1038-00007 · Cascade Retail Holdings · Internal Memoranda

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CALDERWOOD & HARKNESS LLP 600 South Grand Avenue, Suite 3200 Los Angeles, California 90071 Telephone: (213) 555-7400

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

December 20, 2022

TO: Douglas Carmichael, Partner

FROM: Yuki Nakamura, Senior Associate; Carlos Espinoza, Associate

RE: Rebuttal of Meridian Forensic Economics LLC Damages Report — Vantor Holdings Corp. v. Cascade Retail Holdings Inc., Case No. 21STCV-34872 (Superior Court of California, County of Los Angeles)

MATTER NO.: 1038-00007

CLIENT: Cascade Retail Holdings Inc.

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I. EXECUTIVE SUMMARY

The purpose of this memorandum is to summarize and analyze the draft rebuttal expert report prepared by Dr. Vivian Ostrowski of Archer & Colvin Consulting Group (701 Fifth Avenue, Suite 4100, Seattle, WA 98104), which is scheduled for final service on opposing counsel on December 22, 2022. This memorandum identifies the key opinions, methodologies, and evidentiary bases set forth in Dr. Ostrowski's rebuttal, and it assesses the implications of her analysis for Cascade Retail Holdings Inc.'s ("Cascade") settlement posture and trial strategy in this matter.

Dr. Ostrowski's rebuttal responds to the damages report served by Dr. Harold Pryce of Meridian Forensic Economics LLC (2049 Century Park East, Suite 1200, Los Angeles, CA 90067) on behalf of Vantor Holdings Corp. ("Vantor") on December 9, 2022. In that report, Dr. Pryce opined that Vantor sustained total damages of $87.4 million, comprised of $34.2 million attributable to the loss of the Hemsworth Consumer Products LLC ("Hemsworth") supplier relationship, $22.8 million attributable to the loss of the Tridale Manufacturing Inc. ("Tridale") supplier relationship, and $30.4 million attributable to the loss of the Orion Lifestyle Brands Corp. ("Orion") supplier relationship. Dr. Pryce's damages calculations are based on projected multi-year revenue streams, extending well beyond the actual expiration dates of the underlying exclusive supply agreements, discounted at a rate of 8.5%.

Dr. Ostrowski's rebuttal report limits provable damages to a range of $6.1 million to $11.3 million — a reduction of approximately 87% to 93% from Dr. Pryce's figure. When additional adjustments for mitigation failure and termination-for-convenience rights are applied, the provable damages range decreases further still.

The key rebuttal themes advanced by Dr. Ostrowski can be summarized as follows:

1. Improper Projection Period. Dr. Pryce improperly projects damages far beyond the remaining exclusive contract terms of the three Vantor supplier agreements. The enforceable exclusivity rights in each agreement had limited remaining durations at the time Cascade entered into its respective agreements with the suppliers, and Dr. Pryce's extension of the projection period by four to six years beyond expiration is unsupported by the contractual terms.

2. Termination-for-Convenience Clauses. Dr. Pryce entirely ignores the termination-for-convenience clauses present in all three of the Vantor supplier agreements. These clauses gave each supplier the independent contractual right to terminate its relationship with Vantor upon specified notice periods, and the documentary record confirms that each supplier in fact exercised that right.

3. Failure to Account for Mitigation. Dr. Pryce fails to account for Vantor's duty to mitigate its damages by seeking alternative supplier relationships. The evidence in the record demonstrates that Vantor made limited efforts to identify replacement suppliers during the relevant period, despite operating in a large wholesale distribution market with numerous available alternatives.

4. Speculative Renewal Assumptions. Dr. Pryce applies speculative assumptions about contract renewals that are unsupported by the evidence. None of the three supplier agreements contains automatic renewal provisions or right-of-first-refusal language, and the only basis for Dr. Pryce's renewal assumption is the subjective expectation of Vantor's own personnel, which is insufficient to establish lost profits with reasonable certainty under California law.

This memorandum details each of these criticisms in the sections that follow, provides a comprehensive comparison of the two experts' damages opinions, and offers recommendations regarding next steps for deposition preparation, motion practice, and settlement strategy.

II. BACKGROUND ON THE SUPPLIER RELATIONSHIPS AT ISSUE

The underlying dispute in this action centers on Vantor's claims that Cascade tortiously interfered with three exclusive supply agreements between Vantor and its suppliers — Hemsworth, Tridale, and Orion — by entering into competing supply arrangements with those same suppliers as part of Cascade's internal supplier-diversification initiative known as "Project Atlas." In order to assess the damages claimed by Vantor and the rebuttal analysis prepared by Dr. Ostrowski, it is necessary to understand the material terms of each supplier relationship.

A. Hemsworth Consumer Products LLC

Hemsworth Consumer Products LLC ("Hemsworth") is an Oregon limited liability company with its principal place of business at 4720 NW Yeon Avenue, Portland, Oregon 97210. Hemsworth's Chief Executive Officer is Janet Kohler. Hemsworth manufactures and distributes home goods and kitchen accessories, including a range of cookware, small kitchen appliances, storage solutions, and related consumer products.

Vantor and Hemsworth entered into an exclusive supply agreement with a three-year term, executed on March 15, 2019, and expiring on March 14, 2022. Under this agreement, Vantor committed to a minimum annual purchase commitment of $12.5 million in exchange for Hemsworth's agreement to supply products to Vantor on an exclusive basis for the retail channels specified in the contract. The agreement contained a termination-for-convenience clause permitting either party to terminate the agreement upon 90 days' prior written notice.

The agreement did not contain any automatic renewal provision, right-of-first-refusal clause, or any other mechanism that would obligate Hemsworth to continue its exclusive relationship with Vantor beyond the March 14, 2022 expiration date. At the time of execution, the parties understood the agreement to be for a defined, finite term.

Cascade entered into a new supply agreement with Hemsworth on June 1, 2021, with a five-year term and an annual purchase commitment of $28.0 million — more than double Vantor's minimum annual purchase commitment under the Vantor–Hemsworth agreement. At the time the Cascade–Hemsworth agreement was executed, the remaining exclusive term of the Vantor–Hemsworth agreement was approximately nine months (from June 1, 2021 to March 14, 2022). This remaining-term figure is critical to the damages analysis, as it represents the only period during which Vantor held enforceable exclusivity rights with respect to Hemsworth.

B. Tridale Manufacturing Inc.

Tridale Manufacturing Inc. ("Tridale") is a Nevada corporation with its principal place of business at 6300 South Pecos Road, Suite 210, Las Vegas, Nevada 89120. Tridale's President is Gregory Fontaine. Tridale manufactures and distributes consumer electronics accessories, including cables, chargers, protective cases, and related products.

Vantor and Tridale entered into an exclusive supply agreement with a two-year term, executed on January 10, 2020, and expiring on January 9, 2022. The agreement provided for a minimum annual purchase commitment of $8.3 million, and Tridale agreed to supply products to Vantor on an exclusive basis within the specified retail channels. The agreement included a termination-for-convenience clause permitting either party to terminate the agreement upon 60 days' prior written notice.

As with the Hemsworth agreement, the Vantor–Tridale agreement contained no automatic renewal provision, right-of-first-refusal language, or any other mechanism that would obligate Tridale to continue its exclusive relationship with Vantor beyond the January 9, 2022 expiration date. The two-year fixed term was the full extent of the parties' binding commitment.

Cascade entered into a new supply agreement with Tridale on August 15, 2021, with a three-year term and an annual purchase commitment of $19.5 million — more than double Vantor's minimum annual purchase commitment under the Vantor–Tridale agreement. At the time the Cascade–Tridale agreement was executed, the remaining exclusive term of the Vantor–Tridale agreement was approximately five months (from August 15, 2021 to January 9, 2022). This five-month window represents the only period during which Vantor held enforceable exclusivity rights with respect to Tridale.

C. Orion Lifestyle Brands Corp.

Orion Lifestyle Brands Corp. ("Orion") is a California corporation with its principal place of business at 1900 Avenue of the Stars, Suite 1050, Los Angeles, California 90067. Orion's Chief Executive Officer is Simone Alvarez. Orion manufactures and distributes personal care and wellness products, including skincare, bath products, and related consumer goods.

Vantor and Orion entered into an exclusive supply agreement with a four-year term, executed on July 1, 2018, and expiring on June 30, 2022. The agreement provided for a minimum annual purchase commitment of $14.6 million, and Orion agreed to supply products to Vantor on an exclusive basis within the specified retail channels. The agreement included a termination-for-convenience clause permitting either party to terminate the agreement upon 120 days' prior written notice.

Consistent with the other two agreements, the Vantor–Orion agreement contained no automatic renewal provision, right-of-first-refusal clause, or similar mechanism that would have obligated Orion to continue its exclusive relationship with Vantor beyond the June 30, 2022 expiration date. The four-year fixed term was the agreed-upon duration of the parties' exclusive arrangement.

Cascade entered into a new supply agreement with Orion on May 10, 2021, with a four-year term and an annual purchase commitment of $31.0 million — more than double Vantor's minimum annual purchase commitment under the Vantor–Orion agreement. At the time the Cascade–Orion agreement was executed, the remaining exclusive term of the Vantor–Orion agreement was approximately thirteen months (from May 10, 2021 to June 30, 2022). This thirteen-month period represents the only window during which Vantor held enforceable exclusivity rights with respect to Orion.

As the foregoing discussion makes clear, the three supplier agreements at issue had materially different remaining terms at the time Cascade entered into its competing arrangements. In each case, the remaining exclusive term was significantly shorter than the projection periods used by Dr. Pryce in his damages analysis — a discrepancy that lies at the heart of Dr. Ostrowski's rebuttal.

III. SUMMARY OF DR. PRYCE'S DAMAGES REPORT (MERIDIAN FORENSIC ECONOMICS LLC, DECEMBER 9, 2022)

On December 9, 2022, Vantor served the expert report of Dr. Harold Pryce of Meridian Forensic Economics LLC, in which Dr. Pryce opined on the total damages allegedly sustained by Vantor as a result of Cascade's interference with the three supplier relationships described above. The following is a summary of the key elements of Dr. Pryce's analysis.

A. Methodology Overview

Dr. Pryce employed a discounted-cash-flow ("DCF") lost-profits model to calculate Vantor's alleged damages. Under this model, Dr. Pryce projected future revenue streams that Vantor would purportedly have earned from its exclusive supply relationships with Hemsworth, Tridale, and Orion, and then discounted those projected streams to present value using a uniform discount rate of 8.5% across all three supplier relationships.

Critically, Dr. Pryce projected damages not only for the remaining contract terms of the three supplier agreements, but for extended hypothetical renewal periods of substantial duration. In each case, Dr. Pryce assumed that the supplier in question would have renewed and expanded its relationship with Vantor absent Cascade's alleged interference. The bases for this renewal assumption are discussed in greater detail below.

Equally significant is what Dr. Pryce's methodology omitted. Dr. Pryce did not apply any mitigation offset to his damages calculations. He did not reduce his damages figures to account for Vantor's ability to replace the lost supplier relationships with alternative suppliers, nor did he consider whether Vantor took reasonable steps to do so. He also did not account for the termination-for-convenience clauses present in all three supplier agreements, which gave the suppliers the independent contractual right to exit the Vantor relationship on notice.

