expert-retention-memo-ostrowski.docx

1038-00007 · Cascade Retail Holdings · Internal Memoranda

expert-retention-memo-ostrowski.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP MEMORANDUM

FROM: Yuki Nakamura, Senior Associate, Calderwood & Harkness LLP

TO: Douglas Carmichael, Partner, Calderwood & Harkness LLP

DATE: September 15, 2022

RE: Recommendation for Retention of Damages and Economics Expert — Dr. Vivian Ostrowski, Archer & Colvin Consulting Group

MATTER: Vantor Holdings Corp. v. Cascade Retail Holdings Inc., Case No. 21STCV-34872, Superior Court of California, County of Los Angeles

CLIENT: Cascade Retail Holdings Inc.

C&H MATTER NO.: 1038-00007

I. PURPOSE OF MEMORANDUM

This memorandum recommends the retention of Dr. Vivian Ostrowski, Principal at Archer & Colvin Consulting Group, as Cascade Retail Holdings Inc.'s ("Cascade") testifying damages and economics expert in the above-referenced litigation. The purpose of this retention is to provide Cascade with a credible, experienced expert who can serve a dual function: (1) preparing a thorough rebuttal of the anticipated damages analysis to be submitted by Vantor Holdings Corp.'s ("Vantor") retained expert, Dr. Harold Pryce, Managing Director of Meridian Forensic Economics LLC (2049 Century Park East, Suite 1200, Los Angeles, CA 90067); and (2) preparing an independent, defensible alternative damages calculation that properly limits recoverable damages to the remaining terms of the exclusive supply agreements at issue.

As discussed in greater detail below, Vantor has designated Dr. Pryce as its primary damages expert. Pursuant to the scheduling order entered by the Honorable Judge Patricia Delgado on January 14, 2022, Dr. Pryce's expert report is expected to be served in December 2022. That report is anticipated to quantify Vantor's claimed damages at approximately $87.4 million across the three supplier relationships at the center of this dispute—namely, Vantor's exclusive supply agreements with Hemsworth Consumer Products LLC ("Hemsworth"), Tridale Manufacturing Inc. ("Tridale"), and Orion Lifestyle Brands Corp. ("Orion").

Cascade's defense strategy requires a credible expert who can persuasively challenge Vantor's damages methodology and present an alternative, well-supported damages figure that is limited to the remaining exclusive contract terms at the time each supplier entered into its agreement with Cascade. Additionally, the expert must be capable of accounting for Vantor's failure to mitigate its damages—a critical component of Cascade's defense that, based on our preliminary internal analysis, could reduce any damages award by an estimated 40% to 55%. The selection of the right expert at this stage is essential to narrowing Vantor's claim from $87.4 million to the defensible range of approximately $6.1 million to $11.3 million, a reduction that is critical both to the litigation posture and to any potential settlement discussions.

For the reasons set forth in this memorandum, Dr. Ostrowski is the strongest candidate for this engagement among the experts we have evaluated. I respectfully request authorization to proceed with her formal retention at the estimated budget of $485,000.

II. BACKGROUND ON THE NEED FOR EXPERT TESTIMONY

A. Vantor's Damages Claims

Vantor's complaint, as amended on April 22, 2022, asserts claims for tortious interference with contractual relations, tortious interference with prospective economic advantage, and unfair business practices under California Business and Professions Code Section 17200. At the core of each claim is Vantor's contention that Cascade deliberately targeted and induced three of Vantor's exclusive suppliers—Hemsworth, Tridale, and Orion—to terminate their existing exclusive supply agreements with Vantor and enter into new, more lucrative supply agreements with Cascade.

Vantor's damages theory, as articulated in its initial disclosures and developed through the course of discovery, claims total damages of $87.4 million across the three supplier relationships. The breakdown of Vantor's claimed damages is as follows:

Hemsworth Consumer Products LLC — $34.2 million. Vantor's damages claim with respect to Hemsworth is based on a projected five-year revenue stream, discounted at a rate of 8.5%. Vantor and Hemsworth entered into an exclusive supply agreement on March 15, 2019, with a stated expiration date of March 14, 2022. The agreement provided for a minimum annual purchase commitment by Vantor of $12.5 million. Vantor's damages model assumes not only the full remaining term of the Hemsworth agreement but also a projected renewal and expansion of the relationship beyond the contractual expiration date, extending the revenue stream projection to approximately five years from the date of the alleged interference.

Tridale Manufacturing Inc. — $22.8 million. Vantor's Tridale claim is based on a projected four-year revenue stream, also discounted at 8.5%. The exclusive supply agreement between Vantor and Tridale was executed on January 10, 2020, with a stated expiration date of January 9, 2022. The minimum annual purchase commitment under that agreement was $8.3 million. As with the Hemsworth claim, Vantor's damages projection extends well beyond the contractual term, assuming both renewal and revenue growth over a four-year horizon.

Orion Lifestyle Brands Corp. — $30.4 million. The Orion claim is the longest-duration projection, based on a six-year revenue stream discounted at 8.5%. Vantor and Orion entered into an exclusive supply agreement on July 1, 2018, with a stated expiration date of June 30, 2022. The minimum annual purchase commitment was $14.6 million. Vantor's damages theory again contemplates renewal and significant revenue expansion beyond the existing contract term.

In the aggregate, Vantor's claimed damages total $87.4 million ($34.2 million + $22.8 million + $30.4 million). The central infirmity in Vantor's approach—and the basis for our need for a strong rebuttal expert—is that Vantor's damages model appears to project lost profits well beyond the existing contract terms by assuming the renewal and expansion of each supplier relationship. As discussed below, the existing agreements all contained termination-for-convenience clauses, which the suppliers independently exercised prior to contracting with Cascade. Vantor's damages theory effectively ignores these termination provisions and treats the supplier relationships as if they were perpetual, guaranteed revenue streams.

B. Cascade's Damages Theory

Cascade's position is that any recoverable damages must be limited to the remaining exclusive contract terms at the time each supplier made the independent decision to enter into its agreement with Cascade. The critical dates and remaining terms are as follows:

Hemsworth Consumer Products LLC. Cascade and Hemsworth executed their supply agreement on June 1, 2021. At that time, the Hemsworth–Vantor exclusive supply agreement had an expiration date of March 14, 2022, leaving approximately nine months remaining on the exclusive term. Cascade's damages analysis would therefore cap Hemsworth-related damages at a figure reflective of no more than nine months of lost revenue under the Vantor–Hemsworth agreement, rather than the five-year projection advanced by Vantor.

Tridale Manufacturing Inc. Cascade and Tridale executed their supply agreement on August 15, 2021. The Tridale–Vantor exclusive supply agreement was set to expire on January 9, 2022, leaving approximately five months remaining on the exclusive term. Cascade's damages analysis limits Tridale-related damages to this five-month period, rather than the four-year projection advanced by Vantor.

Orion Lifestyle Brands Corp. Cascade and Orion executed their supply agreement on May 10, 2021. The Orion–Vantor exclusive supply agreement had an expiration date of June 30, 2022, leaving approximately thirteen months remaining on the exclusive term. Cascade's damages analysis limits Orion-related damages to this thirteen-month period, rather than the six-year projection advanced by Vantor.

A crucial element of Cascade's defense is that all three of Vantor's exclusive supply agreements contained termination-for-convenience clauses. Specifically, the Hemsworth agreement permitted either party to terminate upon 90 days' written notice without cause. The Tridale agreement contained a 60-day termination-for-convenience provision. The Orion agreement allowed termination for convenience upon 120 days' written notice. The documentary record—corroborated by communications produced in discovery—indicates that each of the three suppliers exercised its respective termination-for-convenience right prior to executing its agreement with Cascade. This fact fundamentally undermines Vantor's theory that these relationships would have continued indefinitely but for Cascade's alleged interference.

Additionally, Cascade intends to assert that Vantor failed to mitigate its damages following the loss of these three supplier relationships. Vantor is a substantial company with established procurement infrastructure and industry relationships. The markets in which Hemsworth, Tridale, and Orion operate—home goods, consumer electronics accessories, and personal care products, respectively—contain numerous alternative suppliers. Vantor's failure to pursue replacement supply arrangements in a timely manner should, under California law, further reduce any recoverable damages. Our preliminary assessment is that this mitigation failure warrants a reduction in the range of 40% to 55%.

Based on our internal analysis, as set forth in the November 15, 2021 exposure assessment memorandum prepared by this office, Cascade's preliminary damages assessment produces a range of $6.1 million (low) to $11.3 million (high), broken down as follows:

The gap between Vantor's $87.4 million claim and Cascade's defensible range of $6.1 million to $11.3 million underscores the importance of retaining an expert who can credibly and persuasively bridge that distance in the court's view. The expert must not only dismantle Vantor's inflated projections but also present an affirmative damages model that the trier of fact can adopt as a reasonable alternative.

C. Context of discovery

The discovery record in this matter is substantial. To date, the parties have engaged in extensive document collection, review, and production. Cascade has collected 452,316 documents, of which 198,740 have been reviewed and 78,412 have been produced to Vantor. Vantor, in turn, has produced 41,308 documents to Cascade. Additionally, 23,567 documents have been produced by the three suppliers—Hemsworth, Tridale, and Orion—in response to third-party subpoenas served earlier this year. In total, the parties and third parties have produced in excess of 143,000 documents, creating a substantial record that the retained expert will need to review selectively, with guidance from the litigation team, to develop a thorough understanding of the relevant financial data, supplier communications, and contractual relationships.

Discovery has continued to expand. On August 3, 2022, the Court granted Vantor's motion to expand the scope of discovery to encompass an additional fifteen supplier relationships beyond the three at the center of the dispute. This expansion brings the total number of supplier relationships subject to discovery to eighteen. While Vantor has not asserted damages claims arising from these additional fifteen relationships, it intends to use them as evidence of a broader pattern of alleged interference. The expanded discovery scope will necessarily increase the volume of documents and financial data that the damages expert will need to consider in assessing the overall competitive landscape and Vantor's mitigation opportunities.

Key fact witness depositions are scheduled for the fall of 2022 and will produce testimony directly relevant to the damages analysis. The following depositions are currently on the calendar:

• Annika Bergström, Vice President of Strategic Sourcing, Cascade Retail Holdings Inc. — Scheduled for October 12, 2022.

• Thomas Brennecke, Vice President of Supplier Relations, Vantor Holdings Corp. — Scheduled for October 26, 2022.

• Lena Torvik, Senior Vice President of Supply Chain & Procurement, Cascade Retail Holdings Inc. — Scheduled for November 18, 2022.

Each of these witnesses is expected to provide testimony regarding the circumstances surrounding the transition of the three supplier relationships, the economic terms of the relevant agreements, and the competitive dynamics of the supplier markets at issue. Dr. Ostrowski would need to review these deposition transcripts as they become available in order to incorporate relevant testimony into her damages analysis.

Expert reports are expected to be exchanged in December 2022, consistent with the scheduling order entered on January 14, 2022. This timeline reinforces the urgency of retaining Dr. Ostrowski immediately so that she has adequate time to familiarize herself with the case record, develop her analytical framework, and prepare a comprehensive rebuttal report.

III. RECOMMENDED EXPERT: DR. VIVIAN OSTROWSKI

A. Overview and Contact Information

I recommend retaining Dr. Vivian Ostrowski as Cascade's testifying damages and economics expert. Dr. Ostrowski's contact information and firm details are as follows:

Full Name: Vivian Ostrowski, Ph.D.

Title: Principal

Firm: Archer & Colvin Consulting Group

Address: 701 Fifth Avenue, Suite 4100, Seattle, Washington 98104

Entity Type: General Partnership, organized under the laws of the State of Washington

Archer & Colvin is a well-regarded forensic economics and litigation consulting firm with a national practice. The firm maintains offices in Seattle, San Francisco, and New York and has been engaged in complex commercial litigation matters across numerous industries and jurisdictions. Dr. Ostrowski heads the firm's commercial damages and supply chain economics practice and has served as the engagement lead on a significant number of high-profile cases.

B. Qualifications and Professional Background

Dr. Ostrowski holds a Ph.D. in Economics, with a specialization in industrial organization and commercial damages analysis. She has over twenty years of experience in forensic economics and litigation consulting, with a particular focus on the quantification and rebuttal of commercial damages claims, lost profits analyses, business valuation, and related economic analyses.

Over the course of her career, Dr. Ostrowski has provided expert testimony in more than fifty matters involving commercial damages, lost profits, business valuation, and economic analysis in both state and federal courts across the United States. Her engagements have spanned a wide range of industries, but she has particular depth in retail, distribution, and supply chain economics—a concentration that is directly relevant to the industries and commercial relationships at issue in the present matter. She has testified extensively regarding damages methodologies, discount rate selection, the proper treatment of projected revenue streams, contract-term limitations on damages, and failure-to-mitigate analysis.

Importantly, Dr. Ostrowski has previously testified in cases involving tortious interference with contractual relations, breach of contract, and unfair competition—the precise categories of claims asserted by Vantor in this litigation. She is familiar with California damages law standards, including the requirement that damages be proven with reasonable certainty and the limitations on speculative or contingent damages projections. Her prior experience in California courts will be particularly valuable in ensuring that her analysis is tailored to the applicable legal standards and that her testimony will withstand challenge under the standards applied by California state courts for the qualification and examination of expert witnesses.

Dr. Ostrowski has published extensively in the fields of damages methodology, discount rate selection, and mitigation analysis. Her publications include articles in peer-reviewed economics journals and chapters in practitioner-focused treatises on forensic economics. This publication record enhances her credibility as an expert and provides a foundation of scholarly rigor that supports the analytical framework she will apply in this matter.

With respect to prior challenges to her qualifications, Dr. Ostrowski has been qualified as an expert in every matter in which she has been proffered. There are no instances in which her testimony has been excluded or her qualifications successfully challenged through a Daubert motion, a Kelly/Frye challenge, or any analogous gatekeeping proceeding. This unblemished record of qualification is a significant factor in our recommendation, as it reduces the risk that Vantor will succeed in any motion to exclude Dr. Ostrowski's testimony.

A copy of Dr. Ostrowski's curriculum vitae, which details her educational background, professional experience, publications, and prior testimony, is attached hereto as Attachment A.

C. Prior Retention by Calderwood & Harkness LLP

Calderwood & Harkness has engaged Archer & Colvin Consulting Group and Dr. Ostrowski on two prior occasions. Both engagements were in the context of commercial litigation matters involving damages analysis, and in both cases, Dr. Ostrowski's work product and testimony were of the highest quality. While the details of those prior engagements are subject to client confidentiality obligations and are not disclosed here, the positive experience the firm has had with Dr. Ostrowski provides an additional basis for confidence in this recommendation. She has demonstrated a thorough and methodical approach to damages analysis, strong communication skills in both written reports and oral testimony, and a collaborative working style that facilitates efficient coordination with the litigation team.

We have conducted a thorough conflicts check, and no conflicts have been identified with respect to any party, counsel, or entity involved in this matter, including Vantor Holdings Corp.; Vantor's counsel at Kessler, Brandt & Whitfield LLP; Hemsworth Consumer Products LLC; Tridale Manufacturing Inc.; Orion Lifestyle Brands Corp.; and Meridian Forensic Economics LLC and its Managing Director, Dr. Harold Pryce. Dr. Ostrowski and Archer & Colvin have confirmed the absence of any conflicting engagements or relationships.

D. Comparison with Other Candidates Considered

In arriving at this recommendation, we evaluated several other forensic economics experts with relevant qualifications. Without naming the specific candidates in detail, the following summarizes the basis for concluding that Dr. Ostrowski is the strongest fit for this engagement:

First, Dr. Ostrowski possesses a depth of experience in supply chain and retail distribution economics that is unmatched among the candidates we reviewed. Several other candidates, while highly qualified in general forensic economics, lacked significant exposure to the specific industry dynamics involved in this case—particularly the competitive dynamics of exclusive supply arrangements in the home goods, consumer electronics accessories, and personal care product categories. Dr. Ostrowski's industry-specific expertise will enhance the persuasiveness and credibility of her analysis.

Second, Dr. Ostrowski's geographic proximity to Cascade's corporate headquarters in Seattle is a practical advantage that should not be overlooked. Her office at 701 Fifth Avenue in Seattle is located in close proximity to Cascade's executive offices, which will facilitate in-person collaboration with Cascade's finance team, including Chief Financial Officer Raj Subramanian and Senior Vice President Lena Torvik. Given the volume of financial data that the expert will need to review and the iterative nature of damages model development, this proximity will reduce both cost and logistical complexity.

Third, Dr. Ostrowski has a strong and documented track record of successfully rebutting lost-profits models that project damages beyond existing contract terms—precisely the type of model that Dr. Pryce is expected to present on behalf of Vantor. In prior engagements, she has effectively demonstrated that projected revenue streams extending beyond contractual expiration dates are speculative and unsupported, particularly where, as here, the underlying agreements contain termination-for-convenience provisions. Her analytical framework for addressing these issues is well-developed and has been validated through prior testimony.

Fourth, Dr. Ostrowski's familiarity with California damages law standards, including the reasonable certainty requirement and the proper treatment of speculative damages, ensures that her analysis will be tailored to the applicable legal framework. Several other candidates we evaluated had limited or no prior experience with California damages jurisprudence, which would have required additional time and coordination to ensure compliance with the relevant legal standards.

For all of these reasons, Dr. Ostrowski is our recommended candidate.

IV. PROPOSED SCOPE OF ENGAGEMENT

The proposed scope of Dr. Ostrowski's engagement encompasses the following categories of work, each of which is critical to Cascade's defense against Vantor's $87.4 million damages claim.

A. Rebuttal of Dr. Harold Pryce / Meridian Forensic Economics Damages Analysis

The primary objective of Dr. Ostrowski's engagement is to review, analyze, and prepare a thorough rebuttal of the damages report anticipated to be submitted by Dr. Harold Pryce of Meridian Forensic Economics LLC on behalf of Vantor. As noted above, Dr. Pryce's report is expected to be served in December 2022, and it is anticipated to quantify Vantor's total damages claim at $87.4 million across the three supplier relationships.

Dr. Ostrowski's rebuttal work will include, at a minimum, the following elements:

(a) A comprehensive review and critique of Dr. Pryce's damages report, including his underlying methodology, data inputs, assumptions, and conclusions.

(b) A specific challenge to Dr. Pryce's use of projected multi-year revenue streams that extend far beyond the remaining terms of the three exclusive supply agreements. As discussed in Section II.B above, the remaining contract terms at the time of the alleged interference were approximately nine months (Hemsworth), five months (Tridale), and thirteen months (Orion). Any projection of lost profits beyond these remaining terms is inherently speculative and unsupported by the contractual record.

(c) A challenge to the selection of the 8.5% discount rate applied uniformly across all three supplier relationships. Dr. Ostrowski will evaluate whether this discount rate appropriately reflects the risk profiles associated with each individual supplier relationship, the industries in which they operate, and the macroeconomic conditions prevailing at the relevant time periods. The use of a single, uniform discount rate across three distinct commercial relationships in different product categories raises significant methodological concerns that Dr. Ostrowski is well-positioned to address.

(d) An analysis of whether Vantor's projected revenue streams—five years for Hemsworth, four years for Tridale, and six years for Orion—are economically supportable given the existence of the termination-for-convenience clauses in each agreement. The presence of these clauses, which permitted either party to terminate the relationship upon relatively short notice (90 days, 60 days, and 120 days, respectively), introduces substantial uncertainty into any projection of future revenues beyond the notice periods. Dr. Ostrowski will analyze the economic significance of these provisions and their implications for damages quantification.

(e) An assessment of the reasonableness of Dr. Pryce's assumptions regarding the likelihood of renewal and expansion of the supplier relationships, including whether historical purchasing patterns, market trends, and supplier communications support or contradict these assumptions.

B. Alternative Damages Calculation

In addition to rebutting Dr. Pryce's analysis, Dr. Ostrowski will prepare an independent, affirmative damages calculation that reflects Cascade's theory of the case. This alternative calculation will serve as the foundation for Cascade's argument that recoverable damages are limited to a fraction of Vantor's claimed amount. The key components of this alternative analysis are as follows:

(a) Dr. Ostrowski will prepare a damages model that limits recoverable lost profits to the remaining exclusive contract terms at the time each supplier entered into its agreement with Cascade. Specifically, the model will calculate lost profits over the following periods: approximately nine months for Hemsworth (from the execution of the Cascade–Hemsworth agreement on June 1, 2021, through the expiration of the Vantor–Hemsworth agreement on March 14, 2022); approximately five months for Tridale (from August 15, 2021, through January 9, 2022); and approximately thirteen months for Orion (from May 10, 2021, through June 30, 2022).

(b) Dr. Ostrowski will select and apply discount rates appropriate to each individual supplier relationship, based on an analysis of market conditions, the specific risk profiles of each relationship, and the industries in which the suppliers operate. This individualized approach will stand in contrast to Dr. Pryce's anticipated use of a uniform 8.5% discount rate and will provide a more rigorous and defensible basis for the calculation of present-value damages.

(c) A critical component of the alternative damages calculation will be the quantification of Vantor's failure to mitigate its damages. Dr. Ostrowski will analyze Vantor's ability to source alternative suppliers following the transition of the three relationships to Cascade. This analysis will consider the available market for comparable products in the home goods, consumer electronics accessories, and personal care categories; the number and capacity of alternative suppliers in each market; the lead times required to establish new supplier relationships; and Vantor's actual mitigation efforts (or lack thereof) as reflected in the documentary record and deposition testimony. Based on our preliminary assessment, we anticipate that the mitigation failure analysis will support a reduction in damages in the range of 40% to 55%.

(d) The expected output of the alternative damages calculation is a range of $6.1 million (low) to $11.3 million (high) before mitigation adjustments. With the application of a 40% to 55% reduction for failure to mitigate, the adjusted range is expected to be in the area of approximately $2.7 million to $6.8 million. Dr. Ostrowski's independent analysis will refine these preliminary figures based on a more detailed review of the financial data and market conditions.

C. Analysis of Vantor's New Supply Commitments from Cascade

Dr. Ostrowski's engagement will also encompass an analysis of the new supply agreements that Cascade entered into with each of the three suppliers. This analysis is relevant both to the damages calculation and to Cascade's affirmative defense that the suppliers made independent economic decisions to transition their relationships based on superior commercial terms offered by Cascade. The specific agreements to be analyzed are as follows:

(a) Cascade–Hemsworth Agreement: Executed June 1, 2021, with a five-year term and an annual purchase commitment of $28.0 million.

(b) Cascade–Tridale Agreement: Executed August 15, 2021, with a three-year term and an annual purchase commitment of $19.5 million.

(c) Cascade–Orion Agreement: Executed May 10, 2021, with a four-year term and an annual purchase commitment of $31.0 million.

Dr. Ostrowski will compare these commitments with Vantor's prior purchase commitments under the exclusive supply agreements ($12.5 million for Hemsworth, $8.3 million for Tridale, and $14.6 million for Orion). In each case, the Cascade agreements represent a substantial increase in annual purchase commitments—more than double in each instance. Dr. Ostrowski will analyze the suppliers' economic incentives to transition to the Cascade relationships, taking into account the significantly higher revenue commitments, the longer contract terms offered by Cascade, and the relevant market conditions at the time of the transitions. This analysis is expected to support the conclusion that the suppliers' decisions to terminate their Vantor agreements and enter into Cascade agreements were driven by independent economic self-interest rather than by any inducement or interference by Cascade.

D. Review of Key Documents and Deposition Testimony

The engagement will necessarily require Dr. Ostrowski and her team at Archer & Colvin to review a substantial volume of documents and testimony. While the review will be guided and prioritized by the Calderwood & Harkness litigation team, the anticipated scope includes:

(a) Relevant documents from among the 78,412 documents produced by Cascade, the 41,308 documents produced by Vantor, and the 23,567 documents produced by the three suppliers in response to third-party subpoenas. Dr. Ostrowski's review will focus on financial records, internal communications regarding the supplier relationships, pricing and contract negotiation documents, and any documents bearing on Vantor's mitigation efforts or the suppliers' decision-making processes.

(b) A focused review of the fourteen Project Atlas emails that reference Vantor's supplier relationships. These fourteen emails are a subset of 2,847 total Project Atlas emails produced in discovery. The Project Atlas emails have been a focal point of Vantor's discovery efforts, and Dr. Ostrowski will need to assess whether any of these fourteen emails bear on the damages methodology—for example, whether they reflect Cascade's knowledge of the remaining terms of the Vantor agreements, the economic terms under consideration, or the suppliers' stated reasons for transitioning.

(c) Deposition transcripts of Annika Bergström (scheduled October 12, 2022), Thomas Brennecke (scheduled October 26, 2022), and Lena Torvik (scheduled November 18, 2022). These transcripts will be provided to Dr. Ostrowski as they become available, and her analysis will incorporate relevant testimony regarding the commercial terms of the agreements, the timing and circumstances of the supplier transitions, and Vantor's post-transition procurement activities.

(d) Financial records produced by Granville & Associates, P.C., Cascade's outside auditors, as well as Vantor's financial disclosures. These records are essential to the development of an accurate and defensible damages model and will be the primary data source for Dr. Ostrowski's quantitative analysis.

E. Expert Report and Testimony

Dr. Ostrowski will prepare a comprehensive rebuttal expert report for service on Vantor's counsel, Kessler, Brandt & Whitfield LLP, attention Martin Kessler and Natalie Whitfield, in accordance with the deadlines established by the Court's scheduling order. The report will address each element of Dr. Pryce's anticipated damages analysis, set forth Dr. Ostrowski's alternative damages calculation, and comply with all applicable disclosure requirements under the California Code of Civil Procedure.

Dr. Ostrowski will be available for deposition by Vantor's counsel following the service of her expert report. Based on the current scheduling order, we anticipate that her deposition would be scheduled in the January–February 2023 timeframe.

Additionally, Dr. Ostrowski will be available for trial testimony in the event that this matter proceeds to trial. Her trial preparation will include the development of demonstrative exhibits to illustrate her damages analysis and the development of testimony outlines in coordination with the Calderwood & Harkness trial team.

V. ESTIMATED EXPERT FEES AND BUDGET

A. Fee Structure

Dr. Ostrowski's standard hourly rate for testifying expert work is $875 per hour. Supporting analysts at Archer & Colvin bill at rates ranging from $325 to $525 per hour, depending on experience and seniority. Senior associates and project managers at Archer & Colvin bill at rates ranging from $525 to $675 per hour. All fees are billed on an hourly basis, with monthly invoices submitted through Calderwood & Harkness LLP in accordance with the firm's standard outside vendor billing procedures. Invoices will include detailed time entries describing the nature of the work performed, and will be subject to review by the Calderwood & Harkness litigation team before being passed through to the client.

B. Estimated Total Fees: $485,000

Based on our assessment of the scope of the engagement and the complexity of the issues involved, we estimate total expert fees for Dr. Ostrowski's engagement at approximately $485,000. This estimate is broken down by anticipated work phase as follows:

The estimated hours reflect a blend of Dr. Ostrowski's time and the supporting work of her Archer & Colvin analyst team. The rebuttal expert report preparation phase is expected to be the largest single component of the engagement, reflecting the complexity of Dr. Pryce's anticipated damages model and the need for a thorough, well-supported written analysis.

The trial preparation and testimony line item may be reduced or eliminated if the matter settles prior to trial, and we will monitor this budget item and provide updates as the case progresses through the settlement discussion process. Conversely, the estimate may need to be revised upward depending on the scope and complexity of Dr. Pryce's expert report and the damages model he presents. If Dr. Pryce's methodology proves to be significantly more complex than anticipated—for example, if it incorporates additional supplier relationships beyond the three at issue or employs a multi-factor econometric model—the time required for Dr. Ostrowski's rebuttal could increase. We will update the budget estimate promptly if any material changes in scope are identified.

C. Budget Context

The estimated $485,000 in expert fees should be considered in the context of Cascade's overall defense budget for this matter. Total defense costs are currently estimated at approximately $5.9 million, of which the $485,000 expert fees represent approximately 8.2%. This is well within the range that is typical for expert retention in complex commercial litigation matters of this magnitude.

For reference, the other significant components of the defense budget include the following:

• E-discovery costs through Krane Investigations LLC (Samuel Byrd, Project Manager): Currently at $892,400 and expected to increase in light of the Court's August 3, 2022 ruling expanding discovery to fifteen additional supplier relationships.

• Local counsel fees through Wortham & Adair LLP (Diana Prescott): Currently at $127,500 for appearances, local procedural matters, and coordination with the Los Angeles Superior Court.

• Calderwood & Harkness legal fees and related costs: The balance of the estimated $5.9 million total defense budget.

With respect to insurance coverage, Cascade's commercial general liability insurer, Pinnacle National Insurance Co. (Policy No. PNG-CGL-2021-04487, Senior Claims Adjuster Leonard Furman), has acknowledged coverage for this matter under the CGL policy. Defense cost reimbursement is anticipated, and expert fees are expected to be treated as a covered defense cost under the policy terms. We are coordinating with Mr. Furman's office and Cascade's risk management team to ensure timely submission of invoices for reimbursement. Accordingly, while the $485,000 expert fee estimate represents a significant expenditure, it is expected to be largely or entirely covered as a defense cost under the applicable insurance policy.

VI. ENGAGEMENT TERMS AND LOGISTICS

A. Retention Agreement

I recommend that Calderwood & Harkness enter into a formal retention agreement with Archer & Colvin Consulting Group for the engagement of Dr. Ostrowski. The retention will be coordinated through Calderwood & Harkness, with all fees billed through the firm to Cascade in accordance with our standard procedures for outside expert retention. The engagement letter will be executed between Calderwood & Harkness LLP and Archer & Colvin Consulting Group, with Cascade's prior written approval. A draft of the proposed retention agreement is attached hereto as Attachment C for your review and comment.

The retention agreement will include standard provisions governing scope of work, billing and payment procedures, intellectual property rights in work product, indemnification, and termination. It will also incorporate by reference the applicable confidentiality and protective order provisions described below.

B. Confidentiality and Privilege

All communications between Calderwood & Harkness and Dr. Ostrowski, and between Dr. Ostrowski's team and any member of the Calderwood & Harkness litigation team or Cascade personnel, will be treated as protected attorney work product. Dr. Ostrowski's draft reports, working analyses, preliminary calculations, internal memoranda, and communications with counsel are all to be maintained as attorney work product and will not be disclosed to opposing counsel or any third party unless and until a final expert report is served in accordance with the Court's scheduling order and applicable rules of civil procedure.

Dr. Ostrowski and all members of her team at Archer & Colvin who are assigned to this engagement will be required to execute confidentiality agreements consistent with the terms of any protective order that has been or may be entered in this case. To the extent that Dr. Ostrowski's review will encompass documents designated as "Confidential" or "Highly Confidential — Attorneys' Eyes Only" under the protective order, the confidentiality agreements will include appropriate provisions restricting the use, storage, and disposition of such materials.

C. Timeline

Immediate retention is recommended. Given the December 2022 deadline for the exchange of expert reports, Dr. Ostrowski will need adequate time to review the voluminous documentary record, analyze the relevant financial data, attend to the deposition transcripts as they become available, develop her damages model, and prepare a comprehensive and well-supported rebuttal report. Any delay in retention risks compressing the timeline for this work and could compromise the quality and thoroughness of the expert analysis.

The anticipated timeline for the key milestones of the engagement is as follows:

• September–October 2022: Execution of retention agreement; initial document review and case familiarization; coordination with Cascade's finance team, including CFO Raj Subramanian, for access to financial data and supporting documentation.

• October–November 2022: Continued document review; review of deposition transcripts of Annika Bergström (October 12), Thomas Brennecke (October 26), and Lena Torvik (November 18) as they become available; preliminary development of damages model and analytical framework.

• November–December 2022: Receipt and review of Dr. Pryce's expert report; refinement of rebuttal analysis; preparation and finalization of Dr. Ostrowski's rebuttal expert report; service of report on Vantor's counsel.

• January–February 2023: Deposition preparation and testimony of Dr. Ostrowski by Vantor's counsel.

• To be determined: Trial preparation and testimony, contingent on whether the matter proceeds to trial.

D. Client Approval

I recommend presenting this retention recommendation to David Pruitt, General Counsel and Corporate Secretary of Cascade Retail Holdings Inc., for formal approval. Mr. Pruitt has been the primary point of contact for legal strategy decisions in this matter and will need to authorize the engagement and the associated budget expenditure.

In light of the significance of the damages dispute to Cascade's overall litigation exposure, I also recommend that Margaret Prumvane, Chief Executive Officer and President of Cascade, be advised of this retention. Cascade reported annual revenue of $6.8 billion for fiscal year 2021 and had a market capitalization of approximately $14.2 billion as of September 2021. While Vantor's $87.4 million damages claim represents a modest fraction of Cascade's overall financial position, it is nonetheless a material litigation exposure that warrants the attention of senior management. Our expectation is that successful retention and deployment of Dr. Ostrowski will narrow the claim from $87.4 million to the defensible range of $6.1 million to $11.3 million—a reduction of approximately 87% to 93%—which represents a substantial and tangible benefit to Cascade.

VII. RECOMMENDATION

For all of the reasons set forth in this memorandum, I strongly recommend retaining Dr. Vivian Ostrowski of Archer & Colvin Consulting Group as Cascade Retail Holdings Inc.'s testifying damages and economics expert in Vantor Holdings Corp. v. Cascade Retail Holdings Inc., Case No. 21STCV-34872.

Dr. Ostrowski's qualifications are ideally suited to this engagement. Her over twenty years of experience in forensic economics, her specialization in commercial damages analysis with particular depth in supply chain and retail distribution economics, and her strong track record in rebutting inflated lost-profits claims make her the ideal candidate to serve as Cascade's damages expert. She has been qualified as an expert in every matter in which she has been proffered, and she has extensive experience testifying in tortious interference and breach of contract matters under California law.

Dr. Ostrowski's analysis will be critical to Cascade's defense. Her rebuttal of Dr. Pryce's anticipated $87.4 million damages claim, combined with her independent alternative damages calculation, is expected to narrow Vantor's claim to the defensible range of $6.1 million to $11.3 million—a figure that reflects only the remaining exclusive contract terms at the time of the alleged interference and incorporates appropriate reductions for Vantor's failure to mitigate its damages. This narrowing of the damages exposure is central to Cascade's litigation strategy and to any potential settlement negotiations.

Accordingly, I respectfully request the following:

1. Authorization to proceed with the formal retention of Dr. Vivian Ostrowski and Archer & Colvin Consulting Group at the estimated budget of $485,000, subject to client approval.

2. Authorization to present this retention recommendation to David Pruitt, General Counsel & Corporate Secretary of Cascade, and to advise Margaret Prumvane, CEO & President, of the proposed engagement.

3. A meeting to discuss this recommendation at your earliest convenience. I am available at any time this week and am prepared to address any questions or concerns you may have regarding Dr. Ostrowski's qualifications, the proposed scope of engagement, or the estimated budget.

Thank you for your consideration of this recommendation.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Yuki Nakamura Senior Associate Calderwood & Harkness LLP

VIII. ATTACHMENTS

The following attachments are referenced in and accompany this memorandum:

Attachment A: Curriculum Vitae of Dr. Vivian Ostrowski, Principal, Archer & Colvin Consulting Group

Attachment B: Archer & Colvin Consulting Group — Firm Overview and Representative Engagements

Attachment C: Proposed Retention Agreement (Draft) — Calderwood & Harkness LLP and Archer & Colvin Consulting Group

Attachment D: Summary Table — Vantor's Damages Claims vs. Cascade's Preliminary Damages Assessment by Supplier

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT Calderwood & Harkness LLP	C&H Matter No. 1038-00007 This document and all attachments are subject to the attorney-client privilege and the work product doctrine.
Supplier	Vantor's Claimed Damages	Cascade Low Estimate	Cascade High Estimate
Hemsworth Consumer Products LLC	$34.2M	$2.8M	$4.9M
Tridale Manufacturing Inc.	$22.8M	$1.4M	$2.7M
Orion Lifestyle Brands Corp.	$30.4M	$1.9M	$3.7M
Total	$87.4M	$6.1M	$11.3M
Work Phase	Estimated Hours	Estimated Cost
Initial document review and case familiarization	220 hours	$95,000
Damages model development and alternative calculation	320 hours	$140,000
Rebuttal expert report preparation	350 hours	$155,000
Deposition preparation and testimony	80 hours	$55,000
Trial preparation and testimony (if needed)	65 hours	$40,000
Total	1,035 hours	$485,000

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. It contains the mental impressions, conclusions, opinions, and legal theories of counsel and is prepared in anticipation of litigation. Do not distribute, copy, or disclose this memorandum or its contents without the express authorization of Calderwood & Harkness LLP.
CALDERWOOD & HARKNESS LLP MEMORANDUM
FROM: Yuki Nakamura, Senior Associate, Calderwood & Harkness LLP
TO: Douglas Carmichael, Partner, Calderwood & Harkness LLP
DATE: September 15, 2022
RE: Recommendation for Retention of Damages and Economics Expert — Dr. Vivian Ostrowski, Archer & Colvin Consulting Group
MATTER: Vantor Holdings Corp. v. Cascade Retail Holdings Inc., Case No. 21STCV-34872, Superior Court of California, County of Los Angeles
CLIENT: Cascade Retail Holdings Inc.
C&H MATTER NO.: 1038-00007
I. PURPOSE OF MEMORANDUM
This memorandum recommends the retention of Dr. Vivian Ostrowski, Principal at Archer & Colvin Consulting Group, as Cascade Retail Holdings Inc.'s ("Cascade") testifying damages and economics expert in the above-referenced litigation. The purpose of this retention is to provide Cascade with a credible, experienced expert who can serve a dual function: (1) preparing a thorough rebuttal of the anticipated damages analysis to be submitted by Vantor Holdings Corp.'s ("Vantor") retained expert, Dr. Harold Pryce, Managing Director of Meridian Forensic Economics LLC (2049 Century Park East, Suite 1200, Los Angeles, CA 90067); and (2) preparing an independent, defensible alternative damages calculation that properly limits recoverable damages to the remaining terms of the exclusive supply agreements at issue.
As discussed in greater detail below, Vantor has designated Dr. Pryce as its primary damages expert. Pursuant to the scheduling order entered by the Honorable Judge Patricia Delgado on January 14, 2022, Dr. Pryce's expert report is expected to be served in December 2022. That report is anticipated to quantify Vantor's claimed damages at approximately $87.4 million across the three supplier relationships at the center of this dispute—namely, Vantor's exclusive supply agreements with Hemsworth Consumer Products LLC ("Hemsworth"), Tridale Manufacturing Inc. ("Tridale"), and Orion Lifestyle Brands Corp. ("Orion").
Cascade's defense strategy requires a credible expert who can persuasively challenge Vantor's damages methodology and present an alternative, well-supported damages figure that is limited to the remaining exclusive contract terms at the time each supplier entered into its agreement with Cascade. Additionally, the expert must be capable of accounting for Vantor's failure to mitigate its damages—a critical component of Cascade's defense that, based on our preliminary internal analysis, could reduce any damages award by an estimated 40% to 55%. The selection of the right expert at this stage is essential to narrowing Vantor's claim from $87.4 million to the defensible range of approximately $6.1 million to $11.3 million, a reduction that is critical both to the litigation posture and to any potential settlement discussions.
For the reasons set forth in this memorandum, Dr. Ostrowski is the strongest candidate for this engagement among the experts we have evaluated. I respectfully request authorization to proceed with her formal retention at the estimated budget of $485,000.
II. BACKGROUND ON THE NEED FOR EXPERT TESTIMONY
A. Vantor's Damages Claims
Vantor's complaint, as amended on April 22, 2022, asserts claims for tortious interference with contractual relations, tortious interference with prospective economic advantage, and unfair business practices under California Business and Professions Code Section 17200. At the core of each claim is Vantor's contention that Cascade deliberately targeted and induced three of Vantor's exclusive suppliers—Hemsworth, Tridale, and Orion—to terminate their existing exclusive supply agreements with Vantor and enter into new, more lucrative supply agreements with Cascade.
Vantor's damages theory, as articulated in its initial disclosures and developed through the course of discovery, claims total damages of $87.4 million across the three supplier relationships. The breakdown of Vantor's claimed damages is as follows:
Hemsworth Consumer Products LLC — $34.2 million. Vantor's damages claim with respect to Hemsworth is based on a projected five-year revenue stream, discounted at a rate of 8.5%. Vantor and Hemsworth entered into an exclusive supply agreement on March 15, 2019, with a stated expiration date of March 14, 2022. The agreement provided for a minimum annual purchase commitment by Vantor of $12.5 million. Vantor's damages model assumes not only the full remaining term of the Hemsworth agreement but also a projected renewal and expansion of the relationship beyond the contractual expiration date, extending the revenue stream projection to approximately five years from the date of the alleged interference.
Tridale Manufacturing Inc. — $22.8 million. Vantor's Tridale claim is based on a projected four-year revenue stream, also discounted at 8.5%. The exclusive supply agreement between Vantor and Tridale was executed on January 10, 2020, with a stated expiration date of January 9, 2022. The minimum annual purchase commitment under that agreement was $8.3 million. As with the Hemsworth claim, Vantor's damages projection extends well beyond the contractual term, assuming both renewal and revenue growth over a four-year horizon.
Orion Lifestyle Brands Corp. — $30.4 million. The Orion claim is the longest-duration projection, based on a six-year revenue stream discounted at 8.5%. Vantor and Orion entered into an exclusive supply agreement on July 1, 2018, with a stated expiration date of June 30, 2022. The minimum annual purchase commitment was $14.6 million. Vantor's damages theory again contemplates renewal and significant revenue expansion beyond the existing contract term.
In the aggregate, Vantor's claimed damages total $87.4 million ($34.2 million + $22.8 million + $30.4 million). The central infirmity in Vantor's approach—and the basis for our need for a strong rebuttal expert—is that Vantor's damages model appears to project lost profits well beyond the existing contract terms by assuming the renewal and expansion of each supplier relationship. As discussed below, the existing agreements all contained termination-for-convenience clauses, which the suppliers independently exercised prior to contracting with Cascade. Vantor's damages theory effectively ignores these termination provisions and treats the supplier relationships as if they were perpetual, guaranteed revenue streams.
B. Cascade's Damages Theory
Cascade's position is that any recoverable damages must be limited to the remaining exclusive contract terms at the time each supplier made the independent decision to enter into its agreement with Cascade. The critical dates and remaining terms are as follows:
Hemsworth Consumer Products LLC. Cascade and Hemsworth executed their supply agreement on June 1, 2021. At that time, the Hemsworth–Vantor exclusive supply agreement had an expiration date of March 14, 2022, leaving approximately nine months remaining on the exclusive term. Cascade's damages analysis would therefore cap Hemsworth-related damages at a figure reflective of no more than nine months of lost revenue under the Vantor–Hemsworth agreement, rather than the five-year projection advanced by Vantor.
Tridale Manufacturing Inc. Cascade and Tridale executed their supply agreement on August 15, 2021. The Tridale–Vantor exclusive supply agreement was set to expire on January 9, 2022, leaving approximately five months remaining on the exclusive term. Cascade's damages analysis limits Tridale-related damages to this five-month period, rather than the four-year projection advanced by Vantor.
Orion Lifestyle Brands Corp. Cascade and Orion executed their supply agreement on May 10, 2021. The Orion–Vantor exclusive supply agreement had an expiration date of June 30, 2022, leaving approximately thirteen months remaining on the exclusive term. Cascade's damages analysis limits Orion-related damages to this thirteen-month period, rather than the six-year projection advanced by Vantor.
A crucial element of Cascade's defense is that all three of Vantor's exclusive supply agreements contained termination-for-convenience clauses. Specifically, the Hemsworth agreement permitted either party to terminate upon 90 days' written notice without cause. The Tridale agreement contained a 60-day termination-for-convenience provision. The Orion agreement allowed termination for convenience upon 120 days' written notice. The documentary record—corroborated by communications produced in discovery—indicates that each of the three suppliers exercised its respective termination-for-convenience right prior to executing its agreement with Cascade. This fact fundamentally undermines Vantor's theory that these relationships would have continued indefinitely but for Cascade's alleged interference.
Additionally, Cascade intends to assert that Vantor failed to mitigate its damages following the loss of these three supplier relationships. Vantor is a substantial company with established procurement infrastructure and industry relationships. The markets in which Hemsworth, Tridale, and Orion operate—home goods, consumer electronics accessories, and personal care products, respectively—contain numerous alternative suppliers. Vantor's failure to pursue replacement supply arrangements in a timely manner should, under California law, further reduce any recoverable damages. Our preliminary assessment is that this mitigation failure warrants a reduction in the range of 40% to 55%.
Based on our internal analysis, as set forth in the November 15, 2021 exposure assessment memorandum prepared by this office, Cascade's preliminary damages assessment produces a range of $6.1 million (low) to $11.3 million (high), broken down as follows:
The gap between Vantor's $87.4 million claim and Cascade's defensible range of $6.1 million to $11.3 million underscores the importance of retaining an expert who can credibly and persuasively bridge that distance in the court's view. The expert must not only dismantle Vantor's inflated projections but also present an affirmative damages model that the trier of fact can adopt as a reasonable alternative.
C. Context of discovery
The discovery record in this matter is substantial. To date, the parties have engaged in extensive document collection, review, and production. Cascade has collected 452,316 documents, of which 198,740 have been reviewed and 78,412 have been produced to Vantor. Vantor, in turn, has produced 41,308 documents to Cascade. Additionally, 23,567 documents have been produced by the three suppliers—Hemsworth, Tridale, and Orion—in response to third-party subpoenas served earlier this year. In total, the parties and third parties have produced in excess of 143,000 documents, creating a substantial record that the retained expert will need to review selectively, with guidance from the litigation team, to develop a thorough understanding of the relevant financial data, supplier communications, and contractual relationships.
Discovery has continued to expand. On August 3, 2022, the Court granted Vantor's motion to expand the scope of discovery to encompass an additional fifteen supplier relationships beyond the three at the center of the dispute. This expansion brings the total number of supplier relationships subject to discovery to eighteen. While Vantor has not asserted damages claims arising from these additional fifteen relationships, it intends to use them as evidence of a broader pattern of alleged interference. The expanded discovery scope will necessarily increase the volume of documents and financial data that the damages expert will need to consider in assessing the overall competitive landscape and Vantor's mitigation opportunities.
Key fact witness depositions are scheduled for the fall of 2022 and will produce testimony directly relevant to the damages analysis. The following depositions are currently on the calendar:
• Annika Bergström, Vice President of Strategic Sourcing, Cascade Retail Holdings Inc. — Scheduled for October 12, 2022.
• Thomas Brennecke, Vice President of Supplier Relations, Vantor Holdings Corp. — Scheduled for October 26, 2022.
• Lena Torvik, Senior Vice President of Supply Chain & Procurement, Cascade Retail Holdings Inc. — Scheduled for November 18, 2022.
Each of these witnesses is expected to provide testimony regarding the circumstances surrounding the transition of the three supplier relationships, the economic terms of the relevant agreements, and the competitive dynamics of the supplier markets at issue. Dr. Ostrowski would need to review these deposition transcripts as they become available in order to incorporate relevant testimony into her damages analysis.
Expert reports are expected to be exchanged in December 2022, consistent with the scheduling order entered on January 14, 2022. This timeline reinforces the urgency of retaining Dr. Ostrowski immediately so that she has adequate time to familiarize herself with the case record, develop her analytical framework, and prepare a comprehensive rebuttal report.
III. RECOMMENDED EXPERT: DR. VIVIAN OSTROWSKI
A. Overview and Contact Information
I recommend retaining Dr. Vivian Ostrowski as Cascade's testifying damages and economics expert. Dr. Ostrowski's contact information and firm details are as follows:
Full Name: Vivian Ostrowski, Ph.D.
Title: Principal
Firm: Archer & Colvin Consulting Group
Address: 701 Fifth Avenue, Suite 4100, Seattle, Washington 98104
Entity Type: General Partnership, organized under the laws of the State of Washington
Archer & Colvin is a well-regarded forensic economics and litigation consulting firm with a national practice. The firm maintains offices in Seattle, San Francisco, and New York and has been engaged in complex commercial litigation matters across numerous industries and jurisdictions. Dr. Ostrowski heads the firm's commercial damages and supply chain economics practice and has served as the engagement lead on a significant number of high-profile cases.
B. Qualifications and Professional Background
Dr. Ostrowski holds a Ph.D. in Economics, with a specialization in industrial organization and commercial damages analysis. She has over twenty years of experience in forensic economics and litigation consulting, with a particular focus on the quantification and rebuttal of commercial damages claims, lost profits analyses, business valuation, and related economic analyses.
Over the course of her career, Dr. Ostrowski has provided expert testimony in more than fifty matters involving commercial damages, lost profits, business valuation, and economic analysis in both state and federal courts across the United States. Her engagements have spanned a wide range of industries, but she has particular depth in retail, distribution, and supply chain economics—a concentration that is directly relevant to the industries and commercial relationships at issue in the present matter. She has testified extensively regarding damages methodologies, discount rate selection, the proper treatment of projected revenue streams, contract-term limitations on damages, and failure-to-mitigate analysis.
Importantly, Dr. Ostrowski has previously testified in cases involving tortious interference with contractual relations, breach of contract, and unfair competition—the precise categories of claims asserted by Vantor in this litigation. She is familiar with California damages law standards, including the requirement that damages be proven with reasonable certainty and the limitations on speculative or contingent damages projections. Her prior experience in California courts will be particularly valuable in ensuring that her analysis is tailored to the applicable legal standards and that her testimony will withstand challenge under the standards applied by California state courts for the qualification and examination of expert witnesses.
Dr. Ostrowski has published extensively in the fields of damages methodology, discount rate selection, and mitigation analysis. Her publications include articles in peer-reviewed economics journals and chapters in practitioner-focused treatises on forensic economics. This publication record enhances her credibility as an expert and provides a foundation of scholarly rigor that supports the analytical framework she will apply in this matter.
With respect to prior challenges to her qualifications, Dr. Ostrowski has been qualified as an expert in every matter in which she has been proffered. There are no instances in which her testimony has been excluded or her qualifications successfully challenged through a Daubert motion, a Kelly/Frye challenge, or any analogous gatekeeping proceeding. This unblemished record of qualification is a significant factor in our recommendation, as it reduces the risk that Vantor will succeed in any motion to exclude Dr. Ostrowski's testimony.
A copy of Dr. Ostrowski's curriculum vitae, which details her educational background, professional experience, publications, and prior testimony, is attached hereto as Attachment A.
C. Prior Retention by Calderwood & Harkness LLP
Calderwood & Harkness has engaged Archer & Colvin Consulting Group and Dr. Ostrowski on two prior occasions. Both engagements were in the context of commercial litigation matters involving damages analysis, and in both cases, Dr. Ostrowski's work product and testimony were of the highest quality. While the details of those prior engagements are subject to client confidentiality obligations and are not disclosed here, the positive experience the firm has had with Dr. Ostrowski provides an additional basis for confidence in this recommendation. She has demonstrated a thorough and methodical approach to damages analysis, strong communication skills in both written reports and oral testimony, and a collaborative working style that facilitates efficient coordination with the litigation team.
We have conducted a thorough conflicts check, and no conflicts have been identified with respect to any party, counsel, or entity involved in this matter, including Vantor Holdings Corp.; Vantor's counsel at Kessler, Brandt & Whitfield LLP; Hemsworth Consumer Products LLC; Tridale Manufacturing Inc.; Orion Lifestyle Brands Corp.; and Meridian Forensic Economics LLC and its Managing Director, Dr. Harold Pryce. Dr. Ostrowski and Archer & Colvin have confirmed the absence of any conflicting engagements or relationships.
D. Comparison with Other Candidates Considered
In arriving at this recommendation, we evaluated several other forensic economics experts with relevant qualifications. Without naming the specific candidates in detail, the following summarizes the basis for concluding that Dr. Ostrowski is the strongest fit for this engagement:
First, Dr. Ostrowski possesses a depth of experience in supply chain and retail distribution economics that is unmatched among the candidates we reviewed. Several other candidates, while highly qualified in general forensic economics, lacked significant exposure to the specific industry dynamics involved in this case—particularly the competitive dynamics of exclusive supply arrangements in the home goods, consumer electronics accessories, and personal care product categories. Dr. Ostrowski's industry-specific expertise will enhance the persuasiveness and credibility of her analysis.
Second, Dr. Ostrowski's geographic proximity to Cascade's corporate headquarters in Seattle is a practical advantage that should not be overlooked. Her office at 701 Fifth Avenue in Seattle is located in close proximity to Cascade's executive offices, which will facilitate in-person collaboration with Cascade's finance team, including Chief Financial Officer Raj Subramanian and Senior Vice President Lena Torvik. Given the volume of financial data that the expert will need to review and the iterative nature of damages model development, this proximity will reduce both cost and logistical complexity.
Third, Dr. Ostrowski has a strong and documented track record of successfully rebutting lost-profits models that project damages beyond existing contract terms—precisely the type of model that Dr. Pryce is expected to present on behalf of Vantor. In prior engagements, she has effectively demonstrated that projected revenue streams extending beyond contractual expiration dates are speculative and unsupported, particularly where, as here, the underlying agreements contain termination-for-convenience provisions. Her analytical framework for addressing these issues is well-developed and has been validated through prior testimony.
Fourth, Dr. Ostrowski's familiarity with California damages law standards, including the reasonable certainty requirement and the proper treatment of speculative damages, ensures that her analysis will be tailored to the applicable legal framework. Several other candidates we evaluated had limited or no prior experience with California damages jurisprudence, which would have required additional time and coordination to ensure compliance with the relevant legal standards.
For all of these reasons, Dr. Ostrowski is our recommended candidate.
IV. PROPOSED SCOPE OF ENGAGEMENT
The proposed scope of Dr. Ostrowski's engagement encompasses the following categories of work, each of which is critical to Cascade's defense against Vantor's $87.4 million damages claim.
A. Rebuttal of Dr. Harold Pryce / Meridian Forensic Economics Damages Analysis
The primary objective of Dr. Ostrowski's engagement is to review, analyze, and prepare a thorough rebuttal of the damages report anticipated to be submitted by Dr. Harold Pryce of Meridian Forensic Economics LLC on behalf of Vantor. As noted above, Dr. Pryce's report is expected to be served in December 2022, and it is anticipated to quantify Vantor's total damages claim at $87.4 million across the three supplier relationships.
Dr. Ostrowski's rebuttal work will include, at a minimum, the following elements:
(a) A comprehensive review and critique of Dr. Pryce's damages report, including his underlying methodology, data inputs, assumptions, and conclusions.
(b) A specific challenge to Dr. Pryce's use of projected multi-year revenue streams that extend far beyond the remaining terms of the three exclusive supply agreements. As discussed in Section II.B above, the remaining contract terms at the time of the alleged interference were approximately nine months (Hemsworth), five months (Tridale), and thirteen months (Orion). Any projection of lost profits beyond these remaining terms is inherently speculative and unsupported by the contractual record.
(c) A challenge to the selection of the 8.5% discount rate applied uniformly across all three supplier relationships. Dr. Ostrowski will evaluate whether this discount rate appropriately reflects the risk profiles associated with each individual supplier relationship, the industries in which they operate, and the macroeconomic conditions prevailing at the relevant time periods. The use of a single, uniform discount rate across three distinct commercial relationships in different product categories raises significant methodological concerns that Dr. Ostrowski is well-positioned to address.
(d) An analysis of whether Vantor's projected revenue streams—five years for Hemsworth, four years for Tridale, and six years for Orion—are economically supportable given the existence of the termination-for-convenience clauses in each agreement. The presence of these clauses, which permitted either party to terminate the relationship upon relatively short notice (90 days, 60 days, and 120 days, respectively), introduces substantial uncertainty into any projection of future revenues beyond the notice periods. Dr. Ostrowski will analyze the economic significance of these provisions and their implications for damages quantification.
(e) An assessment of the reasonableness of Dr. Pryce's assumptions regarding the likelihood of renewal and expansion of the supplier relationships, including whether historical purchasing patterns, market trends, and supplier communications support or contradict these assumptions.
B. Alternative Damages Calculation
In addition to rebutting Dr. Pryce's analysis, Dr. Ostrowski will prepare an independent, affirmative damages calculation that reflects Cascade's theory of the case. This alternative calculation will serve as the foundation for Cascade's argument that recoverable damages are limited to a fraction of Vantor's claimed amount. The key components of this alternative analysis are as follows:
(a) Dr. Ostrowski will prepare a damages model that limits recoverable lost profits to the remaining exclusive contract terms at the time each supplier entered into its agreement with Cascade. Specifically, the model will calculate lost profits over the following periods: approximately nine months for Hemsworth (from the execution of the Cascade–Hemsworth agreement on June 1, 2021, through the expiration of the Vantor–Hemsworth agreement on March 14, 2022); approximately five months for Tridale (from August 15, 2021, through January 9, 2022); and approximately thirteen months for Orion (from May 10, 2021, through June 30, 2022).
(b) Dr. Ostrowski will select and apply discount rates appropriate to each individual supplier relationship, based on an analysis of market conditions, the specific risk profiles of each relationship, and the industries in which the suppliers operate. This individualized approach will stand in contrast to Dr. Pryce's anticipated use of a uniform 8.5% discount rate and will provide a more rigorous and defensible basis for the calculation of present-value damages.
(c) A critical component of the alternative damages calculation will be the quantification of Vantor's failure to mitigate its damages. Dr. Ostrowski will analyze Vantor's ability to source alternative suppliers following the transition of the three relationships to Cascade. This analysis will consider the available market for comparable products in the home goods, consumer electronics accessories, and personal care categories; the number and capacity of alternative suppliers in each market; the lead times required to establish new supplier relationships; and Vantor's actual mitigation efforts (or lack thereof) as reflected in the documentary record and deposition testimony. Based on our preliminary assessment, we anticipate that the mitigation failure analysis will support a reduction in damages in the range of 40% to 55%.
(d) The expected output of the alternative damages calculation is a range of $6.1 million (low) to $11.3 million (high) before mitigation adjustments. With the application of a 40% to 55% reduction for failure to mitigate, the adjusted range is expected to be in the area of approximately $2.7 million to $6.8 million. Dr. Ostrowski's independent analysis will refine these preliminary figures based on a more detailed review of the financial data and market conditions.
C. Analysis of Vantor's New Supply Commitments from Cascade
Dr. Ostrowski's engagement will also encompass an analysis of the new supply agreements that Cascade entered into with each of the three suppliers. This analysis is relevant both to the damages calculation and to Cascade's affirmative defense that the suppliers made independent economic decisions to transition their relationships based on superior commercial terms offered by Cascade. The specific agreements to be analyzed are as follows:
(a) Cascade–Hemsworth Agreement: Executed June 1, 2021, with a five-year term and an annual purchase commitment of $28.0 million.
(b) Cascade–Tridale Agreement: Executed August 15, 2021, with a three-year term and an annual purchase commitment of $19.5 million.
(c) Cascade–Orion Agreement: Executed May 10, 2021, with a four-year term and an annual purchase commitment of $31.0 million.
Dr. Ostrowski will compare these commitments with Vantor's prior purchase commitments under the exclusive supply agreements ($12.5 million for Hemsworth, $8.3 million for Tridale, and $14.6 million for Orion). In each case, the Cascade agreements represent a substantial increase in annual purchase commitments—more than double in each instance. Dr. Ostrowski will analyze the suppliers' economic incentives to transition to the Cascade relationships, taking into account the significantly higher revenue commitments, the longer contract terms offered by Cascade, and the relevant market conditions at the time of the transitions. This analysis is expected to support the conclusion that the suppliers' decisions to terminate their Vantor agreements and enter into Cascade agreements were driven by independent economic self-interest rather than by any inducement or interference by Cascade.
D. Review of Key Documents and Deposition Testimony
The engagement will necessarily require Dr. Ostrowski and her team at Archer & Colvin to review a substantial volume of documents and testimony. While the review will be guided and prioritized by the Calderwood & Harkness litigation team, the anticipated scope includes:
(a) Relevant documents from among the 78,412 documents produced by Cascade, the 41,308 documents produced by Vantor, and the 23,567 documents produced by the three suppliers in response to third-party subpoenas. Dr. Ostrowski's review will focus on financial records, internal communications regarding the supplier relationships, pricing and contract negotiation documents, and any documents bearing on Vantor's mitigation efforts or the suppliers' decision-making processes.
(b) A focused review of the fourteen Project Atlas emails that reference Vantor's supplier relationships. These fourteen emails are a subset of 2,847 total Project Atlas emails produced in discovery. The Project Atlas emails have been a focal point of Vantor's discovery efforts, and Dr. Ostrowski will need to assess whether any of these fourteen emails bear on the damages methodology—for example, whether they reflect Cascade's knowledge of the remaining terms of the Vantor agreements, the economic terms under consideration, or the suppliers' stated reasons for transitioning.
(c) Deposition transcripts of Annika Bergström (scheduled October 12, 2022), Thomas Brennecke (scheduled October 26, 2022), and Lena Torvik (scheduled November 18, 2022). These transcripts will be provided to Dr. Ostrowski as they become available, and her analysis will incorporate relevant testimony regarding the commercial terms of the agreements, the timing and circumstances of the supplier transitions, and Vantor's post-transition procurement activities.
(d) Financial records produced by Granville & Associates, P.C., Cascade's outside auditors, as well as Vantor's financial disclosures. These records are essential to the development of an accurate and defensible damages model and will be the primary data source for Dr. Ostrowski's quantitative analysis.
E. Expert Report and Testimony
Dr. Ostrowski will prepare a comprehensive rebuttal expert report for service on Vantor's counsel, Kessler, Brandt & Whitfield LLP, attention Martin Kessler and Natalie Whitfield, in accordance with the deadlines established by the Court's scheduling order. The report will address each element of Dr. Pryce's anticipated damages analysis, set forth Dr. Ostrowski's alternative damages calculation, and comply with all applicable disclosure requirements under the California Code of Civil Procedure.
Dr. Ostrowski will be available for deposition by Vantor's counsel following the service of her expert report. Based on the current scheduling order, we anticipate that her deposition would be scheduled in the January–February 2023 timeframe.
Additionally, Dr. Ostrowski will be available for trial testimony in the event that this matter proceeds to trial. Her trial preparation will include the development of demonstrative exhibits to illustrate her damages analysis and the development of testimony outlines in coordination with the Calderwood & Harkness trial team.
V. ESTIMATED EXPERT FEES AND BUDGET
A. Fee Structure
Dr. Ostrowski's standard hourly rate for testifying expert work is $875 per hour. Supporting analysts at Archer & Colvin bill at rates ranging from $325 to $525 per hour, depending on experience and seniority. Senior associates and project managers at Archer & Colvin bill at rates ranging from $525 to $675 per hour. All fees are billed on an hourly basis, with monthly invoices submitted through Calderwood & Harkness LLP in accordance with the firm's standard outside vendor billing procedures. Invoices will include detailed time entries describing the nature of the work performed, and will be subject to review by the Calderwood & Harkness litigation team before being passed through to the client.
B. Estimated Total Fees: $485,000
Based on our assessment of the scope of the engagement and the complexity of the issues involved, we estimate total expert fees for Dr. Ostrowski's engagement at approximately $485,000. This estimate is broken down by anticipated work phase as follows:
The estimated hours reflect a blend of Dr. Ostrowski's time and the supporting work of her Archer & Colvin analyst team. The rebuttal expert report preparation phase is expected to be the largest single component of the engagement, reflecting the complexity of Dr. Pryce's anticipated damages model and the need for a thorough, well-supported written analysis.
The trial preparation and testimony line item may be reduced or eliminated if the matter settles prior to trial, and we will monitor this budget item and provide updates as the case progresses through the settlement discussion process. Conversely, the estimate may need to be revised upward depending on the scope and complexity of Dr. Pryce's expert report and the damages model he presents. If Dr. Pryce's methodology proves to be significantly more complex than anticipated—for example, if it incorporates additional supplier relationships beyond the three at issue or employs a multi-factor econometric model—the time required for Dr. Ostrowski's rebuttal could increase. We will update the budget estimate promptly if any material changes in scope are identified.
C. Budget Context
The estimated $485,000 in expert fees should be considered in the context of Cascade's overall defense budget for this matter. Total defense costs are currently estimated at approximately $5.9 million, of which the $485,000 expert fees represent approximately 8.2%. This is well within the range that is typical for expert retention in complex commercial litigation matters of this magnitude.
For reference, the other significant components of the defense budget include the following:
• E-discovery costs through Krane Investigations LLC (Samuel Byrd, Project Manager): Currently at $892,400 and expected to increase in light of the Court's August 3, 2022 ruling expanding discovery to fifteen additional supplier relationships.
• Local counsel fees through Wortham & Adair LLP (Diana Prescott): Currently at $127,500 for appearances, local procedural matters, and coordination with the Los Angeles Superior Court.
• Calderwood & Harkness legal fees and related costs: The balance of the estimated $5.9 million total defense budget.
With respect to insurance coverage, Cascade's commercial general liability insurer, Pinnacle National Insurance Co. (Policy No. PNG-CGL-2021-04487, Senior Claims Adjuster Leonard Furman), has acknowledged coverage for this matter under the CGL policy. Defense cost reimbursement is anticipated, and expert fees are expected to be treated as a covered defense cost under the policy terms. We are coordinating with Mr. Furman's office and Cascade's risk management team to ensure timely submission of invoices for reimbursement. Accordingly, while the $485,000 expert fee estimate represents a significant expenditure, it is expected to be largely or entirely covered as a defense cost under the applicable insurance policy.
VI. ENGAGEMENT TERMS AND LOGISTICS
A. Retention Agreement
I recommend that Calderwood & Harkness enter into a formal retention agreement with Archer & Colvin Consulting Group for the engagement of Dr. Ostrowski. The retention will be coordinated through Calderwood & Harkness, with all fees billed through the firm to Cascade in accordance with our standard procedures for outside expert retention. The engagement letter will be executed between Calderwood & Harkness LLP and Archer & Colvin Consulting Group, with Cascade's prior written approval. A draft of the proposed retention agreement is attached hereto as Attachment C for your review and comment.
The retention agreement will include standard provisions governing scope of work, billing and payment procedures, intellectual property rights in work product, indemnification, and termination. It will also incorporate by reference the applicable confidentiality and protective order provisions described below.
B. Confidentiality and Privilege
All communications between Calderwood & Harkness and Dr. Ostrowski, and between Dr. Ostrowski's team and any member of the Calderwood & Harkness litigation team or Cascade personnel, will be treated as protected attorney work product. Dr. Ostrowski's draft reports, working analyses, preliminary calculations, internal memoranda, and communications with counsel are all to be maintained as attorney work product and will not be disclosed to opposing counsel or any third party unless and until a final expert report is served in accordance with the Court's scheduling order and applicable rules of civil procedure.
Dr. Ostrowski and all members of her team at Archer & Colvin who are assigned to this engagement will be required to execute confidentiality agreements consistent with the terms of any protective order that has been or may be entered in this case. To the extent that Dr. Ostrowski's review will encompass documents designated as "Confidential" or "Highly Confidential — Attorneys' Eyes Only" under the protective order, the confidentiality agreements will include appropriate provisions restricting the use, storage, and disposition of such materials.
C. Timeline
Immediate retention is recommended. Given the December 2022 deadline for the exchange of expert reports, Dr. Ostrowski will need adequate time to review the voluminous documentary record, analyze the relevant financial data, attend to the deposition transcripts as they become available, develop her damages model, and prepare a comprehensive and well-supported rebuttal report. Any delay in retention risks compressing the timeline for this work and could compromise the quality and thoroughness of the expert analysis.
The anticipated timeline for the key milestones of the engagement is as follows:
• September–October 2022: Execution of retention agreement; initial document review and case familiarization; coordination with Cascade's finance team, including CFO Raj Subramanian, for access to financial data and supporting documentation.
• October–November 2022: Continued document review; review of deposition transcripts of Annika Bergström (October 12), Thomas Brennecke (October 26), and Lena Torvik (November 18) as they become available; preliminary development of damages model and analytical framework.
• November–December 2022: Receipt and review of Dr. Pryce's expert report; refinement of rebuttal analysis; preparation and finalization of Dr. Ostrowski's rebuttal expert report; service of report on Vantor's counsel.
• January–February 2023: Deposition preparation and testimony of Dr. Ostrowski by Vantor's counsel.
• To be determined: Trial preparation and testimony, contingent on whether the matter proceeds to trial.
D. Client Approval
I recommend presenting this retention recommendation to David Pruitt, General Counsel and Corporate Secretary of Cascade Retail Holdings Inc., for formal approval. Mr. Pruitt has been the primary point of contact for legal strategy decisions in this matter and will need to authorize the engagement and the associated budget expenditure.
In light of the significance of the damages dispute to Cascade's overall litigation exposure, I also recommend that Margaret Prumvane, Chief Executive Officer and President of Cascade, be advised of this retention. Cascade reported annual revenue of $6.8 billion for fiscal year 2021 and had a market capitalization of approximately $14.2 billion as of September 2021. While Vantor's $87.4 million damages claim represents a modest fraction of Cascade's overall financial position, it is nonetheless a material litigation exposure that warrants the attention of senior management. Our expectation is that successful retention and deployment of Dr. Ostrowski will narrow the claim from $87.4 million to the defensible range of $6.1 million to $11.3 million—a reduction of approximately 87% to 93%—which represents a substantial and tangible benefit to Cascade.
VII. RECOMMENDATION
For all of the reasons set forth in this memorandum, I strongly recommend retaining Dr. Vivian Ostrowski of Archer & Colvin Consulting Group as Cascade Retail Holdings Inc.'s testifying damages and economics expert in Vantor Holdings Corp. v. Cascade Retail Holdings Inc., Case No. 21STCV-34872.
Dr. Ostrowski's qualifications are ideally suited to this engagement. Her over twenty years of experience in forensic economics, her specialization in commercial damages analysis with particular depth in supply chain and retail distribution economics, and her strong track record in rebutting inflated lost-profits claims make her the ideal candidate to serve as Cascade's damages expert. She has been qualified as an expert in every matter in which she has been proffered, and she has extensive experience testifying in tortious interference and breach of contract matters under California law.
Dr. Ostrowski's analysis will be critical to Cascade's defense. Her rebuttal of Dr. Pryce's anticipated $87.4 million damages claim, combined with her independent alternative damages calculation, is expected to narrow Vantor's claim to the defensible range of $6.1 million to $11.3 million—a figure that reflects only the remaining exclusive contract terms at the time of the alleged interference and incorporates appropriate reductions for Vantor's failure to mitigate its damages. This narrowing of the damages exposure is central to Cascade's litigation strategy and to any potential settlement negotiations.
Accordingly, I respectfully request the following:
1. Authorization to proceed with the formal retention of Dr. Vivian Ostrowski and Archer & Colvin Consulting Group at the estimated budget of $485,000, subject to client approval.
2. Authorization to present this retention recommendation to David Pruitt, General Counsel & Corporate Secretary of Cascade, and to advise Margaret Prumvane, CEO & President, of the proposed engagement.
3. A meeting to discuss this recommendation at your earliest convenience. I am available at any time this week and am prepared to address any questions or concerns you may have regarding Dr. Ostrowski's qualifications, the proposed scope of engagement, or the estimated budget.
Thank you for your consideration of this recommendation.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Yuki Nakamura Senior Associate Calderwood & Harkness LLP
VIII. ATTACHMENTS
The following attachments are referenced in and accompany this memorandum:
Attachment A: Curriculum Vitae of Dr. Vivian Ostrowski, Principal, Archer & Colvin Consulting Group
Attachment B: Archer & Colvin Consulting Group — Firm Overview and Representative Engagements
Attachment C: Proposed Retention Agreement (Draft) — Calderwood & Harkness LLP and Archer & Colvin Consulting Group
Attachment D: Summary Table — Vantor's Damages Claims vs. Cascade's Preliminary Damages Assessment by Supplier
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT Calderwood & Harkness LLP | C&H Matter No. 1038-00007 This document and all attachments are subject to the attorney-client privilege and the work product doctrine.
Supplier | Vantor's Claimed Damages | Cascade Low Estimate | Cascade High Estimate
Hemsworth Consumer Products LLC | $34.2M | $2.8M | $4.9M
Tridale Manufacturing Inc. | $22.8M | $1.4M | $2.7M
Orion Lifestyle Brands Corp. | $30.4M | $1.9M | $3.7M
Total | $87.4M | $6.1M | $11.3M
Work Phase | Estimated Hours | Estimated Cost
Initial document review and case familiarization | 220 hours | $95,000
Damages model development and alternative calculation | 320 hours | $140,000
Rebuttal expert report preparation | 350 hours | $155,000
Deposition preparation and testimony | 80 hours | $55,000
Trial preparation and testimony (if needed) | 65 hours | $40,000
Total | 1,035 hours | $485,000