PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE ATTORNEY WORK PRODUCT
May 12, 2025
MEMORANDUM
FROM:
Howard Bellamy, Specialist Partner, Antitrust & Competition Calderwood & Harkness LLP 599 Lexington Avenue, 38th Floor New York, NY 10022
Gabriela Montoya, Partner Whitfield & Crane LLP 1200 New Hampshire Avenue NW, Suite 500 Washington, DC 20036
TO:
Harrison Wexford, Responsible Partner, M&A Calderwood & Harkness LLP
Elena Vasquez-Bright, General Counsel Cascade Retail Holdings Inc.
Theodore "Ted" Langford, SVP, Corporate Development Cascade Retail Holdings Inc.
CC:
Derek Okonkwo, Lead Associate, M&A, Calderwood & Harkness LLP Tiffany Rosenthal, Working Associate, M&A, Calderwood & Harkness LLP
RE: Response Strategy for DOJ Antitrust Division Second Request — Proposed Acquisition of NovaMart Global Inc. by Cascade Retail Holdings Inc.
Matter Reference: HSR Transaction Number 1038-00009
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I. EXECUTIVE SUMMARY
This memorandum sets forth the comprehensive strategy for responding to the Second Request issued by the Antitrust Division of the United States Department of Justice ("DOJ" or the "Division") on May 8, 2025, in connection with the proposed acquisition by Cascade Retail Holdings Inc. ("Cascade" or the "Company") of one hundred percent (100%) of the outstanding capital stock of NovaMart Global Inc. ("NovaMart") for an aggregate cash purchase price of $1,200,000,000 (the "Transaction"). The definitive Stock Purchase Agreement (the "SPA") is in final negotiation and is anticipated to be executed during the week of May 19, 2025. The parties executed a binding Letter of Intent on February 14, 2025 (the "LOI"), and due diligence commenced on February 18, 2025.
The initial Hart-Scott-Rodino ("HSR") waiting period, which would have expired on May 11, 2025, was superseded by the issuance of the Second Request on May 8, 2025 — three calendar days before the scheduled expiration of the initial thirty-day waiting period. The issuance of the Second Request extends the waiting period until thirty days after both the acquiring person (Cascade) and the acquired person (NovaMart, on behalf of the Selling Stockholders) have substantially complied with the Second Request.
The Second Request is focused on the competitive overlap between Cascade's proprietary ecommerce platform, CascadeDirect.com, and NovaMart's online marketplace platform, particularly in what the DOJ has characterized as the "online marketplace for specialty consumer goods" segment. The Division's investigation appears centered on seller-side and buyer-side competitive effects, marketplace dynamics, take rates, and the potential for the combined entity to exercise market power in this segment. As discussed further in this memorandum, our preliminary assessment of the competitive landscape — including a combined market share of approximately 14.0% in a highly fragmented and dynamic market — supports a strong case that the Transaction does not substantially lessen competition and should receive clearance.
The overarching goal of this response strategy is to achieve substantial compliance with the Second Request by August 2025, positioning both parties for HSR clearance (or waiting period expiration) in September–October 2025. This timeline is well in advance of the targeted closing date of October 15, 2025 and comfortably within the Outside Date of December 31, 2025 as anticipated to be set forth in the SPA. Achieving this timeline will require disciplined execution across all workstreams, immediate commencement of document collection, and effective negotiation with DOJ staff on the scope of the production.
This memorandum addresses the following topics:
(a) Overview and scope of the Second Request;
(b) Response team structure and coordination across outside counsel, in-house teams, and third-party advisors;
(c) Custodian identification and prioritization;
(d) Document collection and processing, including preservation obligations;
(e) Search term methodology and negotiation with DOJ;
(f) Privilege review protocol, including clawback protections;
(g) Document production plan and rolling production schedule;
(h) Structured data, interrogatory responses, and deposition preparation;
(i) Timeline and milestones for achieving substantial compliance;
(j) Coordination with Seller's counsel at Calloway, Brandt & Loewe LLP;
(k) Parallel advocacy strategy, including the White Paper and economic expert submissions;
(l) Budget and resource considerations; and
(m) Immediate next steps and action items.
We respectfully request authorization from Cascade to proceed with the strategy and action items outlined herein. Time is of the essence: every day of delay at this stage compresses the downstream schedule and increases the risk of missing the targeted substantial compliance date.