B. Hemsworth Damages Calculation — $34.2 Million

With respect to the Hemsworth relationship, Dr. Pryce projected a five-year revenue stream — that is, a stream extending well beyond the March 14, 2022 contract expiration date. Dr. Pryce assumed that the Hemsworth–Vantor exclusive supply agreement would have been renewed on equivalent or improved terms based on the historical relationship between the two companies. He discounted the projected lost revenue at his selected rate of 8.5%.

The resulting damages figure for the Hemsworth relationship was $34,200,000. This figure encompasses not only the nine months of exclusivity remaining at the time of the Cascade–Hemsworth agreement, but more than four additional years of hypothetical future revenue that Vantor was never contractually entitled to receive.

C. Tridale Damages Calculation — $22.8 Million

With respect to the Tridale relationship, Dr. Pryce projected a four-year revenue stream, again extending far beyond the January 9, 2022 contract expiration date. Dr. Pryce assumed that the Tridale–Vantor exclusive supply agreement would have been renewed on equivalent or improved terms. He applied the same 8.5% discount rate.

The resulting damages figure for the Tridale relationship was $22,800,000. This figure encompasses not only the five months of exclusivity remaining at the time of the Cascade–Tridale agreement, but more than three additional years of hypothetical future revenue for which no contractual basis existed.

D. Orion Damages Calculation — $30.4 Million

With respect to the Orion relationship, Dr. Pryce projected a six-year revenue stream, extending well beyond the June 30, 2022 contract expiration date. Dr. Pryce assumed that the Orion–Vantor exclusive supply agreement would have been renewed on expanded terms, reflecting an anticipated growth trajectory in Vantor's personal care and wellness product line. The same 8.5% discount rate was applied.

The resulting damages figure for the Orion relationship was $30,400,000. This figure encompasses not only the thirteen months of exclusivity remaining at the time of the Cascade–Orion agreement, but nearly five additional years of hypothetical future revenue unsupported by any binding contractual commitment.

E. Aggregate Damages

Dr. Pryce's total claimed damages figure aggregates the three supplier-specific calculations as follows:

• Hemsworth Consumer Products LLC: $34,200,000

• Tridale Manufacturing Inc.: $22,800,000

• Orion Lifestyle Brands Corp.: $30,400,000

• Total: $87,400,000

As discussed in detail in Section IV below, Dr. Ostrowski's rebuttal identifies fundamental flaws in each component of this analysis, resulting in a dramatically reduced damages range.

IV. SUMMARY OF DR. OSTROWSKI'S REBUTTAL REPORT (ARCHER & COLVIN CONSULTING GROUP, DECEMBER 22, 2022)

Dr. Ostrowski's rebuttal report is a comprehensive critique of Dr. Pryce's damages methodology and conclusions. The rebuttal is organized around four fundamental flaws that Dr. Ostrowski identifies in the Pryce analysis, each of which independently reduces the provable damages figure. When taken together, these flaws demonstrate that Dr. Pryce's $87.4 million figure overstates Vantor's actual economic loss by a factor of approximately eight to fourteen.

A. Overarching Critique

Dr. Ostrowski identifies four fundamental flaws in the Pryce analysis:

1. Projection of Damages Beyond the Enforceable Contract Terms. Dr. Pryce projects revenue losses for periods of four to six years per supplier, whereas the remaining enforceable exclusivity terms at the time of Cascade's supplier agreements ranged from only five months to thirteen months. The excess projection period — representing the vast majority of Dr. Pryce's damages — is entirely speculative and unsupported by any contractual entitlement.

2. Speculative Renewal Assumptions. Dr. Pryce's extension of the projection period beyond the contract terms rests on the assumption that each supplier would have renewed its exclusive relationship with Vantor. This assumption lacks any contractual basis, is contradicted by the economic realities of the supplier relationships, and relies solely on the subjective expectations of Vantor's own personnel.

3. Failure to Account for Termination-for-Convenience Clauses. All three Vantor supplier agreements contained termination-for-convenience clauses permitting either party to exit the relationship upon specified notice periods. Dr. Pryce's analysis entirely ignores these clauses, even though the documentary record confirms that each supplier in fact exercised its termination right.

4. Failure to Account for Vantor's Duty to Mitigate. Dr. Pryce's analysis applies no offset whatsoever for Vantor's failure to mitigate its damages. California law imposes a duty on the injured party to take reasonable steps to minimize its losses, and the evidence in this case demonstrates that Vantor made only limited efforts to do so.

Dr. Ostrowski's corrected analysis confines provable damages to the remaining exclusive contract terms at the time each supplier entered into an agreement with Cascade, which is the only period during which Vantor held enforceable exclusivity rights. This methodological correction alone accounts for the majority of the difference between the two experts' opinions.

B. Proper Damages Period — Remaining Exclusive Contract Terms

Dr. Ostrowski's analysis rests on the straightforward principle that Vantor's provable economic loss is limited to the period during which it actually held enforceable contractual rights. The remaining exclusive term for each supplier relationship at the time of the corresponding Cascade agreement was as follows:

• Hemsworth: Approximately 9 months remaining (June 1, 2021 to March 14, 2022). The Vantor–Hemsworth exclusive supply agreement was a three-year fixed-term contract that was already in its final year when Cascade entered the picture. As of June 1, 2021, the agreement had less than ten months until its natural expiration.

• Tridale: Approximately 5 months remaining (August 15, 2021 to January 9, 2022). The Vantor–Tridale exclusive supply agreement was a two-year fixed-term contract that was well into its second year when Cascade entered into its agreement with Tridale. By August 15, 2021, the agreement was approaching the end of its natural term.

• Orion: Approximately 13 months remaining (May 10, 2021 to June 30, 2022). The Vantor–Orion exclusive supply agreement had the longest remaining term of the three, but was still in the final third of its four-year duration when Cascade executed its agreement with Orion.

Dr. Ostrowski notes that these remaining-term periods represent the maximum cognizable damages period, absent a showing — which Dr. Pryce has not made with reasonable certainty — that the agreements would have been renewed. Any damages attributable to periods beyond these dates are inherently speculative and should be excluded from the calculation.

C. Damages Range by Supplier (Before Mitigation Adjustment)

Using the corrected damages period, Dr. Ostrowski calculates a range of provable damages for each supplier relationship. The range reflects the difference between a conservative estimate based strictly on the contractual minimum purchase commitments and a more generous estimate that incorporates reasonable incremental volume above those minimums, supported by historical purchasing patterns documented in Vantor's own financial records produced in discovery.

1. Hemsworth: $2.8 Million to $4.9 Million

Dr. Ostrowski limits Hemsworth-related damages to the lost profits that Vantor would have earned during the remaining approximately nine-month exclusive term (June 1, 2021 to March 14, 2022).

At the low end of the range ($2,800,000), Dr. Ostrowski's calculation is based strictly on the minimum annual purchase commitment of $12.5 million specified in the Vantor–Hemsworth agreement, prorated for the nine-month remaining term. Dr. Ostrowski then applies a margin analysis derived from Vantor's historical financial data to convert the revenue figure into a lost-profits figure, accounting for cost of goods sold, variable operating expenses, and other direct costs that Vantor would have incurred in servicing the Hemsworth relationship.

At the high end of the range ($4,900,000), Dr. Ostrowski includes a reasonable estimate of incremental purchase volume above the contractual minimum, based on historical purchasing patterns reflected in Vantor's own financial records produced in discovery. Vantor produced 41,308 documents in this litigation, including detailed purchase order histories and revenue reports that demonstrate actual purchase volumes for each supplier relationship over time. These records indicate that Hemsworth's actual purchases from Vantor typically exceeded the contractual minimum, though not by the margins that Dr. Pryce's projections would imply.

2. Tridale: $1.4 Million to $2.7 Million

Dr. Ostrowski limits Tridale-related damages to the lost profits that Vantor would have earned during the remaining approximately five-month exclusive term (August 15, 2021 to January 9, 2022).

At the low end of the range ($1,400,000), the calculation is based on the minimum annual purchase commitment of $8.3 million specified in the Vantor–Tridale agreement, prorated for the five-month remaining term, with the same margin analysis applied. The shorter remaining term for Tridale significantly limits the provable damages, even under favorable assumptions about purchase volumes.

At the high end of the range ($2,700,000), Dr. Ostrowski includes a reasonable estimate of incremental purchase volume above the contractual minimum, consistent with the historical purchasing patterns documented in Vantor's financial records and corroborated by Tridale's own production records obtained through third-party subpoena.

3. Orion: $1.9 Million to $3.7 Million

Dr. Ostrowski limits Orion-related damages to the lost profits that Vantor would have earned during the remaining approximately thirteen-month exclusive term (May 10, 2021 to June 30, 2022).

At the low end of the range ($1,900,000), the calculation is based on the minimum annual purchase commitment of $14.6 million specified in the Vantor–Orion agreement, prorated for the thirteen-month remaining term, with the standard margin analysis applied. Although the Orion relationship had the longest remaining term of the three, the resulting damages figure is still a small fraction of Dr. Pryce's $30.4 million projection.

At the high end of the range ($3,700,000), Dr. Ostrowski includes reasonable incremental volume above the contractual minimum, supported by historical purchasing patterns in Vantor's records and Orion's subpoena production documents.

4. Aggregate Range (Pre-Mitigation)

When the supplier-specific figures are aggregated, Dr. Ostrowski's pre-mitigation damages range is as follows:

• Low estimate: $2,800,000 + $1,400,000 + $1,900,000 = $6,100,000

• High estimate: $4,900,000 + $2,700,000 + $3,700,000 = $11,300,000

This represents a reduction of approximately 87% (at the high end) to 93% (at the low end) from Dr. Pryce's $87.4 million figure. The magnitude of this reduction is driven almost entirely by the correction of the damages period from Dr. Pryce's speculative multi-year projections to the actual remaining exclusive contract terms.

D. Critique of Pryce's Renewal Assumptions

Dr. Ostrowski devotes substantial attention to rebutting Dr. Pryce's assumption that all three suppliers would have renewed their exclusive relationships with Vantor. This critique rests on several independent grounds.

No Contractual Basis for Renewal. The three Vantor supplier agreements contain no automatic renewal provisions and no right-of-first-refusal language that would have obligated any supplier to renew its agreement with Vantor. The agreements are fixed-term contracts that, by their express terms, expire on their stated dates without any obligation on either party to negotiate or enter into a successor arrangement. The absence of renewal mechanisms is not an oversight; it reflects the parties' deliberate allocation of risk and their mutual understanding that the exclusive relationships were bounded by the stated terms.

