proper.
Vantor is represented in this matter by the law firm of Kessler, Brandt & Whitfield LLP, with Martin Kessler, Senior Partner, and Natalie Whitfield, Partner, serving as lead counsel for the plaintiff.
The purpose of this engagement is for Calderwood & Harkness to provide vigorous and effective legal representation in defense of Cascade against all claims asserted in the Action, on the terms described below.
2. Scope of Engagement
Calderwood & Harkness's engagement encompasses all aspects of the defense of Case No. 21STCV-34872, including but not limited to the following:
(a) Responsive Pleadings and Motions. Analysis of the complaint and all exhibits and attachments thereto; preparation and filing of responsive pleadings, including Cascade's answer and affirmative defenses; and preparation and filing of any demurrers, motions to strike, motions to dismiss, or other dispositive or pre-trial motions, including any motion for summary judgment or summary adjudication.
(b) discovery. Conducting and responding to all phases of fact and expert discovery, including the preparation, service, and response to interrogatories, requests for production of documents, and requests for admissions; coordination and management of document collection and production, including electronically stored information ("ESI"); and the scheduling, preparation for, and taking or defense of depositions of fact witnesses and expert witnesses.
(c) Expert Witnesses and Third-Party Vendors. Identification, retention, and supervision of expert consultants and testifying experts, e-discovery vendors, jury consultants, and other litigation support professionals as the circumstances of the case may require. This includes coordination with any local California counsel retained to provide supplemental litigation support.
(d) Settlement and Alternative Dispute Resolution. Participation in settlement negotiations, mediation, or any other form of alternative dispute resolution ("ADR") that may be ordered by the court or mutually agreed upon by the parties.
(e) Pre-Trial Preparation and Trial. All pre-trial preparation, including the preparation of trial briefs, motions in limine, witness and exhibit lists, jury instructions, and verdict forms; attendance at pre-trial conferences; and representation of Cascade at trial, whether before a jury or the court, through verdict and entry of judgment.
(f) Post-Trial and Appellate Proceedings. Representation in any post-trial proceedings, including motions for new trial or judgment notwithstanding the verdict. Representation on appeal, if necessary, shall be undertaken only upon separate written agreement between Calderwood & Harkness and Cascade, including agreement on staffing, scope, and billing terms for the appellate engagement.
This engagement is limited to the defense of the Action as described above. The engagement does not extend to, and Calderwood & Harkness does not undertake to provide legal services in connection with, any regulatory inquiries or investigations, any matters relating to Cascade's disclosure obligations under the Securities Exchange Act of 1934 or otherwise before the U.S. Securities and Exchange Commission, or any separate litigation, arbitration, or proceeding arising from the same or related underlying facts, unless Calderwood & Harkness and Cascade separately agree in writing to expand the scope of this engagement or enter into a new engagement for such purpose.
We understand that Cascade's in-house legal department, under the leadership of David Pruitt, General Counsel and Corporate Secretary, will provide oversight and strategic direction with respect to this matter. We further understand that the following individuals within Cascade's organization will serve as key business contacts for purposes of this engagement and may be called upon to provide factual information, participate in witness preparation, and assist in developing the defense strategy:
• Margaret Prumvane, Chief Executive Officer and President
• Raj Subramanian, Chief Financial Officer
• Lena Torvik, Senior Vice President, Supply Chain and Procurement
• Annika Bergström, Vice President, Strategic Sourcing
We will coordinate all communications with these individuals through your office unless you direct us otherwise.
3. Engagement Team
Calderwood & Harkness has assembled the following team of attorneys to handle this matter:
Douglas Carmichael, Partner — Responsible Partner. Mr. Carmichael will have overall supervisory responsibility for this engagement. He will serve as lead trial counsel and will be your primary contact at the firm for all strategic and substantive matters. Mr. Carmichael brings over twenty-five years of experience in complex commercial litigation and has tried numerous high-stakes cases in California state and federal courts. He will be directly involved in all critical phases of the litigation, including key depositions, dispositive motion practice, settlement negotiations, and trial.
Francesca Morano, Partner — Billing Partner. Ms. Morano will share case management responsibilities with Mr. Carmichael and will serve as the billing partner for the engagement. She will oversee budget development and monitoring, staffing decisions, and the preparation and submission of invoices to Cascade. Ms. Morano will also contribute substantively to the development of case strategy, and she will participate in discovery planning and key depositions.
