SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
VANTOR HOLDINGS CORP., a California corporation,
Plaintiff,
v.
CASCADE RETAIL HOLDINGS INC., a Delaware corporation,
Defendant.
Case No. 21STCV-34872
DEFENDANT CASCADE RETAIL HOLDINGS INC.'S OPPOSITION TO PLAINTIFF'S MOTION TO COMPEL CLASS-CERTIFICATION-STYLE EXPANDED DISCOVERY
Attorneys for Defendant Cascade Retail Holdings Inc.:
Douglas Carmichael (SBN 184729), Partner Francesca Morano (SBN 206418), Partner Yuki Nakamura (SBN 297563), Senior Associate Carlos Espinoza (SBN 312847), Associate CALDERWOOD & HARKNESS LLP 600 South Grand Avenue, Suite 3200 Los Angeles, CA 90071 Telephone: (213) 555-4800 Facsimile: (213) 555-4801
Of Counsel: WORTHAM & ADAIR LLP Diana Prescott (SBN 231054), Partner 611 West Sixth Street, Suite 2400 Los Angeles, CA 90017 Telephone: (213) 555-7100 Facsimile: (213) 555-7101 (California Local Counsel)
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I. INTRODUCTION
Defendant Cascade Retail Holdings Inc. ("Cascade" or "Defendant") respectfully submits this Opposition to Plaintiff Vantor Holdings Corp.'s ("Vantor" or "Plaintiff") Motion to Compel Class-Certification-Style Expanded discovery (the "Motion"), filed on June 15, 2022. The Motion should be denied in its entirety because it seeks irrelevant, disproportionate, and unduly burdensome discovery that has no legitimate connection to the narrow claims at issue in this case.
Vantor filed its complaint on September 7, 2021, alleging three causes of action: (1) tortious interference with contractual relations; (2) tortious interference with prospective economic advantage; and (3) unfair business practices under California Business and Professions Code section 17200 et seq. Each of these claims arises from a single, well-defined factual predicate — Cascade's entry into supply agreements with three specific suppliers: Hemsworth Consumer Products LLC ("Hemsworth"), Tridale Manufacturing Inc. ("Tridale"), and Orion Lifestyle Brands Corp. ("Orion"). The complaint identifies no other supplier relationships as the basis for any claim, and Vantor's own damages calculations — totaling $87.4 million — are derived exclusively from these three supplier relationships.
Despite the narrow scope of the claims it chose to plead, Vantor now seeks to transform this case into a sprawling, class-certification-style inquiry into every supplier relationship Cascade has entered into from January 2020 to the present. The Motion asks the Court to compel production of documents and information concerning all of Cascade's supplier relationships across home goods, consumer electronics accessories, personal care, and — remarkably — "any adjacent product categories." Vantor characterizes this sweeping request as discovery into a "pattern and practice" of supplier poaching, but Vantor has brought no class action, has identified no putative class, and seeks to certify no class. There is no legal basis under California law for the class-certification-style discovery Vantor demands.
This Motion should be denied for four independent and overlapping reasons.
First, the requested discovery is irrelevant to the claims at issue. Each of Vantor's three causes of action requires proof of specific elements tied to specific contractual relationships. Discovery into Cascade's relationships with hundreds of other suppliers — suppliers whom Vantor never had contracts with, suppliers in unrelated product categories, suppliers with whom Cascade has dealt for years — has no bearing on whether Cascade knew about three specific exclusivity provisions in three specific supply agreements, or whether Cascade intentionally induced breach of those agreements. California tortious interference claims are evaluated on a claim-by-claim, contract-by-contract basis, and Vantor cites no authority to the contrary.
Second, the discovery already undertaken in this case is extensive and more than sufficient for Vantor to prosecute the claims it has actually pled. To date, Cascade has collected 452,316 documents from its custodians, reviewed 198,740 of those documents for relevance and privilege, and produced 78,412 documents to Vantor. Third-party subpoenas served on each of the three suppliers at issue have yielded an additional 23,567 documents. Vantor itself has produced 41,308 documents. The parties have exchanged written discovery, and Cascade has responded fully to Vantor's first set of interrogatories and requests for production. The documentary record regarding the three supplier relationships at issue — including the entirety of Cascade's internal "Project Atlas" strategic sourcing initiative — is robust and comprehensive.
Third, the requested discovery would impose a massive and wholly disproportionate burden on Cascade. Cascade is a multi-channel retail and e-commerce company operating more than 340 retail locations across 22 states, with annual revenue of $6.8 billion and relationships with hundreds of suppliers across dozens of product categories. Compelling discovery into all of these supplier relationships would require the collection, processing, and review of potentially millions of additional documents at enormous expense — an expense wildly disproportionate to claims totaling $87.4 million that are limited to three supplier relationships. The proportionality principles embodied in California Code of Civil Procedure section 2019.030 exist precisely to prevent this kind of discovery abuse.
Fourth, the breadth and timing of Vantor's Motion betray its true purpose: to inflate Cascade's defense costs and leverage a more favorable settlement position. Vantor filed its Motion during the core document discovery period, less than two weeks after Calderwood & Harkness LLP transmitted a detailed meet-and-confer letter proposing to narrow the parties' discovery disputes. Vantor's counsel at Kessler, Brandt & Whitfield LLP did not substantively engage in the meet-and-confer process before rushing to file the instant Motion. The request for discovery into every supplier relationship Cascade maintains is not a good-faith effort to obtain relevant evidence; it is a fishing expedition designed to impose disproportionate costs on Cascade.
At a minimum, should the Court be inclined to permit any expanded discovery beyond the three supplier relationships at issue, Cascade respectfully requests that the Court narrowly tailor any such expansion. Specifically, any additional discovery should be limited to a small number of additional supplier relationships in the three specific product categories at issue (home goods, consumer electronics accessories, and personal care products), limited to suppliers who also had pre-existing relationships with Vantor, limited to the Project Atlas period (February 2021 forward), and subject to appropriate custodial limitations and cost-sharing provisions. Such limitations would ensure that any additional discovery is proportional to the actual needs of this case while protecting Cascade from the oppressive and burdensome discovery Vantor seeks.