Subjective Expectations Are Insufficient. Dr. Pryce's renewal assumption is based solely on the subjective expectation of Vantor's own personnel, principally the testimony of Thomas Brennecke, Vice President of Supplier Relations at Vantor, who was deposed on October 26, 2022. Dr. Pryce cites Mr. Brennecke's testimony about the "longstanding" nature of Vantor's relationships with the three suppliers as support for the proposition that renewals were highly likely. However, Dr. Ostrowski notes that Mr. Brennecke's deposition testimony conceded under cross-examination that no written commitments to renew existed with any of the three suppliers. Mr. Brennecke acknowledged that the suppliers had not provided any assurances — written or oral — that they intended to renew, and that any expectation of renewal was based on his personal assessment of the relationship dynamics rather than on any binding obligation or formal indication of intent.

Under California law, lost profits must be established with "reasonable certainty" and cannot be based on speculation or conjecture. See Sargon Enterprises, Inc. v. University of Southern California, 55 Cal.4th 747, 773–74 (2012). The subjective hope or expectation that a contract will be renewed, in the absence of any contractual obligation or concrete indication of renewal intent from the counterparty, falls short of the reasonable-certainty standard. Projecting four to six years of future revenue beyond the contract term on this basis is precisely the kind of speculative damages analysis that California courts have repeatedly rejected.

Economic Realities Militate Against Renewal. Dr. Ostrowski further points out that the economic realities of the supplier relationships made renewal with Vantor on existing terms unlikely. Cascade offered each of the three suppliers significantly higher annual purchase commitments than Vantor had provided:

• Hemsworth: Cascade's $28.0 million annual commitment versus Vantor's $12.5 million — a 124% increase.

• Tridale: Cascade's $19.5 million annual commitment versus Vantor's $8.3 million — a 135% increase.

• Orion: Cascade's $31.0 million annual commitment versus Vantor's $14.6 million — a 112% increase.

Given these substantial economic differentials, it is not reasonable to assume that the suppliers would have chosen to renew their exclusive relationships with Vantor on existing terms when a competing retailer was prepared to offer commitments that were more than double Vantor's. While Dr. Pryce's report does not address this competitive dynamic, the evidence in the record strongly suggests that the suppliers were motivated by rational economic self-interest in seeking more lucrative distribution arrangements. Dr. Ostrowski's opinion is that Vantor's expectation of renewal, when weighed against the economic incentives facing the suppliers, does not rise to the level of reasonable certainty required to support a lost-profits claim for post-expiration periods.

E. Critique of Pryce's discount Rate

Dr. Pryce applied a uniform discount rate of 8.5% to all three supplier relationships without adequately justifying the selection of this rate. Dr. Ostrowski critiques this choice on the ground that a higher discount rate — in the range of 12% to 15% — would be more appropriate given the speculative nature of the projected cash flows, particularly for the hypothetical renewal periods that constitute the bulk of Dr. Pryce's damages.

Dr. Ostrowski explains that discount rates in a DCF analysis should reflect the risk profile of the projected cash flows. Cash flows from enforceable contractual commitments with known counterparties carry relatively lower risk, and a lower discount rate may be appropriate. However, cash flows from speculative future renewals — which are contingent on the voluntary decisions of third-party suppliers — carry substantially higher risk, and an upward adjustment to the discount rate is warranted to reflect that uncertainty.

That said, Dr. Ostrowski acknowledges that the discount rate issue is of less practical significance in her own analysis, because her methodology confines the damages calculation to the remaining contract terms. Over these shorter time horizons (five to thirteen months), the impact of the discount rate on the present-value calculation is relatively modest. The discount rate dispute is primarily relevant to the critique of Dr. Pryce's multi-year projections, where even a small adjustment in the rate can produce materially different results over a four-to-six-year horizon.

F. Termination-for-Convenience Analysis

A significant independent basis for reducing Vantor's claimed damages is the presence of termination-for-convenience clauses in all three exclusive supply agreements. These clauses permitted either party — including the supplier — to terminate the agreement upon specified prior written notice, without cause and without breach. The notice periods were as follows:

• Hemsworth: 90 days' prior written notice

• Tridale: 60 days' prior written notice

• Orion: 120 days' prior written notice

Dr. Ostrowski's analysis of the documentary record, including third-party subpoena productions totaling 23,567 documents from the three suppliers, confirms that each supplier exercised its termination-for-convenience right prior to entering into its agreement with Cascade. The actual termination-for-convenience notices sent by each supplier to Vantor were produced in response to third-party subpoenas served on the suppliers, and they corroborate that the suppliers independently determined to exit the Vantor relationship on contractual notice, separate and apart from any inducement by Cascade.

The significance of the termination-for-convenience evidence is twofold. First, it demonstrates that the suppliers had a contractual right to exit the Vantor relationship on relatively short notice, independent of any action by Cascade. Even in a but-for world in which Cascade had never approached the suppliers, the suppliers retained the unilateral ability to terminate their exclusive arrangements with Vantor at any time upon the specified notice periods. This further undermines the assumption that the suppliers would have remained in exclusive relationships with Vantor for the multi-year periods projected by Dr. Pryce.

Second, the termination-for-convenience evidence provides an alternative damages framework that further limits Cascade's exposure. Dr. Ostrowski calculates that if the court credits the termination-for-convenience defense — i.e., if the court concludes that the suppliers would have terminated their Vantor agreements on notice regardless of Cascade's involvement — then damages should be limited to the notice period for each supplier plus any reasonable wind-down costs. Under this approach, Dr. Ostrowski calculates total damages of approximately $1.8 million to $3.5 million, depending on assumptions about wind-down costs and transition expenses.

G. Failure-to-Mitigate Analysis

As a further adjustment, Dr. Ostrowski applies a reduction of 40% to 55% to account for Vantor's failure to mitigate its damages by seeking alternative supplier relationships. Under California law, a party claiming damages has a duty to take reasonable steps to minimize its losses, and any damages that could have been avoided through reasonable mitigation efforts are not recoverable. The burden of proving failure to mitigate rests with the defendant, but the evidence in this case provides strong support for this defense.

Dr. Ostrowski identifies the following evidence supporting the application of a mitigation reduction:

Market Availability of Alternative Suppliers. Vantor operates in the wholesale distribution market, serving retail consumers through its network of approximately 85 retail locations across California, Arizona, Nevada, and Oregon. With annual revenue of approximately $1.1 billion, Vantor has significant market presence and purchasing power. The home goods, consumer electronics accessories, and personal care product categories in which Vantor's three suppliers operate are large, competitive markets with numerous alternative suppliers capable of servicing a retailer of Vantor's size. Dr. Ostrowski's analysis identifies no structural barriers that would have prevented Vantor from replacing the lost supplier relationships within a reasonable timeframe.

Vantor's Limited Mitigation Efforts. Deposition testimony from two senior Vantor executives — Deborah Marcelino, Vantor's Chief Financial Officer, and Patricia Sung, Vantor's Chief Operating Officer — indicated that Vantor made limited efforts to identify replacement suppliers during the relevant period. Both witnesses acknowledged that Vantor did not undertake a systematic search for alternative suppliers in the immediate aftermath of learning that Hemsworth, Tridale, and Orion intended to terminate their exclusive relationships.

Delayed Action. Vantor's own interrogatory responses in this litigation acknowledged that the company did not begin actively seeking alternative suppliers until after filing the complaint on September 7, 2021, despite the first Cascade supplier agreement (the Cascade–Orion agreement) having been executed on May 10, 2021 — nearly four months earlier. This delay is significant because it represents a period during which Vantor could have been actively pursuing replacement suppliers to reduce its losses but instead chose not to do so.

Based on these factors, Dr. Ostrowski applies a mitigation reduction in the range of 40% to 55%. When this reduction is applied to the pre-mitigation damages range of $6.1 million to $11.3 million, the provable damages range falls further, to approximately $2.7 million to $6.8 million.

Dr. Ostrowski notes that the precise mitigation reduction is a question of fact for the jury, and she presents the 40% to 55% range as her expert opinion based on the economic evidence and comparable market data. The low end of the range (40%) reflects a conservative assumption that mitigation would have been somewhat difficult given the timing of the supplier transitions, while the high end (55%) reflects the view that Vantor's size, market position, and purchasing power would have enabled relatively swift replacement of the lost supplier relationships.

V. KEY EVIDENTIARY SUPPORT IN THE RECORD

Dr. Ostrowski's rebuttal opinions are grounded in an extensive body of evidentiary material developed through fact discovery and expert discovery in this litigation. This section summarizes the most significant categories of supporting evidence.

A. Depositions

Three depositions are particularly relevant to the damages rebuttal:

Annika Bergström Deposition (October 12, 2022). Ms. Bergström is a senior member of Cascade's supply chain management team and was intimately involved in the execution of Project Atlas. She testified that Cascade's Project Atlas team did not review or request copies of any of the Vantor exclusive supply agreements prior to entering into new agreements with the three suppliers. Ms. Bergström's testimony supports Cascade's lack-of-knowledge defense — i.e., the argument that Cascade was not aware of the specific exclusivity terms in the Vantor agreements and therefore did not intentionally induce the suppliers to breach those agreements. While this testimony is primarily relevant to the liability issues in the case, it also bears on the damages analysis insofar as it undermines the narrative that Cascade deliberately targeted Vantor's supplier relationships.

Thomas Brennecke Deposition (October 26, 2022). Mr. Brennecke is Vantor's Vice President of Supplier Relations and is a key witness for the plaintiff on the question of damages. As discussed above, Mr. Brennecke conceded under cross-examination that no written renewal commitments existed with any of the three suppliers. He acknowledged that the suppliers had not provided any formal indication of intent to renew and that his expectation of renewal was based on the general tenor of the business relationships rather than any concrete commitments. Significantly, Mr. Brennecke also acknowledged that Vantor had been aware of competitive interest from other retailers in its suppliers — an admission that undercuts the suggestion that the suppliers' departures were unexpected or attributable solely to Cascade's conduct.

Lena Torvik Deposition (November 18, 2022). Ms. Torvik is a Cascade executive who oversaw the Project Atlas initiative. She testified about the $4.2 million budget allocated to Project Atlas, the decision-making criteria employed for new supplier selection, and the overall scope and objectives of the initiative. Critically, Ms. Torvik confirmed that Project Atlas was designed to diversify Cascade's supply chain across 25 new suppliers and was not designed to target Vantor specifically. Her testimony provides important context for the argument that Cascade's supplier outreach was a legitimate business initiative rather than a tortious scheme directed at Vantor.

B. Documentary Evidence

The documentary record in this case is extensive. Cascade produced 78,412 documents from a collection of 452,316 documents, of which 198,740 were reviewed for responsiveness and privilege. Cascade's privilege log contains 3,214 entries. Vantor produced 41,308 documents, and the three suppliers produced a combined total of 23,567 documents in response to third-party subpoenas.

Of particular significance to the damages rebuttal is the analysis of internal Project Atlas emails. Out of 2,847 total internal Project Atlas emails reviewed, only 14 reference Vantor's existing supplier relationships. This analysis was documented in our June 30, 2022 internal memorandum. None of the 14 emails demonstrates actual knowledge of the specific exclusivity terms in the Vantor supplier agreements. The emails reference Vantor only in general terms — for example, noting that certain suppliers had existing retail relationships — and do not evidence any intent to induce breach of the exclusivity provisions.

Vantor's financial records, produced as part of the 41,308-document production, include purchase order histories, revenue reports, and margin analyses for each of the three supplier relationships. Dr. Ostrowski relied on these records to develop the historical purchasing patterns that inform the high end of her damages range.

C. Termination Notices

Among the most significant documents in the record are the actual termination-for-convenience notices sent by each of the three suppliers to Vantor. These notices were produced as part of the third-party subpoena productions from Hemsworth, Tridale, and Orion. They corroborate that each supplier independently exercised its contractual termination-for-convenience right prior to entering into its agreement with Cascade. The notices further demonstrate that the suppliers' decisions to exit the Vantor relationship were predicated on legitimate business considerations — including the availability of more favorable terms from competing retailers — and were not induced or directed by Cascade.

The existence and timing of these termination notices are critical to Dr. Ostrowski's termination-for-convenience analysis, which limits damages to the notice period plus wind-down costs and yields a total damages figure of approximately $1.8 million to $3.5 million.

VI. COMPARISON OF EXPERT DAMAGES OPINIONS

The following table presents a side-by-side comparison of the damages opinions of Dr. Pryce and Dr. Ostrowski for each of the three supplier relationships:

The table illustrates the dramatic disparity between the two experts' opinions. Dr. Pryce's aggregate figure of $87.4 million exceeds Dr. Ostrowski's high-end estimate by approximately $76.1 million and exceeds her low-end estimate by approximately $81.3 million.

When additional adjustments are applied, the gap widens further:

• After mitigation reduction (40%–55%): Provable damages range falls to approximately $2.7 million to $6.8 million.

• Under termination-for-convenience theory alone: If the court credits the evidence that each supplier independently exercised its termination-for-convenience right, damages may be limited to the notice period plus wind-down costs, yielding a total of approximately $1.8 million to $3.5 million.

These figures confirm that Dr. Ostrowski's rebuttal, if credited by the trier of fact, would reduce Vantor's claimed damages by a minimum of approximately 87% and potentially by as much as 98%.

VII. IMPLICATIONS FOR SETTLEMENT POSTURE AND TRIAL STRATEGY

A. Damages Exposure

Dr. Ostrowski's rebuttal report significantly reshapes the damages landscape in this litigation. Even if the jury were to credit some portion of Dr. Pryce's analysis — for example, by allowing some degree of post-expiration projection — Dr. Ostrowski's rebuttal provides strong grounds to challenge both the projection period and the mitigation assumptions, dramatically reducing the provable damages.

The wide gap between Dr. Pryce's $87.4 million figure and Dr. Ostrowski's range of $6.1 million to $11.3 million (or $2.7 million to $6.8 million after mitigation) provides Cascade with significant leverage in any settlement negotiations. Vantor's counsel will be aware that the damages opinions are far apart and that a jury presented with both experts' analyses may well credit Dr. Ostrowski's more conservative methodology, particularly given the strength of the underlying contractual evidence (finite terms, no renewal obligations, termination-for-convenience clauses).

We note that Dr. Ostrowski is scheduled for deposition on February 3, 2023, and Dr. Pryce is scheduled for deposition on January 20, 2023. Both depositions will be critical opportunities to solidify the record. Dr. Pryce's deposition, in particular, will be an important forum for challenging his renewal assumptions, discount rate selection, and failure to apply any mitigation offset. Dr. Ostrowski's deposition will require careful preparation to ensure that she can defend her remaining-term methodology and the termination-for-convenience evidence under rigorous cross-examination by Vantor's counsel.

B. Daubert/Kelly Challenges

We recommend that Cascade evaluate whether to file a motion to exclude portions of Dr. Pryce's testimony under the applicable evidentiary standards. In California state court, the relevant framework for challenging expert testimony is set forth in Kelly v. New West Federal Savings (1996) 49 Cal.App.4th 659 and Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747. Under Sargon, the trial court acts as a "gatekeeper" to exclude expert opinion testimony that is based on matter that is not a "reasonably reliable" foundation for the expert's opinion. The court may exclude expert testimony that is based on assumptions not supported by the evidence, speculative in nature, or derived from unreliable methodologies.

Dr. Pryce's speculative renewal period projections are potentially subject to exclusion under the Sargon framework. The assumption that all three suppliers would have renewed their exclusive relationships with Vantor for extended periods of four to six years, in the absence of any contractual renewal obligation or concrete indication of renewal intent, rests on a foundation that may not satisfy the reasonable-reliability standard. Similarly, Dr. Pryce's failure to apply any mitigation offset is an independently challengeable aspect of his methodology. An expert damages analysis that wholly ignores the injured party's duty to mitigate arguably fails to reflect a reliable methodology and may be subject to exclusion or, at a minimum, limitation.

We recommend further analysis of the viability and timing of such a motion and will prepare a separate memorandum on this issue in January 2023.

C. Coordination with Pending Motions

Cascade's motion for partial summary judgment, which is scheduled to be filed on February 28, 2023, addresses the Business and Professions Code § 17200 unfair competition claim and the interference with prospective economic advantage claim, among others. Dr. Ostrowski's analysis provides valuable support for this motion, particularly with respect to the demonstration that any lost profits from prospective (non-contractual) relationships — that is, relationships that would have existed only in the hypothetical post-renewal period — are inherently speculative and insufficient to support a claim for damages.

The partial summary judgment motion can incorporate Dr. Ostrowski's opinion that the only cognizable damages period is the remaining exclusive contract term for each supplier, and that Vantor's claims based on prospective future renewals fail as a matter of law because the alleged lost profits are not established with reasonable certainty. Coordinating the damages rebuttal with the summary judgment briefing will reinforce the consistency of Cascade's legal and economic arguments.

VIII. RECOMMENDATIONS

Based on our analysis of Dr. Ostrowski's rebuttal report and its implications for Cascade's defense, we make the following recommendations:

1. Finalize and Authorize Service of Dr. Ostrowski's Rebuttal Report. Dr. Ostrowski's draft rebuttal report should be reviewed for final corrections, authorized by the client, and served on Vantor's counsel by the December 22, 2022 deadline. We have identified no substantive issues with the report that require revision, and the draft is in final form.

2. Begin Preparation for Dr. Pryce's January 20, 2023 Deposition. Cross-examination of Dr. Pryce should focus on the following areas: (a) the absence of any contractual basis for his renewal assumptions; (b) the specific methodology used to select the 8.5% discount rate and his failure to consider higher rates reflective of the speculative nature of the projected cash flows; (c) his omission of any mitigation analysis and his awareness of the evidence regarding Vantor's failure to seek replacement suppliers; and (d) his treatment (or lack thereof) of the termination-for-convenience clauses. A detailed deposition outline should be prepared no later than January 10, 2023.

3. Prepare Dr. Ostrowski for Her February 3, 2023 Deposition. Dr. Ostrowski's deposition preparation should emphasize the remaining-term methodology, the termination-for-convenience evidence, and the margin and volume analyses that underlie her damages range. We should anticipate that Vantor's counsel will challenge Dr. Ostrowski's mitigation reduction percentages and attempt to elicit concessions regarding the reasonableness of some post-expiration damages. Preparation sessions should be scheduled for the last two weeks of January 2023.

4. Evaluate Potential Sargon Motion. We recommend that the team prepare a separate memorandum evaluating the viability and timing of a motion under Sargon Enterprises, Inc. v. University of Southern California to exclude the speculative portions of Dr. Pryce's testimony. This memorandum should be completed by January 31, 2023, to allow time for any necessary briefing in advance of the expert discovery cutoff and dispositive motion deadlines.

5. Incorporate Damages Rebuttal into Partial Summary Judgment Briefing. The economic analysis set forth in Dr. Ostrowski's rebuttal should be integrated into the partial summary judgment motion to be filed on February 28, 2023, particularly with respect to the arguments that Vantor's claims based on prospective future renewals are too speculative to support a damages award and that the § 17200 and prospective advantage claims fail for lack of provable economic loss.

6. Update Exposure Assessment and Litigation Budget. The litigation exposure assessment and budget memorandum originally prepared on November 15, 2021 should be updated to reflect the refined damages range established by Dr. Ostrowski's rebuttal. The updated assessment should be provided to David Pruitt for review and should incorporate the full range of potential outcomes, from the termination-for-convenience floor ($1.8 million to $3.5 million) to Dr. Ostrowski's pre-mitigation ceiling ($6.1 million to $11.3 million), as well as the residual risk that a jury could credit some portion of Dr. Pryce's analysis. An updated budget projection should account for the anticipated costs of the January and February depositions, the Sargon motion, and the partial summary judgment motion.

We are available to discuss the contents of this memorandum at your convenience and recommend scheduling a meeting before the close of business on December 21, 2022, to obtain final authorization for service of the rebuttal report.

IX. APPENDICES (REFERENCED)

The following appendices are referenced throughout this memorandum and are available as separate attachments to the electronic version of this document:

Appendix A: Detailed timeline of supplier agreement execution dates, termination-for-convenience exercise dates, and Cascade agreement execution dates for all three supplier relationships (Hemsworth, Tridale, and Orion). The timeline includes key milestones such as the initial execution of the Vantor exclusive supply agreements, the dates on which each supplier provided its termination-for-convenience notice to Vantor, the dates on which each Cascade supplier agreement was executed, and the contractual expiration dates of the Vantor agreements.

Appendix B: Table of minimum annual purchase commitments comparing the Vantor agreements and the Cascade agreements for each supplier, including the percentage increase in purchase commitments offered by Cascade. This table supports Dr. Ostrowski's opinion that renewal of the Vantor agreements on existing terms was economically unlikely.

Appendix C: List of key deposition transcript citations from the depositions of Annika Bergström (October 12, 2022), Thomas Brennecke (October 26, 2022), and Lena Torvik (November 18, 2022) supporting Dr. Ostrowski's rebuttal opinions. Citations are organized by topic area, including renewal expectations, mitigation efforts, Project Atlas objectives, and knowledge of exclusivity terms.

Appendix D: Summary chart of the 14 Project Atlas emails (out of 2,847 total) referencing Vantor's supplier relationships, including the date, sender, recipient(s), and a brief description of each email's contents. As documented in our June 30, 2022 internal memorandum, none of the 14 emails demonstrates actual knowledge of the specific exclusivity terms in the Vantor supplier agreements.

This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the addressee and other authorized members of the Calderwood & Harkness LLP litigation team representing Cascade Retail Holdings Inc. in the above-captioned matter. Any unauthorized review, use, disclosure, or distribution is strictly prohibited.