II. BACKGROUND
A. Transaction Overview
The Transaction contemplates the acquisition by Cascade of one hundred percent (100%) of the outstanding capital stock of NovaMart from the following Selling Stockholders, in the following approximate proportions:
The aggregate purchase price is $1,200,000,000 in cash, with no earnout, contingent consideration, or financing condition. The Transaction is structured as a stock purchase under a definitive Stock Purchase Agreement, which is currently in final negotiation and is anticipated to be executed during the week of May 19, 2025. The LOI was executed on February 14, 2025, and Cascade commenced its due diligence investigation of NovaMart on February 18, 2025.
Cascade Retail Holdings Inc. is a Delaware corporation, publicly traded on the Nasdaq Stock Market under the ticker symbol "CRHI," and is headquartered at 4500 Elliott Avenue West, Suite 3200, Seattle, Washington 98119. Cascade reported fiscal year 2024 revenues of approximately $14.7 billion and operates over 380 brick-and-mortar retail locations across the United States, in addition to its proprietary ecommerce platform, CascadeDirect.com, which serves approximately 28 million active customers. CascadeDirect.com operates primarily as a first-party retail platform but has been expanding its third-party marketplace functionality over the past eighteen months. Cascade's product categories span home goods, specialty consumer products, electronics accessories, outdoor and sporting goods, and artisanal and craft products.
NovaMart Global Inc. is a Delaware corporation, privately held, and is headquartered at 1100 Congress Avenue, Suite 800, Austin, Texas 78701. NovaMart reported fiscal year 2024 revenues of approximately $891 million and fiscal year 2024 gross merchandise volume ("GMV") of approximately $6.2 billion. NovaMart operates a third-party online marketplace platform connecting approximately 62,400 active sellers with approximately 9.1 million registered buyers. NovaMart's marketplace is organized around several vertical categories, with its largest vertical being the "NovaHome" home décor and furnishings category. NovaMart also operates the "NovaShip" logistics network, consisting of fourteen fulfillment centers across nine states, which provides warehousing, pick-and-pack, and last-mile delivery services to NovaMart marketplace sellers. NovaMart employs approximately 2,400 individuals.
The strategic rationale for the Transaction, as communicated internally at Cascade, centers on the acquisition of NovaMart's marketplace technology platform, its established seller base, and its logistics infrastructure, which Cascade intends to integrate with CascadeDirect.com to create a more robust omnichannel retail offering. The Transaction is expected to generate significant procompetitive efficiencies, including improved seller tools, expanded product selection for consumers, enhanced fulfillment capabilities, and cost savings from the elimination of redundant technology and administrative functions.
B. HSR Filing History
The HSR notification was submitted to the Federal Trade Commission ("FTC") and the Department of Justice on April 11, 2025. Cascade Retail Holdings Inc. filed as the acquiring person, and NovaMart Global Inc. filed as the acquired person on behalf of the Selling Stockholders holding interests exceeding the applicable notification threshold. The HSR filing fee was $2,390,000, consistent with the FTC fee schedule for transactions valued at $1.2 billion.
The initial thirty-day waiting period would have expired on May 11, 2025. However, on May 8, 2025 — three calendar days before the scheduled expiration of the initial waiting period — the Antitrust Division of the Department of Justice issued a Second Request to both Cascade and NovaMart, requesting additional information and documentary material. The issuance of the Second Request supersedes the initial waiting period and extends the waiting period until thirty days after both the acquiring person and the acquired person have substantially complied with all outstanding requests.
The clearance of the Transaction to the DOJ rather than the FTC was communicated through the standard interagency clearance process. The DOJ's decision to issue a Second Request within the initial waiting period — while not unexpected given the Transaction's size and the apparent competitive overlap — underscores the need for a well-organized, expeditious, and strategically sound response.
C. Scope of the Second Request
Based on our initial review of the Second Request specifications, the DOJ has identified the "online marketplace for specialty consumer goods" as the relevant product market under investigation. This characterization is narrower than the product market definition we would advocate, and a significant element of our advocacy strategy will be to demonstrate that the relevant market is properly defined as the broader U.S. online retail and ecommerce market, or at a minimum the broader online marketplace market encompassing all product categories, rather than the narrow "specialty consumer goods" segment the DOJ appears to be investigating.
