1038-00007 · Cascade Retail Holdings · Motions

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SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

VANTOR HOLDINGS CORP.,

Plaintiff,

CASCADE RETAIL HOLDINGS INC.,

Defendant.

Case No. 21STCV-34872

Assigned for All Purposes to the Honorable Patricia M. Gutierrez, Department 36

DEFENDANT CASCADE RETAIL HOLDINGS INC.'S REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT ON PLAINTIFF'S SECOND AND THIRD CAUSES OF ACTION

Motion Filed: February 28, 2023 Opposition Filed: March 21, 2023 Reply Filed: April 4, 2023 Hearing Date: April 14, 2023 Time: 9:00 a.m. Dept.: 36

Douglas Carmichael (SBN 187452) Francesca Morano (SBN 224891) Yuki Nakamura (SBN 301776) Carlos Espinoza (SBN 318904) CALDERWOOD & HARKNESS LLP 600 South Grand Avenue, Suite 3200 Los Angeles, California 90071 Telephone: (213) 629-4000 Facsimile: (213) 629-4001

Email: dcarmichael@calderwoodharkness.com

Attorneys for Defendant Cascade Retail Holdings Inc.

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I. INTRODUCTION

Defendant Cascade Retail Holdings Inc. ("Cascade" or "Defendant") respectfully submits this Reply in support of its Motion for Partial Summary Judgment filed on February 28, 2023, seeking summary adjudication on Plaintiff Vantor Holdings Corp.'s ("Vantor" or "Plaintiff") Second Cause of Action for Tortious Interference with Prospective Economic Advantage and Third Cause of Action for Unfair Business Practices under California Business and Professions Code section 17200 et seq. Cascade files this Reply in response to Vantor's Opposition, filed on March 21, 2023, and the accompanying declarations and exhibits submitted therewith.

Vantor's Opposition fails to raise any triable issue of material fact sufficient to defeat summary adjudication on either claim. Despite a lengthy brief and voluminous exhibits, Vantor's Opposition does not cure the fundamental legal deficiencies that Cascade identified in its moving papers. Instead, the Opposition highlights the weakness of these two causes of action and underscores why summary adjudication is both appropriate and warranted at this stage of the proceedings.

On the Section 17200 Claim (Third Cause of Action), Vantor's Opposition effectively concedes the point. The Opposition identifies no independent unlawful, unfair, or fraudulent business practice that could sustain a claim under the Unfair Competition Law ("UCL") apart from the same supplier solicitation conduct that forms the basis of Vantor's First and Second Causes of Action for tortious interference. Vantor has not alleged any consumer harm, any deceptive advertising, any violation of any separate statutory scheme, or any other independently actionable practice cognizable under Section 17200. The Third Cause of Action is, in substance and in fact, a wholesale repackaging of the tortious interference claims, and it adds no independent factual or legal basis for relief. The claim should be adjudicated in Cascade's favor as a matter of law.

On the Prospective Economic Advantage Claim (Second Cause of Action), Vantor's Opposition rests almost entirely on fourteen (14) internal Cascade emails from the "Project Atlas" initiative that reference Vantor's existing supplier relationships with Hemsworth Consumer Products LLC ("Hemsworth"), Tridale Manufacturing Inc. ("Tridale"), and Orion Lifestyle Brands Corp. ("Orion"). These fourteen emails—drawn from a universe of 2,847 Project Atlas emails reviewed in discovery—are the centerpiece of Vantor's Opposition. But awareness of a competitor's existence in the marketplace is not independently wrongful conduct. It is the irreducible minimum of competitive intelligence in any industry, and the consumer goods distribution industry is no exception. Vantor conflates competitive awareness with the type of actionable wrongful conduct—fraud, misrepresentation, threats, intimidation, or other conduct independently tortious or violative of a constitutional, statutory, regulatory, or common law standard—that California law requires to sustain a claim for interference with prospective economic advantage.

This distinction is not merely semantic. It is the bright-line rule established by the California Supreme Court and consistently applied by courts throughout this state. A plaintiff claiming tortious interference with prospective economic advantage, as opposed to interference with an existing contractual relationship, must demonstrate that the defendant employed independently wrongful means. Vantor has not done so, and the record evidence does not permit any reasonable trier of fact to so conclude.

This Reply addresses the specific arguments raised in Vantor's Opposition, demonstrates that none of them saves either the Second or Third Cause of Action from summary adjudication, and respectfully requests that the Court grant Cascade's Motion.

II. ARGUMENT

A. Vantor's Third Cause of Action Under Business and Professions Code Section 17200 Is Properly Subject to Summary Adjudication as Duplicative and Lacking Independent Legal Basis

1. Vantor's Opposition Identifies No Independent "Unlawful, Unfair, or Fraudulent" Conduct Beyond the Alleged Tortious Interference

California's Unfair Competition Law, Business and Professions Code section 17200, prohibits "any unlawful, unfair or fraudulent business act or practice." The statute establishes three independent prongs—unlawful, unfair, and fraudulent—each of which provides a separate and distinct basis for relief. Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180. However, the UCL is not a freestanding vehicle to relitigate claims that are otherwise grounded in other legal theories. Where a Section 17200 claim is wholly derivative of another tort claim and adds no independent theory of liability, it is properly subject to summary adjudication.

Vantor's Third Cause of Action is precisely such a derivative claim. In its Opposition, Vantor asserts that Cascade's conduct was "unlawful" and "unfair" within the meaning of Section 17200, but it identifies no business practice that is independently unlawful, unfair, or fraudulent apart from the same supplier solicitations that form the basis of the First Cause of Action (tortious interference with contractual relations) and the Second Cause of Action (tortious interference with prospective economic advantage). The Opposition merely restates, in slightly different language, the allegations that Cascade entered into supply agreements with Hemsworth, Tridale, and Orion during the period when those suppliers had existing exclusive supply agreements with Vantor. This is the identical factual predicate upon which all three causes of action rest, and the Section 17200 claim adds nothing to the analysis.

Significantly, Vantor has not alleged any consumer harm. It has not alleged any deceptive advertising directed at consumers or competitors. It has not alleged any violation of any statute other than Section 17200 itself—which, under the "unlawful" prong, requires an underlying statutory violation that the UCL "borrows" and treats as independently actionable. See Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 383 ("By proscribing 'any unlawful' business practice, section 17200 'borrows' violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable."). Vantor has identified no such borrowed violation. It has not alleged any separate regulatory infraction, any violation of the Cartwright Act, any violation of the Federal Trade Commission Act, or any other statutory predicate that could independently sustain the "unlawful" prong. The Opposition is conspicuously silent on this point.

Nor has Vantor alleged any "fraudulent" conduct within the meaning of the UCL's third prong. There are no allegations that Cascade made any false representations to Vantor, to any of the three suppliers, or to any member of the consuming public. There are no allegations that Cascade engaged in deceptive marketing, false advertising, or any other form of misrepresentation. The "fraudulent" prong is simply inapplicable on this record.

What remains is Vantor's argument under the "unfair" prong, which Cascade addresses separately below. But the fundamental point is this: Vantor's Section 17200 claim is not an independent cause of action. It is a repackaging of the same facts and the same theory of harm that animate the tortious interference claims. Under well-established California precedent, such wholly derivative UCL claims are properly dismissed on summary judgment because they serve no independent purpose and merely multiply the theories of recovery without adding any substantive content. See Glenrock Corporation (2003) 29 Cal.4th 1134, 1143–1144.

2. Vantor's "Unfairness" Theory Fails the Applicable Balancing Test

To the extent Vantor argues that Cascade's conduct was "unfair" under the Section 17200 framework, it must satisfy the applicable standard for "unfairness" in competitor cases. In disputes between competitors, California courts apply the test articulated in Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., supra, 20 Cal.4th at 186–187, which requires that the challenged conduct "threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition." The Cel-Tech test is demanding by design. It ensures that the UCL's "unfair" prong does not become "a back door by which to attack conduct that is lawful competition."

Even under the broader balancing test applied in some consumer-harm contexts—which weighs the utility of the defendant's conduct against the harm to the plaintiff—Vantor's theory fails. Entering into arm's-length supply agreements in the ordinary course of business is presumptively lawful competitive conduct. Cascade's "Project Atlas" initiative, launched in February 2021, was a company-wide supplier diversification strategy designed to identify and onboard twenty-five (25) new suppliers across three product categories: home goods, consumer electronics accessories, and personal care products. The initiative was led by Annika Bergström, Vice President of Strategic Sourcing, under the supervision of Lena Torvik, Senior Vice President of Supply Chain and Procurement, and was approved by Cascade's executive leadership team as part of its fiscal year 2021 strategic plan. Project Atlas was a legitimate business diversification strategy by a publicly traded company (Nasdaq: CRHI) with approximately $6.8 billion in annual revenue and over 340 retail locations across the western United States and Pacific Northwest.