Supplier	Pryce (Plaintiff)	Ostrowski Low	Ostrowski High
Hemsworth Consumer Products LLC	$34,200,000	$2,800,000	$4,900,000
Tridale Manufacturing Inc.	$22,800,000	$1,400,000	$2,700,000
Orion Lifestyle Brands Corp.	$30,400,000	$1,900,000	$3,700,000
Total	$87,400,000	$6,100,000	$11,300,000

CALDERWOOD & HARKNESS LLP 600 South Grand Avenue, Suite 3200 Los Angeles, California 90071 Telephone: (213) 555-7400 | Facsimile: (213) 555-7401
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
December 20, 2022
TO: Douglas Carmichael, Partner
FROM: Yuki Nakamura, Senior Associate; Carlos Espinoza, Associate
RE: Rebuttal of Meridian Forensic Economics LLC Damages Report — Vantor Holdings Corp. v. Cascade Retail Holdings Inc., Case No. 21STCV-34872 (Superior Court of California, County of Los Angeles)
MATTER NO.: 1038-00007
CLIENT: Cascade Retail Holdings Inc.
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I. EXECUTIVE SUMMARY
The purpose of this memorandum is to summarize and analyze the draft rebuttal expert report prepared by Dr. Vivian Ostrowski of Archer & Colvin Consulting Group (701 Fifth Avenue, Suite 4100, Seattle, WA 98104), which is scheduled for final service on opposing counsel on December 22, 2022. This memorandum identifies the key opinions, methodologies, and evidentiary bases set forth in Dr. Ostrowski's rebuttal, and it assesses the implications of her analysis for Cascade Retail Holdings Inc.'s ("Cascade") settlement posture and trial strategy in this matter.
Dr. Ostrowski's rebuttal responds to the damages report served by Dr. Harold Pryce of Meridian Forensic Economics LLC (2049 Century Park East, Suite 1200, Los Angeles, CA 90067) on behalf of Vantor Holdings Corp. ("Vantor") on December 9, 2022. In that report, Dr. Pryce opined that Vantor sustained total damages of $87.4 million, comprised of $34.2 million attributable to the loss of the Hemsworth Consumer Products LLC ("Hemsworth") supplier relationship, $22.8 million attributable to the loss of the Tridale Manufacturing Inc. ("Tridale") supplier relationship, and $30.4 million attributable to the loss of the Orion Lifestyle Brands Corp. ("Orion") supplier relationship. Dr. Pryce's damages calculations are based on projected multi-year revenue streams, extending well beyond the actual expiration dates of the underlying exclusive supply agreements, discounted at a rate of 8.5%.
Dr. Ostrowski's rebuttal report limits provable damages to a range of $6.1 million to $11.3 million — a reduction of approximately 87% to 93% from Dr. Pryce's figure. When additional adjustments for mitigation failure and termination-for-convenience rights are applied, the provable damages range decreases further still.
The key rebuttal themes advanced by Dr. Ostrowski can be summarized as follows:
1. Improper Projection Period. Dr. Pryce improperly projects damages far beyond the remaining exclusive contract terms of the three Vantor supplier agreements. The enforceable exclusivity rights in each agreement had limited remaining durations at the time Cascade entered into its respective agreements with the suppliers, and Dr. Pryce's extension of the projection period by four to six years beyond expiration is unsupported by the contractual terms.
2. Termination-for-Convenience Clauses. Dr. Pryce entirely ignores the termination-for-convenience clauses present in all three of the Vantor supplier agreements. These clauses gave each supplier the independent contractual right to terminate its relationship with Vantor upon specified notice periods, and the documentary record confirms that each supplier in fact exercised that right.
3. Failure to Account for Mitigation. Dr. Pryce fails to account for Vantor's duty to mitigate its damages by seeking alternative supplier relationships. The evidence in the record demonstrates that Vantor made limited efforts to identify replacement suppliers during the relevant period, despite operating in a large wholesale distribution market with numerous available alternatives.
4. Speculative Renewal Assumptions. Dr. Pryce applies speculative assumptions about contract renewals that are unsupported by the evidence. None of the three supplier agreements contains automatic renewal provisions or right-of-first-refusal language, and the only basis for Dr. Pryce's renewal assumption is the subjective expectation of Vantor's own personnel, which is insufficient to establish lost profits with reasonable certainty under California law.
This memorandum details each of these criticisms in the sections that follow, provides a comprehensive comparison of the two experts' damages opinions, and offers recommendations regarding next steps for deposition preparation, motion practice, and settlement strategy.
II. BACKGROUND ON THE SUPPLIER RELATIONSHIPS AT ISSUE
The underlying dispute in this action centers on Vantor's claims that Cascade tortiously interfered with three exclusive supply agreements between Vantor and its suppliers — Hemsworth, Tridale, and Orion — by entering into competing supply arrangements with those same suppliers as part of Cascade's internal supplier-diversification initiative known as "Project Atlas." In order to assess the damages claimed by Vantor and the rebuttal analysis prepared by Dr. Ostrowski, it is necessary to understand the material terms of each supplier relationship.
A. Hemsworth Consumer Products LLC
Hemsworth Consumer Products LLC ("Hemsworth") is an Oregon limited liability company with its principal place of business at 4720 NW Yeon Avenue, Portland, Oregon 97210. Hemsworth's Chief Executive Officer is Janet Kohler. Hemsworth manufactures and distributes home goods and kitchen accessories, including a range of cookware, small kitchen appliances, storage solutions, and related consumer products.
Vantor and Hemsworth entered into an exclusive supply agreement with a three-year term, executed on March 15, 2019, and expiring on March 14, 2022. Under this agreement, Vantor committed to a minimum annual purchase commitment of $12.5 million in exchange for Hemsworth's agreement to supply products to Vantor on an exclusive basis for the retail channels specified in the contract. The agreement contained a termination-for-convenience clause permitting either party to terminate the agreement upon 90 days' prior written notice.
The agreement did not contain any automatic renewal provision, right-of-first-refusal clause, or any other mechanism that would obligate Hemsworth to continue its exclusive relationship with Vantor beyond the March 14, 2022 expiration date. At the time of execution, the parties understood the agreement to be for a defined, finite term.
Cascade entered into a new supply agreement with Hemsworth on June 1, 2021, with a five-year term and an annual purchase commitment of $28.0 million — more than double Vantor's minimum annual purchase commitment under the Vantor–Hemsworth agreement. At the time the Cascade–Hemsworth agreement was executed, the remaining exclusive term of the Vantor–Hemsworth agreement was approximately nine months (from June 1, 2021 to March 14, 2022). This remaining-term figure is critical to the damages analysis, as it represents the only period during which Vantor held enforceable exclusivity rights with respect to Hemsworth.
B. Tridale Manufacturing Inc.
Tridale Manufacturing Inc. ("Tridale") is a Nevada corporation with its principal place of business at 6300 South Pecos Road, Suite 210, Las Vegas, Nevada 89120. Tridale's President is Gregory Fontaine. Tridale manufactures and distributes consumer electronics accessories, including cables, chargers, protective cases, and related products.
Vantor and Tridale entered into an exclusive supply agreement with a two-year term, executed on January 10, 2020, and expiring on January 9, 2022. The agreement provided for a minimum annual purchase commitment of $8.3 million, and Tridale agreed to supply products to Vantor on an exclusive basis within the specified retail channels. The agreement included a termination-for-convenience clause permitting either party to terminate the agreement upon 60 days' prior written notice.
As with the Hemsworth agreement, the Vantor–Tridale agreement contained no automatic renewal provision, right-of-first-refusal language, or any other mechanism that would obligate Tridale to continue its exclusive relationship with Vantor beyond the January 9, 2022 expiration date. The two-year fixed term was the full extent of the parties' binding commitment.
Cascade entered into a new supply agreement with Tridale on August 15, 2021, with a three-year term and an annual purchase commitment of $19.5 million — more than double Vantor's minimum annual purchase commitment under the Vantor–Tridale agreement. At the time the Cascade–Tridale agreement was executed, the remaining exclusive term of the Vantor–Tridale agreement was approximately five months (from August 15, 2021 to January 9, 2022). This five-month window represents the only period during which Vantor held enforceable exclusivity rights with respect to Tridale.
C. Orion Lifestyle Brands Corp.
Orion Lifestyle Brands Corp. ("Orion") is a California corporation with its principal place of business at 1900 Avenue of the Stars, Suite 1050, Los Angeles, California 90067. Orion's Chief Executive Officer is Simone Alvarez. Orion manufactures and distributes personal care and wellness products, including skincare, bath products, and related consumer goods.
Vantor and Orion entered into an exclusive supply agreement with a four-year term, executed on July 1, 2018, and expiring on June 30, 2022. The agreement provided for a minimum annual purchase commitment of $14.6 million, and Orion agreed to supply products to Vantor on an exclusive basis within the specified retail channels. The agreement included a termination-for-convenience clause permitting either party to terminate the agreement upon 120 days' prior written notice.
Consistent with the other two agreements, the Vantor–Orion agreement contained no automatic renewal provision, right-of-first-refusal clause, or similar mechanism that would have obligated Orion to continue its exclusive relationship with Vantor beyond the June 30, 2022 expiration date. The four-year fixed term was the agreed-upon duration of the parties' exclusive arrangement.
Cascade entered into a new supply agreement with Orion on May 10, 2021, with a four-year term and an annual purchase commitment of $31.0 million — more than double Vantor's minimum annual purchase commitment under the Vantor–Orion agreement. At the time the Cascade–Orion agreement was executed, the remaining exclusive term of the Vantor–Orion agreement was approximately thirteen months (from May 10, 2021 to June 30, 2022). This thirteen-month period represents the only window during which Vantor held enforceable exclusivity rights with respect to Orion.
As the foregoing discussion makes clear, the three supplier agreements at issue had materially different remaining terms at the time Cascade entered into its competing arrangements. In each case, the remaining exclusive term was significantly shorter than the projection periods used by Dr. Pryce in his damages analysis — a discrepancy that lies at the heart of Dr. Ostrowski's rebuttal.
III. SUMMARY OF DR. PRYCE'S DAMAGES REPORT (MERIDIAN FORENSIC ECONOMICS LLC, DECEMBER 9, 2022)
On December 9, 2022, Vantor served the expert report of Dr. Harold Pryce of Meridian Forensic Economics LLC, in which Dr. Pryce opined on the total damages allegedly sustained by Vantor as a result of Cascade's interference with the three supplier relationships described above. The following is a summary of the key elements of Dr. Pryce's analysis.
A. Methodology Overview
Dr. Pryce employed a discounted-cash-flow ("DCF") lost-profits model to calculate Vantor's alleged damages. Under this model, Dr. Pryce projected future revenue streams that Vantor would purportedly have earned from its exclusive supply relationships with Hemsworth, Tridale, and Orion, and then discounted those projected streams to present value using a uniform discount rate of 8.5% across all three supplier relationships.
Critically, Dr. Pryce projected damages not only for the remaining contract terms of the three supplier agreements, but for extended hypothetical renewal periods of substantial duration. In each case, Dr. Pryce assumed that the supplier in question would have renewed and expanded its relationship with Vantor absent Cascade's alleged interference. The bases for this renewal assumption are discussed in greater detail below.
Equally significant is what Dr. Pryce's methodology omitted. Dr. Pryce did not apply any mitigation offset to his damages calculations. He did not reduce his damages figures to account for Vantor's ability to replace the lost supplier relationships with alternative suppliers, nor did he consider whether Vantor took reasonable steps to do so. He also did not account for the termination-for-convenience clauses present in all three supplier agreements, which gave the suppliers the independent contractual right to exit the Vantor relationship on notice.
B. Hemsworth Damages Calculation — $34.2 Million