The key competitive overlap identified by the DOJ involves Cascade's CascadeDirect.com platform and NovaMart's third-party marketplace platform, both of which serve sellers and buyers of specialty consumer goods, home décor, artisanal products, and consumer electronics accessories. The DOJ's investigation appears to be examining both seller-side effects (impact on sellers who list products on both platforms) and buyer-side effects (impact on consumers who purchase specialty goods through these platforms).
The Second Request specifications encompass the following broad categories of information and documentary material:
(i) Documents relating to competition, market definition, and market shares in the online marketplace for specialty consumer goods, including internal analyses, reports, presentations, and communications regarding competitive conditions and Cascade's competitive position;
(ii) Documents relating to pricing, take rates, seller fees, seller acquisition and retention strategies, buyer acquisition costs, buyer retention metrics, and promotional programs;
(iii) Strategic planning documents, including annual business plans, long-range strategic plans, board presentations, and any documents discussing Cascade's growth strategy for the CascadeDirect.com platform;
(iv) Documents relating to the Transaction rationale, including deal origination materials, diligence reports, valuation analyses, integration plans, and any documents discussing the competitive effects of the Transaction;
(v) Structured data on revenues, GMV, transaction volumes, seller counts, buyer counts, marketplace take rates, product category breakdowns, and related financial and operational metrics, for the period from January 1, 2023 through the present;
(vi) Documents regarding potential competitors, including but not limited to BrightBazaar Inc. and other online marketplace platforms, including any analyses of competitive threats, win/loss reports, and competitive benchmarking studies.
Our preliminary internal market share estimates, based on available industry data and Cascade's own competitive intelligence, suggest the following approximate shares of U.S. online specialty consumer goods GMV:
A combined share of approximately 14.0% is well below the thresholds that would traditionally raise serious competitive concerns under the DOJ/FTC Horizontal Merger Guidelines. The post-merger HHI in this market segment is expected to be modest, with a delta (change in HHI) that would likely fall within the "unlikely to be challenged" zone. These preliminary figures will be refined by our economic expert, Dr. Henrik Johansson of Apex Economics LLC, as part of his market definition analysis and merger simulation work.
III. RESPONSE TEAM STRUCTURE AND COORDINATION
A. Legal Team — Buyer Side
Effective management of the Second Request response requires a clearly defined team structure with well-delineated responsibilities. The following team has been assembled to manage Cascade's response:
Lead Antitrust Counsel — Calderwood & Harkness LLP:
Howard Bellamy, Specialist Partner, Antitrust & Competition Calderwood & Harkness LLP 599 Lexington Avenue, 38th Floor New York, NY 10022 Tel: (212) 555-7400 hbellamy@calderwoodharkness.com
Howard will serve as lead antitrust counsel for the buyer side, overseeing the overall response strategy, privilege review determinations, and advocacy submissions. He will coordinate closely with Gabriela Montoya at Whitfield & Crane LLP on all aspects of the DOJ engagement.
Outside Antitrust Counsel — Whitfield & Crane LLP:
Gabriela Montoya, Partner Whitfield & Crane LLP 1200 New Hampshire Avenue NW, Suite 500 Washington, DC 20036 Tel: (202) 555-3200 gmontoya@whitfieldcrane.com
Whitfield & Crane LLP will serve as the primary interface with DOJ staff throughout the investigation. Gabriela has extensive experience in Second Request responses and DOJ merger investigations and has established working relationships with career staff at the Antitrust Division. She will lead all negotiations with DOJ regarding search terms, production format, custodian scope, and timing. She will also lead mock examination sessions for any investigational hearings and will coordinate the submission of the White Paper and economic expert report.
M&A Deal Team Coordination — Calderwood & Harkness LLP:
Harrison Wexford, Responsible Partner, M&A Derek Okonkwo, Lead Associate, M&A Tiffany Rosenthal, Working Associate, M&A
The M&A deal team will coordinate the antitrust workstream with the broader transaction execution, including monitoring the interaction between the Second Request timeline and the SPA milestones, managing the privilege review workflow at the associate level, and overseeing document management logistics. Derek Okonkwo will serve as the day-to-day project manager for document collection, processing, and production logistics, and Tiffany Rosenthal will provide support on privilege review oversight and coordination with the contract review team.