The utility of such conduct is self-evident. Supplier diversification reduces supply chain risk, enhances product assortment for consumers, and promotes competitive pricing—all of which serve the interests of both the company and its customers. Against this substantial utility, Vantor's claim of harm amounts to the assertion that it lost three supplier relationships to a competitor that offered those suppliers more favorable commercial terms. This is not the type of cognizable harm that the UCL's "unfair" prong was designed to address. It is the ordinary consequence of vigorous marketplace competition.

Vantor cites no authority—and Cascade is aware of none—for the proposition that a larger competitor's supplier outreach program constitutes an "unfair" practice cognizable under Section 17200 absent some additional wrongful element such as fraud, deception, coercion, or violation of a separate statutory scheme. The Opposition's failure to identify any such authority is telling. Summary adjudication on the Third Cause of Action should be granted.

B. Vantor's Second Cause of Action for Tortious Interference with Prospective Economic Advantage Fails Because Vantor Cannot Establish Independently Wrongful Conduct

1. The Legal Standard Requires Independently Wrongful Conduct

The elements of a claim for tortious interference with prospective economic advantage under California law are well established. A plaintiff must demonstrate: (1) an economic relationship between the plaintiff and a third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts by the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the defendant's acts. Glenrock Corporation, supra, 29 Cal.4th at 1164–1165.

Critically, California law imposes an additional requirement on claims for interference with prospective economic advantage that does not apply to claims for interference with existing contractual relations: the plaintiff must demonstrate that the defendant engaged in conduct that was "independently wrongful"—i.e., wrongful apart from the interference itself. della Penna v. Crowne Albany Industries (1995) 11 Cal.4th 376, 392–393. This is the critical distinction between the two interference torts, and it reflects the California Supreme Court's recognition that "it is not tort simply to do business with a third party, even if doing so causes harm to a competitor." Id.

The "independently wrongful" requirement is not a low bar. The conduct must be "proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard." Korea Supply Co., supra, 29 Cal.4th at 1159. Merely entering into a competing supply agreement—even with knowledge that the supplier has existing relationships with another firm—does not satisfy this standard. As the Court of Appeal explained in Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1152, the independently wrongful conduct requirement ensures that "a plaintiff may not recover for the tort of interference with prospective economic advantage where the defendant's allegedly wrongful conduct consists of nothing more than lawful competition."

Vantor's Opposition fails to identify any independently wrongful act by Cascade. This failure is dispositive. Without evidence of independently wrongful conduct, Vantor's Second Cause of Action cannot survive summary adjudication as a matter of law.

2. The Fourteen Project Atlas Emails Do Not Create a Triable Issue of Fact on Independently Wrongful Conduct

Vantor's Opposition centers its entire argument regarding independently wrongful conduct on fourteen (14) internal Cascade emails from the Project Atlas initiative that reference Vantor's existing supplier relationships with Hemsworth, Tridale, and Orion. These fourteen emails were produced by Cascade in discovery and constitute the core of Vantor's evidentiary showing in opposition to Cascade's Motion. Out of a universe of 2,847 Project Atlas–related emails reviewed and produced in discovery, Vantor has identified fourteen that mention Vantor by name. Vantor argues that these fourteen emails demonstrate that Cascade "knew" about Vantor's supplier relationships and therefore acted with the requisite intent to interfere with Vantor's prospective economic advantages—i.e., the expectation of renewed and expanded supplier relationships beyond the initial contract terms with Hemsworth, Tridale, and Orion.

This argument fundamentally mischaracterizes the legal standard. Even taken in the light most favorable to Vantor—as the Court must on a motion for summary judgment—these fourteen emails do not establish independently wrongful conduct. They establish, at most, that Cascade was aware that Vantor had business relationships with three suppliers. Awareness of a competitor's existence is not tortious conduct, independently wrongful or otherwise. The argument fails for several independent reasons, each of which is addressed in turn below.

a. Awareness of a Competitor Is Not Wrongful Conduct. The fourteen emails upon which Vantor relies reflect nothing more than Cascade personnel's awareness that Hemsworth, Tridale, and Orion had existing business relationships with Vantor. This is unremarkable competitive intelligence. In the consumer goods distribution industry, supplier-distributor relationships are well known within the trade. Trade publications, industry conferences, product packaging, retail shelf placements, and supplier marketing materials all provide readily accessible information about which suppliers serve which distributors and retailers. The notion that a competitor's awareness of such publicly available information could constitute "independently wrongful conduct" within the meaning of della Penna and Korea Supply finds no support in the case law and would, if adopted, effectively prohibit routine market analysis by every firm in every industry.

Critically, awareness of a competitor's business relationships is categorically different from knowledge of the specific exclusivity provisions in a competitor's contracts. None of the fourteen emails demonstrates that any Cascade employee had actual knowledge of the exclusive terms, minimum purchase commitments ($12.5 million for Hemsworth, $8.3 million for Tridale, $14.6 million for Orion), termination-for-convenience provisions, contract durations, or other specific contractual provisions of Vantor's supply agreements with any of the three suppliers. The emails reference Vantor as a competitor in the marketplace and identify Hemsworth, Tridale, and Orion as suppliers that do business with Vantor. They do not reference, discuss, or even allude to the terms of Vantor's agreements with those suppliers.

This distinction is confirmed by the deposition testimony of Annika Bergström, Cascade's Vice President of Strategic Sourcing and the leader of the Project Atlas initiative, who was deposed on October 12, 2022. Ms. Bergström testified clearly and without equivocation that Cascade did not have access to, nor did it seek, copies of Vantor's supply agreements. (Bergström Dep. 143:8–144:2.) She further testified that Project Atlas focused on identifying quality suppliers across multiple product categories and that the existence of a supplier's other customer relationships was not a factor in the decision to pursue new agreements with that supplier. (Bergström Dep. 156:11–157:19.) Ms. Bergström explained that the Project Atlas team evaluated potential suppliers based on product quality, manufacturing capacity, delivery reliability, pricing competitiveness, and alignment with Cascade's brand positioning—not based on whether those suppliers had existing relationships with Vantor or any other competitor. (Bergström Dep. 158:3–159:14.)

Vantor's Opposition does not address this testimony. It does not argue that Ms. Bergström's testimony was not credible or that it was contradicted by other evidence. It simply ignores it. But Ms. Bergström's unrebutted testimony confirms what the fourteen emails themselves demonstrate: Cascade was aware that Vantor existed as a competitor, and it was aware that certain suppliers did business with Vantor. That awareness is not independently wrongful conduct. It is the baseline knowledge that every firm in every competitive industry possesses about its competitors.

b. The Emails Reflect Routine Competitive Market Assessment, Not Wrongful Targeting. Vantor's reading of the fourteen emails is not only legally insufficient; it is factually misleading. Vantor's Opposition selectively quotes from the fourteen emails in a manner that omits the broader context in which references to Vantor appear. The fourteen emails are part of a comprehensive market assessment conducted by the Project Atlas team between February 2021 and September 2021. That market assessment involved the systematic evaluation of over one hundred potential suppliers across three product categories, the cataloging of existing supplier-distributor relationships throughout the consumer goods industry, and the development of outreach strategies for twenty-five target suppliers selected on the basis of product quality, capacity, and strategic fit.

References to Vantor in the fourteen emails appear in the context of cataloging the competitive landscape—i.e., understanding which suppliers serve which distributors and retailers across the market—not in the context of devising a scheme to disrupt Vantor's business or to "steal" Vantor's suppliers. Vantor was one of dozens of distributors and retailers referenced in the Project Atlas market assessment materials. The fourteen emails do not single out Vantor for targeted disruption. They do not discuss strategies for undermining Vantor's business. They do not propose approaching Vantor's suppliers with the purpose of depriving Vantor of those relationships. They reflect the ordinary process of supply chain due diligence by a company with a $4.2 million budget for supplier transition costs spread across twenty-five target suppliers.

Indeed, Vantor's effort to extract a narrative of wrongful targeting from these fourteen emails requires the Court to ignore the other 2,833 Project Atlas emails that were reviewed in discovery—the overwhelming majority of which have no connection to Vantor whatsoever and reflect a broad-based supplier diversification effort directed at numerous suppliers across the industry. When the fourteen emails are viewed in context, as they must be, they reveal nothing more than routine competitive intelligence gathering of the type that every company in a competitive industry engages in as a matter of course.

c. Knowledge of a Prospective Relationship Is Insufficient Without Wrongful Means. Even assuming arguendo that the fourteen emails demonstrated Cascade's knowledge that Vantor hoped to renew or expand its supplier relationships beyond the current contract terms—which they do not—knowledge alone does not constitute independently wrongful conduct. This point bears emphasis because it goes to the heart of Vantor's legal theory.

