Contract analysis

I. Executive Summary Calderwood & Harkness LLP provides this initial monthly status report on the defense of Gloria Reyes, individually and on behalf of all others similarly situated, and on behalf of the State of California v. Vantage Mobility Systems Corp., Case No. CIVSB-2025-04781, currently pending in the Superior Court of California, County of San Bernardino. This memorandum is privileged and confidential and i

II. Case Background and Parties A. Defendant — Vantage Mobility Systems Corp. Vantage Mobility Systems Corp. is a Delaware corporation, registered and authorized to conduct business in both California and Michigan. The Company maintains its corporate headquarters at 4200 Industrial Parkway, Auburn Hills, Michigan 48326. The facility at issue in this litigation is the Fontana Plant, located at 11780 Cherry Avenue, Fon

III. Procedural History and Current Status A. Key Procedural Events to Date The following table summarizes the key procedural events that have occurred since the inception of this matter: The case has been assigned to the San Bernardino County Superior Court, but no specific judicial assignment has been made to date. We expect a department assignment to occur in connection with the Case Management Conference, which w

IV. Completed Tasks — August 2025 The following is a detailed summary of all tasks completed by the defense team during the month of August 2025: A. Engagement Formalized The formal engagement of Calderwood & Harkness LLP as defense counsel for VMS in this matter was completed promptly upon receipt of the complaint. The engagement letter was executed by Priya Nandakumar, in her capacity as General Counsel of Vantage

1. Meal period violations (Cal. Lab. Code §§ 226.7, 512): The complaint alleges that VMS maintained a policy and practice of failing to provide lawful meal periods to non-exempt hourly employees, including through the use of an automatic 30-minute meal period deduction in the ApexTime 6.2 timekeeping system regardless of whether employees actually took uninterrupted, duty-free meal breaks. Under California law, emplo

2. Rest period violations (Cal. Lab. Code § 226.7): The complaint alleges that VMS failed to authorize and permit employees to take 10-minute rest periods for every four hours worked, or major fraction thereof. The complaint specifically references the alleged practice of shortening or denying rest breaks during "surge" production periods. This claim presents a secondary exposure risk, although the evidence of system

3. Unpaid wages (Cal. Lab. Code §§ 204, 1194): This derivative claim alleges that the failure to properly compensate employees for missed or shortened meal and rest periods constitutes a failure to pay all wages due. Liability on this claim is largely derivative of the underlying meal and rest break claims.

4. Inaccurate wage statements (Cal. Lab. Code § 226): The complaint alleges that VMS's wage statements were inaccurate because they failed to reflect the premium pay owed for meal and rest break violations, and because the auto-deduction policy resulted in inaccurate reporting of hours worked. Statutory penalties under Section 226 are $50 for the initial violation and $100 for each subsequent violation, per employee,

5. Waiting time penalties (Cal. Lab. Code § 203): This claim is asserted on behalf of approximately 2,100 former employees who separated from the Company during the class period and were allegedly not paid all wages owed, including meal and rest break premiums, within the time required by statute. Waiting time penalties accrue at the employee's daily rate of pay for up to 30 calendar days from the date of separation.

6. Unfair business practices (Cal. Bus. & Prof. Code § 17200): The UCL claim is predicated on the same underlying conduct alleged in the Labor Code causes of action and seeks restitutionary relief. The four-year statute of limitations under the UCL provides the longest applicable limitations period and defines the class period. Remedies under the UCL are largely duplicative of the premium pay recoverable under the La

7. PAGA penalties (Cal. Lab. Code § 2698 et seq.): The PAGA claim seeks civil penalties of $100 per employee per pay period for initial violations and $200 per employee per pay period for subsequent violations. Seventy-five percent of any PAGA penalties recovered are payable to the LWDA, with the remaining twenty-five percent distributed to aggrieved employees. The PAGA claim is not subject to class certification req

V. Insurance Coverage Status A. Ridgeway National EPL Policy VMS maintains an Employment Practices Liability ("EPL") insurance policy with Ridgeway National Insurance Company. The relevant policy details are as follows: The claim was timely reported to Ridgeway during the active policy period. The SIR of $500,000 erodes first (i.e., the Company is responsible for the first $500,000 in defense costs and/or indemnity p

VI. Exposure Analysis — Updated The following exposure analysis reflects our current assessment of the Company's potential liability in this matter. The analysis is based on the allegations in the complaint, our preliminary review of the Company's records and policies, and our experience in similar California wage-and-hour class actions. We caution that this analysis is preliminary and subject to revision as addition

VII. Expert Retention A. Defense Expert — Dr. Kenneth Proulx We have retained Dr. Kenneth Proulx of Veltrano Analytics LLC as the defense's primary expert witness. Dr. Proulx holds a Ph.D. in Statistics and Econometrics and is based at the firm's offices at 155 South Lake Avenue, Suite 800, Pasadena, California 91101. Dr. Proulx has extensive experience in labor and employment class action litigation, with a particul

VIII. Strategic Recommendations A. Phased Defense Approach We recommend a phased defense strategy that prioritizes building a strong factual and legal record through the class certification stage, preserving the Company's leverage for settlement negotiations while maintaining readiness for trial if necessary. Phase 1: Responsive Pleadings and Class Certification Defense (Current – Q2 2026) This phase encompasses the

1. Contingent liability disclosure. The realistic settlement exposure of $8.5 million to $18.7 million constitutes a material contingent liability that must be disclosed in connection with any planned exit or secondary sale. The specific disclosure obligations will depend on the form of the transaction (asset sale, stock sale, or merger) and the applicable representations and warranties, but as a general matter, a pe

2. Balance sheet reserves. Ashgrove Equity Partners and VMS management should evaluate whether and at what level to establish a reserve for litigation exposure on VMS's balance sheet. The appropriate reserve level will depend on the Company's assessment of the probable outcome and the range of potential loss, consistent with applicable accounting standards (ASC 450 / IAS 37). We recommend discussing the reserve metho

3. Transaction timing and structure. If a settlement is achieved before the commencement of the sale process, the contingent liability will be eliminated, reducing deal risk and simplifying the transaction. If the matter remains unresolved at the time of a sale, the prospective buyer may seek indemnification provisions, escrow holdbacks, purchase price adjustments, or other protections to allocate the litigation risk

4. Regular reporting. We recommend that regular updates on the status of this litigation be provided to Catherine Hsu and, through her, to Douglas Fielding and the Ashgrove Equity Partners investment committee, to ensure that the equity sponsor remains fully informed and can make timely decisions regarding exit timing and strategy.

IX. Budget and Fees — August 2025 A. Current Month (August 2025) The following attorneys incurred time on this matter during August 2025 in connection with the engagement setup, litigation hold preparation and issuance, preliminary case assessment, federal removal analysis, responsive pleading drafting, insurance coverage analysis, expert retention, and general case management: The final fee totals for August 2025 ar