Economic Expert:
Dr. Henrik Johansson Apex Economics LLC 900 G Street NW, Suite 700 Washington, DC 20001 Tel: (202) 555-8100 hjohansson@apexecon.com
Dr. Johansson has been retained to provide expert economic analysis in support of the Transaction, including market definition analysis, HHI calculations, merger simulation modeling, and efficiencies quantification. His work product will inform both the White Paper advocacy submission and responses to the DOJ's structured data requests. Dr. Johansson's team at Apex Economics has substantial experience in DOJ and FTC merger investigations in the technology and ecommerce sectors.
Client-Side Coordination — Cascade Retail Holdings Inc.:
Elena Vasquez-Bright, General Counsel — overall legal coordination, privilege oversight, and litigation hold management
Theodore "Ted" Langford, SVP, Corporate Development — deal-specific factual support, custodian identification, and integration planning materials
Rajiv Sundaram, CFO — financial data extraction, structured data compilation, and coordination with Cascade's IT and analytics teams
B. Legal Team — Seller Side
NovaMart's response to the Second Request will be managed by its outside counsel:
Calloway, Brandt & Loewe LLP Richard Calloway, Lead Partner Simone Adesanya, Associate Lead 600 Travis Street, Suite 4500 Houston, TX 77002 Tel: (713) 555-6200
NovaMart's in-house legal and financial teams will also play key roles:
Amanda Trevino, General Counsel, NovaMart — overall coordination and privilege review on the seller side
Douglas "Doug" Whitfield, CFO, NovaMart — structured data compilation and financial data extraction
In addition, NovaMart's investment bank, Pemberton Strauss Advisory LLC (Vivian Hong, lead), may possess responsive transaction-related documents, including competitive analyses, valuation materials, and buyer/seller presentations prepared in connection with the sale process. Calloway, Brandt & Loewe LLP will be responsible for obtaining and reviewing these materials.
The following third-party custodians on the seller side may also hold responsive materials and should be addressed by Calloway, Brandt & Loewe LLP:
Franklin Osei, Ridgeline Equity Partners, LP — board-level involvement in the Transaction and oversight of NovaMart's strategic direction
Naomi Katzenbach, Brindoval Ventures Fund III, LP — board-level involvement and participation in the sale process
Coordination Protocol Between Buyer and Seller Counsel:
The buyer-side and seller-side legal teams will hold weekly joint coordination calls, to be held each Wednesday at 2:00 p.m. Eastern, with the following standing participants: Howard Bellamy, Gabriela Montoya, Richard Calloway, Simone Adesanya, and Amanda Trevino. These calls will cover production progress, search term developments, timing issues, and any DOJ communications. The parties will maintain parallel but independent document productions and will coordinate on privilege log format, production specifications (TIFF imaging, Bates numbering conventions, metadata fields, and load file format), and the timing of substantial compliance certification. Both parties must certify substantial compliance before the new waiting period begins to run, so close coordination on timing is essential.
C. Clean Team Considerations
The parties entered into a Clean Team / Antitrust Protocol Agreement on February 18, 2025, in connection with the commencement of due diligence. That agreement establishes firewalls governing the handling of competitively sensitive information exchanged between the parties. The Clean Team Protocol remains in full force and effect and must be scrupulously observed throughout the Second Request response process.
In particular, certain documents produced by NovaMart in response to the Second Request may contain competitively sensitive pricing data, take-rate information, seller fee structures, seller-specific terms, and buyer acquisition cost data that Cascade business personnel should not access outside the Clean Team framework. To the extent that the DOJ's investigation generates cross-party document sharing (for example, if Cascade's counsel needs to review NovaMart documents to prepare investigational hearing witnesses), such sharing must be conducted within the Clean Team framework.
Whitfield & Crane LLP will serve as the Clean Team repository for cross-party competitively sensitive materials. Any Cascade business personnel who are authorized to access NovaMart competitively sensitive information must be designated members of the Clean Team and must have executed the appropriate confidentiality undertakings under the Clean Team Protocol.
We recommend that Howard Bellamy and Gabriela Montoya review the Clean Team Protocol with Elena Vasquez-Bright to confirm that the protocol is adequate for the Second Request context and to make any necessary amendments.
IV. CUSTODIAN IDENTIFICATION
The identification and prioritization of document custodians is one of the most critical early steps in the Second Request response process. The scope of the custodian list directly impacts document collection volumes, review costs, and the overall timeline. Our strategy is to identify the minimum number of custodians necessary to achieve substantial compliance while producing a complete and defensible document set, and to negotiate with DOJ staff to limit or defer the collection from marginal custodians.