Under Korea Supply Co., the California Supreme Court held that a defendant's awareness of a plaintiff's prospective business expectancy does not, without more, give rise to liability for tortious interference with prospective economic advantage. 29 Cal.4th at 1164–1165. The plaintiff must show that the defendant used wrongful means—such as fraud, threats, intimidation, misrepresentation, or violation of a statutory or regulatory scheme—to disrupt the prospective relationship. Id. The reason for this requirement is straightforward: in a competitive marketplace, every firm is aware that its competitors have existing and prospective business relationships. If mere awareness of a competitor's prospective relationships were sufficient to establish liability, every competitive act that disrupted a rival's expectations would be tortious. Such a rule would be inconsistent with California's strong public policy favoring vigorous competition.

Vantor has identified no wrongful means whatsoever. Cascade's supply agreements with the three suppliers were arm's-length commercial transactions, negotiated at fair market terms, and entered into voluntarily by all parties:

• Cascade's agreement with Hemsworth Consumer Products LLC was executed on June 1, 2021, for a five-year term, with an annual purchase commitment of $28.0 million.

• Cascade's agreement with Tridale Manufacturing Inc. was executed on August 15, 2021, for a three-year term, with an annual purchase commitment of $19.5 million.

• Cascade's agreement with Orion Lifestyle Brands Corp. was executed on May 10, 2021, for a four-year term, with an annual purchase commitment of $31.0 million.

Each of these agreements was the product of good-faith negotiations between sophisticated commercial parties. There is no evidence that Cascade made any false representations to any of the three suppliers. There is no evidence that Cascade threatened, coerced, or intimidated any supplier into entering an agreement. There is no evidence that Cascade offered any inducement that was unlawful or contrary to public policy. There is no evidence that Cascade violated any statute, regulation, or other determinable legal standard in connection with any of these agreements.

Moreover, each of the three suppliers independently chose to enter agreements with Cascade after exercising termination-for-convenience clauses in their existing agreements with Vantor—provisions that Vantor itself negotiated and agreed to. Hemsworth exercised a 90-day termination-for-convenience clause; Tridale exercised a 60-day termination-for-convenience clause; and Orion exercised a 120-day termination-for-convenience clause. These contractual provisions gave each supplier the unilateral right to terminate its relationship with Vantor upon notice, for any reason or no reason at all. Vantor agreed to those provisions. Having done so, Vantor cannot now claim that a competitor's exercise of lawful competitive activity—offering better terms to suppliers who were contractually free to leave—constitutes independently wrongful conduct.

3. Vantor's "Pattern and Practice" Argument Is Unavailing

Vantor's Opposition suggests that the Court should infer wrongful conduct from the fact that Cascade entered agreements with three of Vantor's suppliers during the same general time period—May through August 2021. Vantor characterizes this temporal overlap as a "pattern and practice" of targeting Vantor's suppliers and argues that it creates a triable issue of fact regarding Cascade's intent and the wrongfulness of its conduct. This argument fails for multiple independent reasons.

First, the undisputed evidence demonstrates that Project Atlas targeted twenty-five (25) new suppliers across three product categories. Only three of those twenty-five suppliers were among Vantor's existing suppliers. The remaining twenty-two had no business relationship with Vantor. The expanded discovery ordered by the Court on August 3, 2022—which covered fifteen additional supplier relationships for a total of eighteen, including the three at issue—confirmed that the vast majority of Cascade's supplier outreach during the Project Atlas initiative was directed at suppliers with no connection to Vantor whatsoever. A ratio of three out of twenty-five does not constitute a "pattern and practice" of targeting a specific competitor. It reflects, at most, a modest overlap between two companies operating in the same industry and pursuing some of the same suppliers—which is exactly what one would expect in a competitive marketplace.

Second, entering into competing supply agreements in the ordinary course of business is lawful competition, not "wrongful conduct." California law protects—indeed, actively encourages—the right of businesses to compete vigorously for supplier relationships, customer relationships, and market position. See Bixby v. Pierno (1971) 4 Cal.3d 130, 141 (recognizing California's strong public policy favoring free and vigorous competition). The fact that a competitor successfully attracts suppliers away from a rival by offering better terms is the very essence of competition. It is not tortious conduct, and no amount of relabeling it as a "pattern and practice" can transform it into independently wrongful conduct within the meaning of della Penna and Korea Supply.

Third, the timeline of the three agreements reflects the natural progression of a supplier diversification initiative launched in February 2021, not a targeted campaign against Vantor. Project Atlas involved outreach to twenty-five suppliers, each of which required separate analysis, separate negotiations, and separate contracting processes. The three agreements at issue were executed over a four-month period—May 10 (Orion), June 1 (Hemsworth), and August 15 (Tridale)—as negotiations with different suppliers concluded at different times based on the ordinary dynamics of commercial negotiation. This timeline is entirely consistent with the normal course of a multi-supplier procurement initiative. It does not support an inference of targeted wrongful conduct.

4. Vantor's Reliance on the Deposition Testimony of Thomas Brennecke Is Misplaced

Vantor's Opposition cites extensively to the deposition testimony of Thomas Brennecke, Vantor's Vice President of Supplier Relations, who was deposed on October 26, 2022. Mr. Brennecke testified that each of the three suppliers—Hemsworth, Tridale, and Orion—informed Vantor that they were terminating their exclusive supply arrangements to pursue a relationship with Cascade. (Brennecke Dep. 87:14–88:9; 102:3–103:17; 118:22–119:15.) Vantor argues that this testimony demonstrates Cascade's culpability and the suppliers' awareness of the competitive dynamic.

Mr. Brennecke's testimony establishes only one thing: that the three suppliers chose to leave Vantor for Cascade. It does not establish—and cannot establish—that Cascade used wrongful means to cause that decision. The fact that a competitor offers better terms—higher annual purchase commitments, longer contract durations, and greater business certainty—is lawful competition. It is precisely the kind of competitive conduct that the marketplace is designed to encourage. Suppliers, like all economic actors, are free to choose the business partners that offer them the most favorable terms, and they are free to exercise contractual termination rights that were negotiated at arm's length with their existing partners.

The significance of the comparative economics cannot be overstated. As the deposition of Lena Torvik, Cascade's Senior Vice President of Supply Chain and Procurement, deposed on November 18, 2022, confirmed, Cascade's supply agreements offered significantly higher annual purchase commitments than Vantor's agreements:

(Torvik Dep. 201:4–203:11.) In light of these figures, it is unsurprising—indeed, it is entirely predictable—that the three suppliers chose to enter agreements with Cascade. No supplier acting in its own economic self-interest would decline purchase commitments that are more than double those of its existing partner. The suppliers' decisions to leave Vantor for Cascade were rational commercial decisions driven by superior economic terms, not the product of any wrongful conduct by Cascade.

Mr. Brennecke's testimony, far from creating a triable issue of fact on independently wrongful conduct, actually confirms the absence of any wrongful conduct. The suppliers told Vantor they were leaving. They did so openly and in accordance with their contractual rights. There was no subterfuge, no deception, and no coercion. This is lawful competition at its most transparent.

C. Even If a Triable Issue Existed on Independently Wrongful Conduct, the Prospective Economic Advantage Claim Fails for Lack of Cognizable Damages

1. Vantor's Damages Theory for the Prospective Advantage Claim Depends on Speculative Future Revenue Streams

Even if the Court were to find that a triable issue of fact exists on the element of independently wrongful conduct—which Cascade respectfully submits it should not—the Second Cause of Action would still fail as a matter of law because Vantor's damages theory is impermissibly speculative.

The Second Cause of Action concerns tortious interference with prospective economic advantage—i.e., the expectation that Vantor would have renewed or expanded its supplier relationships with Hemsworth, Tridale, and Orion beyond the existing contract terms. This is a claim about future business opportunities that may or may not have materialized, not a claim about the disruption of existing contractual rights. The distinction is critical to the damages analysis.

Vantor's damages expert, Dr. Harold Pryce of Meridian Forensic Economics LLC, submitted an expert report projecting lost profits from the alleged interference with Vantor's prospective economic advantages. Dr. Pryce's projections are based on multi-year revenue streams extending well beyond the expiration dates of Vantor's existing supply agreements:

These projections are inherently speculative for the prospective advantage claim because there is no guarantee—and no contractual entitlement—that any of the three suppliers would have renewed or expanded their agreements with Vantor. The existing supply agreements were fixed-term contracts with no automatic renewal provisions. Each agreement contained a termination-for-convenience clause that gave the supplier the unilateral right to terminate the relationship upon notice (Hemsworth: 90 days; Tridale: 60 days; Orion: 120 days). And each agreement had a fixed expiration date beyond which neither party had any obligation to the other.