Yuki Nakamura, Senior Associate — Lead Associate. Ms. Nakamura will manage the day-to-day litigation activities on this matter, including discovery management, motion practice, and deposition preparation. She will serve as the primary point of contact for routine case administration matters, coordinate with opposing counsel on scheduling and discovery issues, and supervise the work of junior attorneys and paralegals assigned to the case.
Carlos Espinoza, Associate — Working Associate. Mr. Espinoza will handle legal research and analysis, coordinate document review and production, draft discovery responses and correspondence, and provide support for deposition preparation and motion briefing. Mr. Espinoza will work under the direct supervision of Ms. Nakamura and the overall direction of Mr. Carmichael and Ms. Morano.
Additional attorneys, paralegals, litigation support specialists, and other professional staff may be assigned to this matter from time to time as the needs of the engagement require. We will inform you of any material changes in staffing, including the addition of any new attorney who will play a significant role in the case. We are committed to ensuring that the team assigned to this matter possesses the experience, skill, and availability necessary to provide Cascade with the highest quality of legal representation.
4. Billing Rates and Fee Arrangements
Calderwood & Harkness will bill for its professional services on an hourly basis. The current standard hourly rates for the attorneys initially assigned to this matter are as follows:
Any other attorneys or professional staff assigned to this matter will be billed at their then-current standard hourly rates, which will be communicated to Cascade at the time of assignment.
Hourly rates are subject to annual adjustment, typically effective as of January 1 of each calendar year. Calderwood & Harkness will provide Cascade with advance written notice of any rate adjustment not less than thirty (30) days before the effective date of such adjustment. Continued provision of services following notice of a rate adjustment will constitute acceptance of the adjusted rates.
Calderwood & Harkness will render monthly invoices for professional services and disbursements. Each invoice will include a narrative description of the work performed by each timekeeper during the billing period, the number of hours billed by each timekeeper, and the applicable hourly rate. Time will be recorded in increments of one-tenth (0.10) of an hour. Invoices are payable within thirty (30) days of the date of receipt. Amounts not paid within such thirty-day period may, at the firm's discretion, accrue interest at a rate of one percent (1.0%) per month, or the maximum rate permitted by applicable law, whichever is less.
In addition to professional fees, Calderwood & Harkness will bill for reasonable out-of-pocket disbursements and expenses incurred in connection with this matter. Such disbursements and expenses may include, without limitation, the following: court filing fees and service of process costs; travel expenses (including airfare, hotel, ground transportation, and meals); courier and overnight delivery charges; fees for computerized legal research (e.g., Westmark Data Systems, Sundial Solutions); photocopying and document reproduction costs; transcription and court reporter fees; long-distance telephone charges; and similar direct costs. Disbursements will be itemized on each monthly invoice.
We understand that effective cost management is important to Cascade. We will endeavor to staff this matter efficiently and to use the most junior attorney competent to perform each task. We are prepared to discuss budget estimates, phased budgeting, staffing protocols, or billing guidelines that Cascade may wish to implement, and we will work collaboratively with your office to ensure that our billing practices meet your expectations.
5. Third-Party Vendors and Disbursements
Calderwood & Harkness anticipates that the efficient handling of this matter will require the retention of certain third-party vendors and consultants. Based on our preliminary assessment of the case, we expect the following categories of third-party services to be necessary:
(a) E-discovery and Document Review Vendors. Given the nature of the claims asserted by Vantor, we anticipate that a substantial volume of electronically stored information will need to be collected, processed, hosted on a review platform, and reviewed for relevance, privilege, and production. We will retain one or more qualified e-discovery vendors to perform these services and will coordinate with Cascade's information technology department and any existing e-discovery infrastructure Cascade may have in place.
(b) Expert Consultants and Testifying Experts. The plaintiff's claims include allegations of approximately $87.4 million in damages. We anticipate the need to retain one or more economic or financial experts to analyze and rebut Vantor's damages theories, as well as potentially an industry expert to provide context regarding supply chain practices and the nature of the supplier relationships at issue. Depending on the development of the case, additional expert support in areas such as trade practices, market competition, or contract interpretation may be warranted.
(c) Local California Counsel. While Calderwood & Harkness maintains its principal office in Los Angeles and our litigation team is well-versed in California state court procedures, we may from time to time require supplemental support from local counsel for court appearances, filings, or procedural matters, particularly if proceedings overlap with other commitments of the primary engagement team.
Third-party vendor fees and expenses will be billed through Calderwood & Harkness's regular monthly invoicing process unless Cascade directs that certain vendors bill Cascade directly. In the event Cascade elects to receive direct invoices from any vendor, Calderwood & Harkness will coordinate the vendor relationship but will not be responsible for payment of the vendor's fees.
We will discuss with Cascade in advance, and obtain Cascade's approval for, the retention of any expert or vendor that is anticipated to incur fees in excess of Fifty Thousand Dollars ($50,000.00). We will provide Cascade with proposals or estimates from prospective vendors when available and will work with your office to select vendors that offer the best combination of quality, efficiency, and cost-effectiveness.
6. Insurance Coverage Coordination
You have informed us that Cascade maintains a commercial general liability insurance policy issued by Pinnacle National Insurance Co. under Policy No. PNG-CGL-2021-04487 (the "CGL Policy"), as well as directors and officers ("D&O") insurance coverage. We understand that the CGL Policy may provide coverage for some or all of the claims asserted by Vantor in this Action, including defense costs and, potentially, indemnification against any settlement or judgment.
Calderwood & Harkness will promptly notify Pinnacle National Insurance Co. of the claim and tender the defense of the Action under the applicable policy or policies. We will coordinate with your office and with Pinnacle National regarding any coverage determination, reservation of rights, or other communications from the insurer relating to the claim. In the event that Pinnacle National issues a reservation of rights letter or declines coverage, we will advise you of your rights and options with respect to the coverage dispute.
Cascade acknowledges that insurance coverage, if it is determined to be applicable, may offset a portion of the defense costs incurred in this matter and may also offset a portion of any settlement amount or judgment entered against Cascade. Calderwood & Harkness will cooperate with Pinnacle National's claims adjustment process as directed by Cascade, including providing information reasonably requested by the insurer, participating in insurer-initiated case assessments, and complying with any insurer reporting or billing requirements, to the extent consistent with our duties to Cascade as our client.
Notwithstanding the foregoing, Cascade remains responsible for the payment of all fees and costs invoiced by Calderwood & Harkness in accordance with this engagement letter, including any fees and costs that are not reimbursed or covered by Cascade's insurer(s). Our obligation to represent Cascade is to Cascade as our client, and our professional duties run exclusively to Cascade regardless of any insurance coverage arrangement.
7. Conflicts Check and Waiver
Prior to accepting this engagement, Calderwood & Harkness conducted a comprehensive conflicts of interest check in accordance with the California Rules of Professional Conduct and the firm's internal conflicts protocols. The conflicts check covered all parties to the Action, known witnesses, and opposing counsel, including the following individuals and entities:
• Vantor Holdings Corp. and its known principals, officers, and directors: Richard Ellsworth, Patricia Sung, Thomas Brennecke, and Deborah Marcelino
• Hemsworth Consumer Products LLC and its Chief Executive Officer, Janet Kohler
• Tridale Manufacturing Inc. and its President, Gregory Fontaine
• Orion Lifestyle Brands Corp. and its Chief Executive Officer, Simone Alvarez
• Kessler, Brandt & Whitfield LLP, plaintiff's counsel, and the individual attorneys identified as lead counsel: Martin Kessler, Natalie Whitfield, and Jason Okafor
The conflicts check was documented in an internal memorandum prepared by Calderwood & Harkness's Office of the General Counsel, dated September 11, 2021, and reviewed by Douglas Carmichael and Francesca Morano. Based on the results of this review, the firm has identified no disqualifying conflicts of interest. Calderwood & Harkness has not represented any of the above-listed adverse parties or third-party witnesses in any matter, and no attorney at the firm has a personal or financial interest that would impair the firm's ability to provide independent and competent representation to Cascade in this Action.
In the event that a conflict of interest arises during the course of this engagement — whether due to new information, the addition of parties or witnesses, or any other development — Calderwood & Harkness will promptly notify Cascade of the nature and circumstances of the conflict. The parties will then discuss appropriate measures, which may include obtaining an informed written waiver from all affected parties, implementing an ethical screen within the firm, or, if the conflict cannot be resolved, orderly withdrawal from the representation. Calderwood & Harkness is committed to maintaining the highest ethical standards throughout this engagement.
8. Confidentiality and Attorney-Client Privilege
All communications between Cascade and Calderwood & Harkness relating to this engagement, whether written or oral, are intended to be and shall remain confidential and protected by the attorney-client privilege and/or the attorney work product doctrine to the fullest extent permitted by applicable law. This includes, without limitation, communications concerning litigation strategy, factual analysis, settlement discussions, legal assessments, and internal deliberations regarding the defense of the Action.
Cascade agrees to take reasonable steps to preserve the privileged and confidential nature of such communications, including limiting the internal distribution of privileged communications to those officers, directors, employees, and agents who have a legitimate need to know and whose receipt of the information is consistent with maintenance of the privilege. We recommend that all communications with our firm be clearly marked as "Attorney-Client Privileged and Confidential" or words to similar effect, and that privileged documents not be forwarded to third parties outside the privilege without prior consultation with our office.
Calderwood & Harkness will maintain all client files, documents, and confidential information in accordance with the California Rules of Professional Conduct, applicable ethical rules, and the firm's internal information security and document management policies. Access to client files will be restricted to attorneys and staff working on this matter and to other firm personnel with a legitimate need for access.
9. Client Responsibilities
The effectiveness of Calderwood & Harkness's representation will depend in significant measure on Cascade's full and timely cooperation. Cascade agrees to cooperate with the firm in the defense of this matter, including without limitation the following:
(a) Document Production and Information. Cascade will promptly and completely produce all relevant documents, data, and information requested by Calderwood & Harkness in connection with this engagement. This includes internal records, correspondence, contracts, financial data, emails, and any other materials relating to the claims at issue in the Action, as well as information necessary for the preparation of discovery responses and the development of the defense strategy.
(b) Personnel Availability. Cascade will make key personnel — including, without limitation, the individuals identified in Section 2 of this letter — available for interviews, witness preparation sessions, depositions, court appearances, and trial testimony as required by the litigation schedule. Cascade acknowledges that the scheduling of depositions and trial is largely within the control of the court and opposing counsel, and that reasonable flexibility will be necessary.
(c) Review and Response. Cascade will promptly review and provide comments on draft pleadings, discovery responses, correspondence, and other work product prepared by Calderwood & Harkness. Timely feedback is essential to the firm's ability to meet court-imposed deadlines and to maintain the momentum of the defense.
(d) Settlement Authority and Strategic Direction. Cascade will provide timely decisions on settlement authority, strategic direction, and other matters requiring client input. All settlement offers, demands, or proposals will be communicated to Cascade, and no settlement will be entered into without Cascade's prior written authorization.
Cascade's principal contact for day-to-day communications will be David Pruitt, General Counsel and Corporate Secretary. Unless otherwise agreed, Calderwood & Harkness will direct all substantive communications to Mr. Pruitt or his designee.
10. Document Preservation
Cascade acknowledges its obligation under applicable law to preserve all documents, records, and electronically stored information that are potentially relevant to the claims and defenses in this Action. This obligation arises upon the reasonable anticipation of litigation and continues until the matter is finally resolved.
Calderwood & Harkness will issue a formal litigation hold memorandum to Cascade within a reasonable time following the execution of this engagement letter. The litigation hold memorandum will identify the custodians whose files and records must be preserved, the categories of documents and data subject to the hold, and the preservation protocols to be followed. The memorandum will also address the preservation of electronic data, including email, instant messages, shared drives, cloud storage, backup tapes, and mobile devices.
Cascade agrees to implement and enforce the litigation hold across all relevant departments, business units, and personnel, including but not limited to the Legal, Supply Chain and Procurement, Strategic Sourcing, Finance, and Information Technology departments. Cascade further agrees to suspend any routine document destruction or data purge policies with respect to materials subject to the litigation hold, and to promptly notify Calderwood & Harkness of any inadvertent destruction, loss, or alteration of potentially relevant documents or data.
Failure to preserve relevant evidence may result in adverse evidentiary inferences, sanctions, or other consequences imposed by the court. We therefore emphasize the critical importance of full compliance with the litigation hold.
11. Termination of Engagement
Either Cascade or Calderwood & Harkness may terminate this engagement upon reasonable written notice to the other party. In the event of termination by either party, the following provisions shall apply:
(a) Calderwood & Harkness will take such steps as are reasonably practicable to protect Cascade's interests in the Action, including cooperating in an orderly transition of the matter to successor counsel selected by Cascade. Such steps may include, without limitation, providing successor counsel with copies of the case file, work product, and relevant correspondence; seeking court approval for the substitution of counsel; and taking such other actions as may be required by applicable rules of professional conduct or court order.
(b) Cascade will remain responsible for the payment of all fees, costs, and disbursements incurred by Calderwood & Harkness through the effective date of termination. Any outstanding invoices shall be payable in accordance with the terms set forth in Section 4 of this letter.
(c) Calderwood & Harkness's obligation to preserve and maintain client files shall survive termination of this engagement in accordance with applicable rules of professional conduct, California law, and the firm's internal document retention policies.
12. Limitation on Guarantee of Outcome
Calderwood & Harkness will devote its best professional efforts to the defense of Cascade in this matter. However, the firm makes no guarantee, warranty, or prediction regarding the outcome of this litigation or any aspect thereof, including but not limited to the likelihood of prevailing on any motion, at trial, or on appeal; the amount of damages, if any, that may be awarded; or the ultimate terms of any settlement.
Any assessments of risk, evaluation of the merits of claims or defenses, estimates of potential damages exposure, or opinions regarding the likelihood of success communicated by Calderwood & Harkness to Cascade — whether orally or in writing — are professional opinions based on the information available to the firm at the time such assessments are made and are inherently uncertain. Such opinions are subject to change as the facts and circumstances of the matter develop, as discovery progresses, and as the court rules on pending issues. They should not be relied upon as guarantees or assurances of any particular result.
13. Governing Law and Dispute Resolution
This engagement letter and the relationship between Calderwood & Harkness and Cascade shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflict of laws principles.
In the event of any dispute, claim, or controversy arising out of or relating to this engagement letter, the services provided hereunder, or the fees and costs charged in connection with this engagement, the parties agree to submit such dispute to binding arbitration in Los Angeles, California. The arbitration shall be conducted in accordance with the rules of JAMS or another mutually agreed-upon arbitration service provider. The decision of the arbitrator shall be final and binding upon the parties and may be entered as a judgment in any court of competent jurisdiction. Notwithstanding the foregoing, nothing in this section shall preclude either party from seeking provisional or injunctive relief from a court of competent jurisdiction to the extent necessary to preserve the status quo pending the outcome of arbitration.
14. Acceptance
We are grateful for the opportunity to represent Cascade Retail Holdings Inc. in this matter, and we look forward to working closely with you and your team to achieve the best possible outcome.
If the terms of this engagement letter are acceptable, please countersign this letter in the space provided below and return one executed copy to our office. Your countersignature will constitute Cascade's agreement to the terms and conditions set forth herein. If you have any questions or wish to discuss any aspect of this letter, please do not hesitate to contact Douglas Carmichael at (213) 555-7810 or Francesca Morano at (213) 555-7825.
We look forward to your prompt response so that we may proceed with the defense of this matter without delay.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Carmichael, Partner
Date: ________
By: ________
Francesca Morano, Partner
Date: ________
AGREED AND ACCEPTED:
The undersigned, duly authorized to act on behalf of Cascade Retail Holdings Inc., hereby accepts and agrees to the terms and conditions set forth in this engagement letter.
CASCADE RETAIL HOLDINGS INC.
By: ________
Name: David Pruitt
Title: General Counsel & Corporate Secretary
Date: ________
Enc.: Calderwood & Harkness LLP Standard Terms of Engagement
cc: Margaret Prumvane, CEO & President, Cascade Retail Holdings Inc. Francesca Morano, Partner, Calderwood & Harkness LLP Yuki Nakamura, Senior Associate, Calderwood & Harkness LLP
| Timekeeper | Position | Hourly Rate |
| Douglas Carmichael | Partner | $1,150.00 |
| Francesca Morano | Partner | $1,050.00 |
| Yuki Nakamura | Senior Associate | $725.00 |
| Carlos Espinoza | Associate | $575.00 |