A. Cascade Custodians (Buyer Side)
We have preliminarily identified the following Cascade custodians, organized into two tiers based on the expected responsiveness of their files:
Tier 1 — Primary Custodians
Tier 1 custodians are individuals whose files are expected to contain the most responsive materials and who should be the first priority for collection and review. We recommend beginning collection from these custodians immediately, no later than May 19, 2025.
1. Margaret "Meg" Alderton — Chief Executive Officer. As CEO, Ms. Alderton will have received and participated in strategic planning discussions, board materials, and high-level competitive analyses. She is expected to have documents relating to the Transaction rationale, Cascade's overall corporate strategy, and competitive positioning in the ecommerce market. Board presentations and CEO-level strategy memoranda are among the most commonly requested and closely scrutinized documents in DOJ merger investigations.
2. Theodore "Ted" Langford — Senior Vice President, Corporate Development. Mr. Langford is the deal lead on the Cascade side and is expected to have the largest volume of directly responsive documents. His files will include deal origination materials, competitive analyses prepared in connection with the Transaction, integration planning documents, valuation work, and communications with NovaMart, the investment bank (Hargrove Mead & Co.), and counsel regarding the Transaction. Mr. Langford is also a likely witness for any investigational hearing.
3. Rajiv Sundaram — Chief Financial Officer. Mr. Sundaram's files will contain financial analyses, valuation models, market projections, and budget-related materials relevant to the Transaction and to Cascade's competitive position. He will also be the primary point of contact for the structured data requests.
4. Elena Vasquez-Bright — General Counsel. As General Counsel, Ms. Vasquez-Bright will have transaction-related documents, regulatory strategy materials, board resolutions (including the February 3, 2025 board authorization to pursue the acquisition), and communications with outside counsel. Significant portions of Ms. Vasquez-Bright's files may be subject to attorney-client privilege and/or work product protection, but her files must nonetheless be collected and reviewed.
5. Head of CascadeDirect.com Ecommerce Division — [Name to Be Confirmed]. This individual is responsible for the competitive strategy, marketplace operations, pricing, and seller/buyer acquisition programs of the CascadeDirect.com platform — the precise business unit at the center of the DOJ's competitive analysis. We request that Cascade identify this individual by name as soon as possible so that collection can commence. This custodian is likely to have the most granular documents regarding competitive dynamics, win/loss analyses, and marketplace operations.
6. Head of Corporate Strategy / Business Development — [Name to Be Confirmed]. This individual is responsible for market analysis, competitor assessments, and strategic planning at the corporate level. Documents from this custodian will likely include market studies, competitive landscape analyses, and strategic plans that discuss Cascade's position relative to NovaMart, BrightBazaar, and other marketplace competitors. We again request that Cascade identify this individual by name promptly.
Tier 2 — Secondary Custodians
Tier 2 custodians are individuals who may have responsive documents but whose files are expected to be less central to the DOJ's investigation. We recommend collecting from Tier 2 custodians in parallel with Tier 1 but prioritizing the review of Tier 1 files for the initial production batches. Depending on the results of the initial production and DOJ feedback, it may be possible to negotiate a limitation on the scope of Tier 2 custodian productions.
7. Vice President of Marketing. The VP of Marketing may have documents relating to customer acquisition strategies, competitive positioning, brand strategy, and marketing campaigns that reference competitors or discuss CascadeDirect.com's competitive advantages.
8. Vice President of Merchandising / Marketplace Operations. This individual may have documents relating to seller relationships, product category management, seller onboarding, and marketplace operational policies that are relevant to the seller-side competitive effects analysis.
9. Head of Data Analytics. This individual may have documents relating to market share data, GMV reporting, marketplace performance metrics, and internal dashboards or reports that quantify Cascade's competitive position.
10. Additional Individuals. As the initial document review proceeds, it is possible that additional custodians will be identified as having responsive materials — for example, regional operations managers, category managers, or technology executives involved in platform development. We will evaluate the need for additional custodians on a rolling basis and in consultation with DOJ staff.
Total Estimated Cascade Custodians: 8–12 individuals.