Under these circumstances, Dr. Pryce's projections of five, four, and six years of future revenue beyond the contract expiration dates are built entirely on assumptions about future events that are, by definition, uncertain. There is no evidence that any of the three suppliers had committed to renewing their agreements with Vantor. There is no evidence that any renewal negotiations had commenced. There is no evidence of any binding letters of intent, memoranda of understanding, or other pre-contractual commitments. Dr. Pryce's projections assume that the suppliers would have renewed their agreements with Vantor at the same or higher volume levels, that the exclusivity provisions would have been maintained, and that Vantor's profit margins would have remained stable—assumptions that are entirely speculative and unsupported by the factual record.

California law is clear that damages based on the mere hope or expectation of future business relationships are too speculative to support a judgment. See Youst v. Longo (1987) 43 Cal.3d 64, 79 (holding that damages for lost profits must be proven with "reasonable certainty" and may not be based on "speculation or conjecture"). The prospective advantage claim's damages theory fails this standard.

2. Dr. Ostrowski's Rebuttal Report Confirms the Speculative Nature of Vantor's Prospective Damages

The speculative nature of Vantor's damages theory is further confirmed by the rebuttal report of Cascade's damages expert, Dr. Vivian Ostrowski of Archer & Colvin Consulting Group, submitted on December 22, 2022. Dr. Ostrowski conducted an independent analysis of the damages attributable to the alleged interference and concluded that any cognizable damages should be limited to the remaining exclusive contract terms—i.e., the period between the date the suppliers terminated their agreements with Vantor and the dates those agreements would have expired by their own terms:

Dr. Ostrowski further opined that Vantor's failure to mitigate its damages by seeking alternative suppliers during the post-termination period would reduce the recoverable damages by approximately 40% to 55%. Dr. Ostrowski noted that Vantor did not initiate discussions with any alternative suppliers until more than four months after the last of the three suppliers (Tridale) exercised its termination-for-convenience clause, despite the availability of numerous comparable suppliers in each of the three product categories.

The contrast between Dr. Pryce's $87.4 million projection and Dr. Ostrowski's $6.1–$11.3 million range is striking, but for purposes of the pending Motion, the critical point is not the magnitude of the discrepancy. The critical point is that Dr. Pryce's multi-year projections rest on assumptions about future contract renewals, expanded product lines, and continued exclusivity that are unsupported by the terms of the existing agreements, by the suppliers' conduct, or by any other evidence in the record. These assumptions are the very definition of speculation, and they cannot sustain a damages claim on the prospective advantage cause of action as a matter of law.

Because the Second Cause of Action's damages theory is built entirely on speculation about future business relationships that may never have materialized, the claim fails independently on the damages element, providing an additional and independent basis for summary adjudication.

III. VANTOR'S OPPOSITION DOES NOT OVERCOME CASCADE'S SHOWING ON EITHER CLAIM

In summary, Vantor's Opposition suffers from four fundamental deficiencies, each of which independently warrants the granting of Cascade's Motion:

First, on the Section 17200 claim (Third Cause of Action), Vantor identifies no independent unlawful, unfair, or fraudulent business practice separate from the tortious interference allegations. The Third Cause of Action is entirely derivative of the First and Second Causes of Action and adds no independent legal theory, no independent factual basis, and no independent measure of damages. It is properly subject to summary adjudication.

Second, on the prospective economic advantage claim (Second Cause of Action), Vantor's reliance on the fourteen Project Atlas emails confuses competitive awareness with independently wrongful conduct. The emails demonstrate, at most, that Cascade was aware of Vantor's existence as a competitor in the marketplace and knew that certain suppliers did business with Vantor. This is not independently wrongful conduct. No evidence of fraud, threats, misrepresentation, coercion, intimidation, or violation of any statutory, regulatory, or common law standard has been presented. Vantor has failed to carry its burden on the essential element of independently wrongful conduct, and no reasonable trier of fact could find otherwise on this record.

Third, Vantor's "pattern and practice" theory—the suggestion that the temporal overlap of the three supply agreements creates an inference of wrongful targeting—is belied by the undisputed facts. Project Atlas targeted twenty-five suppliers across three product categories. Only three of those twenty-five had any business relationship with Vantor. The remaining twenty-two had no connection to Vantor whatsoever. The timeline of the three agreements (May through August 2021) reflects the natural cadence of a multi-supplier procurement initiative, not a targeted campaign against a single competitor.

Fourth, Vantor's damages theory for the prospective advantage claim is impermissibly speculative. Dr. Pryce's projections extend five, four, and six years beyond the expiration dates of Vantor's existing supply agreements, based on assumptions about future contract renewals and expanded exclusivity arrangements that are unsupported by the record. The existing agreements contained termination-for-convenience clauses and fixed expiration dates. There was no contractual entitlement to renewal, no binding commitment to renewal, and no evidence that renewal negotiations had even commenced. Damages built on the hope that future business relationships might have materialized are too speculative to sustain a cause of action as a matter of law.

The undisputed material facts, as set forth in Cascade's Separate Statement of Undisputed Material Facts filed on February 28, 2023, and as confirmed by the evidence discussed herein, establish that Cascade is entitled to summary adjudication on both the Second and Third Causes of Action. Vantor's Opposition has not raised a triable issue of material fact on any element of either claim, and summary adjudication should be granted.

IV. CONCLUSION

For the reasons set forth above and in Cascade's moving papers filed on February 28, 2023, Defendant Cascade Retail Holdings Inc. respectfully requests that the Court grant its Motion for Partial Summary Judgment and enter summary adjudication in Cascade's favor on the following causes of action:

1. Vantor's Second Cause of Action for Tortious Interference with Prospective Economic Advantage; and

2. Vantor's Third Cause of Action for Unfair Business Practices under California Business and Professions Code section 17200 et seq.

Dated: April 4, 2023

CALDERWOOD & HARKNESS LLP

By: ________

Douglas Carmichael (SBN 187452)

600 South Grand Avenue, Suite 3200 Los Angeles, California 90071 Telephone: (213) 629-4000

Attorneys for Defendant Cascade Retail Holdings Inc.

PROOF OF SERVICE

STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

I, Carlos Espinoza, am employed in the County of Los Angeles, State of California. I am over the age of eighteen (18) years and 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 April 4, 2023, I served the foregoing document described as DEFENDANT CASCADE RETAIL HOLDINGS INC.'S REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT ON PLAINTIFF'S SECOND AND THIRD CAUSES OF ACTION on the interested parties in this action by transmitting a true copy via electronic service through the Court's electronic filing system and by email to the following persons at the email addresses listed below:

Martin Kessler (SBN 156823) Natalie Whitfield (SBN 198745) Jason Okafor (SBN 287631) KESSLER, BRANDT & WHITFIELD LLP 1999 Avenue of the Stars, Suite 2800 Los Angeles, California 90067 Telephone: (310) 553-7200

Email: mkessler@kbwlaw.com

Email: nwhitfield@kbwlaw.com

Email: jokafor@kbwlaw.com

Attorneys for Plaintiff Vantor Holdings Corp.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on April 4, 2023, at Los Angeles, California.

________________________________________

Carlos Espinoza

Supplier	Vantor Annual Commitment	Cascade Annual Commitment	Difference
Hemsworth Consumer Products LLC	$12.5 million	$28.0 million	+$15.5 million (+124%)
Tridale Manufacturing Inc.	$8.3 million	$19.5 million	+$11.2 million (+135%)
Orion Lifestyle Brands Corp.	$14.6 million	$31.0 million	+$16.4 million (+112%)
Supplier	Existing Contract Expiration	Dr. Pryce's Projection Period	Projected Lost Profits	Discount Rate
Hemsworth	March 14, 2022	5 years beyond expiration	$34.2 million	8.5%
Tridale	January 9, 2022	4 years beyond expiration	$22.8 million	8.5%
Orion	June 30, 2022	6 years beyond expiration	$30.4 million	8.5%
Total	$87.4 million
Supplier	Remaining Exclusive Term	Dr. Ostrowski's Damages Range
Hemsworth	Approximately 9 months	$2.8 million – $4.9 million
Tridale	Approximately 5 months	$1.4 million – $2.7 million
Orion	Approximately 13 months	$1.9 million – $3.7 million
Total	$6.1 million – $11.3 million

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
VANTOR HOLDINGS CORP.,
Plaintiff,
v.
CASCADE RETAIL HOLDINGS INC.,
Defendant.
Case No. 21STCV-34872
Assigned for All Purposes to the Honorable Patricia M. Gutierrez, Department 36
DEFENDANT CASCADE RETAIL HOLDINGS INC.'S REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT ON PLAINTIFF'S SECOND AND THIRD CAUSES OF ACTION
Motion Filed: February 28, 2023 Opposition Filed: March 21, 2023 Reply Filed: April 4, 2023 Hearing Date: April 14, 2023 Time: 9:00 a.m. Dept.: 36
Douglas Carmichael (SBN 187452) Francesca Morano (SBN 224891) Yuki Nakamura (SBN 301776) Carlos Espinoza (SBN 318904) CALDERWOOD & HARKNESS LLP 600 South Grand Avenue, Suite 3200 Los Angeles, California 90071 Telephone: (213) 629-4000 Facsimile: (213) 629-4001
Email: dcarmichael@calderwoodharkness.com
Attorneys for Defendant Cascade Retail Holdings Inc.
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I. INTRODUCTION
Defendant Cascade Retail Holdings Inc. ("Cascade" or "Defendant") respectfully submits this Reply in support of its Motion for Partial Summary Judgment filed on February 28, 2023, seeking summary adjudication on Plaintiff Vantor Holdings Corp.'s ("Vantor" or "Plaintiff") Second Cause of Action for Tortious Interference with Prospective Economic Advantage and Third Cause of Action for Unfair Business Practices under California Business and Professions Code section 17200 et seq. Cascade files this Reply in response to Vantor's Opposition, filed on March 21, 2023, and the accompanying declarations and exhibits submitted therewith.
Vantor's Opposition fails to raise any triable issue of material fact sufficient to defeat summary adjudication on either claim. Despite a lengthy brief and voluminous exhibits, Vantor's Opposition does not cure the fundamental legal deficiencies that Cascade identified in its moving papers. Instead, the Opposition highlights the weakness of these two causes of action and underscores why summary adjudication is both appropriate and warranted at this stage of the proceedings.
On the Section 17200 Claim (Third Cause of Action), Vantor's Opposition effectively concedes the point. The Opposition identifies no independent unlawful, unfair, or fraudulent business practice that could sustain a claim under the Unfair Competition Law ("UCL") apart from the same supplier solicitation conduct that forms the basis of Vantor's First and Second Causes of Action for tortious interference. Vantor has not alleged any consumer harm, any deceptive advertising, any violation of any separate statutory scheme, or any other independently actionable practice cognizable under Section 17200. The Third Cause of Action is, in substance and in fact, a wholesale repackaging of the tortious interference claims, and it adds no independent factual or legal basis for relief. The claim should be adjudicated in Cascade's favor as a matter of law.
On the Prospective Economic Advantage Claim (Second Cause of Action), Vantor's Opposition rests almost entirely on fourteen (14) internal Cascade emails from the "Project Atlas" initiative that reference Vantor's existing supplier relationships with Hemsworth Consumer Products LLC ("Hemsworth"), Tridale Manufacturing Inc. ("Tridale"), and Orion Lifestyle Brands Corp. ("Orion"). These fourteen emails—drawn from a universe of 2,847 Project Atlas emails reviewed in discovery—are the centerpiece of Vantor's Opposition. But awareness of a competitor's existence in the marketplace is not independently wrongful conduct. It is the irreducible minimum of competitive intelligence in any industry, and the consumer goods distribution industry is no exception. Vantor conflates competitive awareness with the type of actionable wrongful conduct—fraud, misrepresentation, threats, intimidation, or other conduct independently tortious or violative of a constitutional, statutory, regulatory, or common law standard—that California law requires to sustain a claim for interference with prospective economic advantage.
This distinction is not merely semantic. It is the bright-line rule established by the California Supreme Court and consistently applied by courts throughout this state. A plaintiff claiming tortious interference with prospective economic advantage, as opposed to interference with an existing contractual relationship, must demonstrate that the defendant employed independently wrongful means. Vantor has not done so, and the record evidence does not permit any reasonable trier of fact to so conclude.
This Reply addresses the specific arguments raised in Vantor's Opposition, demonstrates that none of them saves either the Second or Third Cause of Action from summary adjudication, and respectfully requests that the Court grant Cascade's Motion.
II. ARGUMENT
A. Vantor's Third Cause of Action Under Business and Professions Code Section 17200 Is Properly Subject to Summary Adjudication as Duplicative and Lacking Independent Legal Basis
1. Vantor's Opposition Identifies No Independent "Unlawful, Unfair, or Fraudulent" Conduct Beyond the Alleged Tortious Interference
California's Unfair Competition Law, Business and Professions Code section 17200, prohibits "any unlawful, unfair or fraudulent business act or practice." The statute establishes three independent prongs—unlawful, unfair, and fraudulent—each of which provides a separate and distinct basis for relief. Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180. However, the UCL is not a freestanding vehicle to relitigate claims that are otherwise grounded in other legal theories. Where a Section 17200 claim is wholly derivative of another tort claim and adds no independent theory of liability, it is properly subject to summary adjudication.
Vantor's Third Cause of Action is precisely such a derivative claim. In its Opposition, Vantor asserts that Cascade's conduct was "unlawful" and "unfair" within the meaning of Section 17200, but it identifies no business practice that is independently unlawful, unfair, or fraudulent apart from the same supplier solicitations that form the basis of the First Cause of Action (tortious interference with contractual relations) and the Second Cause of Action (tortious interference with prospective economic advantage). The Opposition merely restates, in slightly different language, the allegations that Cascade entered into supply agreements with Hemsworth, Tridale, and Orion during the period when those suppliers had existing exclusive supply agreements with Vantor. This is the identical factual predicate upon which all three causes of action rest, and the Section 17200 claim adds nothing to the analysis.
Significantly, Vantor has not alleged any consumer harm. It has not alleged any deceptive advertising directed at consumers or competitors. It has not alleged any violation of any statute other than Section 17200 itself—which, under the "unlawful" prong, requires an underlying statutory violation that the UCL "borrows" and treats as independently actionable. See Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 383 ("By proscribing 'any unlawful' business practice, section 17200 'borrows' violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable."). Vantor has identified no such borrowed violation. It has not alleged any separate regulatory infraction, any violation of the Cartwright Act, any violation of the Federal Trade Commission Act, or any other statutory predicate that could independently sustain the "unlawful" prong. The Opposition is conspicuously silent on this point.
Nor has Vantor alleged any "fraudulent" conduct within the meaning of the UCL's third prong. There are no allegations that Cascade made any false representations to Vantor, to any of the three suppliers, or to any member of the consuming public. There are no allegations that Cascade engaged in deceptive marketing, false advertising, or any other form of misrepresentation. The "fraudulent" prong is simply inapplicable on this record.
What remains is Vantor's argument under the "unfair" prong, which Cascade addresses separately below. But the fundamental point is this: Vantor's Section 17200 claim is not an independent cause of action. It is a repackaging of the same facts and the same theory of harm that animate the tortious interference claims. Under well-established California precedent, such wholly derivative UCL claims are properly dismissed on summary judgment because they serve no independent purpose and merely multiply the theories of recovery without adding any substantive content. See Glenrock Corporation (2003) 29 Cal.4th 1134, 1143–1144.
2. Vantor's "Unfairness" Theory Fails the Applicable Balancing Test
To the extent Vantor argues that Cascade's conduct was "unfair" under the Section 17200 framework, it must satisfy the applicable standard for "unfairness" in competitor cases. In disputes between competitors, California courts apply the test articulated in Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., supra, 20 Cal.4th at 186–187, which requires that the challenged conduct "threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition." The Cel-Tech test is demanding by design. It ensures that the UCL's "unfair" prong does not become "a back door by which to attack conduct that is lawful competition."