II. FACTUAL BACKGROUND
A. The Parties
Cascade Retail Holdings Inc. Cascade is a Delaware corporation and publicly traded company listed on the Nasdaq Stock Market under the ticker symbol "CRHI." Cascade is headquartered at 2200 Elliott Avenue West, Suite 1400, Seattle, Washington 98119. Cascade is a multi-channel retail and e-commerce company that operates more than 340 retail locations across 22 states, complemented by a robust e-commerce platform. In fiscal year 2021, Cascade reported annual revenue of approximately $6.8 billion. As of September 2021, Cascade's market capitalization was approximately $14.2 billion. Cascade employs approximately 28,000 people nationwide and maintains supplier relationships with hundreds of manufacturers and distributors across dozens of product categories, including home goods, consumer electronics and accessories, personal care and wellness, sporting goods, apparel, and automotive aftermarket products. Cascade's supply chain operations are headquartered in Seattle and are managed by its Supply Chain & Procurement division.
Vantor Holdings Corp. Vantor is a California corporation, privately held, and headquartered at 18500 Von Karman Avenue, Suite 600, Irvine, California 92612. Vantor is a wholesale distribution and specialty retail company operating approximately 85 retail locations in California, Arizona, Nevada, and Oregon. In fiscal year 2021, Vantor reported annual revenue of approximately $1.1 billion. Vantor's retail operations focus principally on home goods, consumer electronics accessories, and personal care products — product categories in which Vantor has historically maintained exclusive or preferred supply arrangements with regional and national manufacturers. Vantor is represented in this action by Kessler, Brandt & Whitfield LLP (Martin Kessler, Natalie Whitfield, and Jason Okafor), 1999 Avenue of the Stars, Suite 2800, Los Angeles, California 90067.
B. The Three Supplier Relationships at Issue
Vantor's complaint identifies precisely three supplier relationships that form the basis of all three causes of action. The factual record developed through discovery to date confirms that these three supplier relationships — and only these three — are at issue in this litigation.
1. Hemsworth Consumer Products LLC. Hemsworth is an Oregon limited liability company headquartered in Portland, Oregon. Hemsworth manufactures home goods and kitchen accessories that it distributes through regional and national retail channels. On March 15, 2019, Vantor and Hemsworth entered into an exclusive supply agreement (the "Hemsworth-Vantor Agreement") with a three-year term expiring on March 14, 2022. Under the Hemsworth-Vantor Agreement, Vantor committed to a minimum annual purchase volume of $12.5 million, and Hemsworth agreed to supply its products exclusively to Vantor within Vantor's operating territories. The Hemsworth-Vantor Agreement contained a termination-for-convenience clause permitting either party to terminate upon 90 days' written notice. On June 1, 2021, Cascade and Hemsworth entered into a separate supply agreement (the "Hemsworth-Cascade Agreement") with a five-year term and an annual purchase commitment of $28.0 million. Vantor alleges that Cascade's entry into the Hemsworth-Cascade Agreement caused Hemsworth to breach or disrupt its exclusive supply obligations to Vantor.
2. Tridale Manufacturing Inc. Tridale is a Nevada corporation headquartered in Las Vegas, Nevada. Tridale manufactures consumer electronics accessories, including charging cables, device cases, screen protectors, and related products. On January 10, 2020, Vantor and Tridale entered into an exclusive supply agreement (the "Tridale-Vantor Agreement") with a two-year term expiring on January 9, 2022. Vantor committed to a minimum annual purchase volume of $8.3 million, and Tridale agreed to supply its consumer electronics accessories exclusively to Vantor within Vantor's operating territories. The Tridale-Vantor Agreement contained a termination-for-convenience clause permitting either party to terminate upon 60 days' written notice. On August 15, 2021, Cascade and Tridale entered into a separate supply agreement (the "Tridale-Cascade Agreement") with a three-year term and an annual purchase commitment of $19.5 million. Vantor alleges that Cascade's entry into the Tridale-Cascade Agreement induced Tridale to breach or disrupt its exclusive supply obligations to Vantor.
3. Orion Lifestyle Brands Corp. Orion is a California corporation headquartered in Los Angeles, California. Orion manufactures personal care and wellness products, including skincare, grooming, and health and wellness products. On July 1, 2018, Vantor and Orion entered into an exclusive supply agreement (the "Orion-Vantor Agreement") with a four-year term expiring on June 30, 2022. Vantor committed to a minimum annual purchase volume of $14.6 million, and Orion agreed to supply its products exclusively to Vantor within Vantor's operating territories. The Orion-Vantor Agreement contained a termination-for-convenience clause permitting either party to terminate upon 120 days' written notice. On May 10, 2021, Cascade and Orion entered into a separate supply agreement (the "Orion-Cascade Agreement") with a four-year term and an annual purchase commitment of $31.0 million. Vantor alleges that Cascade's entry into the Orion-Cascade Agreement induced Orion to breach or disrupt its exclusive supply obligations to Vantor.
No other supplier relationship is identified in Vantor's complaint, and no other supplier relationship is the subject of any cause of action Vantor has pled. Vantor's total claimed damages of $87.4 million are derived exclusively from these three relationships: $34.2 million attributable to the Hemsworth relationship, $22.8 million attributable to the Tridale relationship, and $30.4 million attributable to the Orion relationship.
C. Project Atlas
In February 2021, Cascade launched an internal strategic initiative known as "Project Atlas." Project Atlas was a supply chain diversification and strengthening initiative designed to identify, evaluate, and onboard new suppliers across three specific product categories: home goods, consumer electronics accessories, and personal care products. The initiative was conceived as part of Cascade's broader effort to reduce concentration risk in its supplier base and to secure competitive pricing and terms in anticipation of post-pandemic supply chain normalization.
Project Atlas was led by Annika Bergström, Vice President of Strategic Sourcing at Cascade, who reported to Lena Torvik, Senior Vice President of Supply Chain & Procurement. Cascade's executive leadership approved a budget of $4.2 million for supplier transition costs associated with Project Atlas, including costs for supplier identification, due diligence, onboarding, logistics integration, and initial purchase order fulfillment.
The stated objective of Project Atlas was to identify and onboard approximately 25 new suppliers across the three targeted product categories. Internal planning documents — all of which have been produced to Vantor in discovery — describe the initiative as focused on supplier diversification and cost optimization, with no reference to targeting competitors' exclusive supply arrangements.
The discovery record regarding Project Atlas is comprehensive. Cascade has reviewed 2,847 internal Project Atlas emails. Of those 2,847 emails, only 14 contain any reference to Vantor's existing supplier relationships. Critically, none of those 14 emails demonstrate actual knowledge on the part of any Cascade employee of the specific exclusivity provisions contained in any of the three Vantor supplier agreements at issue. The Project Atlas documents have been produced in their entirety, and Vantor has had full access to the documentary record of this initiative.
D. Procedural History Relevant to This Motion
The procedural history of this case confirms both the extensive discovery that has already been conducted and the premature nature of Vantor's Motion.
• September 7, 2021: Vantor files its complaint in this Court, alleging three causes of action against Cascade arising from the three supplier relationships described above.
• September 28, 2021: Cascade is served with the summons and complaint.
• October 18, 2021: Cascade files its answer and affirmative defenses, including defenses of failure to state a claim, lack of causation, independent business justification, and the statute of limitations as to certain claims.
• November 5, 2021: The Court holds the initial case management conference. The parties discuss the anticipated scope of discovery, and the Court sets a discovery schedule.
• January 14, 2022: The Court enters the joint discovery plan and scheduling order, which establishes the discovery cutoff, identifies the categories of discovery to be exchanged, and provides for phased discovery beginning with document production and written discovery, followed by depositions.
• March 15, 2022: Cascade serves its first set of requests for production and interrogatories on Vantor.
• March 2022 – present: Extensive document discovery is ongoing. As described in detail in the Declaration of Yuki Nakamura filed concurrently herewith, Cascade has collected 452,316 documents from Cascade custodians, reviewed 198,740 of those documents for relevance and privilege, and produced 78,412 documents to Vantor. Cascade has generated a privilege log containing 3,214 entries.
• April 2022: Third-party subpoenas duces tecum are served on Hemsworth Consumer Products LLC, Tridale Manufacturing Inc., and Orion Lifestyle Brands Corp. The combined third-party productions total 23,567 documents.
• April 22, 2022: Vantor serves its first set of interrogatories on Cascade (25 interrogatories).
• May 20, 2022: Cascade serves its responses to Vantor's first set of interrogatories and requests for production.
• Ongoing: Vantor has produced 41,308 documents to Cascade.
• June 2, 2022: Yuki Nakamura of Calderwood & Harkness LLP sends a detailed meet-and-confer letter to Martin Kessler and Natalie Whitfield at Kessler, Brandt & Whitfield LLP regarding Vantor's expressed intent to seek expanded discovery. The letter identifies Cascade's objections, proposes a telephonic meet-and-confer to narrow the parties' discovery disputes, and offers to discuss reasonable accommodations should Vantor identify specific, non-duplicative discovery needs. (A true and correct copy of this letter is attached as Exhibit A to the Declaration of Yuki Nakamura.)
• June 15, 2022: Less than two weeks after the June 2, 2022 meet-and-confer letter, and without substantively engaging in the meet-and-confer process, Vantor files the instant Motion to Compel.
E. Vantor's Motion
Vantor's Motion seeks an order compelling Cascade to produce documents and respond to discovery requests concerning all supplier relationships Cascade entered into from January 2020 to the present. Vantor does not limit its request to the three supplier relationships identified in its complaint. Instead, Vantor characterizes the expanded discovery as necessary to investigate a purported "pattern and practice" of supplier poaching and argues that such evidence is relevant to the section 17200 claim and to establishing Cascade's intent and knowledge with respect to the three supplier relationships at issue.
Specifically, Vantor seeks communications with, and agreements entered into with, every supplier with whom Cascade has done business in the home goods, consumer electronics accessories, personal care, and — in a breathtaking expansion — "any adjacent product categories." Given the scope of Cascade's operations — a $6.8 billion retailer with relationships spanning hundreds of suppliers across dozens of product categories — this request would encompass potentially hundreds of supplier relationships and require the collection, processing, and review of millions of additional documents. The request is, in practical terms, a demand that Cascade open its entire supplier network to Vantor's inspection, with no limiting principle whatsoever.
As set forth below, the Motion should be denied.
III. LEGAL STANDARD
Under California Code of Civil Procedure section 2017.010, any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action, "if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence." While the scope of discovery under California law is broad, it is not without limits. Courts have consistently recognized that the right to discovery is "not absolute" and must be balanced against competing interests, including the burden and expense imposed on the responding party. Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 223.
California Code of Civil Procedure section 2019.030 provides that the Court shall restrict the frequency or extent of use of a discovery method if it determines that "[t]he discovery sought is unreasonably cumulative or duplicative," or that "[t]he burden, expense, or intrusiveness of that discovery clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence." Cal. Code Civ. Proc. § 2019.030(a)(1)-(2). The Court is vested with broad discretion to manage discovery and to prevent discovery from becoming an instrument of oppression. Obregon v. Superior Court (1998) 67 Cal.App.4th 424, 431.
The proportionality of discovery to the needs of the case is a critical consideration in evaluating any motion to compel. Courts evaluate proportionality by reference to factors including: (1) the importance of the issues at stake in the action; (2) the amount in controversy; (3) the parties' relative access to relevant information; (4) the parties' resources; (5) the importance of the discovery in resolving the issues; and (6) whether the burden or expense of the proposed discovery outweighs its likely benefit. See Williams v. Superior Court (2017) 3 Cal.5th 531, 549 (discussing the balancing of competing interests in evaluating discovery disputes).
The party seeking to compel discovery bears the burden of demonstrating that the discovery sought is relevant to the subject matter of the action and proportional to the needs of the case. Velmoran v. Superior Court (2002) 95 Cal.App.4th 92, 98. Where the responding party objects to discovery as overbroad, burdensome, or oppressive, the propounding party must establish good cause for the discovery sought, and the Court must weigh the burden of the discovery against its likely benefit. Digital Music News LLC v. Superior Court (2014) 226 Cal.App.4th 216, 224.
Courts regularly deny discovery requests that are overbroad, that amount to fishing expeditions, or that seek to impose disproportionate costs on a responding party. See, e.g., Gonzalez v. Superior Court (1995) 33 Cal.App.4th 1539, 1546 (Discovery requests must be "reasonably particularized" and not constitute a "fishing expedition"); West Pico Furniture Co. v. Superior Court (1961) 56 Cal.2d 407, 417 (the trial court has inherent authority to control the course of discovery to prevent abuse). Where a party seeks discovery far beyond the scope of the issues actually in dispute, courts exercise their discretion to deny or limit such discovery. Greyhound Corp. v. Superior Court (1961) 56 Cal.2d 355, 380 (although the scope of discovery is broad, it "is not so broad as to permit a fishing expedition").
IV. ARGUMENT
A. Vantor's Motion Seeks discovery That Is Irrelevant and Disproportionate to the Claims at Issue
1. The Claims Are Limited to Three Specific Supplier Relationships
The threshold question in evaluating Vantor's Motion is whether the discovery it seeks bears any reasonable relationship to the claims Vantor has actually pled. The answer is no. Vantor's complaint alleges three causes of action, each arising from a common and well-defined nucleus of facts: Cascade's entry into supply agreements with three specific suppliers — Hemsworth, Tridale, and Orion — that Vantor alleges were subject to exclusive supply agreements with Vantor. The complaint identifies no other supplier. It alleges no other interference. It claims no damages from any other supplier relationship.
California law is clear that tortious interference with contractual relations requires proof of each of the following elements: (a) a valid contract between the plaintiff and a third party; (b) the defendant's knowledge of that contract; (c) intentional acts by the defendant designed to induce a breach or disruption of that contract; (d) actual breach or disruption of the contract; and (e) resulting damages. Pacific Gas & Electric Co. v. Ridgeline Trust Bank (1990) 50 Cal.3d 1118, 1126; Camberwell Corporation (1998) 19 Cal.4th 26, 55. Each of these elements is specific to the individual contractual relationship at issue. To prevail on its tortious interference claims, Vantor must prove that Cascade knew about the specific exclusivity provisions in the Hemsworth-Vantor Agreement, the Tridale-Vantor Agreement, and the Orion-Vantor Agreement, and that Cascade intentionally acted to cause the breach or disruption of each.
Similarly, Vantor's tortious interference with prospective economic advantage claim requires proof that Cascade engaged in an independently wrongful act that disrupted an economic relationship between Vantor and a specific third party. Glenrock Corporation (2003) 29 Cal.4th 1134, 1153-54. Again, the claim is tethered to identified relationships and identified conduct.
Discovery into Cascade's relationships with hundreds of other suppliers has no bearing on whether Cascade had knowledge of these three specific exclusive supply agreements or induced breach of them. The fact that Cascade may have entered into supply agreements with suppliers in other product categories, or with suppliers who had no pre-existing relationship with Vantor, tells the Court nothing about whether Cascade knew about or intentionally interfered with the Hemsworth-Vantor Agreement, the Tridale-Vantor Agreement, or the Orion-Vantor Agreement. Such discovery is irrelevant to every element of every claim Vantor has pled.
Vantor's damages calculation further confirms the narrow scope of this case. Vantor's claimed damages of $87.4 million are calculated solely from the three supplier relationships at issue: $34.2 million attributable to the Hemsworth relationship, $22.8 million attributable to the Tridale relationship, and $30.4 million attributable to the Orion relationship. No other supplier relationship factors into Vantor's damages model. There is no claim for damages arising from any other supplier relationship, and Vantor has identified no basis for seeking damages beyond those three relationships. Discovery into unrelated supplier relationships would serve no legitimate purpose in establishing or refuting Vantor's damages claims.
2. "Pattern and Practice" Discovery Is Not Appropriate Here
The centerpiece of Vantor's argument in support of its Motion is the assertion that discovery into Cascade's other supplier relationships is necessary to establish a "pattern and practice" of supplier poaching. Vantor argues that evidence of a pattern would be relevant to establishing Cascade's intent, knowledge, and modus operandi with respect to the three supplier relationships at issue, and that such evidence is independently relevant to the section 17200 unfair business practices claim. This argument is legally unfounded and factually unsupported.
This is not a class action. Vantor's Motion seeks what it forthrightly describes as "class-certification-style" expanded discovery. But this is not a class action. There is no class to certify, no putative class members, and no procedural basis for class-certification-style discovery. Vantor is a single plaintiff asserting individual claims arising from three specific supplier relationships. The discovery tools available to Vantor are those available to any individual litigant — they do not include the right to conduct an industry-wide investigation of a defendant's business relationships in the hope of finding useful evidence.
The distinction matters. In a class action, the need for broad discovery is tied to the requirement that the named plaintiff demonstrate that its claims are typical of and common to the claims of a proposed class. See Cal. Code Civ. Proc. § 382; Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1021-22. Here, there is no proposed class, no commonality requirement, and no typicality analysis. Vantor has not moved to certify a class and has no standing to seek discovery as though it were class counsel for a universe of aggrieved suppliers.
California tortious interference claims are evaluated on a claim-by-claim basis. Pattern evidence is not an element of any of Vantor's causes of action. The elements of tortious interference with contractual relations focus on the defendant's knowledge of, and intentional interference with, a specific contract. Pacific Gas & Electric Co., 50 Cal.3d at 1126. The plaintiff must prove that the defendant knew about the contract at issue and intended to interfere with it — not that the defendant had a generalized practice of entering into supply agreements with third parties. Evidence that Cascade entered into supply agreements with other suppliers in other product categories, or even with other suppliers in the same product categories who had no exclusive arrangements with Vantor, has no tendency in reason to prove that Cascade knew about the specific exclusivity provisions in the three Vantor agreements at issue or that Cascade intended to cause their breach.
Vantor cites no California authority holding that a plaintiff in a tortious interference action is entitled to discovery into the defendant's entire universe of business relationships to establish a "pattern and practice." And for good reason: no such authority exists. California courts have consistently held that discovery must be reasonably calculated to lead to the discovery of admissible evidence, and that discovery requests must be "reasonably particularized" rather than constituting a "fishing expedition." Gonzalez v. Superior Court, 33 Cal.App.4th at 1546.
Even if the Court were to conclude that evidence of other supplier relationships has some marginal relevance — a conclusion Cascade disputes — the probative value of such evidence is substantially outweighed by the burden and expense of the requested discovery. The Court has discretion under Code of Civil Procedure section 2019.030 to limit discovery where the burden clearly outweighs the likely benefit. Here, requiring Cascade to produce documents concerning all of its supplier relationships across all product categories from January 2020 to the present would impose an extraordinary burden for marginal, speculative evidentiary gain. The Court should exercise its discretion to deny the Motion.
The section 17200 claim does not transform this case into a pattern-and-practice action. Vantor argues that its claim under California Business and Professions Code section 17200 entitles it to broader discovery because section 17200 prohibits "unlawful, unfair, or fraudulent business act[s] or practice[s]" (emphasis Vantor's). But this argument misapprehends the nature of the section 17200 claim as pled. Vantor's section 17200 claim is tethered to the same underlying conduct as its tortious interference claims — Cascade's alleged interference with the Hemsworth, Tridale, and Orion supplier relationships. The complaint does not allege that Cascade engaged in unfair business practices with respect to any other supplier. It does not allege industry-wide misconduct. It does not seek injunctive relief to protect any supplier other than the three named in the complaint.
Section 17200 is not a license to conduct discovery into every aspect of a defendant's business operations. A section 17200 claim based on a predicate violation — here, the alleged tortious interference — rises or falls with the predicate conduct. See Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 (explaining the structure of section 17200 claims). Discovery into unrelated supplier relationships is no more relevant to the section 17200 claim than it is to the tortious interference claims.
Moreover, even in cases where section 17200 claims are based on a broader pattern of conduct, courts retain discretion to limit discovery to what is proportional and non-burdensome. See Britt v. Superior Court (1978) 20 Cal.3d 844, 859 (Discovery must be weighed against the right of privacy and other countervailing interests). Here, the balance of interests overwhelmingly favors denial of the Motion.
3. The discovery Already Conducted Is Extensive and Sufficient
Vantor's Motion fails to account for the extraordinary breadth and depth of discovery that has already been conducted in this case. The record before the Court demonstrates that Cascade has made a substantial, good-faith effort to produce all relevant documents concerning the three supplier relationships at issue, and that Vantor already has ample documentary evidence to prosecute its claims.
The discovery record is as follows:
• 452,316 documents have been collected from Cascade custodians, including key personnel in Cascade's Supply Chain & Procurement division, Strategic Sourcing team, and executive leadership.
• 198,740 documents have been reviewed for relevance and privilege by Cascade's counsel and litigation support team.
• 78,412 documents have been produced to Vantor through Cascade's discovery productions.
• 3,214 entries appear on Cascade's privilege log, reflecting the careful and thorough privilege review conducted during the document review process.
• 41,308 documents have been produced by Vantor to Cascade.
• 23,567 documents have been produced by third parties Hemsworth, Tridale, and Orion in response to subpoenas duces tecum served in April 2022.
In addition to document production, the parties have exchanged written discovery. Vantor served its first set of 25 interrogatories on April 22, 2022, and Cascade served its responses on May 20, 2022. Cascade served its own first set of requests for production and interrogatories on Vantor on March 15, 2022.
Of particular significance, Cascade's production includes the entirety of the Project Atlas documentary record. As described above, Project Atlas was the internal strategic initiative under which Cascade identified and onboarded new suppliers, including Hemsworth, Tridale, and Orion. All 2,847 internal Project Atlas emails have been reviewed, and all responsive, non-privileged Project Atlas documents have been produced. This includes:
• All Project Atlas planning documents, including the initiative's charter, budget approvals, project timelines, and milestone reports.
• All communications among the Project Atlas team, including Annika Bergström (VP Strategic Sourcing), Lena Torvik (SVP Supply Chain & Procurement), David Pruitt (Director of Vendor Relations), Margaret Prumvane (Senior Category Manager), and Raj Subramanian (Strategic Sourcing Analyst).
• All communications between Cascade personnel and the three suppliers at issue — Hemsworth, Tridale, and Orion — concerning the negotiation and execution of the respective supply agreements.
• The 14 emails referencing Vantor's existing supplier relationships, which Vantor can examine in full.
Vantor has not identified any specific deficiency in Cascade's production with respect to the three supplier relationships at issue. Vantor has not argued that Cascade has failed to produce responsive documents about Hemsworth, Tridale, or Orion. Vantor has not asserted that Cascade has improperly withheld documents on privilege grounds or that Cascade's privilege log is deficient. Instead, Vantor seeks to expand discovery far beyond the scope of the claims it has pled — not because the existing discovery is inadequate, but because Vantor hopes to find something useful in the millions of additional documents it seeks.
This is precisely the kind of fishing expedition that California discovery rules are designed to prevent. The Court should deny the Motion.
B. The Requested discovery Would Impose an Undue Burden on Cascade
1. Scope of the Burden
Even if the discovery Vantor seeks were marginally relevant — and it is not — the Motion should be denied because the burden it would impose on Cascade is grossly disproportionate to any possible benefit.
Cascade operates more than 340 retail locations across 22 states and maintains active supplier relationships with hundreds of manufacturers, distributors, and brand partners. Cascade's supplier base spans dozens of product categories, including not only the three categories at issue in this case (home goods, consumer electronics accessories, and personal care products) but also sporting goods, apparel, automotive aftermarket products, outdoor and garden, pet supplies, and numerous others. Vantor's Motion seeks discovery into all supplier relationships across the three named categories as well as "any adjacent product categories" — a term so broad and undefined as to potentially encompass the majority of Cascade's supplier network.
Expanding discovery to encompass all of these supplier relationships would require Cascade to:
• Identify additional custodians. The current litigation hold and custodian list covers five key individuals directly involved in the Project Atlas initiative and the three supplier relationships at issue: Annika Bergström, Lena Torvik, David Pruitt, Margaret Prumvane, and Raj Subramanian. Expanding discovery to cover all supplier relationships would require identifying and collecting documents from dozens of additional custodians — category managers, buyers, logistics coordinators, regional merchandising leads, and others who were involved in supplier relationships unrelated to the claims in this case.
• Collect, process, and host millions of additional documents. Cascade has already collected 452,316 documents from the current custodian pool. The Declaration of Yuki Nakamura describes Cascade's estimate that expanding the scope of discovery as Vantor requests would require the collection of potentially 1.5 to 3 million additional documents, all of which would need to be processed, de-duplicated, hosted on the review platform maintained by Cascade's e-discovery vendor Krane Investigations LLC (Samuel Byrd, Project Manager), and made available for review.
• Review additional documents for relevance and privilege. Each additional document collected would need to be reviewed by counsel for relevance and privilege — a labor-intensive process that Cascade has already undertaken with respect to the 198,740 documents reviewed to date. Expanding the document universe would require a proportional expansion of the review effort, including additional privilege review that would further expand the already 3,214-entry privilege log.
• Produce additional documents. Responsive, non-privileged documents would need to be produced to Vantor, further increasing the volume of the documentary record and the costs associated with production, Bates-numbering, and quality assurance.
The scope of this burden is staggering, and it is entirely unwarranted given the narrow claims at issue in this case.
2. Cost and Resource Implications
Cascade has already incurred substantial e-discovery costs in this litigation. The collection, processing, hosting, and review of 452,316 documents — culminating in the production of 78,412 documents and the creation of a 3,214-entry privilege log — has required significant expenditures for e-discovery vendor services, attorney review time, and litigation support resources. These costs are a necessary and appropriate part of defending against Vantor's claims as pled.
The expansion requested by Vantor would require proportional — if not exponential — increases in all of these cost categories. Collecting documents from additional custodians would increase vendor processing and hosting fees. Reviewing millions of additional documents for relevance and privilege would require additional attorney time and, potentially, the engagement of contract review attorneys. Producing additional responsive documents would increase production costs. And the need to log additional privileged documents would further increase the already substantial burden of privilege review.
These costs are disproportionate by any measure. Vantor's total claimed damages are $87.4 million, all of which are attributable to three supplier relationships. Cascade is a $6.8 billion company with hundreds of supplier relationships, and the discovery Vantor seeks would require Cascade to open its entire supplier network to inspection — at Cascade's expense — in a case that is, at bottom, about three specific supply agreements. The proportionality principles of Code of Civil Procedure section 2019.030 require the Court to weigh the burden of the proposed discovery against its likely benefit. Here, the burden is enormous, and the benefit is speculative at best. The Court should deny the Motion.
C. If the Court Is Inclined to Allow Any Expanded discovery, It Should Be Narrowly Tailored
Cascade is confident that the discovery already conducted is more than sufficient for Vantor to prosecute its claims and that no additional discovery into other supplier relationships is warranted. However, should the Court find some relevance to supplier relationships beyond the three at issue, Cascade respectfully requests that the Court exercise its discretion to narrowly limit any expansion of discovery to ensure that it remains proportional to the needs of this case.
Specifically, Cascade proposes the following limitations on any expanded discovery:
1. Product Category Limitation. Any expanded discovery should be limited to supplier relationships in the three specific product categories at issue in this case: home goods, consumer electronics accessories, and personal care products. Vantor's request for discovery into "any adjacent product categories" is undefined, overbroad, and untethered to any claim Vantor has pled. Discovery should not extend to sporting goods, apparel, automotive aftermarket, or any other product category.
2. Pre-Existing Vantor Relationship Requirement. Any expanded discovery should be limited to suppliers who also had pre-existing supply relationships with Vantor. The relevance of other supplier relationships, to the extent it exists, derives from the allegation that Cascade targeted Vantor's suppliers. Suppliers who had no pre-existing relationship with Vantor have no connection to Vantor's claims.
3. Temporal Limitation. Any expanded discovery should be limited to the Project Atlas period — February 2021 forward. Vantor's Motion seeks discovery dating back to January 2020, but the claims in this case arise from conduct that began with Project Atlas in February 2021. There is no basis for extending the temporal scope of discovery beyond the period relevant to the alleged interference.
4. Numerical Limitation. Any expanded discovery should be limited to no more than 10 to 15 additional supplier relationships beyond the three at issue, for a total of no more than 13 to 18 supplier relationships. The parties should meet and confer to identify the specific additional suppliers, if any, that fall within the scope of any expanded discovery.
5. Custodial Limitation. Any expanded discovery should be limited to custodians already identified in the litigation hold — Annika Bergström, Lena Torvik, David Pruitt, Margaret Prumvane, and Raj Subramanian — plus any individual who was directly involved in negotiations with any additional identified supplier. The discovery should not require collection from new custodians who had no involvement in the specific supplier relationships identified.
6. Cost-Sharing Provisions. Any expansion of discovery beyond the three supplier relationships at issue should be accompanied by appropriate cost-sharing provisions. Vantor is seeking discovery that goes well beyond the scope of its own claims; it should not be permitted to do so entirely at Cascade's expense. The Court should require Vantor to share in the reasonable costs of collection, processing, and review associated with any expanded discovery.
These limitations would ensure that any additional discovery is targeted, proportional, and limited to information that has a reasonable connection to the claims in this case. They would also protect Cascade from the oppressive and burdensome discovery that Vantor's Motion, as currently framed, would impose.
D. Vantor's Motion Is a Litigation Tactic Designed to Increase Cascade's Costs
The Court should view Vantor's Motion in the context in which it was filed. The breadth of the request, the timing of the filing, and the inadequacy of the meet-and-confer process all point to a single conclusion: this Motion is a litigation tactic designed to increase Cascade's defense costs and to leverage a more favorable settlement position.
Timing. Vantor filed its Motion on June 15, 2022, during the core document discovery period — a period in which both parties are actively engaged in collecting, reviewing, and producing documents. The Motion was filed less than one month after Cascade served its responses to Vantor's first set of interrogatories and requests for production on May 20, 2022. Vantor has not identified any deficiency in those responses. Instead, Vantor seeks to expand the scope of discovery at the very moment when the parties are making the most progress on the discovery that is actually relevant to the claims at issue. The timing is calculated to disrupt Cascade's document review workflow, divert resources, and increase costs.
Breadth. The request itself is inconsistent with a good-faith effort to obtain relevant evidence. Vantor does not seek discovery into a handful of additional supplier relationships that it has identified as potentially relevant. It seeks discovery into every supplier relationship Cascade has entered into from January 2020 to the present, across all relevant product categories and "any adjacent product categories." No good-faith litigant would need or seek such broadly defined discovery in a case involving three supplier relationships and $87.4 million in claimed damages. The breadth of the request reveals its purpose: to impose maximum burden on Cascade and to create settlement pressure.
Inadequate meet-and-confer. The meet-and-confer process was inadequate — through no fault of Cascade. On June 2, 2022, Yuki Nakamura of Calderwood & Harkness LLP sent a detailed meet-and-confer letter to Martin Kessler and Natalie Whitfield at Kessler, Brandt & Whitfield LLP. The letter identified Cascade's objections to the proposed expanded discovery, proposed a telephonic meet-and-confer to discuss the parties' respective positions, and offered to explore reasonable accommodations should Vantor identify specific, non-duplicative discovery needs. (See Declaration of Yuki Nakamura, ¶¶ 12-14; Exhibit A.)
Vantor filed its Motion less than two weeks later, on June 15, 2022, without substantively engaging in the meet-and-confer process. Kessler, Brandt & Whitfield did not respond to the June 2, 2022 letter with a counter-proposal, did not participate in a telephonic meet-and-confer, and did not identify specific discovery needs that could have been addressed through negotiation. Instead, Vantor chose to burden the Court and Cascade with this Motion.
California Code of Civil Procedure section 2016.040 requires that a motion to compel be accompanied by a declaration stating facts showing a "reasonable and good faith attempt at an informal resolution of each issue presented by the motion." Vantor's perfunctory engagement with the meet-and-confer process falls short of this requirement. The Court should deny the Motion on this additional ground, or at a minimum, require the parties to engage in a meaningful meet-and-confer before any expanded discovery is considered.
V. CONCLUSION
For the foregoing reasons, Defendant Cascade Retail Holdings Inc. respectfully requests that the Court deny Plaintiff Vantor Holdings Corp.'s Motion to Compel Class-Certification-Style Expanded discovery in its entirety. The discovery Vantor seeks is irrelevant to the three specific supplier relationships at the heart of this case, disproportionate to the claims and amount in controversy, and unduly burdensome to Cascade. The existing discovery — which includes the production of 78,412 documents from Cascade, 41,308 documents from Vantor, and 23,567 documents from the three third-party suppliers, along with complete production of the Project Atlas documentary record — is more than sufficient for Vantor to prosecute the claims it has actually pled.
In the alternative, if the Court is inclined to permit any expanded discovery, Cascade respectfully requests that the Court narrowly limit such discovery as described in Section IV.C above. Specifically, any expansion should be restricted to a limited number of additional supplier relationships (no more than 10 to 15) in the three specific product categories at issue (home goods, consumer electronics accessories, and personal care products), limited to suppliers who had pre-existing relationships with Vantor, limited to the Project Atlas period (February 2021 forward), and subject to appropriate custodial limitations and cost-sharing provisions. Such limitations would ensure that any additional discovery remains proportional to the needs of this case while protecting Cascade from the oppressive and burdensome discovery that Vantor's Motion would otherwise impose.
Dated: July 18, 2022
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Carmichael, Partner
Francesca Morano, Partner Yuki Nakamura, Senior Associate Carlos Espinoza, Associate 600 South Grand Avenue, Suite 3200 Los Angeles, CA 90071 Telephone: (213) 555-4800 Facsimile: (213) 555-4801
Attorneys for Defendant Cascade Retail Holdings Inc.
Of Counsel:
WORTHAM & ADAIR LLP
Diana Prescott, Partner 611 West Sixth Street, Suite 2400 Los Angeles, CA 90017 Telephone: (213) 555-7100 Facsimile: (213) 555-7101
PROOF OF SERVICE
PROOF OF SERVICE
I, the undersigned, declare as follows:
I am employed in the County of Los Angeles, State of California. I am over the age of eighteen (18) years and am not a party to the within action. My business address is Calderwood & Harkness LLP, 600 South Grand Avenue, Suite 3200, Los Angeles, California 90071.
On July 18, 2022, I served the foregoing document described as:
DEFENDANT CASCADE RETAIL HOLDINGS INC.'S OPPOSITION TO PLAINTIFF'S MOTION TO COMPEL CLASS-CERTIFICATION-STYLE EXPANDED DISCOVERY
on the interested parties in this action by the following means:
BY ELECTRONIC FILING AND SERVICE: I caused a true and correct copy of the foregoing document to be electronically filed with the Superior Court of the State of California, County of Los Angeles, via the Court's electronic filing system, and served by electronic transmission on the following parties:
Martin Kessler, Esq. Natalie Whitfield, Esq. Jason Okafor, Esq. KESSLER, BRANDT & WHITFIELD LLP 1999 Avenue of the Stars, Suite 2800 Los Angeles, California 90067
Email: mkessler@kbwlaw.com
Email: nwhitfield@kbwlaw.com
Email: jokafor@kbwlaw.com
Attorneys for Plaintiff Vantor Holdings Corp.
BY EMAIL: I also caused a true and correct copy of the foregoing document to be transmitted by email to each of the above-listed persons at the email addresses set forth above.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Executed on July 18, 2022, at Los Angeles, California.
________________________________________
Carlos Espinoza
DECLARATION OF YUKI NAKAMURA IN SUPPORT OF DEFENDANT'S OPPOSITION TO PLAINTIFF'S MOTION TO COMPEL
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
VANTOR HOLDINGS CORP., a California corporation, Plaintiff,
v.
CASCADE RETAIL HOLDINGS INC., a Delaware corporation, Defendant.
Case No. 21STCV-34872
DECLARATION OF YUKI NAKAMURA IN SUPPORT OF DEFENDANT CASCADE RETAIL HOLDINGS INC.'S OPPOSITION TO PLAINTIFF'S MOTION TO COMPEL CLASS-CERTIFICATION-STYLE EXPANDED DISCOVERY
I, Yuki Nakamura, declare as follows:
A. Identification
1. I am a Senior Associate at Calderwood & Harkness LLP, 600 South Grand Avenue, Suite 3200, Los Angeles, California 90071. I am admitted to practice law in the State of California (State Bar No. 297563) and am counsel of record for Defendant Cascade Retail Holdings Inc. ("Cascade") in this action. I have personal knowledge of the facts set forth in this declaration and, if called as a witness, could and would testify competently thereto.
2. I submit this declaration in support of Cascade's Opposition to Plaintiff Vantor Holdings Corp.'s ("Vantor") Motion to Compel Class-Certification-Style Expanded discovery (the "Motion"), filed on June 15, 2022.
B. Discovery Efforts to Date
3. Since the commencement of discovery in this action pursuant to the January 14, 2022 scheduling order, Cascade has undertaken an extensive and good-faith effort to identify, collect, review, and produce documents responsive to Vantor's discovery requests.
4. To facilitate document collection, Calderwood & Harkness LLP engaged Krane Investigations LLC as Cascade's e-discovery vendor. Samuel Byrd serves as the Project Manager for Krane Investigations LLC on this engagement. Krane Investigations LLC has been responsible for the collection, processing, de-duplication, hosting, and production of electronically stored information ("ESI") from Cascade custodians.
5. As of the date of this declaration, Cascade has collected a total of 452,316 documents from Cascade custodians. The custodians from whom documents have been collected include the following individuals, who are the key personnel involved in the Project Atlas initiative and the three supplier relationships at issue in this action:
(a) Annika Bergström, Vice President of Strategic Sourcing;
(b) Lena Torvik, Senior Vice President of Supply Chain & Procurement;
(c) David Pruitt, Director of Vendor Relations;
(d) Margaret Prumvane, Senior Category Manager; and
(e) Raj Subramanian, Strategic Sourcing Analyst.
6. Of the 452,316 documents collected, 198,740 documents have been reviewed for relevance and privilege by the Calderwood & Harkness LLP litigation team, including attorneys, paralegals, and trained litigation support personnel.
7. As a result of the document review, 78,412 documents have been produced to Vantor. The produced documents include, among other things, internal communications, supplier correspondence, negotiation materials, supply agreements, purchase orders, financial analyses, and strategic planning documents relating to the three supplier relationships at issue (Hemsworth Consumer Products LLC, Tridale Manufacturing Inc., and Orion Lifestyle Brands Corp.) and to the Project Atlas initiative.
8. Cascade has prepared and served a privilege log containing 3,214 entries, identifying documents withheld from production on the basis of attorney-client privilege, work product protection, or both.
C. Project Atlas Documents
9. As part of Cascade's document review, the litigation team identified and reviewed all documents relating to Cascade's internal strategic initiative known as "Project Atlas." Project Atlas was launched in February 2021 to identify and onboard approximately 25 new suppliers across three product categories: home goods, consumer electronics accessories, and personal care products.
10. The team reviewed a total of 2,847 internal Project Atlas emails. Of those 2,847 emails, only 14 contain any reference to Vantor's existing supplier relationships. I have personally reviewed each of those 14 emails. None of the 14 emails demonstrates actual knowledge on the part of any Cascade employee of the specific exclusivity provisions contained in any of the three Vantor supplier agreements at issue in this litigation — i.e., the Hemsworth-Vantor Agreement, the Tridale-Vantor Agreement, or the Orion-Vantor Agreement.
11. All Project Atlas planning documents — including the initiative's charter, budget approvals, project timelines, milestone reports, supplier identification lists, and onboarding materials — have been reviewed and, to the extent responsive and non-privileged, produced to Vantor.
D. Third-Party Productions
12. In April 2022, third-party subpoenas duces tecum were served on each of the three suppliers identified in Vantor's complaint: Hemsworth Consumer Products LLC, Tridale Manufacturing Inc., and Orion Lifestyle Brands Corp. The subpoenas sought documents relating to the suppliers' relationships with both Vantor and Cascade, including all communications, agreements, purchase orders, and related correspondence.
13. All three suppliers responded to the subpoenas and produced documents. The combined third-party productions total 23,567 documents, which have been processed, hosted, and made available on the review platform maintained by Krane Investigations LLC.
E. Meet-and-Confer Efforts
14. On June 2, 2022, I sent a letter on behalf of Calderwood & Harkness LLP to Martin Kessler and Natalie Whitfield at Kessler, Brandt & Whitfield LLP, counsel for Vantor, regarding Vantor's expressed intent to seek expanded discovery beyond the three supplier relationships at issue. In the letter, I identified Cascade's objections to the proposed expanded discovery, outlined the substantial discovery already conducted, proposed a telephonic meet-and-confer to discuss the parties' respective positions, and offered to explore reasonable accommodations should Vantor identify specific, non-duplicative discovery needs that could be addressed through targeted, proportional discovery.
15. A true and correct copy of my June 2, 2022 letter is attached hereto as Exhibit A.
16. Vantor filed its Motion to Compel on June 15, 2022 — less than two weeks after my June 2, 2022 meet-and-confer letter. Prior to filing the Motion, Kessler, Brandt & Whitfield LLP did not respond to my letter with a substantive counter-proposal, did not participate in a telephonic meet-and-confer, and did not identify specific discovery needs that could have been addressed through negotiation. To my knowledge, Vantor did not make any effort to engage in a meaningful informal resolution of the discovery dispute before filing the Motion.
F. Burden Estimate
17. If the Court were to grant Vantor's Motion as requested — compelling Cascade to produce documents and respond to discovery concerning all supplier relationships Cascade entered into from January 2020 to the present — the burden on Cascade would be substantial.
18. Based on my discussions with Samuel Byrd at Krane Investigations LLC and with members of Cascade's legal and information technology departments, I estimate that expanding the scope of discovery as Vantor requests would require the collection of documents from approximately 35 to 50 additional custodians beyond the five custodians currently subject to the litigation hold.
19. Based on the volume of documents collected from the current five custodians (452,316 documents), and accounting for the substantially larger number of custodians who would need to be added, I estimate that expanding the scope of discovery would result in the collection of approximately 1.5 to 3 million additional documents requiring processing, de-duplication, hosting, and review.
20. The estimated additional e-discovery costs — including vendor processing and hosting fees, attorney review time, privilege review, privilege log preparation, and production costs — would be substantial. While a precise cost estimate would require further analysis, I estimate that the additional costs would be in the range of $2.5 million to $5 million, depending on the ultimate number of custodians and documents involved.
21. In addition to direct cost, the expanded discovery would significantly delay the progress of this litigation. The current document review is proceeding on a timeline consistent with the January 14, 2022 scheduling order. Adding 1.5 to 3 million additional documents to the review queue would require months of additional review time and would likely necessitate an extension of the discovery cutoff.