Third-Party Custodians (Cascade Side)
In addition to the Cascade employee custodians listed above, the following third-party custodian should be included in the collection plan:
Christopher Dunleavy, Managing Director, Hargrove Mead & Co. — Cascade's investment bank for the Transaction. Hargrove Mead may hold responsive deal-related competitive analyses, valuation materials, buyer presentations, and communications with Cascade regarding the Transaction rationale and competitive effects. Investment bank materials are routinely sought by the DOJ in merger investigations and are often among the most scrutinized documents. Derek Okonkwo should contact Hargrove Mead immediately to initiate the preservation and collection process for Mr. Dunleavy's files and any shared deal team files.
B. NovaMart Custodians (Seller Side)
Custodian identification and management for NovaMart will be the responsibility of Calloway, Brandt & Loewe LLP, in coordination with NovaMart's General Counsel, Amanda Trevino. Based on our understanding of NovaMart's organizational structure and the Transaction dynamics, we expect the following individuals to be among the primary NovaMart custodians:
• Julian Reeves, Founder & CEO — Transaction rationale, strategic vision, competitive positioning
• Priya Narasimhan, Co-Founder & CTO — Technology platform strategy, marketplace operations, product development
• Douglas "Doug" Whitfield, CFO — Financial data, valuation, market projections
• Amanda Trevino, General Counsel — Transaction documents, regulatory strategy (significant privilege overlay expected)
• Head of Marketplace Operations — Seller management, platform operations, competitive dynamics
• Head of Sales / Seller Relations — Seller acquisition and retention, seller fees, competitive win/loss
We estimate that NovaMart will have 6–10 custodians. In addition, the following third-party custodians on the seller side may hold responsive documents:
• Vivian Hong, Pemberton Strauss Advisory LLC (NovaMart's investment bank for the sale process)
• Franklin Osei, Ridgeline Equity Partners, LP (board member and majority stockholder)
• Naomi Katzenbach, Brindoval Ventures Fund III, LP (board member and significant stockholder)
Calloway, Brandt & Loewe LLP should be consulted regarding the scope and timing of collection from these third-party custodians.
C. Custodian Prioritization and Negotiation with DOJ
Our recommended approach is to propose the Tier 1 custodian list to the DOJ in our initial discussions regarding the scope of the production, and to offer to produce from Tier 2 custodians on a conditional basis — that is, we would propose to add Tier 2 custodians only if the Tier 1 production does not adequately address the DOJ's informational needs. This approach is consistent with accepted practice in Second Request responses and can significantly reduce document volumes, review costs, and production timelines.
Gabriela Montoya will lead the custodian negotiation with DOJ staff, presenting the rationale for the proposed custodian list and advocating for the exclusion or deferral of marginal custodians. We will also seek DOJ agreement to a rolling custodian prioritization approach, under which we would produce from the highest-priority custodians first and discuss the need for additional custodians after the DOJ has had an opportunity to review the initial production.
V. DOCUMENT COLLECTION AND PROCESSING
A. Sources of Documents
A thorough and defensible Second Request response requires the identification and collection of documents from all sources where responsive materials may reside. Based on our understanding of Cascade's information systems and business practices, we have identified the following categories of document sources:
Email Systems. Cascade's primary corporate email system is understood to be Strathmore Data Systems / Ashbury Software (or an equivalent enterprise email platform). All custodian email accounts, including both active mailboxes and archived messages, must be collected for the applicable time period. In addition, if any custodian has used a personal email account (e.g., Northgate Software, Cascade Health IT, or other personal accounts) for business-related communications — particularly communications regarding the Transaction, competitive strategy, or marketplace operations — those personal accounts must also be collected. The litigation hold notice should specifically instruct custodians to preserve and disclose any use of personal email for business purposes.
Shared Drives and Collaboration Platforms. Cascade's internal document management systems, Aldermere Systems sites, Northgate Data Systems channels, shared network drives, and any cloud-based collaboration platforms (e.g., Hollowell Health IT, Larkspur Technologies, box) that are used by the identified custodians must be searched and collected. Strategic planning documents, board materials, competitive analyses, and market studies are frequently stored on shared drives rather than in individual custodian email accounts, and failure to collect from these sources would risk gaps in the production.
Hard Copy Files. Physical files maintained in the offices of custodians, particularly the CEO and SVP of Corporate Development, should be inventoried and collected. While the volume of hard copy files is typically smaller than digital sources in a modern corporate environment, board books, handwritten notes, and printed reports may not exist in digital form and must be captured.
