PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 600 South Grand Avenue, Suite 3200 Los Angeles, California 90071
INTERNAL MEMORANDUM
June 30, 2022
TO: Yuki Nakamura, Senior Associate
FROM: Carlos Espinoza, Associate
RE: Analysis of 14 Internal Cascade Emails Referencing Vantor Holdings Corp. Supplier Relationships — Project Atlas
MATTER: Cascade Retail Holdings Inc. — Defense of Tortious Interference Claim
MATTER NO.: 1038-00007
CASE: Vantor Holdings Corp. v. Cascade Retail Holdings Inc., Case No. 21STCV-34872, Superior Court of California, County of Los Angeles
I. Purpose and Scope
This memorandum presents a detailed analysis of the 14 internal Cascade Retail Holdings Inc. ("Cascade" or "CRH") emails, identified during our ongoing document review, that reference Vantor Holdings Corp. ("Vantor") or Vantor's existing supplier relationships in the context of Cascade's "Project Atlas" supplier diversification initiative. The purpose of this memorandum is to assess the significance of these emails to Cascade's defense in the above-captioned matter and to provide the defense team with a complete, email-by-email evaluation of the documentary record.
Out of a total of 2,847 Project Atlas-related emails reviewed from the broader collection of 452,316 documents collected from Cascade's custodial and non-custodial sources, exactly 14 emails contain references to Vantor's supplier relationships with one or more of the following three entities: Hemsworth Consumer Products LLC ("Hemsworth"), Tridale Manufacturing Inc. ("Tridale"), and/or Orion Lifestyle Brands Corp. ("Orion"). These three suppliers are the subjects of Vantor's tortious interference claim, which alleges that Cascade knowingly and intentionally interfered with the exclusive supply agreements between Vantor and each of these three suppliers.
The central question addressed by this memorandum is whether any of these 14 emails demonstrates that Cascade had actual knowledge of the exclusivity provisions contained in the supply agreements between Vantor and any of the three suppliers at the time Cascade entered into its own supply agreements with those suppliers. The relevant execution dates for the Cascade supply agreements are as follows: the Cascade–Orion agreement was executed on May 10, 2021; the Cascade–Hemsworth agreement was executed on June 1, 2021; and the Cascade–Tridale agreement was executed on August 15, 2021.
This analysis is critical to Cascade's primary defense that it did not have actual knowledge of the exclusivity provisions when it contracted with the three suppliers. Under California law, a claim for tortious interference with contractual relations requires, among other elements, that the defendant had knowledge of the existence of the contract. See Harborview Industries, 50 Cal. 3d 1118, 1126 (1990). Cascade's position is that it was aware of commercially observable competitive relationships between Vantor and the three suppliers but had no knowledge of the specific contractual terms — including exclusivity provisions — that governed those relationships.
This memorandum is also relevant to the anticipated meet-and-confer and potential motion to compel from Kessler, Brandt & Whitfield LLP ("KBW"), plaintiff's counsel, regarding expanded discovery into Cascade's supplier relationships. KBW filed its motion to compel on June 15, 2022, and our opposition is due July 18, 2022. The characterization of these 14 emails will be a central issue in the briefing. KBW's lead attorneys on this matter — Martin Kessler, Natalie Whitfield, and Jason Okafor — can be expected to rely heavily on these emails to argue that Cascade had knowledge of the exclusive supply relationships and that expanded discovery is warranted to uncover additional evidence of such knowledge.
II. Background
A. Project Atlas Overview
Cascade launched Project Atlas in February 2021 as a strategic initiative to diversify and strengthen its supplier network across three key product categories: home goods, consumer electronics accessories, and personal care products. The initiative was conceived in response to Cascade's strategic planning review conducted in the fourth quarter of 2020, which identified supply chain concentration risk as a material vulnerability in Cascade's business operations. At the time of the initiative's launch, Cascade's top ten suppliers accounted for approximately 68% of the company's total inventory sourcing, a concentration level that Cascade's board of directors and executive leadership determined was strategically unacceptable.
Project Atlas was led by Annika Bergström, Vice President of Strategic Sourcing, who reported directly to Lena Torvik, Senior Vice President of Supply Chain & Procurement. Bergström was responsible for the day-to-day execution of the initiative, including the identification, evaluation, and onboarding of new supplier partners. Torvik provided executive oversight and served as the primary point of escalation for strategic decisions and supplier negotiations that exceeded Bergström's approval authority.
Cascade's board of directors approved a budget allocation of $4.2 million for supplier transition costs associated with Project Atlas. This budget encompassed direct onboarding expenses, including supplier qualification audits, initial inventory purchases, logistics integration costs, and legal fees associated with the negotiation and execution of new supply agreements. The budget was structured to be deployed over a twelve-month period from February 2021 through January 2022.
The stated objective of Project Atlas was to identify and onboard approximately 25 new suppliers across the target product categories in order to reduce supply chain concentration risk, improve pricing competitiveness, and expand Cascade's product assortment. Project Atlas was a company-wide initiative involving cross-functional participation from Cascade's procurement, supply chain, merchandising, finance, and legal departments. Regular status meetings were held on a bi-weekly basis, and progress reports were provided to Cascade's executive leadership team on a monthly basis.
It is important to note that Project Atlas was not directed at Vantor or Vantor's suppliers specifically. The initiative encompassed outreach to dozens of potential suppliers across multiple product categories, and the three suppliers at issue in this litigation — Hemsworth, Tridale, and Orion — represent only a portion of the suppliers evaluated and onboarded under the Project Atlas framework.
B. Relevant Supplier Agreements
An understanding of the specific supply agreements at issue is essential to the analysis of the 14 emails. The following summarizes the key terms of the relevant agreements.
Vantor's Exclusive Supply Agreements:
The Hemsworth–Vantor exclusive supply agreement was a three-year agreement executed on March 15, 2019, with an expiration date of March 14, 2022. The agreement contained a minimum annual purchase commitment by Vantor of $12.5 million and included a termination-for-convenience clause that permitted either party to terminate the agreement upon provision of 90 days' prior written notice.
The Tridale–Vantor exclusive supply agreement was a two-year agreement executed on January 10, 2020, with an expiration date of January 9, 2022. The agreement contained a minimum annual purchase commitment by Vantor of $8.3 million and included a termination-for-convenience clause that permitted either party to terminate the agreement upon provision of 60 days' prior written notice.
The Orion–Vantor exclusive supply agreement was a four-year agreement executed on July 1, 2018, with an expiration date of June 30, 2022. The agreement contained a minimum annual purchase commitment by Vantor of $14.6 million and included a termination-for-convenience clause that permitted either party to terminate the agreement upon provision of 120 days' prior written notice.
Each of these agreements contained provisions requiring the respective supplier to supply its products exclusively to Vantor within certain defined product categories and geographic territories. It is these exclusivity provisions that form the basis of Vantor's tortious interference claim.
Cascade's Supply Agreements:
Cascade subsequently entered into supply agreements with each of the three suppliers. The Cascade–Orion agreement was executed on May 10, 2021, for a four-year term with an annual commitment of $31.0 million. The Cascade–Hemsworth agreement was executed on June 1, 2021, for a five-year term with an annual commitment of $28.0 million. The Cascade–Tridale agreement was executed on August 15, 2021, for a three-year term with an annual commitment of $19.5 million.
In each case, the annual commitment offered by Cascade significantly exceeded the minimum annual purchase commitment contained in the corresponding Vantor exclusive supply agreement. This fact is relevant to the suppliers' independent economic motivations for entering into agreements with Cascade.
C. Discovery Context
The 14 emails that are the subject of this memorandum were identified during the core document discovery period, which runs from March 2022 through August 2022 pursuant to the parties' stipulated discovery plan approved by the Court on February 14, 2022.
Cascade collected a total of 452,316 documents from designated custodians and non-custodial data sources, including email archives, shared drives, and document management systems. Of this total collection, 198,740 documents were reviewed for relevance and privilege by our review team. Following review, 78,412 documents were produced to Vantor as part of Cascade's document production, which was made in rolling productions beginning on April 1, 2022.
E-discovery processing and review were conducted on a hosted platform managed by Krane Investigations LLC, with Samuel Byrd serving as the project manager overseeing document processing, de-duplication, and search term application. The 14 emails at issue were identified through a combination of search term hits (including "Vantor," "exclusiv*," "supplier agreement," and related terms) and manual review of all Project Atlas-related communications.
Significantly, all 14 emails were produced to Vantor's counsel as part of Cascade's document production. None of the 14 emails was withheld on privilege grounds. While two of the emails (Emails 5 and 13) include David Pruitt, Cascade's General Counsel, as a recipient, these emails do not contain legal advice or request legal advice in a manner that would support a privilege designation. The decision to produce these emails was made in consultation with Douglas Carmichael, the Responsible Partner on this matter, after careful review of the privilege implications.
Given that all 14 emails are now in the possession of Vantor's counsel at KBW, we must anticipate that Martin Kessler, Natalie Whitfield, and Jason Okafor will rely heavily on these emails to argue that Cascade had knowledge of the exclusive supply relationships. This memorandum is intended, in part, to equip our team to respond effectively to those arguments in the context of motion practice, depositions, and any eventual trial.
III. Methodology
Each of the 14 emails was reviewed and analyzed according to the following criteria:
(a) the specific language referencing Vantor, including the precise words and phrases used and the context in which they appear;
(b) the identity of the author and recipients of the email, including their roles within Cascade and their relationship to the Project Atlas initiative;
(c) the date of the email relative to the execution dates of the Cascade supply agreements with Hemsworth (June 1, 2021), Tridale (August 15, 2021), and Orion (May 10, 2021);
(d) whether the email references the existence of any contract or agreement between Vantor and any of the three suppliers;
(e) whether the email references the term "exclusive," "exclusivity," or any functionally equivalent term suggesting awareness of exclusive supply arrangements;
(f) the broader context and purpose of the email, including the subject matter, the stage of the Project Atlas initiative at the time of the communication, and whether the email was part of a larger email chain or a standalone communication.
For purposes of this analysis, the emails are categorized into three primary groups: (1) emails referencing Hemsworth Consumer Products LLC and Vantor; (2) emails referencing Tridale Manufacturing Inc. and Vantor; and (3) emails referencing Orion Lifestyle Brands Corp. and Vantor. Certain emails reference more than one supplier and accordingly appear in multiple categories. A fourth category addresses a single email (Email 14) that references multiple suppliers and Vantor in the context of an executive progress report.
Each email has been assigned an internal document identification number (Email 1 through Email 14) for ease of reference in this memorandum. These internal numbers correspond to the Bates-numbered production copies, which are cross-referenced in the Email Index attached as the Appendix to this memorandum.
Throughout this analysis, I have endeavored to assess each email not only from the defense perspective but also from the perspective of KBW's anticipated arguments. Where an email presents potential vulnerabilities for Cascade's defense, I have identified those vulnerabilities and offered preliminary observations regarding how they may be addressed.
IV. Email-by-Email Analysis
A. Emails Referencing Hemsworth Consumer Products LLC and Vantor (5 Emails)
Five of the 14 emails reference both Hemsworth Consumer Products LLC and Vantor. These emails span the period from March 3, 2021, through May 22, 2021, and collectively document the progression of Cascade's engagement with Hemsworth from initial identification through the period immediately preceding execution of the Cascade–Hemsworth supply agreement on June 1, 2021.
Email 1. Date: March 3, 2021
From: Annika Bergström, Vice President, Strategic Sourcing
To: Lena Torvik, Senior Vice President, Supply Chain & Procurement
Subject Line: Project Atlas — Potential Home Goods Suppliers
Bates Range: CRH-ATLAS-000412 through CRH-ATLAS-000414
Summary of Content: In this email, Bergström identifies Hemsworth Consumer Products as a potential supplier of home goods and kitchen accessories as part of the initial target identification phase of Project Atlas. The email provides a high-level overview of Hemsworth's product portfolio, including its premium kitchen accessories line and its mid-range home décor products. Bergström notes that Hemsworth currently supplies Vantor's retail locations, observing that Hemsworth products are "well-positioned in the home goods aisles at Vantor stores I've visited." The email does not reference any contractual arrangement between Hemsworth and Vantor; rather, it merely notes Vantor as a current customer or retail channel for Hemsworth's products. The email further discusses Hemsworth's product quality, pricing structure (which Bergström characterizes as "competitive with our current home goods suppliers"), and production capacity (noting that Hemsworth operates two manufacturing facilities in the United States and one in Mexico).
Analysis: The reference to Vantor in this email is limited to identifying Hemsworth's existing customer base as part of a competitive landscape analysis. The statement that Hemsworth products are available in Vantor retail locations is a publicly observable fact — any consumer visiting a Vantor store could observe the same information. There is no reference to any contract, exclusivity, or specific terms governing the Hemsworth–Vantor relationship. The email is consistent with ordinary competitive intelligence gathering in the context of a supplier diversification initiative. From a defense perspective, this email presents minimal risk. The reference to Vantor is incidental and purely descriptive. KBW would have difficulty extracting from this email any inference of knowledge regarding the exclusivity provisions of the Hemsworth–Vantor agreement.
Sensitivity Assessment: Low.
Email 2. Date: March 18, 2021
From: Annika Bergström, Vice President, Strategic Sourcing
To: Rachel Tan, Procurement Analyst
Cc: Lena Torvik, Senior Vice President, Supply Chain & Procurement
Subject Line: RE: Hemsworth Product Catalog and Pricing
Bates Range: CRH-ATLAS-000587 through CRH-ATLAS-000589
Summary of Content: In this email, Bergström directs Rachel Tan, a Procurement Analyst on the Project Atlas team, to compile pricing comparisons for Hemsworth products currently available at Vantor retail stores versus online pricing for the same or comparable products. Bergström references Vantor only as a retail competitor whose shelf pricing is publicly observable. The email notes that Bergström visited two Vantor retail locations (specifically, the Vantor stores on West Third Street and in Glendale, California) to review product placement and retail pricing for Hemsworth products. Bergström asks Tan to use the in-store pricing observations, along with pricing data available from Vantor's public-facing e-commerce platform, to develop a comparative pricing matrix. The email includes no discussion of any contractual arrangement between Hemsworth and Vantor.
Analysis: Vantor is referenced solely in its capacity as a retail competitor whose pricing and product placement are publicly accessible. The practice of visiting a competitor's retail locations to observe pricing and product placement is a standard and well-recognized business practice in the retail industry, and it does not suggest any knowledge of the competitor's underlying supplier agreements. There is no mention of any contractual relationship between Hemsworth and Vantor. The reference is to publicly available retail pricing — shelf prices observable by any consumer — rather than to any supply agreement terms, wholesale pricing, or contractual commitments. This email presents no meaningful risk to Cascade's defense.
Sensitivity Assessment: Low.
Email 3. Date: April 12, 2021
From: Kevin Driscoll, Senior Buyer
To: Annika Bergström, Vice President, Strategic Sourcing
Subject Line: Hemsworth — Follow-Up from Introductory Call
Bates Range: CRH-ATLAS-001204 through CRH-ATLAS-001206
Summary of Content: In this email, Kevin Driscoll, a Senior Buyer on Cascade's procurement team, reports to Bergström on an introductory telephone call with Janet Kohler, Chief Executive Officer of Hemsworth Consumer Products. Driscoll summarizes Kohler's description of Hemsworth's product capabilities, manufacturing capacity, and current distribution channels. The email notes that Kohler mentioned Hemsworth supplies several retail chains, including Vantor, as well as two other unnamed regional retailers. Driscoll reports that Kohler indicated Hemsworth was "exploring opportunities to expand its distribution footprint" and was receptive to discussing a potential supply arrangement with Cascade. The email does not contain any discussion of exclusivity or contractual terms governing Hemsworth's relationship with Vantor or any other retailer.
Analysis: The reference to Vantor in this email originates from a third party — Janet Kohler, the CEO of Hemsworth — rather than from Cascade's own independent knowledge. Kohler's statement that Hemsworth supplies Vantor, among other retailers, is a factual representation of Hemsworth's existing customer base. This is the type of information that a supplier would routinely share with a prospective customer as part of establishing its credentials and market presence.
Kohler's statement that Hemsworth was "exploring opportunities to expand its distribution footprint" is noteworthy because it is ambiguous. It does not suggest that Hemsworth was constrained by any exclusive arrangement; to the contrary, it suggests that Hemsworth was independently seeking to grow its business. However, KBW could argue that a reasonable inference from this statement is that Hemsworth's current "distribution footprint" was limited in some way — potentially by contractual exclusivity. We do not believe this inference is reasonable on its face, as there are many business reasons why a supplier might seek to expand its distribution beyond its current customers, none of which require the existence of an exclusive supply agreement.
Notably, the email does not state or imply that Hemsworth's relationship with Vantor was governed by an exclusive supply agreement. Driscoll does not ask Kohler about the nature of Hemsworth's contractual relationship with Vantor, and Kohler does not volunteer any such information. The absence of any inquiry regarding exclusivity is consistent with Cascade's defense position that it did not consider the potential existence of exclusive arrangements.
Sensitivity Assessment: Low.
Email 4. Date: May 5, 2021
From: Annika Bergström, Vice President, Strategic Sourcing
To: Lena Torvik, Senior Vice President, Supply Chain & Procurement
Subject Line: Hemsworth — Final Terms Under Review
Bates Range: CRH-ATLAS-002118 through CRH-ATLAS-002120
Summary of Content: In this email, Bergström discusses the nearing finalization of the Cascade–Hemsworth supply agreement, which was ultimately executed on June 1, 2021. The email provides an update on the status of contract negotiations, noting that Hemsworth's legal team had returned a marked-up draft of the agreement with certain revisions to the pricing, delivery, and quality assurance provisions. Bergström notes that Hemsworth's team indicated it would "transition" certain existing customer commitments in order to accommodate the volume requirements of the proposed Cascade agreement. The email does not name Vantor specifically. Bergström references the proposed $28.0 million annual purchase commitment and notes that the commitment represented a significant increase over Hemsworth's current aggregate annual sales volume, which would require Hemsworth to allocate additional manufacturing capacity.
Analysis: Although this email references Hemsworth transitioning "existing customer commitments," it does not identify Vantor by name, nor does it reference any exclusive supply arrangement. The term "transition" is inherently ambiguous and could refer to any number of customer relationships and commercial adjustments. In the context of a manufacturer entering into a substantial new supply agreement with a $28.0 million annual commitment, it is commercially reasonable and expected that the manufacturer would need to reallocate production capacity and adjust its commitments to existing customers. This is a standard business consideration that does not imply the existence of exclusive supply arrangements.
Standing alone, this email does not demonstrate knowledge of Vantor's exclusivity provisions. However, KBW may attempt to use this email in conjunction with Email 5 (discussed below) to construct a narrative that Bergström was aware that Hemsworth had binding commitments to specific customers, including Vantor, that needed to be addressed before the Cascade agreement could be executed. Our response should emphasize that the concept of "transitioning customer commitments" is a routine commercial concept that does not require or imply awareness of exclusivity.
Sensitivity Assessment: Low to Medium.
Email 5. Date: May 22, 2021
From: Annika Bergström, Vice President, Strategic Sourcing
To: Lena Torvik, Senior Vice President, Supply Chain & Procurement; David Pruitt, General Counsel
Subject Line: Hemsworth Agreement — Status Update
Bates Range: CRH-ATLAS-002487 through CRH-ATLAS-002490
Summary of Content: In this email, Bergström provides a status update on the Cascade–Hemsworth agreement, noting that the agreement is expected to be executed within the next two weeks (it was ultimately executed on June 1, 2021). The email addresses several outstanding items, including final pricing adjustments and delivery scheduling. The critical passage states that Hemsworth confirmed it has provided notice to its "other retail partners, including Vantor" regarding changes to supply arrangements. Bergström notes that "[t]his is Hemsworth's responsibility, not ours, and we understand they are managing the process on their end." The email also discusses logistical preparations for the initial inventory order and the timeline for product integration into Cascade's retail and e-commerce channels.
Analysis: This is the most significant of the five Hemsworth-related emails because it explicitly references Vantor in the context of Hemsworth providing notice regarding changes to supply arrangements. The email demonstrates that Bergström was aware, as of May 22, 2021 — ten days before the Cascade–Hemsworth agreement was executed — that Hemsworth was providing some form of notice to Vantor in connection with changes to its supply arrangements.
However, the email does not reference the term "exclusive" or "exclusivity." It does not describe the nature of the notice that Hemsworth provided to Vantor. The reference to "notice" is consistent with Hemsworth exercising its termination-for-convenience clause under the Hemsworth–Vantor agreement, which required 90 days' prior written notice, but Bergström does not characterize it as such or demonstrate any understanding of the specific contractual mechanism at work. The email characterizes the provision of notice as Hemsworth's unilateral action and responsibility, and Bergström expressly notes that Cascade considers this to be Hemsworth's matter to manage.
KBW will likely seize upon this email as evidence that Cascade was aware that Hemsworth had existing obligations to Vantor that required formal notice prior to their alteration or termination. This argument has some surface appeal, as the concept of a supplier providing "notice" to a customer regarding changes to supply arrangements does suggest some form of contractual obligation. However, notice is a standard commercial practice that applies in many contexts, not exclusively in the context of exclusive supply agreements. A supplier might provide notice to a customer of changes to pricing, product availability, delivery schedules, or other aspects of the commercial relationship, none of which require or imply the existence of an exclusive supply agreement.
Our defense position should emphasize the following points: (1) Bergström's awareness that Hemsworth was providing notice to its retail partners, including Vantor, is not equivalent to knowledge of the specific exclusivity provisions in the Hemsworth–Vantor agreement; (2) the email characterizes the notice as Hemsworth's responsibility and initiative, not Cascade's; (3) the email does not reference exclusivity, contractual terms, or the specific provisions of any agreement between Hemsworth and Vantor; and (4) the concept of a supplier providing notice to its customers of changes to supply arrangements is a routine commercial practice that does not, without more, demonstrate knowledge of exclusive supply terms.
Sensitivity Assessment: High.
B. Emails Referencing Tridale Manufacturing Inc. and Vantor (4 Emails)
Four of the 14 emails reference Tridale Manufacturing Inc. and Vantor (or reference Tridale and Vantor implicitly through references to "other retailers" or "other customers"). These emails span the period from April 8, 2021, through July 22, 2021, and document Cascade's engagement with Tridale from initial identification through the final stages of contract negotiation preceding the execution of the Cascade–Tridale agreement on August 15, 2021.
Email 6. Date: April 8, 2021
From: Annika Bergström, Vice President, Strategic Sourcing
To: Marcus Hale, Category Manager, Electronics Accessories
Subject Line: Consumer Electronics Accessories — Supplier Shortlist
Bates Range: CRH-ATLAS-001098 through CRH-ATLAS-001102
Summary of Content: In this email, Bergström circulates a shortlist of potential consumer electronics accessories suppliers to Marcus Hale, who was responsible for the electronics accessories category within the Project Atlas initiative. The shortlist includes seven manufacturers, of which Tridale is one. Each manufacturer on the shortlist is accompanied by a brief notation regarding its product capabilities, approximate revenue, and current customer base. The notation beside Tridale states: "currently supplies Vantor and [two other retailers — names redacted]." The email discusses the evaluation criteria for narrowing the shortlist and requests that Hale schedule introductory calls with the top three candidates. No reference is made to any contract, exclusivity, or specific terms of any arrangement between Tridale and Vantor or any other retailer.
Analysis: Vantor is mentioned in a passing, factual notation identifying Tridale's existing customer base. This type of competitive landscape mapping — identifying which manufacturers supply which retailers — is a standard and necessary component of any supplier diversification initiative. The information that Tridale supplies Vantor is the type of information that is generally available through industry publications, trade shows, retail store visits, and other publicly accessible sources. No contractual terms are discussed, and there is no reference to any exclusive arrangement. This email presents minimal risk to Cascade's defense.
Sensitivity Assessment: Low.
Email 7. Date: May 19, 2021
From: Marcus Hale, Category Manager, Electronics Accessories
To: Annika Bergström, Vice President, Strategic Sourcing
Subject Line: Tridale — Initial Discussion Summary
Bates Range: CRH-ATLAS-002301 through CRH-ATLAS-002303
Summary of Content: In this email, Hale summarizes an initial telephone discussion with Gregory Fontaine, President of Tridale Manufacturing. Hale reports that Fontaine expressed strong interest in partnering with a larger retailer such as Cascade, noting that Tridale's current revenue base was approximately $35 million and that Fontaine saw significant growth potential through a relationship with Cascade. The email notes that Fontaine mentioned Tridale's "current arrangements" with other retailers but did not specify the contractual terms governing those arrangements. Hale reports that Fontaine described these arrangements as "manageable" and expressed confidence that Tridale could accommodate a new large-scale customer. Vantor is not named in this email, although it is implied among the "other retailers" referenced by Fontaine.
Analysis: This email does not name Vantor explicitly. The reference to "current arrangements" is vague and does not indicate knowledge of exclusivity or any specific contractual terms. Fontaine's characterization of his existing arrangements as "manageable" could be read to suggest that Tridale had some form of obligations to its existing customers, but it is equally consistent with the interpretation that Tridale simply needed to ensure adequate production capacity to serve both its existing customers and a new large-scale customer like Cascade. Fontaine's expressed interest in partnering with a larger retailer suggests Tridale's independent initiative in seeking new business relationships, which is consistent with Cascade's defense that the suppliers independently chose to enter into agreements with Cascade.
KBW may attempt to link this email to Email 9 (discussed below) to argue that Cascade was progressively made aware of Tridale's existing obligations. However, standing alone, this email does not reference Vantor, does not reference exclusivity, and does not provide Cascade with any information regarding the specific terms of Tridale's relationships with its existing customers.
Sensitivity Assessment: Low.
Email 8. Date: June 28, 2021
From: Annika Bergström, Vice President, Strategic Sourcing
To: Lena Torvik, Senior Vice President, Supply Chain & Procurement
Subject Line: Tridale — Negotiation Update
Bates Range: CRH-ATLAS-003142 through CRH-ATLAS-003145
Summary of Content: In this email, Bergström provides an update on the ongoing negotiations with Tridale Manufacturing. The email discusses several aspects of the proposed agreement, including pricing terms, minimum order quantities, and delivery schedules. Bergström notes that Tridale has expressed interest in a $19.5 million annual commitment from Cascade, which Bergström describes as "significantly above its current commitments to existing customers including Vantor." The email further discusses the production capacity implications of the proposed Cascade commitment and notes that Tridale has indicated it would need to invest in additional production equipment to meet the anticipated volume. Bergström references Vantor as one of several existing customers in the context of comparing the scale of Cascade's proposed commitment to Tridale's current business. The email does not reference any exclusive arrangement or specific contractual terms governing Tridale's relationship with Vantor.
Analysis: Vantor is referenced in this email as one of Tridale's existing customers, in the context of establishing that the proposed Cascade commitment of $19.5 million would represent a substantial increase over Tridale's current business volume. This reference demonstrates that Bergström was aware that Tridale had a commercial relationship with Vantor, but it provides no indication of knowledge regarding the nature — exclusive versus non-exclusive — or specific terms of that relationship.
The comparison of the proposed Cascade commitment to Tridale's "current commitments to existing customers including Vantor" is noteworthy because it uses the word "commitments," which could be interpreted as a reference to contractual obligations. However, in common commercial usage, the term "commitments" is frequently used to describe the general volume of business between a supplier and its customers, without implying the existence of formal contractual obligations or exclusive arrangements. Bergström's use of the term in this context appears to be descriptive of the overall scale of Tridale's existing business rather than indicative of knowledge of specific contractual terms.
Sensitivity Assessment: Low to Medium.
Email 9. Date: July 22, 2021
From: Annika Bergström, Vice President, Strategic Sourcing
To: Lena Torvik, Senior Vice President, Supply Chain & Procurement; David Pruitt, General Counsel
Subject Line: RE: Tridale Agreement — Timing
Bates Range: CRH-ATLAS-003891 through CRH-ATLAS-003894
Summary of Content: In this email, Bergström discusses the timing of the Cascade–Tridale agreement, which was ultimately executed on August 15, 2021. The email is part of a chain discussing the expected timeline for finalizing the agreement, with Torvik and Pruitt included on the thread. Bergström notes that Tridale's outside counsel requested additional time to "resolve its obligations to other customers" before finalizing the agreement with Cascade. Bergström reports that she considered this request reasonable and recommends accommodating the additional time. The email does not name Vantor, does not reference exclusivity, and does not specify the nature of the obligations that Tridale's counsel sought to resolve. Bergström notes that the delay would push the expected execution date from late July to mid-August.
Analysis: The phrase "resolve its obligations to other customers" is the critical language in this email. This phrase is ambiguous. It could refer to contractual obligations, including exclusivity provisions, that Tridale needed to address before entering into a new supply agreement with Cascade. Alternatively, it could refer to logistical or commercial obligations, such as fulfilling outstanding purchase orders, adjusting delivery schedules, or providing advance notice of changes to supply arrangements. Without additional context, the phrase does not specify the nature of the obligations at issue.
KBW will likely argue that this email demonstrates, at minimum, constructive knowledge that Tridale had binding obligations to its existing customers — potentially including exclusive supply obligations to Vantor — that needed to be resolved before Tridale could commit to a supply agreement with Cascade. This argument is not without force, as the involvement of Tridale's outside counsel in requesting additional time to "resolve obligations" suggests a legal dimension to the situation that goes beyond routine commercial adjustments.
However, our defense position should emphasize the following: (1) the email does not name Vantor or identify any specific customer to whom Tridale had obligations; (2) the email does not reference exclusivity or any specific contractual terms; (3) the involvement of outside counsel in a significant supply agreement negotiation is not unusual and does not, by itself, suggest that exclusivity issues were at play; (4) the phrase "resolve its obligations" is consistent with a wide range of commercial and legal activities, including winding down existing purchase orders, negotiating mutual termination of non-exclusive supply arrangements, or addressing any number of other commercial matters; and (5) Bergström's characterization of the request as "reasonable" and her recommendation to accommodate the delay suggest that she did not view the situation as raising any legal concerns regarding interference with exclusive arrangements.
The inclusion of David Pruitt, General Counsel, on this email chain is also noteworthy. KBW may argue that the inclusion of in-house counsel suggests that Bergström or Torvik perceived a legal issue related to Tridale's existing obligations. However, Pruitt was routinely included on communications regarding the finalization of significant supply agreements as part of his standard oversight role, and his inclusion on this email is consistent with that practice. Privilege issues may arise if KBW seeks to explore the substance of any legal advice Pruitt provided in response to this email; we should be prepared to address those issues.
Sensitivity Assessment: Medium to High.
C. Emails Referencing Orion Lifestyle Brands Corp. and Vantor (4 Emails)
Four of the 14 emails reference Orion Lifestyle Brands Corp. and Vantor. These emails span the period from February 22, 2021, through April 29, 2021, and document Cascade's engagement with Orion from the earliest stage of Project Atlas through the decision to move forward with the Cascade–Orion agreement, which was executed on May 10, 2021. The Orion-related emails are particularly significant because the Cascade–Orion agreement was the first of the three supply agreements to be executed.
Email 10. Date: February 22, 2021
From: Annika Bergström, Vice President, Strategic Sourcing
To: Lena Torvik, Senior Vice President, Supply Chain & Procurement
Subject Line: Project Atlas — Personal Care Category Targets
Bates Range: CRH-ATLAS-000089 through CRH-ATLAS-000092
Summary of Content: This is one of the earliest Project Atlas emails in the collection. In this email, Bergström identifies Orion Lifestyle Brands as a target supplier in the personal care and wellness product category. The email provides an overview of Orion's brand portfolio, noting that Orion's products are "prominently featured in Vantor's retail stores and website" and have "strong consumer recognition in the wellness and personal care space." Bergström discusses Orion's brand reputation, product line depth, pricing positioning, and estimated annual revenue. The email identifies several other potential personal care suppliers alongside Orion. No reference is made to any contractual arrangement between Orion and Vantor.
Analysis: This email references Vantor only as a retail outlet where Orion products are available to consumers. The observation that Orion products are "prominently featured in Vantor's retail stores and website" is publicly observable information that any consumer, industry analyst, or competitor could ascertain through a visit to a Vantor store or website. There is no reference to any supply agreement, exclusivity, or contractual terms. The email is entirely consistent with the early-stage target identification process of Project Atlas and presents no risk to Cascade's defense.
Sensitivity Assessment: Low.
Email 11. Date: March 29, 2021
From: Sarah Lindgren, Senior Buyer, Personal Care
To: Annika Bergström, Vice President, Strategic Sourcing
Subject Line: Orion — Preliminary Discussion with Simone Alvarez
Bates Range: CRH-ATLAS-000812 through CRH-ATLAS-000815
Summary of Content: In this email, Sarah Lindgren, a Senior Buyer responsible for the personal care category, summarizes a preliminary telephone discussion with Simone Alvarez, Chief Executive Officer of Orion Lifestyle Brands. Lindgren reports that Alvarez expressed significant interest in expanding Orion's retail presence beyond its current channels, which Alvarez identified as including Vantor and several direct-to-consumer online channels. Alvarez reportedly stated that Orion was "evaluating its distribution strategy" and was interested in exploring partnerships with retailers that could offer broader geographic reach and higher sales volume. Lindgren notes that Alvarez was enthusiastic about the prospect of a partnership with Cascade and requested a follow-up meeting to discuss specific terms. The email does not mention exclusivity, contractual terms, or any specific provisions of Orion's relationship with Vantor.
Analysis: The reference to Vantor in this email originates from Simone Alvarez, the CEO of Orion, who identified Vantor as one of Orion's current distribution channels in the context of describing Orion's existing business. This type of disclosure — a supplier identifying its current customers to a prospective new customer — is entirely standard commercial practice. Alvarez's statement that Orion was "evaluating its distribution strategy" suggests that Orion was independently and proactively considering changes to its distribution channels, which is consistent with Cascade's defense that the suppliers independently chose to engage with Cascade.
KBW may argue that Alvarez's desire to expand "beyond" Orion's current channels, combined with the specific identification of Vantor as one of those current channels, should have prompted Cascade to inquire about the nature of Orion's arrangement with Vantor. However, there is no duty under California law for a prospective contracting party to affirmatively investigate whether a potential supplier has exclusive arrangements with third parties. The absence of such an inquiry does not establish actual knowledge or even willful blindness.
Sensitivity Assessment: Low.
Email 12. Date: April 15, 2021
From: Annika Bergström, Vice President, Strategic Sourcing
To: Lena Torvik, Senior Vice President, Supply Chain & Procurement
Subject Line: Orion — Competitive Positioning
Bates Range: CRH-ATLAS-001412 through CRH-ATLAS-001416
Summary of Content: In this email, Bergström presents a competitive positioning analysis of Orion's products relative to products available at Vantor stores. The email discusses Vantor's pricing and merchandising of Orion products, noting that Vantor's retail pricing for certain Orion product lines is "approximately 8–12% above comparable products from other brands." Bergström analyzes the potential for Cascade to offer Orion better retail placement, more prominent merchandising, and higher volume than what Orion currently achieves through its existing channels. The email references the proposed annual commitment of $31.0 million that Cascade would offer Orion, and compares this to what Bergström estimates Vantor's current purchases from Orion to be, stating: "Based on our market analysis and publicly available information, Vantor's annual purchases from Orion are likely in the range of $14–15 million annually." The email does not reference exclusivity, contractual terms, or any specific provisions of Orion's relationship with Vantor.
Analysis: This email requires careful analysis because of Bergström's estimate of Vantor's annual purchase volume from Orion. Bergström estimates this volume at $14–15 million, which is remarkably close to the actual minimum annual purchase commitment of $14.6 million contained in the Vantor–Orion exclusive supply agreement. KBW will likely argue that the precision of this estimate reflects inside knowledge of the contract terms rather than independent market analysis.
However, several factors support the defense position that the estimate was derived from publicly available information and market analysis rather than knowledge of the Vantor–Orion contract:
First, Bergström expressly attributes the estimate to "our market analysis and publicly available information," indicating that the estimate was based on Cascade's own research rather than on knowledge of the contract terms.
Second, the estimate is a range ($14–15 million) rather than a precise figure, which is consistent with an approximation derived from market analysis rather than knowledge of a specific contractual commitment.
Third, industry estimates of a competitor's purchase volumes from a particular supplier are routinely derived from publicly available data, including the competitor's annual reports, SEC filings (to the extent the competitor is a public company), industry trade publications, analyst reports, and retail sales data. It is entirely plausible that Bergström arrived at the $14–15 million estimate through these publicly available sources.
Fourth, the fact that the estimate happens to be close to the actual contractual minimum is, standing alone, insufficient to establish knowledge of the contract. Estimates derived from market analysis are frequently close to actual figures — that is the purpose of market analysis.
Notwithstanding these defenses, we should anticipate that KBW will make this email a focal point of its argument. The proximity of the estimate to the actual contractual minimum is circumstantially suggestive, and KBW may use this email to support a broader narrative that Cascade possessed a detailed understanding of Vantor's supplier economics. We should be prepared to present affirmative evidence of the market analysis methodology that Bergström employed to arrive at this estimate, including any underlying market research or competitive intelligence reports that informed the figure.
Sensitivity Assessment: Medium to High.
Email 13. Date: April 29, 2021
From: Annika Bergström, Vice President, Strategic Sourcing
To: Lena Torvik, Senior Vice President, Supply Chain & Procurement; David Pruitt, General Counsel
Subject Line: Orion Agreement — Moving Forward
Bates Range: CRH-ATLAS-001687 through CRH-ATLAS-001691
Summary of Content: In this email, Bergström discusses the decision to move forward with the Cascade–Orion agreement, which was ultimately executed on May 10, 2021, approximately eleven days after this email was sent. The email addresses several topics, including final commercial terms, onboarding logistics, and timeline. The critical passage states: "Orion's legal team has indicated that Orion will need to manage its transition from existing commercial relationships and has requested that we not contact Vantor regarding this new arrangement. I think this is a reasonable request and I've agreed to it — this is their customer relationship to manage, and we don't need to involve ourselves in that process." The email further discusses the integration timeline for Orion products into Cascade's retail and e-commerce channels, projected first-year revenue from the Orion product lines, and the proposed $31.0 million annual commitment.
Analysis: This email is the most concerning of the 14 emails from a defense perspective. It contains two elements that KBW will undoubtedly highlight: (1) the reference to Orion's need to "manage its transition from existing commercial relationships," and (2) Orion's specific request that Cascade not contact Vantor regarding the new arrangement.
With respect to the first element, the phrase "transition from existing commercial relationships" is similar in import to the language in Email 4 (Hemsworth transitioning "existing customer commitments") and Email 9 (Tridale resolving "its obligations to other customers"). Standing alone, this phrase is ambiguous and does not specify the nature of the existing commercial relationships or whether they were governed by exclusive supply arrangements. The concept of a supplier managing a transition from existing relationships to new ones is a routine commercial reality.
With respect to the second element, Orion's request that Cascade not contact Vantor is more problematic. KBW will argue that this request would be unnecessary if Orion's relationship with Vantor were merely a non-exclusive, arms-length commercial relationship. The argument will be that Orion's desire to prevent Cascade from contacting Vantor reflects an awareness — shared by both Orion and Cascade — that the Orion–Vantor relationship involved sensitive contractual obligations, specifically exclusivity provisions, that Orion needed to address before entering into a supply agreement with Cascade.
Our defense position should emphasize the following:
First, the request not to contact Vantor is attributable to Orion, not to Cascade. It was Orion's legal team that made the request, and Cascade merely agreed to it. Cascade's agreement to the request does not constitute an admission of knowledge regarding the nature of Orion's relationship with Vantor.
Second, there are many commercially reasonable explanations for such a request that do not involve exclusivity. A supplier managing a transition between retail partners would reasonably want to control the timing and manner of communications with its existing customers. Premature contact from a new retail partner could disrupt the supplier's existing customer relationships, create uncertainty in the market, or undermine the supplier's negotiating position with its existing customers. These concerns exist regardless of whether the underlying relationship is exclusive.
Third, the email does not use the term "exclusive" or reference any specific contract between Orion and Vantor. Bergström characterizes the request as relating to "their customer relationship" — a characterization that is consistent with general commercial sensitivity rather than specific knowledge of exclusivity terms.
Fourth, Bergström's statement that "we don't need to involve ourselves in that process" suggests that Cascade viewed the management of Orion's existing customer relationships as entirely Orion's responsibility, which is inconsistent with the intent or knowledge that would characterize intentional tortious interference.
Notwithstanding these defenses, this email presents the highest risk of the 14 emails to Cascade's primary defense. KBW will argue that the combination of Orion's need to "manage its transition" and the request not to contact Vantor, read together and in the context of the other emails, demonstrates at least constructive knowledge or willful blindness to the existence of an exclusive supply arrangement between Orion and Vantor. We should anticipate that this email will be the centerpiece of KBW's factual argument on the knowledge element, and we should develop a comprehensive response that addresses both the individual email and its place within the broader documentary context.
Sensitivity Assessment: High.
D. Email Referencing Multiple Suppliers and Vantor (1 Email)
Email 14. Date: May 28, 2021
From: Lena Torvik, Senior Vice President, Supply Chain & Procurement
To: Margaret Prumvane, Chief Executive Officer; Raj Subramanian, Chief Financial Officer; Annika Bergström, Vice President, Strategic Sourcing
Subject Line: Project Atlas — Phase 1 Progress Report
Bates Range: CRH-ATLAS-002598 through CRH-ATLAS-002605
Summary of Content: This email is a senior-level progress report on Phase 1 of Project Atlas, sent by Torvik to Cascade's CEO and CFO, with Bergström copied. The email provides a comprehensive summary of the status of supplier onboarding across all targeted product categories. The email references the Orion agreement, which had been executed on May 10, 2021, and the pending Hemsworth agreement, which was expected to be executed shortly and was ultimately executed on June 1, 2021. The Tridale relationship is referenced as being in the early negotiation stage. The email notes broadly that "several of our new supplier partners previously supplied Vantor, among other retailers." This statement is made in the context of a general description of the competitive advantages that Cascade is gaining through the Project Atlas initiative, and it is not accompanied by any discussion of contractual or exclusivity issues. The tone of the email is strategic and forward-looking, focused on Cascade's supply chain diversification goals, anticipated cost savings, and competitive positioning improvements. The email also references the $4.2 million Project Atlas budget and reports that approximately $1.8 million had been expended to date.
Analysis: This is a high-level executive summary that mentions Vantor in passing as one of the retailers whose suppliers Cascade has attracted through the Project Atlas initiative. The email does not discuss any contractual terms, exclusivity, or knowledge of Vantor's specific arrangements with any supplier. The reference to Vantor is incidental to the broader report on Project Atlas progress and is made in the context of describing the competitive landscape rather than in the context of any specific supplier negotiation.
From a defense perspective, this email is not materially different from the lower-sensitivity emails discussed above. The statement that "several of our new supplier partners previously supplied Vantor, among other retailers" is a factual observation that adds no new information regarding Cascade's knowledge of exclusivity provisions. However, KBW may attempt to use this email to argue that Vantor was a specific competitive target of Project Atlas, rather than merely an incidental competitor. Our response should emphasize that the email references "among other retailers" in addition to Vantor, indicating that the suppliers' relationships with Vantor were not uniquely significant to Cascade's strategy.
The presence of Margaret Prumvane (CEO) and Raj Subramanian (CFO) on this email chain raises the issue of whether KBW will argue that Cascade's most senior executives were aware that the company was onboarding suppliers who had existing relationships with Vantor. While this is technically true, awareness that suppliers have existing customer relationships is not equivalent to knowledge that those relationships are governed by exclusive supply agreements. We should, however, be prepared for the possibility that KBW will seek to depose Prumvane and/or Subramanian regarding this email.
Sensitivity Assessment: Low to Medium.
V. Summary of Findings