Even under the broader balancing test applied in some consumer-harm contexts—which weighs the utility of the defendant's conduct against the harm to the plaintiff—Vantor's theory fails. Entering into arm's-length supply agreements in the ordinary course of business is presumptively lawful competitive conduct. Cascade's "Project Atlas" initiative, launched in February 2021, was a company-wide supplier diversification strategy designed to identify and onboard twenty-five (25) new suppliers across three product categories: home goods, consumer electronics accessories, and personal care products. The initiative was led by Annika Bergström, Vice President of Strategic Sourcing, under the supervision of Lena Torvik, Senior Vice President of Supply Chain and Procurement, and was approved by Cascade's executive leadership team as part of its fiscal year 2021 strategic plan. Project Atlas was a legitimate business diversification strategy by a publicly traded company (Nasdaq: CRHI) with approximately $6.8 billion in annual revenue and over 340 retail locations across the western United States and Pacific Northwest.
The utility of such conduct is self-evident. Supplier diversification reduces supply chain risk, enhances product assortment for consumers, and promotes competitive pricing—all of which serve the interests of both the company and its customers. Against this substantial utility, Vantor's claim of harm amounts to the assertion that it lost three supplier relationships to a competitor that offered those suppliers more favorable commercial terms. This is not the type of cognizable harm that the UCL's "unfair" prong was designed to address. It is the ordinary consequence of vigorous marketplace competition.
Vantor cites no authority—and Cascade is aware of none—for the proposition that a larger competitor's supplier outreach program constitutes an "unfair" practice cognizable under Section 17200 absent some additional wrongful element such as fraud, deception, coercion, or violation of a separate statutory scheme. The Opposition's failure to identify any such authority is telling. Summary adjudication on the Third Cause of Action should be granted.
B. Vantor's Second Cause of Action for Tortious Interference with Prospective Economic Advantage Fails Because Vantor Cannot Establish Independently Wrongful Conduct
1. The Legal Standard Requires Independently Wrongful Conduct
The elements of a claim for tortious interference with prospective economic advantage under California law are well established. A plaintiff must demonstrate: (1) an economic relationship between the plaintiff and a third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts by the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the defendant's acts. Glenrock Corporation, supra, 29 Cal.4th at 1164–1165.
Critically, California law imposes an additional requirement on claims for interference with prospective economic advantage that does not apply to claims for interference with existing contractual relations: the plaintiff must demonstrate that the defendant engaged in conduct that was "independently wrongful"—i.e., wrongful apart from the interference itself. della Penna v. Crowne Albany Industries (1995) 11 Cal.4th 376, 392–393. This is the critical distinction between the two interference torts, and it reflects the California Supreme Court's recognition that "it is not tort simply to do business with a third party, even if doing so causes harm to a competitor." Id.
The "independently wrongful" requirement is not a low bar. The conduct must be "proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard." Korea Supply Co., supra, 29 Cal.4th at 1159. Merely entering into a competing supply agreement—even with knowledge that the supplier has existing relationships with another firm—does not satisfy this standard. As the Court of Appeal explained in Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1152, the independently wrongful conduct requirement ensures that "a plaintiff may not recover for the tort of interference with prospective economic advantage where the defendant's allegedly wrongful conduct consists of nothing more than lawful competition."
Vantor's Opposition fails to identify any independently wrongful act by Cascade. This failure is dispositive. Without evidence of independently wrongful conduct, Vantor's Second Cause of Action cannot survive summary adjudication as a matter of law.
2. The Fourteen Project Atlas Emails Do Not Create a Triable Issue of Fact on Independently Wrongful Conduct
Vantor's Opposition centers its entire argument regarding independently wrongful conduct on fourteen (14) internal Cascade emails from the Project Atlas initiative that reference Vantor's existing supplier relationships with Hemsworth, Tridale, and Orion. These fourteen emails were produced by Cascade in discovery and constitute the core of Vantor's evidentiary showing in opposition to Cascade's Motion. Out of a universe of 2,847 Project Atlas–related emails reviewed and produced in discovery, Vantor has identified fourteen that mention Vantor by name. Vantor argues that these fourteen emails demonstrate that Cascade "knew" about Vantor's supplier relationships and therefore acted with the requisite intent to interfere with Vantor's prospective economic advantages—i.e., the expectation of renewed and expanded supplier relationships beyond the initial contract terms with Hemsworth, Tridale, and Orion.
This argument fundamentally mischaracterizes the legal standard. Even taken in the light most favorable to Vantor—as the Court must on a motion for summary judgment—these fourteen emails do not establish independently wrongful conduct. They establish, at most, that Cascade was aware that Vantor had business relationships with three suppliers. Awareness of a competitor's existence is not tortious conduct, independently wrongful or otherwise. The argument fails for several independent reasons, each of which is addressed in turn below.
a. Awareness of a Competitor Is Not Wrongful Conduct. The fourteen emails upon which Vantor relies reflect nothing more than Cascade personnel's awareness that Hemsworth, Tridale, and Orion had existing business relationships with Vantor. This is unremarkable competitive intelligence. In the consumer goods distribution industry, supplier-distributor relationships are well known within the trade. Trade publications, industry conferences, product packaging, retail shelf placements, and supplier marketing materials all provide readily accessible information about which suppliers serve which distributors and retailers. The notion that a competitor's awareness of such publicly available information could constitute "independently wrongful conduct" within the meaning of della Penna and Korea Supply finds no support in the case law and would, if adopted, effectively prohibit routine market analysis by every firm in every industry.
Critically, awareness of a competitor's business relationships is categorically different from knowledge of the specific exclusivity provisions in a competitor's contracts. None of the fourteen emails demonstrates that any Cascade employee had actual knowledge of the exclusive terms, minimum purchase commitments ($12.5 million for Hemsworth, $8.3 million for Tridale, $14.6 million for Orion), termination-for-convenience provisions, contract durations, or other specific contractual provisions of Vantor's supply agreements with any of the three suppliers. The emails reference Vantor as a competitor in the marketplace and identify Hemsworth, Tridale, and Orion as suppliers that do business with Vantor. They do not reference, discuss, or even allude to the terms of Vantor's agreements with those suppliers.
This distinction is confirmed by the deposition testimony of Annika Bergström, Cascade's Vice President of Strategic Sourcing and the leader of the Project Atlas initiative, who was deposed on October 12, 2022. Ms. Bergström testified clearly and without equivocation that Cascade did not have access to, nor did it seek, copies of Vantor's supply agreements. (Bergström Dep. 143:8–144:2.) She further testified that Project Atlas focused on identifying quality suppliers across multiple product categories and that the existence of a supplier's other customer relationships was not a factor in the decision to pursue new agreements with that supplier. (Bergström Dep. 156:11–157:19.) Ms. Bergström explained that the Project Atlas team evaluated potential suppliers based on product quality, manufacturing capacity, delivery reliability, pricing competitiveness, and alignment with Cascade's brand positioning—not based on whether those suppliers had existing relationships with Vantor or any other competitor. (Bergström Dep. 158:3–159:14.)
Vantor's Opposition does not address this testimony. It does not argue that Ms. Bergström's testimony was not credible or that it was contradicted by other evidence. It simply ignores it. But Ms. Bergström's unrebutted testimony confirms what the fourteen emails themselves demonstrate: Cascade was aware that Vantor existed as a competitor, and it was aware that certain suppliers did business with Vantor. That awareness is not independently wrongful conduct. It is the baseline knowledge that every firm in every competitive industry possesses about its competitors.
b. The Emails Reflect Routine Competitive Market Assessment, Not Wrongful Targeting. Vantor's reading of the fourteen emails is not only legally insufficient; it is factually misleading. Vantor's Opposition selectively quotes from the fourteen emails in a manner that omits the broader context in which references to Vantor appear. The fourteen emails are part of a comprehensive market assessment conducted by the Project Atlas team between February 2021 and September 2021. That market assessment involved the systematic evaluation of over one hundred potential suppliers across three product categories, the cataloging of existing supplier-distributor relationships throughout the consumer goods industry, and the development of outreach strategies for twenty-five target suppliers selected on the basis of product quality, capacity, and strategic fit.
References to Vantor in the fourteen emails appear in the context of cataloging the competitive landscape—i.e., understanding which suppliers serve which distributors and retailers across the market—not in the context of devising a scheme to disrupt Vantor's business or to "steal" Vantor's suppliers. Vantor was one of dozens of distributors and retailers referenced in the Project Atlas market assessment materials. The fourteen emails do not single out Vantor for targeted disruption. They do not discuss strategies for undermining Vantor's business. They do not propose approaching Vantor's suppliers with the purpose of depriving Vantor of those relationships. They reflect the ordinary process of supply chain due diligence by a company with a $4.2 million budget for supplier transition costs spread across twenty-five target suppliers.
Indeed, Vantor's effort to extract a narrative of wrongful targeting from these fourteen emails requires the Court to ignore the other 2,833 Project Atlas emails that were reviewed in discovery—the overwhelming majority of which have no connection to Vantor whatsoever and reflect a broad-based supplier diversification effort directed at numerous suppliers across the industry. When the fourteen emails are viewed in context, as they must be, they reveal nothing more than routine competitive intelligence gathering of the type that every company in a competitive industry engages in as a matter of course.
c. Knowledge of a Prospective Relationship Is Insufficient Without Wrongful Means. Even assuming arguendo that the fourteen emails demonstrated Cascade's knowledge that Vantor hoped to renew or expand its supplier relationships beyond the current contract terms—which they do not—knowledge alone does not constitute independently wrongful conduct. This point bears emphasis because it goes to the heart of Vantor's legal theory.
Under Korea Supply Co., the California Supreme Court held that a defendant's awareness of a plaintiff's prospective business expectancy does not, without more, give rise to liability for tortious interference with prospective economic advantage. 29 Cal.4th at 1164–1165. The plaintiff must show that the defendant used wrongful means—such as fraud, threats, intimidation, misrepresentation, or violation of a statutory or regulatory scheme—to disrupt the prospective relationship. Id. The reason for this requirement is straightforward: in a competitive marketplace, every firm is aware that its competitors have existing and prospective business relationships. If mere awareness of a competitor's prospective relationships were sufficient to establish liability, every competitive act that disrupted a rival's expectations would be tortious. Such a rule would be inconsistent with California's strong public policy favoring vigorous competition.
Vantor has identified no wrongful means whatsoever. Cascade's supply agreements with the three suppliers were arm's-length commercial transactions, negotiated at fair market terms, and entered into voluntarily by all parties:
• Cascade's agreement with Hemsworth Consumer Products LLC was executed on June 1, 2021, for a five-year term, with an annual purchase commitment of $28.0 million.
• Cascade's agreement with Tridale Manufacturing Inc. was executed on August 15, 2021, for a three-year term, with an annual purchase commitment of $19.5 million.
• Cascade's agreement with Orion Lifestyle Brands Corp. was executed on May 10, 2021, for a four-year term, with an annual purchase commitment of $31.0 million.
Each of these agreements was the product of good-faith negotiations between sophisticated commercial parties. There is no evidence that Cascade made any false representations to any of the three suppliers. There is no evidence that Cascade threatened, coerced, or intimidated any supplier into entering an agreement. There is no evidence that Cascade offered any inducement that was unlawful or contrary to public policy. There is no evidence that Cascade violated any statute, regulation, or other determinable legal standard in connection with any of these agreements.
Moreover, each of the three suppliers independently chose to enter agreements with Cascade after exercising termination-for-convenience clauses in their existing agreements with Vantor—provisions that Vantor itself negotiated and agreed to. Hemsworth exercised a 90-day termination-for-convenience clause; Tridale exercised a 60-day termination-for-convenience clause; and Orion exercised a 120-day termination-for-convenience clause. These contractual provisions gave each supplier the unilateral right to terminate its relationship with Vantor upon notice, for any reason or no reason at all. Vantor agreed to those provisions. Having done so, Vantor cannot now claim that a competitor's exercise of lawful competitive activity—offering better terms to suppliers who were contractually free to leave—constitutes independently wrongful conduct.
3. Vantor's "Pattern and Practice" Argument Is Unavailing
Vantor's Opposition suggests that the Court should infer wrongful conduct from the fact that Cascade entered agreements with three of Vantor's suppliers during the same general time period—May through August 2021. Vantor characterizes this temporal overlap as a "pattern and practice" of targeting Vantor's suppliers and argues that it creates a triable issue of fact regarding Cascade's intent and the wrongfulness of its conduct. This argument fails for multiple independent reasons.
First, the undisputed evidence demonstrates that Project Atlas targeted twenty-five (25) new suppliers across three product categories. Only three of those twenty-five suppliers were among Vantor's existing suppliers. The remaining twenty-two had no business relationship with Vantor. The expanded discovery ordered by the Court on August 3, 2022—which covered fifteen additional supplier relationships for a total of eighteen, including the three at issue—confirmed that the vast majority of Cascade's supplier outreach during the Project Atlas initiative was directed at suppliers with no connection to Vantor whatsoever. A ratio of three out of twenty-five does not constitute a "pattern and practice" of targeting a specific competitor. It reflects, at most, a modest overlap between two companies operating in the same industry and pursuing some of the same suppliers—which is exactly what one would expect in a competitive marketplace.
Second, entering into competing supply agreements in the ordinary course of business is lawful competition, not "wrongful conduct." California law protects—indeed, actively encourages—the right of businesses to compete vigorously for supplier relationships, customer relationships, and market position. See Bixby v. Pierno (1971) 4 Cal.3d 130, 141 (recognizing California's strong public policy favoring free and vigorous competition). The fact that a competitor successfully attracts suppliers away from a rival by offering better terms is the very essence of competition. It is not tortious conduct, and no amount of relabeling it as a "pattern and practice" can transform it into independently wrongful conduct within the meaning of della Penna and Korea Supply.
Third, the timeline of the three agreements reflects the natural progression of a supplier diversification initiative launched in February 2021, not a targeted campaign against Vantor. Project Atlas involved outreach to twenty-five suppliers, each of which required separate analysis, separate negotiations, and separate contracting processes. The three agreements at issue were executed over a four-month period—May 10 (Orion), June 1 (Hemsworth), and August 15 (Tridale)—as negotiations with different suppliers concluded at different times based on the ordinary dynamics of commercial negotiation. This timeline is entirely consistent with the normal course of a multi-supplier procurement initiative. It does not support an inference of targeted wrongful conduct.
4. Vantor's Reliance on the Deposition Testimony of Thomas Brennecke Is Misplaced
Vantor's Opposition cites extensively to the deposition testimony of Thomas Brennecke, Vantor's Vice President of Supplier Relations, who was deposed on October 26, 2022. Mr. Brennecke testified that each of the three suppliers—Hemsworth, Tridale, and Orion—informed Vantor that they were terminating their exclusive supply arrangements to pursue a relationship with Cascade. (Brennecke Dep. 87:14–88:9; 102:3–103:17; 118:22–119:15.) Vantor argues that this testimony demonstrates Cascade's culpability and the suppliers' awareness of the competitive dynamic.
Mr. Brennecke's testimony establishes only one thing: that the three suppliers chose to leave Vantor for Cascade. It does not establish—and cannot establish—that Cascade used wrongful means to cause that decision. The fact that a competitor offers better terms—higher annual purchase commitments, longer contract durations, and greater business certainty—is lawful competition. It is precisely the kind of competitive conduct that the marketplace is designed to encourage. Suppliers, like all economic actors, are free to choose the business partners that offer them the most favorable terms, and they are free to exercise contractual termination rights that were negotiated at arm's length with their existing partners.
The significance of the comparative economics cannot be overstated. As the deposition of Lena Torvik, Cascade's Senior Vice President of Supply Chain and Procurement, deposed on November 18, 2022, confirmed, Cascade's supply agreements offered significantly higher annual purchase commitments than Vantor's agreements:
(Torvik Dep. 201:4–203:11.) In light of these figures, it is unsurprising—indeed, it is entirely predictable—that the three suppliers chose to enter agreements with Cascade. No supplier acting in its own economic self-interest would decline purchase commitments that are more than double those of its existing partner. The suppliers' decisions to leave Vantor for Cascade were rational commercial decisions driven by superior economic terms, not the product of any wrongful conduct by Cascade.
Mr. Brennecke's testimony, far from creating a triable issue of fact on independently wrongful conduct, actually confirms the absence of any wrongful conduct. The suppliers told Vantor they were leaving. They did so openly and in accordance with their contractual rights. There was no subterfuge, no deception, and no coercion. This is lawful competition at its most transparent.
C. Even If a Triable Issue Existed on Independently Wrongful Conduct, the Prospective Economic Advantage Claim Fails for Lack of Cognizable Damages
1. Vantor's Damages Theory for the Prospective Advantage Claim Depends on Speculative Future Revenue Streams
Even if the Court were to find that a triable issue of fact exists on the element of independently wrongful conduct—which Cascade respectfully submits it should not—the Second Cause of Action would still fail as a matter of law because Vantor's damages theory is impermissibly speculative.
The Second Cause of Action concerns tortious interference with prospective economic advantage—i.e., the expectation that Vantor would have renewed or expanded its supplier relationships with Hemsworth, Tridale, and Orion beyond the existing contract terms. This is a claim about future business opportunities that may or may not have materialized, not a claim about the disruption of existing contractual rights. The distinction is critical to the damages analysis.
Vantor's damages expert, Dr. Harold Pryce of Meridian Forensic Economics LLC, submitted an expert report projecting lost profits from the alleged interference with Vantor's prospective economic advantages. Dr. Pryce's projections are based on multi-year revenue streams extending well beyond the expiration dates of Vantor's existing supply agreements:
These projections are inherently speculative for the prospective advantage claim because there is no guarantee—and no contractual entitlement—that any of the three suppliers would have renewed or expanded their agreements with Vantor. The existing supply agreements were fixed-term contracts with no automatic renewal provisions. Each agreement contained a termination-for-convenience clause that gave the supplier the unilateral right to terminate the relationship upon notice (Hemsworth: 90 days; Tridale: 60 days; Orion: 120 days). And each agreement had a fixed expiration date beyond which neither party had any obligation to the other.
Under these circumstances, Dr. Pryce's projections of five, four, and six years of future revenue beyond the contract expiration dates are built entirely on assumptions about future events that are, by definition, uncertain. There is no evidence that any of the three suppliers had committed to renewing their agreements with Vantor. There is no evidence that any renewal negotiations had commenced. There is no evidence of any binding letters of intent, memoranda of understanding, or other pre-contractual commitments. Dr. Pryce's projections assume that the suppliers would have renewed their agreements with Vantor at the same or higher volume levels, that the exclusivity provisions would have been maintained, and that Vantor's profit margins would have remained stable—assumptions that are entirely speculative and unsupported by the factual record.
California law is clear that damages based on the mere hope or expectation of future business relationships are too speculative to support a judgment. See Youst v. Longo (1987) 43 Cal.3d 64, 79 (holding that damages for lost profits must be proven with "reasonable certainty" and may not be based on "speculation or conjecture"). The prospective advantage claim's damages theory fails this standard.
2. Dr. Ostrowski's Rebuttal Report Confirms the Speculative Nature of Vantor's Prospective Damages
The speculative nature of Vantor's damages theory is further confirmed by the rebuttal report of Cascade's damages expert, Dr. Vivian Ostrowski of Archer & Colvin Consulting Group, submitted on December 22, 2022. Dr. Ostrowski conducted an independent analysis of the damages attributable to the alleged interference and concluded that any cognizable damages should be limited to the remaining exclusive contract terms—i.e., the period between the date the suppliers terminated their agreements with Vantor and the dates those agreements would have expired by their own terms:
Dr. Ostrowski further opined that Vantor's failure to mitigate its damages by seeking alternative suppliers during the post-termination period would reduce the recoverable damages by approximately 40% to 55%. Dr. Ostrowski noted that Vantor did not initiate discussions with any alternative suppliers until more than four months after the last of the three suppliers (Tridale) exercised its termination-for-convenience clause, despite the availability of numerous comparable suppliers in each of the three product categories.
The contrast between Dr. Pryce's $87.4 million projection and Dr. Ostrowski's $6.1–$11.3 million range is striking, but for purposes of the pending Motion, the critical point is not the magnitude of the discrepancy. The critical point is that Dr. Pryce's multi-year projections rest on assumptions about future contract renewals, expanded product lines, and continued exclusivity that are unsupported by the terms of the existing agreements, by the suppliers' conduct, or by any other evidence in the record. These assumptions are the very definition of speculation, and they cannot sustain a damages claim on the prospective advantage cause of action as a matter of law.
Because the Second Cause of Action's damages theory is built entirely on speculation about future business relationships that may never have materialized, the claim fails independently on the damages element, providing an additional and independent basis for summary adjudication.
III. VANTOR'S OPPOSITION DOES NOT OVERCOME CASCADE'S SHOWING ON EITHER CLAIM
In summary, Vantor's Opposition suffers from four fundamental deficiencies, each of which independently warrants the granting of Cascade's Motion:
First, on the Section 17200 claim (Third Cause of Action), Vantor identifies no independent unlawful, unfair, or fraudulent business practice separate from the tortious interference allegations. The Third Cause of Action is entirely derivative of the First and Second Causes of Action and adds no independent legal theory, no independent factual basis, and no independent measure of damages. It is properly subject to summary adjudication.
Second, on the prospective economic advantage claim (Second Cause of Action), Vantor's reliance on the fourteen Project Atlas emails confuses competitive awareness with independently wrongful conduct. The emails demonstrate, at most, that Cascade was aware of Vantor's existence as a competitor in the marketplace and knew that certain suppliers did business with Vantor. This is not independently wrongful conduct. No evidence of fraud, threats, misrepresentation, coercion, intimidation, or violation of any statutory, regulatory, or common law standard has been presented. Vantor has failed to carry its burden on the essential element of independently wrongful conduct, and no reasonable trier of fact could find otherwise on this record.
Third, Vantor's "pattern and practice" theory—the suggestion that the temporal overlap of the three supply agreements creates an inference of wrongful targeting—is belied by the undisputed facts. Project Atlas targeted twenty-five suppliers across three product categories. Only three of those twenty-five had any business relationship with Vantor. The remaining twenty-two had no connection to Vantor whatsoever. The timeline of the three agreements (May through August 2021) reflects the natural cadence of a multi-supplier procurement initiative, not a targeted campaign against a single competitor.
Fourth, Vantor's damages theory for the prospective advantage claim is impermissibly speculative. Dr. Pryce's projections extend five, four, and six years beyond the expiration dates of Vantor's existing supply agreements, based on assumptions about future contract renewals and expanded exclusivity arrangements that are unsupported by the record. The existing agreements contained termination-for-convenience clauses and fixed expiration dates. There was no contractual entitlement to renewal, no binding commitment to renewal, and no evidence that renewal negotiations had even commenced. Damages built on the hope that future business relationships might have materialized are too speculative to sustain a cause of action as a matter of law.
The undisputed material facts, as set forth in Cascade's Separate Statement of Undisputed Material Facts filed on February 28, 2023, and as confirmed by the evidence discussed herein, establish that Cascade is entitled to summary adjudication on both the Second and Third Causes of Action. Vantor's Opposition has not raised a triable issue of material fact on any element of either claim, and summary adjudication should be granted.
IV. CONCLUSION
For the reasons set forth above and in Cascade's moving papers filed on February 28, 2023, Defendant Cascade Retail Holdings Inc. respectfully requests that the Court grant its Motion for Partial Summary Judgment and enter summary adjudication in Cascade's favor on the following causes of action:
1. Vantor's Second Cause of Action for Tortious Interference with Prospective Economic Advantage; and
2. Vantor's Third Cause of Action for Unfair Business Practices under California Business and Professions Code section 17200 et seq.
Dated: April 4, 2023
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Carmichael (SBN 187452)
600 South Grand Avenue, Suite 3200 Los Angeles, California 90071 Telephone: (213) 629-4000
Attorneys for Defendant Cascade Retail Holdings Inc.
PROOF OF SERVICE
STATE OF CALIFORNIA, COUNTY OF LOS ANGELES
I, Carlos Espinoza, am employed in the County of Los Angeles, State of California. I am over the age of eighteen (18) years and 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 April 4, 2023, I served the foregoing document described as DEFENDANT CASCADE RETAIL HOLDINGS INC.'S REPLY IN SUPPORT OF MOTION FOR PARTIAL SUMMARY JUDGMENT ON PLAINTIFF'S SECOND AND THIRD CAUSES OF ACTION on the interested parties in this action by transmitting a true copy via electronic service through the Court's electronic filing system and by email to the following persons at the email addresses listed below:
Martin Kessler (SBN 156823) Natalie Whitfield (SBN 198745) Jason Okafor (SBN 287631) KESSLER, BRANDT & WHITFIELD LLP 1999 Avenue of the Stars, Suite 2800 Los Angeles, California 90067 Telephone: (310) 553-7200
Email: mkessler@kbwlaw.com
Email: nwhitfield@kbwlaw.com
Email: jokafor@kbwlaw.com
Attorneys for Plaintiff Vantor Holdings Corp.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on April 4, 2023, at Los Angeles, California.
________________________________________
Carlos Espinoza
Supplier | Vantor Annual Commitment | Cascade Annual Commitment | Difference
Hemsworth Consumer Products LLC | $12.5 million | $28.0 million | +$15.5 million (+124%)
Tridale Manufacturing Inc. | $8.3 million | $19.5 million | +$11.2 million (+135%)
Orion Lifestyle Brands Corp. | $14.6 million | $31.0 million | +$16.4 million (+112%)
Supplier | Existing Contract Expiration | Dr. Pryce's Projection Period | Projected Lost Profits | Discount Rate
Hemsworth | March 14, 2022 | 5 years beyond expiration | $34.2 million | 8.5%
Tridale | January 9, 2022 | 4 years beyond expiration | $22.8 million | 8.5%
Orion | June 30, 2022 | 6 years beyond expiration | $30.4 million | 8.5%
Total | $87.4 million
Supplier | Remaining Exclusive Term | Dr. Ostrowski's Damages Range
Hemsworth | Approximately 9 months | $2.8 million – $4.9 million
Tridale | Approximately 5 months | $1.4 million – $2.7 million
Orion | Approximately 13 months | $1.9 million – $3.7 million
Total | $6.1 million – $11.3 million