Mobile Devices. Text messages (SMS and Westmark Software), messaging applications (including Meridian Services Inc., signal, and Meridian Solutions), and other mobile communications are increasingly the subject of Second Request specifications. We anticipate that the DOJ's Second Request covers these communication channels. An immediate preservation directive must be issued to all custodians instructing them to preserve all text messages and messaging application data and to refrain from deleting any messages on any device. Forensic collection from mobile devices will require the engagement of a specialized vendor with the capability to extract and process mobile data in a defensible manner.
Third-Party Document Repositories. Documents held by Hargrove Mead & Co. (Cascade's investment bank) in connection with the Transaction, including deal files, pitch books, valuation models, and competitive analyses, must be collected. In addition, data room materials maintained during the diligence process — both materials that Cascade uploaded to the data room and materials that Cascade accessed from NovaMart's data room — should be preserved and collected. The virtual data room platform provider should be contacted to ensure that access logs and document indices are preserved.
Board Materials. Cascade's board of directors meeting minutes, presentations, resolutions, and committee materials are highly likely to be responsive to the Second Request, particularly materials from the board meeting on or about February 3, 2025, at which the board authorized management to pursue the acquisition of NovaMart. Board materials often contain concise summaries of the Transaction rationale, competitive landscape, and strategic objectives that receive close attention from DOJ investigators. The office of the Corporate Secretary should be contacted to ensure the complete collection of all board and committee materials for the applicable period.
B. Preservation and Litigation Hold
A litigation hold was issued in connection with the HSR filing on or about April 11, 2025. We recommend the immediate issuance of a supplemental litigation hold notice, specifically addressed to all identified custodians and to Cascade's IT department, that:
(a) Confirms the obligation to preserve all documents that may be responsive to the Second Request;
(b) Identifies the specific categories of documents and data sources that must be preserved, including email, text messages, messaging applications, shared drives, hard copy files, and mobile device data;
(c) Instructs all custodians to suspend any routine deletion of emails, messages, or files pending further notice;
(d) Directs Cascade's IT department to immediately suspend all auto-deletion policies, data retention policies, and email archival purge schedules for all identified custodians;
(e) Provides a point of contact (Elena Vasquez-Bright or her designee) for any questions regarding preservation obligations; and
(f) Reminds all custodians that the destruction, alteration, or concealment of potentially responsive documents may constitute obstruction of a federal investigation and a violation of federal law.
We recommend that the supplemental litigation hold notice be issued by Elena Vasquez-Bright on behalf of Cascade no later than May 14, 2025.
In addition, a forensic collection vendor should be engaged promptly (no later than May 16, 2025) to conduct the defensible collection of documents from all digital sources. Forensic collection — as opposed to self-collection by custodians — is the standard of care in Second Request responses and provides a defensible chain of custody, metadata preservation, and completeness assurance. The forensic collection vendor should have experience with Second Request responses and should be able to deploy collection technicians to Cascade's offices, data centers, and the offices of any custodians who work remotely.
Date Range for Collection. The Second Request specification date range must be confirmed by reviewing the full text of the Second Request. Typically, the DOJ requests documents for a period of approximately two years prior to the announcement or filing date. Based on the LOI date of February 14, 2025, we anticipate that the relevant date range will extend from approximately February 2023 through the present. However, certain specification categories (e.g., strategic planning documents, annual reports, and competitive analyses) may call for a longer lookback period. We will confirm the applicable date range with DOJ staff during our initial discussions and, if necessary, negotiate the scope of the lookback period.
C. Document Processing
Based on our experience with similar transactions and the anticipated number of custodians (8–12 on the Cascade side), we estimate that the total pre-deduplication document population from Cascade sources will be in the range of 500,000 to 1,000,000 documents. This estimate includes emails (with attachments treated as separate documents), electronic files from shared drives and collaboration platforms, and any collected hard copy and mobile device data.
The document processing workflow will proceed through the following stages:
Stage 1 — Ingestion. Collected data will be ingested into the e-discovery platform for processing. The platform will parse email containers, decompose compound files, extract text and metadata, and generate document-level records.
Stage 2 — Deduplication. Global deduplication will be applied across all custodians to eliminate exact duplicate documents, significantly reducing the review population. Deduplication is typically performed at the MD5 or SHA-1 hash level. We anticipate that deduplication will reduce the document population by approximately 30–40%.