With respect to the Hemsworth relationship, Dr. Pryce projected a five-year revenue stream — that is, a stream extending well beyond the March 14, 2022 contract expiration date. Dr. Pryce assumed that the Hemsworth–Vantor exclusive supply agreement would have been renewed on equivalent or improved terms based on the historical relationship between the two companies. He discounted the projected lost revenue at his selected rate of 8.5%.
The resulting damages figure for the Hemsworth relationship was $34,200,000. This figure encompasses not only the nine months of exclusivity remaining at the time of the Cascade–Hemsworth agreement, but more than four additional years of hypothetical future revenue that Vantor was never contractually entitled to receive.
C. Tridale Damages Calculation — $22.8 Million
With respect to the Tridale relationship, Dr. Pryce projected a four-year revenue stream, again extending far beyond the January 9, 2022 contract expiration date. Dr. Pryce assumed that the Tridale–Vantor exclusive supply agreement would have been renewed on equivalent or improved terms. He applied the same 8.5% discount rate.
The resulting damages figure for the Tridale relationship was $22,800,000. This figure encompasses not only the five months of exclusivity remaining at the time of the Cascade–Tridale agreement, but more than three additional years of hypothetical future revenue for which no contractual basis existed.
D. Orion Damages Calculation — $30.4 Million
With respect to the Orion relationship, Dr. Pryce projected a six-year revenue stream, extending well beyond the June 30, 2022 contract expiration date. Dr. Pryce assumed that the Orion–Vantor exclusive supply agreement would have been renewed on expanded terms, reflecting an anticipated growth trajectory in Vantor's personal care and wellness product line. The same 8.5% discount rate was applied.
The resulting damages figure for the Orion relationship was $30,400,000. This figure encompasses not only the thirteen months of exclusivity remaining at the time of the Cascade–Orion agreement, but nearly five additional years of hypothetical future revenue unsupported by any binding contractual commitment.
E. Aggregate Damages
Dr. Pryce's total claimed damages figure aggregates the three supplier-specific calculations as follows:
• Hemsworth Consumer Products LLC: $34,200,000
• Tridale Manufacturing Inc.: $22,800,000
• Orion Lifestyle Brands Corp.: $30,400,000
• Total: $87,400,000
As discussed in detail in Section IV below, Dr. Ostrowski's rebuttal identifies fundamental flaws in each component of this analysis, resulting in a dramatically reduced damages range.
IV. SUMMARY OF DR. OSTROWSKI'S REBUTTAL REPORT (ARCHER & COLVIN CONSULTING GROUP, DECEMBER 22, 2022)
Dr. Ostrowski's rebuttal report is a comprehensive critique of Dr. Pryce's damages methodology and conclusions. The rebuttal is organized around four fundamental flaws that Dr. Ostrowski identifies in the Pryce analysis, each of which independently reduces the provable damages figure. When taken together, these flaws demonstrate that Dr. Pryce's $87.4 million figure overstates Vantor's actual economic loss by a factor of approximately eight to fourteen.
A. Overarching Critique
Dr. Ostrowski identifies four fundamental flaws in the Pryce analysis:
1. Projection of Damages Beyond the Enforceable Contract Terms. Dr. Pryce projects revenue losses for periods of four to six years per supplier, whereas the remaining enforceable exclusivity terms at the time of Cascade's supplier agreements ranged from only five months to thirteen months. The excess projection period — representing the vast majority of Dr. Pryce's damages — is entirely speculative and unsupported by any contractual entitlement.
2. Speculative Renewal Assumptions. Dr. Pryce's extension of the projection period beyond the contract terms rests on the assumption that each supplier would have renewed its exclusive relationship with Vantor. This assumption lacks any contractual basis, is contradicted by the economic realities of the supplier relationships, and relies solely on the subjective expectations of Vantor's own personnel.
3. Failure to Account for Termination-for-Convenience Clauses. All three Vantor supplier agreements contained termination-for-convenience clauses permitting either party to exit the relationship upon specified notice periods. Dr. Pryce's analysis entirely ignores these clauses, even though the documentary record confirms that each supplier in fact exercised its termination right.
4. Failure to Account for Vantor's Duty to Mitigate. Dr. Pryce's analysis applies no offset whatsoever for Vantor's failure to mitigate its damages. California law imposes a duty on the injured party to take reasonable steps to minimize its losses, and the evidence in this case demonstrates that Vantor made only limited efforts to do so.
Dr. Ostrowski's corrected analysis confines provable damages to the remaining exclusive contract terms at the time each supplier entered into an agreement with Cascade, which is the only period during which Vantor held enforceable exclusivity rights. This methodological correction alone accounts for the majority of the difference between the two experts' opinions.
B. Proper Damages Period — Remaining Exclusive Contract Terms
Dr. Ostrowski's analysis rests on the straightforward principle that Vantor's provable economic loss is limited to the period during which it actually held enforceable contractual rights. The remaining exclusive term for each supplier relationship at the time of the corresponding Cascade agreement was as follows:
• Hemsworth: Approximately 9 months remaining (June 1, 2021 to March 14, 2022). The Vantor–Hemsworth exclusive supply agreement was a three-year fixed-term contract that was already in its final year when Cascade entered the picture. As of June 1, 2021, the agreement had less than ten months until its natural expiration.
• Tridale: Approximately 5 months remaining (August 15, 2021 to January 9, 2022). The Vantor–Tridale exclusive supply agreement was a two-year fixed-term contract that was well into its second year when Cascade entered into its agreement with Tridale. By August 15, 2021, the agreement was approaching the end of its natural term.
• Orion: Approximately 13 months remaining (May 10, 2021 to June 30, 2022). The Vantor–Orion exclusive supply agreement had the longest remaining term of the three, but was still in the final third of its four-year duration when Cascade executed its agreement with Orion.
Dr. Ostrowski notes that these remaining-term periods represent the maximum cognizable damages period, absent a showing — which Dr. Pryce has not made with reasonable certainty — that the agreements would have been renewed. Any damages attributable to periods beyond these dates are inherently speculative and should be excluded from the calculation.
C. Damages Range by Supplier (Before Mitigation Adjustment)
Using the corrected damages period, Dr. Ostrowski calculates a range of provable damages for each supplier relationship. The range reflects the difference between a conservative estimate based strictly on the contractual minimum purchase commitments and a more generous estimate that incorporates reasonable incremental volume above those minimums, supported by historical purchasing patterns documented in Vantor's own financial records produced in discovery.
1. Hemsworth: $2.8 Million to $4.9 Million
Dr. Ostrowski limits Hemsworth-related damages to the lost profits that Vantor would have earned during the remaining approximately nine-month exclusive term (June 1, 2021 to March 14, 2022).
At the low end of the range ($2,800,000), Dr. Ostrowski's calculation is based strictly on the minimum annual purchase commitment of $12.5 million specified in the Vantor–Hemsworth agreement, prorated for the nine-month remaining term. Dr. Ostrowski then applies a margin analysis derived from Vantor's historical financial data to convert the revenue figure into a lost-profits figure, accounting for cost of goods sold, variable operating expenses, and other direct costs that Vantor would have incurred in servicing the Hemsworth relationship.
At the high end of the range ($4,900,000), Dr. Ostrowski includes a reasonable estimate of incremental purchase volume above the contractual minimum, based on historical purchasing patterns reflected in Vantor's own financial records produced in discovery. Vantor produced 41,308 documents in this litigation, including detailed purchase order histories and revenue reports that demonstrate actual purchase volumes for each supplier relationship over time. These records indicate that Hemsworth's actual purchases from Vantor typically exceeded the contractual minimum, though not by the margins that Dr. Pryce's projections would imply.
2. Tridale: $1.4 Million to $2.7 Million
Dr. Ostrowski limits Tridale-related damages to the lost profits that Vantor would have earned during the remaining approximately five-month exclusive term (August 15, 2021 to January 9, 2022).
At the low end of the range ($1,400,000), the calculation is based on the minimum annual purchase commitment of $8.3 million specified in the Vantor–Tridale agreement, prorated for the five-month remaining term, with the same margin analysis applied. The shorter remaining term for Tridale significantly limits the provable damages, even under favorable assumptions about purchase volumes.
At the high end of the range ($2,700,000), Dr. Ostrowski includes a reasonable estimate of incremental purchase volume above the contractual minimum, consistent with the historical purchasing patterns documented in Vantor's financial records and corroborated by Tridale's own production records obtained through third-party subpoena.
3. Orion: $1.9 Million to $3.7 Million
Dr. Ostrowski limits Orion-related damages to the lost profits that Vantor would have earned during the remaining approximately thirteen-month exclusive term (May 10, 2021 to June 30, 2022).
At the low end of the range ($1,900,000), the calculation is based on the minimum annual purchase commitment of $14.6 million specified in the Vantor–Orion agreement, prorated for the thirteen-month remaining term, with the standard margin analysis applied. Although the Orion relationship had the longest remaining term of the three, the resulting damages figure is still a small fraction of Dr. Pryce's $30.4 million projection.
At the high end of the range ($3,700,000), Dr. Ostrowski includes reasonable incremental volume above the contractual minimum, supported by historical purchasing patterns in Vantor's records and Orion's subpoena production documents.
4. Aggregate Range (Pre-Mitigation)
When the supplier-specific figures are aggregated, Dr. Ostrowski's pre-mitigation damages range is as follows:
• Low estimate: $2,800,000 + $1,400,000 + $1,900,000 = $6,100,000
• High estimate: $4,900,000 + $2,700,000 + $3,700,000 = $11,300,000
This represents a reduction of approximately 87% (at the high end) to 93% (at the low end) from Dr. Pryce's $87.4 million figure. The magnitude of this reduction is driven almost entirely by the correction of the damages period from Dr. Pryce's speculative multi-year projections to the actual remaining exclusive contract terms.
D. Critique of Pryce's Renewal Assumptions
Dr. Ostrowski devotes substantial attention to rebutting Dr. Pryce's assumption that all three suppliers would have renewed their exclusive relationships with Vantor. This critique rests on several independent grounds.
No Contractual Basis for Renewal. The three Vantor supplier agreements contain no automatic renewal provisions and no right-of-first-refusal language that would have obligated any supplier to renew its agreement with Vantor. The agreements are fixed-term contracts that, by their express terms, expire on their stated dates without any obligation on either party to negotiate or enter into a successor arrangement. The absence of renewal mechanisms is not an oversight; it reflects the parties' deliberate allocation of risk and their mutual understanding that the exclusive relationships were bounded by the stated terms.
Subjective Expectations Are Insufficient. Dr. Pryce's renewal assumption is based solely on the subjective expectation of Vantor's own personnel, principally the testimony of Thomas Brennecke, Vice President of Supplier Relations at Vantor, who was deposed on October 26, 2022. Dr. Pryce cites Mr. Brennecke's testimony about the "longstanding" nature of Vantor's relationships with the three suppliers as support for the proposition that renewals were highly likely. However, Dr. Ostrowski notes that Mr. Brennecke's deposition testimony conceded under cross-examination that no written commitments to renew existed with any of the three suppliers. Mr. Brennecke acknowledged that the suppliers had not provided any assurances — written or oral — that they intended to renew, and that any expectation of renewal was based on his personal assessment of the relationship dynamics rather than on any binding obligation or formal indication of intent.
Under California law, lost profits must be established with "reasonable certainty" and cannot be based on speculation or conjecture. See Sargon Enterprises, Inc. v. University of Southern California, 55 Cal.4th 747, 773–74 (2012). The subjective hope or expectation that a contract will be renewed, in the absence of any contractual obligation or concrete indication of renewal intent from the counterparty, falls short of the reasonable-certainty standard. Projecting four to six years of future revenue beyond the contract term on this basis is precisely the kind of speculative damages analysis that California courts have repeatedly rejected.
Economic Realities Militate Against Renewal. Dr. Ostrowski further points out that the economic realities of the supplier relationships made renewal with Vantor on existing terms unlikely. Cascade offered each of the three suppliers significantly higher annual purchase commitments than Vantor had provided:
• Hemsworth: Cascade's $28.0 million annual commitment versus Vantor's $12.5 million — a 124% increase.
• Tridale: Cascade's $19.5 million annual commitment versus Vantor's $8.3 million — a 135% increase.
• Orion: Cascade's $31.0 million annual commitment versus Vantor's $14.6 million — a 112% increase.
Given these substantial economic differentials, it is not reasonable to assume that the suppliers would have chosen to renew their exclusive relationships with Vantor on existing terms when a competing retailer was prepared to offer commitments that were more than double Vantor's. While Dr. Pryce's report does not address this competitive dynamic, the evidence in the record strongly suggests that the suppliers were motivated by rational economic self-interest in seeking more lucrative distribution arrangements. Dr. Ostrowski's opinion is that Vantor's expectation of renewal, when weighed against the economic incentives facing the suppliers, does not rise to the level of reasonable certainty required to support a lost-profits claim for post-expiration periods.
E. Critique of Pryce's discount Rate
Dr. Pryce applied a uniform discount rate of 8.5% to all three supplier relationships without adequately justifying the selection of this rate. Dr. Ostrowski critiques this choice on the ground that a higher discount rate — in the range of 12% to 15% — would be more appropriate given the speculative nature of the projected cash flows, particularly for the hypothetical renewal periods that constitute the bulk of Dr. Pryce's damages.
Dr. Ostrowski explains that discount rates in a DCF analysis should reflect the risk profile of the projected cash flows. Cash flows from enforceable contractual commitments with known counterparties carry relatively lower risk, and a lower discount rate may be appropriate. However, cash flows from speculative future renewals — which are contingent on the voluntary decisions of third-party suppliers — carry substantially higher risk, and an upward adjustment to the discount rate is warranted to reflect that uncertainty.
That said, Dr. Ostrowski acknowledges that the discount rate issue is of less practical significance in her own analysis, because her methodology confines the damages calculation to the remaining contract terms. Over these shorter time horizons (five to thirteen months), the impact of the discount rate on the present-value calculation is relatively modest. The discount rate dispute is primarily relevant to the critique of Dr. Pryce's multi-year projections, where even a small adjustment in the rate can produce materially different results over a four-to-six-year horizon.
F. Termination-for-Convenience Analysis
A significant independent basis for reducing Vantor's claimed damages is the presence of termination-for-convenience clauses in all three exclusive supply agreements. These clauses permitted either party — including the supplier — to terminate the agreement upon specified prior written notice, without cause and without breach. The notice periods were as follows:
• Hemsworth: 90 days' prior written notice
• Tridale: 60 days' prior written notice
• Orion: 120 days' prior written notice
Dr. Ostrowski's analysis of the documentary record, including third-party subpoena productions totaling 23,567 documents from the three suppliers, confirms that each supplier exercised its termination-for-convenience right prior to entering into its agreement with Cascade. The actual termination-for-convenience notices sent by each supplier to Vantor were produced in response to third-party subpoenas served on the suppliers, and they corroborate that the suppliers independently determined to exit the Vantor relationship on contractual notice, separate and apart from any inducement by Cascade.
The significance of the termination-for-convenience evidence is twofold. First, it demonstrates that the suppliers had a contractual right to exit the Vantor relationship on relatively short notice, independent of any action by Cascade. Even in a but-for world in which Cascade had never approached the suppliers, the suppliers retained the unilateral ability to terminate their exclusive arrangements with Vantor at any time upon the specified notice periods. This further undermines the assumption that the suppliers would have remained in exclusive relationships with Vantor for the multi-year periods projected by Dr. Pryce.
Second, the termination-for-convenience evidence provides an alternative damages framework that further limits Cascade's exposure. Dr. Ostrowski calculates that if the court credits the termination-for-convenience defense — i.e., if the court concludes that the suppliers would have terminated their Vantor agreements on notice regardless of Cascade's involvement — then damages should be limited to the notice period for each supplier plus any reasonable wind-down costs. Under this approach, Dr. Ostrowski calculates total damages of approximately $1.8 million to $3.5 million, depending on assumptions about wind-down costs and transition expenses.
G. Failure-to-Mitigate Analysis
As a further adjustment, Dr. Ostrowski applies a reduction of 40% to 55% to account for Vantor's failure to mitigate its damages by seeking alternative supplier relationships. Under California law, a party claiming damages has a duty to take reasonable steps to minimize its losses, and any damages that could have been avoided through reasonable mitigation efforts are not recoverable. The burden of proving failure to mitigate rests with the defendant, but the evidence in this case provides strong support for this defense.
Dr. Ostrowski identifies the following evidence supporting the application of a mitigation reduction:
Market Availability of Alternative Suppliers. Vantor operates in the wholesale distribution market, serving retail consumers through its network of approximately 85 retail locations across California, Arizona, Nevada, and Oregon. With annual revenue of approximately $1.1 billion, Vantor has significant market presence and purchasing power. The home goods, consumer electronics accessories, and personal care product categories in which Vantor's three suppliers operate are large, competitive markets with numerous alternative suppliers capable of servicing a retailer of Vantor's size. Dr. Ostrowski's analysis identifies no structural barriers that would have prevented Vantor from replacing the lost supplier relationships within a reasonable timeframe.
Vantor's Limited Mitigation Efforts. Deposition testimony from two senior Vantor executives — Deborah Marcelino, Vantor's Chief Financial Officer, and Patricia Sung, Vantor's Chief Operating Officer — indicated that Vantor made limited efforts to identify replacement suppliers during the relevant period. Both witnesses acknowledged that Vantor did not undertake a systematic search for alternative suppliers in the immediate aftermath of learning that Hemsworth, Tridale, and Orion intended to terminate their exclusive relationships.
Delayed Action. Vantor's own interrogatory responses in this litigation acknowledged that the company did not begin actively seeking alternative suppliers until after filing the complaint on September 7, 2021, despite the first Cascade supplier agreement (the Cascade–Orion agreement) having been executed on May 10, 2021 — nearly four months earlier. This delay is significant because it represents a period during which Vantor could have been actively pursuing replacement suppliers to reduce its losses but instead chose not to do so.
Based on these factors, Dr. Ostrowski applies a mitigation reduction in the range of 40% to 55%. When this reduction is applied to the pre-mitigation damages range of $6.1 million to $11.3 million, the provable damages range falls further, to approximately $2.7 million to $6.8 million.
Dr. Ostrowski notes that the precise mitigation reduction is a question of fact for the jury, and she presents the 40% to 55% range as her expert opinion based on the economic evidence and comparable market data. The low end of the range (40%) reflects a conservative assumption that mitigation would have been somewhat difficult given the timing of the supplier transitions, while the high end (55%) reflects the view that Vantor's size, market position, and purchasing power would have enabled relatively swift replacement of the lost supplier relationships.
V. KEY EVIDENTIARY SUPPORT IN THE RECORD
Dr. Ostrowski's rebuttal opinions are grounded in an extensive body of evidentiary material developed through fact discovery and expert discovery in this litigation. This section summarizes the most significant categories of supporting evidence.
A. Depositions
Three depositions are particularly relevant to the damages rebuttal:
Annika Bergström Deposition (October 12, 2022). Ms. Bergström is a senior member of Cascade's supply chain management team and was intimately involved in the execution of Project Atlas. She testified that Cascade's Project Atlas team did not review or request copies of any of the Vantor exclusive supply agreements prior to entering into new agreements with the three suppliers. Ms. Bergström's testimony supports Cascade's lack-of-knowledge defense — i.e., the argument that Cascade was not aware of the specific exclusivity terms in the Vantor agreements and therefore did not intentionally induce the suppliers to breach those agreements. While this testimony is primarily relevant to the liability issues in the case, it also bears on the damages analysis insofar as it undermines the narrative that Cascade deliberately targeted Vantor's supplier relationships.
Thomas Brennecke Deposition (October 26, 2022). Mr. Brennecke is Vantor's Vice President of Supplier Relations and is a key witness for the plaintiff on the question of damages. As discussed above, Mr. Brennecke conceded under cross-examination that no written renewal commitments existed with any of the three suppliers. He acknowledged that the suppliers had not provided any formal indication of intent to renew and that his expectation of renewal was based on the general tenor of the business relationships rather than any concrete commitments. Significantly, Mr. Brennecke also acknowledged that Vantor had been aware of competitive interest from other retailers in its suppliers — an admission that undercuts the suggestion that the suppliers' departures were unexpected or attributable solely to Cascade's conduct.
Lena Torvik Deposition (November 18, 2022). Ms. Torvik is a Cascade executive who oversaw the Project Atlas initiative. She testified about the $4.2 million budget allocated to Project Atlas, the decision-making criteria employed for new supplier selection, and the overall scope and objectives of the initiative. Critically, Ms. Torvik confirmed that Project Atlas was designed to diversify Cascade's supply chain across 25 new suppliers and was not designed to target Vantor specifically. Her testimony provides important context for the argument that Cascade's supplier outreach was a legitimate business initiative rather than a tortious scheme directed at Vantor.
B. Documentary Evidence
The documentary record in this case is extensive. Cascade produced 78,412 documents from a collection of 452,316 documents, of which 198,740 were reviewed for responsiveness and privilege. Cascade's privilege log contains 3,214 entries. Vantor produced 41,308 documents, and the three suppliers produced a combined total of 23,567 documents in response to third-party subpoenas.
Of particular significance to the damages rebuttal is the analysis of internal Project Atlas emails. Out of 2,847 total internal Project Atlas emails reviewed, only 14 reference Vantor's existing supplier relationships. This analysis was documented in our June 30, 2022 internal memorandum. None of the 14 emails demonstrates actual knowledge of the specific exclusivity terms in the Vantor supplier agreements. The emails reference Vantor only in general terms — for example, noting that certain suppliers had existing retail relationships — and do not evidence any intent to induce breach of the exclusivity provisions.
Vantor's financial records, produced as part of the 41,308-document production, include purchase order histories, revenue reports, and margin analyses for each of the three supplier relationships. Dr. Ostrowski relied on these records to develop the historical purchasing patterns that inform the high end of her damages range.
C. Termination Notices
Among the most significant documents in the record are the actual termination-for-convenience notices sent by each of the three suppliers to Vantor. These notices were produced as part of the third-party subpoena productions from Hemsworth, Tridale, and Orion. They corroborate that each supplier independently exercised its contractual termination-for-convenience right prior to entering into its agreement with Cascade. The notices further demonstrate that the suppliers' decisions to exit the Vantor relationship were predicated on legitimate business considerations — including the availability of more favorable terms from competing retailers — and were not induced or directed by Cascade.
The existence and timing of these termination notices are critical to Dr. Ostrowski's termination-for-convenience analysis, which limits damages to the notice period plus wind-down costs and yields a total damages figure of approximately $1.8 million to $3.5 million.
VI. COMPARISON OF EXPERT DAMAGES OPINIONS
The following table presents a side-by-side comparison of the damages opinions of Dr. Pryce and Dr. Ostrowski for each of the three supplier relationships:
The table illustrates the dramatic disparity between the two experts' opinions. Dr. Pryce's aggregate figure of $87.4 million exceeds Dr. Ostrowski's high-end estimate by approximately $76.1 million and exceeds her low-end estimate by approximately $81.3 million.
When additional adjustments are applied, the gap widens further:
• After mitigation reduction (40%–55%): Provable damages range falls to approximately $2.7 million to $6.8 million.
• Under termination-for-convenience theory alone: If the court credits the evidence that each supplier independently exercised its termination-for-convenience right, damages may be limited to the notice period plus wind-down costs, yielding a total of approximately $1.8 million to $3.5 million.
These figures confirm that Dr. Ostrowski's rebuttal, if credited by the trier of fact, would reduce Vantor's claimed damages by a minimum of approximately 87% and potentially by as much as 98%.
VII. IMPLICATIONS FOR SETTLEMENT POSTURE AND TRIAL STRATEGY
A. Damages Exposure
Dr. Ostrowski's rebuttal report significantly reshapes the damages landscape in this litigation. Even if the jury were to credit some portion of Dr. Pryce's analysis — for example, by allowing some degree of post-expiration projection — Dr. Ostrowski's rebuttal provides strong grounds to challenge both the projection period and the mitigation assumptions, dramatically reducing the provable damages.
The wide gap between Dr. Pryce's $87.4 million figure and Dr. Ostrowski's range of $6.1 million to $11.3 million (or $2.7 million to $6.8 million after mitigation) provides Cascade with significant leverage in any settlement negotiations. Vantor's counsel will be aware that the damages opinions are far apart and that a jury presented with both experts' analyses may well credit Dr. Ostrowski's more conservative methodology, particularly given the strength of the underlying contractual evidence (finite terms, no renewal obligations, termination-for-convenience clauses).
We note that Dr. Ostrowski is scheduled for deposition on February 3, 2023, and Dr. Pryce is scheduled for deposition on January 20, 2023. Both depositions will be critical opportunities to solidify the record. Dr. Pryce's deposition, in particular, will be an important forum for challenging his renewal assumptions, discount rate selection, and failure to apply any mitigation offset. Dr. Ostrowski's deposition will require careful preparation to ensure that she can defend her remaining-term methodology and the termination-for-convenience evidence under rigorous cross-examination by Vantor's counsel.
B. Daubert/Kelly Challenges
We recommend that Cascade evaluate whether to file a motion to exclude portions of Dr. Pryce's testimony under the applicable evidentiary standards. In California state court, the relevant framework for challenging expert testimony is set forth in Kelly v. New West Federal Savings (1996) 49 Cal.App.4th 659 and Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747. Under Sargon, the trial court acts as a "gatekeeper" to exclude expert opinion testimony that is based on matter that is not a "reasonably reliable" foundation for the expert's opinion. The court may exclude expert testimony that is based on assumptions not supported by the evidence, speculative in nature, or derived from unreliable methodologies.
Dr. Pryce's speculative renewal period projections are potentially subject to exclusion under the Sargon framework. The assumption that all three suppliers would have renewed their exclusive relationships with Vantor for extended periods of four to six years, in the absence of any contractual renewal obligation or concrete indication of renewal intent, rests on a foundation that may not satisfy the reasonable-reliability standard. Similarly, Dr. Pryce's failure to apply any mitigation offset is an independently challengeable aspect of his methodology. An expert damages analysis that wholly ignores the injured party's duty to mitigate arguably fails to reflect a reliable methodology and may be subject to exclusion or, at a minimum, limitation.
We recommend further analysis of the viability and timing of such a motion and will prepare a separate memorandum on this issue in January 2023.
C. Coordination with Pending Motions
Cascade's motion for partial summary judgment, which is scheduled to be filed on February 28, 2023, addresses the Business and Professions Code § 17200 unfair competition claim and the interference with prospective economic advantage claim, among others. Dr. Ostrowski's analysis provides valuable support for this motion, particularly with respect to the demonstration that any lost profits from prospective (non-contractual) relationships — that is, relationships that would have existed only in the hypothetical post-renewal period — are inherently speculative and insufficient to support a claim for damages.
The partial summary judgment motion can incorporate Dr. Ostrowski's opinion that the only cognizable damages period is the remaining exclusive contract term for each supplier, and that Vantor's claims based on prospective future renewals fail as a matter of law because the alleged lost profits are not established with reasonable certainty. Coordinating the damages rebuttal with the summary judgment briefing will reinforce the consistency of Cascade's legal and economic arguments.
VIII. RECOMMENDATIONS
Based on our analysis of Dr. Ostrowski's rebuttal report and its implications for Cascade's defense, we make the following recommendations:
1. Finalize and Authorize Service of Dr. Ostrowski's Rebuttal Report. Dr. Ostrowski's draft rebuttal report should be reviewed for final corrections, authorized by the client, and served on Vantor's counsel by the December 22, 2022 deadline. We have identified no substantive issues with the report that require revision, and the draft is in final form.
2. Begin Preparation for Dr. Pryce's January 20, 2023 Deposition. Cross-examination of Dr. Pryce should focus on the following areas: (a) the absence of any contractual basis for his renewal assumptions; (b) the specific methodology used to select the 8.5% discount rate and his failure to consider higher rates reflective of the speculative nature of the projected cash flows; (c) his omission of any mitigation analysis and his awareness of the evidence regarding Vantor's failure to seek replacement suppliers; and (d) his treatment (or lack thereof) of the termination-for-convenience clauses. A detailed deposition outline should be prepared no later than January 10, 2023.
3. Prepare Dr. Ostrowski for Her February 3, 2023 Deposition. Dr. Ostrowski's deposition preparation should emphasize the remaining-term methodology, the termination-for-convenience evidence, and the margin and volume analyses that underlie her damages range. We should anticipate that Vantor's counsel will challenge Dr. Ostrowski's mitigation reduction percentages and attempt to elicit concessions regarding the reasonableness of some post-expiration damages. Preparation sessions should be scheduled for the last two weeks of January 2023.
4. Evaluate Potential Sargon Motion. We recommend that the team prepare a separate memorandum evaluating the viability and timing of a motion under Sargon Enterprises, Inc. v. University of Southern California to exclude the speculative portions of Dr. Pryce's testimony. This memorandum should be completed by January 31, 2023, to allow time for any necessary briefing in advance of the expert discovery cutoff and dispositive motion deadlines.
5. Incorporate Damages Rebuttal into Partial Summary Judgment Briefing. The economic analysis set forth in Dr. Ostrowski's rebuttal should be integrated into the partial summary judgment motion to be filed on February 28, 2023, particularly with respect to the arguments that Vantor's claims based on prospective future renewals are too speculative to support a damages award and that the § 17200 and prospective advantage claims fail for lack of provable economic loss.
6. Update Exposure Assessment and Litigation Budget. The litigation exposure assessment and budget memorandum originally prepared on November 15, 2021 should be updated to reflect the refined damages range established by Dr. Ostrowski's rebuttal. The updated assessment should be provided to David Pruitt for review and should incorporate the full range of potential outcomes, from the termination-for-convenience floor ($1.8 million to $3.5 million) to Dr. Ostrowski's pre-mitigation ceiling ($6.1 million to $11.3 million), as well as the residual risk that a jury could credit some portion of Dr. Pryce's analysis. An updated budget projection should account for the anticipated costs of the January and February depositions, the Sargon motion, and the partial summary judgment motion.
We are available to discuss the contents of this memorandum at your convenience and recommend scheduling a meeting before the close of business on December 21, 2022, to obtain final authorization for service of the rebuttal report.
IX. APPENDICES (REFERENCED)
The following appendices are referenced throughout this memorandum and are available as separate attachments to the electronic version of this document:
Appendix A: Detailed timeline of supplier agreement execution dates, termination-for-convenience exercise dates, and Cascade agreement execution dates for all three supplier relationships (Hemsworth, Tridale, and Orion). The timeline includes key milestones such as the initial execution of the Vantor exclusive supply agreements, the dates on which each supplier provided its termination-for-convenience notice to Vantor, the dates on which each Cascade supplier agreement was executed, and the contractual expiration dates of the Vantor agreements.
Appendix B: Table of minimum annual purchase commitments comparing the Vantor agreements and the Cascade agreements for each supplier, including the percentage increase in purchase commitments offered by Cascade. This table supports Dr. Ostrowski's opinion that renewal of the Vantor agreements on existing terms was economically unlikely.
Appendix C: List of key deposition transcript citations from the depositions of Annika Bergström (October 12, 2022), Thomas Brennecke (October 26, 2022), and Lena Torvik (November 18, 2022) supporting Dr. Ostrowski's rebuttal opinions. Citations are organized by topic area, including renewal expectations, mitigation efforts, Project Atlas objectives, and knowledge of exclusivity terms.
Appendix D: Summary chart of the 14 Project Atlas emails (out of 2,847 total) referencing Vantor's supplier relationships, including the date, sender, recipient(s), and a brief description of each email's contents. As documented in our June 30, 2022 internal memorandum, none of the 14 emails demonstrates actual knowledge of the specific exclusivity terms in the Vantor supplier agreements.
This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the addressee and other authorized members of the Calderwood & Harkness LLP litigation team representing Cascade Retail Holdings Inc. in the above-captioned matter. Any unauthorized review, use, disclosure, or distribution is strictly prohibited.
Supplier | Pryce (Plaintiff) | Ostrowski Low | Ostrowski High
Hemsworth Consumer Products LLC | $34,200,000 | $2,800,000 | $4,900,000
Tridale Manufacturing Inc. | $22,800,000 | $1,400,000 | $2,700,000
Orion Lifestyle Brands Corp. | $30,400,000 | $1,900,000 | $3,700,000
Total | $87,400,000 | $6,100,000 | $11,300,000

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MATTER NO.: 1038-00007

I. EXECUTIVE SUMMARY

II. BACKGROUND ON THE SUPPLIER RELATIONSHIPS AT ISSUE

V. KEY EVIDENTIARY SUPPORT IN THE RECORD

VI. COMPARISON OF EXPERT DAMAGES OPINIONS

VII. IMPLICATIONS FOR SETTLEMENT POSTURE AND TRIAL STRATEGY

VIII. RECOMMENDATIONS

IX. APPENDICES (REFERENCED)

Record

Parties

Dates

Amounts