Stage 3 — Date Filtering. Documents falling outside the applicable date range will be filtered out and excluded from the review population. Date filtering typically provides an additional 10–20% reduction depending on the date range.
Stage 4 — Search Term Application. The agreed-upon search terms (see Section VI) will be applied to the deduplicated, date-filtered population to identify the subset of documents that are potentially responsive. Search term hit rates will be tracked and reported to DOJ staff.
Stage 5 — Technology-Assisted Review (TAR). The search-term-hit population will be reviewed using a TAR 2.0 (continuous active learning) protocol to prioritize and classify documents for responsiveness. The TAR protocol is discussed in detail in Section VI.C below.
Stage 6 — Manual Review. Documents identified as potentially responsive through TAR will be reviewed manually by trained reviewers for responsiveness, relevance, and potential privilege issues. Documents determined to be responsive will be designated for production.
Stage 7 — Privilege Review. All documents designated for production will undergo privilege review to identify and withhold documents protected by the attorney-client privilege, the work product doctrine, or other applicable privileges. The privilege review protocol is discussed in detail in Section VII below.
Stage 8 — Production. Reviewed and cleared documents will be produced to the DOJ in the agreed-upon format (typically TIFF images with extracted text and metadata, in a standard load file format, with Bates numbering).
E-discovery Platform. We recommend the use of Relativity (or an equivalent e-discovery platform such as Pinnacle Software or Calderon Services Inc.) for document hosting, search, TAR, review, and production. The selection of the platform should be confirmed in consultation with the e-discovery vendor.
Processing Vendor. A processing vendor with experience in large-scale Second Request responses should be engaged no later than May 16, 2025. We will provide recommendations for qualified vendors and can assist Cascade in evaluating proposals.
VI. SEARCH TERM METHODOLOGY
A. Proposed Search Terms (Subject to Negotiation with DOJ)
The development and negotiation of search terms is a critical component of the Second Request response. The objective is to develop a search term set that is sufficiently comprehensive to capture all responsive documents while avoiding the generation of an unmanageably large volume of non-responsive "noise" documents. The search term set will be proposed to DOJ staff, and we anticipate an iterative negotiation process before final agreement is reached.
We have developed the following preliminary categories of search terms, which will be refined before submission to the DOJ:
Transaction-Specific Terms:
• "NovaMart" and variations (e.g., "Nova Mart," "NMG")
• "NovaShip" and "NovaHome"
• The Transaction deal code name (to be confirmed with Cascade — all transactions of this nature are typically assigned an internal code name, and this code name is highly likely to appear in responsive documents)
• "acquisition," "merger," "combination," "purchase," "transaction" (when used in proximity to NovaMart-related terms)
• Names of key NovaMart personnel: "Reeves," "Narasimhan," "Whitfield," "Trevino"
• "Ridgeline" or "Brindoval" (in the context of the selling stockholders)
Competition and Market Terms:
• "marketplace," "online marketplace," "ecommerce marketplace"
• "specialty consumer goods," "specialty goods," "specialty products"
• "home décor" or "home decor," "artisanal," "artisan," "handmade," "craft"
• "consumer electronics accessories"
• "ecommerce," "e-commerce," "online retail"
• "third-party seller," "third party seller," "3P seller," "marketplace seller"
• "GMV," "gross merchandise volume"
• "take rate," "commission rate," "seller fee," "transaction fee"
• "CascadeDirect" or "Cascade Direct"
Competitor Terms:
• "BrightBazaar" or "Bright Bazaar"
• Names of other identified marketplace competitors (to be compiled based on Cascade's competitive intelligence — we anticipate that the DOJ may provide its own list of competitors of interest)
Market Share and Strategy Terms:
• "market share," "share of market," "market position"
• "competitive landscape," "competitive analysis," "competitor analysis"
• "market definition," "relevant market," "product market," "geographic market"
• "pricing strategy," "pricing power"
• "seller acquisition," "seller retention," "seller churn," "seller onboarding"
• "buyer acquisition," "customer acquisition," "buyer retention," "customer retention"
• "win/loss," "win rate," "lost to," "competitive win," "competitive loss"
• "competitive advantage," "competitive threat," "competitive response"
• "barrier to entry," "barriers to entry," "switching cost"
Regulatory Terms: