Contract analysis

I. Executive Summary The purpose of this memorandum is to present a comprehensive analysis of Stonefield Logistics Group Inc.'s ("SLG" or the "Company") internal records concerning the extent to which delivery drivers classified as independent contractors under SLG's Independent Contractor Operating Agreements ("ICOAs") engaged in (a) subcontracting of deliveries to third parties, and (b) performing delivery or drivi

II. Scope of Review and Data Sources A. Records Reviewed In preparing this memorandum, we reviewed the following categories of records and data sources:

1. SLG Human Resources and Driver Relations Records. We reviewed records maintained by Karen Lund, Director of Driver Relations, including driver roster files, ICOA execution records, correspondence files relating to driver classification and engagement terms, and internal policy memoranda governing the Company's relationship with contracted drivers across all 14 distribution hubs.

2. Independent Contractor Operating Agreements (All Versions). We reviewed and analyzed all three versions of the ICOA: (a) ICOA v1.0 (2018), originally drafted by Pennfield & Daye LLP in connection with SLG's transition to an independent contractor delivery model; (b) ICOA v2.0 (August 2020), incorporating revisions to the subcontracting approval process and the addition of the Subcontractor Approval Request Form as

3. Subcontracting Approval Request Files. We reviewed subcontracting approval request files maintained at the hub level by individual hub managers and centrally by the Driver Relations department. These files include the Subcontractor Approval Request Forms (for drivers operating under ICOA v2.0 and v3.0), informal written requests (for drivers operating under ICOA v1.0), approval and denial correspondence, backgroun

4. RouteSync Dispatch Platform Data. We reviewed RouteSync dispatch data for the relevant period of April 30, 2022 through June 2025 across all 14 distribution hubs. This data includes delivery assignment records, driver acceptance and declination records, delivery completion timestamps, and scheduling data. This data set is the same data set analyzed in the RouteSync Data & GPS Log Analysis Memorandum dated June 25,

5. GPS Telematics Data. We reviewed GPS telematics data from SLG-provided telematics devices installed on all contracted driver vehicles. This data includes vehicle location, ignition status, mileage, and route tracking information. As discussed in Section V below, GPS data was utilized as indirect evidence of multi-platform engagement during non-delivery hours, subject to the limitations identified in the RouteSync/

6. Accounts Payable Records. We reviewed SLG's accounts payable records reflecting payments to drivers and, where applicable, to driver-designated subcontractors during the relevant period. These records include payment amounts, payment dates, delivery volume associated with each payment, and deductions or adjustments. Where payments were directed to a subcontractor rather than the contracting driver, those transacti

7. Driver Onboarding and Orientation Files. We reviewed onboarding and orientation files for drivers who commenced services during the relevant period, including executed ICOAs, acknowledgment forms, intake questionnaires (which include questions regarding concurrent engagement with other delivery or logistics companies), and training completion records.

8. Performance Review Records. We reviewed performance review records triggered by driver acceptance rates falling below the 85% minimum acceptance rate per rolling 30-day period. These records include written notifications to drivers, driver responses, and any corrective action or contract termination proceedings that resulted from sustained sub-threshold acceptance rates. 9. 50-Driver Sample. Consistent with the sa

10. Interviews and Communications. We conducted interviews and reviewed communications with the following SLG personnel: • Trevor Sandoval, Vice President of Operations, interviewed on May 8, 2025 and June 12, 2025; • Karen Lund, Director of Driver Relations, interviewed on May 15, 2025 and June 19, 2025; and • Dennis Faulkner, Hub Manager, Fort Worth HUB-01, interviewed on June 5, 2025. B. Limitations. Several signi

III. ICOA Subcontracting Provisions Across Versions A. ICOA v1.0 (2018) The original ICOA, drafted by Pennfield & Daye LLP in 2018 in connection with SLG's transition from an employee-driver model to an independent contractor model, addressed subcontracting in Section 4.3, titled "Substitute Drivers and Helpers." The operative language provided: "Contractor may engage substitute drivers or helpers to perform assigned

Section 4.3(f) of v3.0 further added language providing that the contracting driver "remains solely responsible for the performance and quality of all deliveries performed by any approved substitute driver," and that any service failures, customer complaints, or safety incidents attributable to a substitute driver will be assessed against the contracting driver's performance record for purposes of the performance eva

IV. Subcontracting in Practice: Empirical Analysis A. Subcontracting Approval Request Data (All Hubs, April 2022 – June 2025)

1. Aggregate Findings. Based on our review of subcontracting approval request files maintained at the hub level and centrally by the Driver Relations department, the following aggregate data reflects subcontracting activity across all 14 SLG distribution hubs during the relevant period of April 30, 2022 through June 30, 2025: • Total subcontracting approval requests submitted: 73 • Total approvals granted: 19 • Total

2. Hub-by-Hub Breakdown. The following table presents subcontracting approval request data by hub. The data reveals significant variation across hubs, which is relevant to SLG's conditional certification opposition. Several observations emerge from the hub-level data: Hubs with Zero Approvals. Four hubs — HUB-01 Fort Worth, HUB-11 Shreveport, HUB-13 Lubbock, and HUB-14 Corpus Christi — granted zero subcontracting app

3. Reasons for Denials. Our review of the 47 denial records reveals the following categories of stated reasons for denial: • Substitute driver failed background check: 14 denials (29.8%). In these cases, the proposed substitute driver had disqualifying criminal history, an unsatisfactory driving record (including excessive moving violations or a DUI within the preceding five years), or failed a drug screening (under

V. Multi-Platform Engagement Analysis A. Framework and Relevance Under the FLSA economic reality test, a key factor in determining whether a worker is an employee or an independent contractor is whether the worker has the opportunity to profit or lose based on the exercise of managerial skill or entrepreneurial initiative. The Fifth Circuit has consistently recognized that a worker's freedom to provide services to co

1. RouteSync Scheduling Gap Analysis. We analyzed RouteSync dispatch data for the 50-driver sample across the five selected hubs to identify periods during which drivers had delivery-free days or blocks of time that could have been used for competing platform work. The RouteSync platform records the time at which delivery assignments are offered to each driver, the driver's acceptance or declination of each offer, an

2. Driver Intake Questionnaire Data. SLG's onboarding process requires drivers to complete an intake questionnaire that includes the following question: "Are you currently performing delivery, driving, or logistics services for any other company? If yes, please identify the company or companies." Our review of intake questionnaire responses for drivers who commenced services during the relevant period yielded the fol

3. Hub Manager Reports and Anecdotal Evidence. Interviews with Trevor Sandoval (VP of Operations) and Karen Lund (Director of Driver Relations) provided additional context regarding multi-platform engagement. Sandoval stated that it was "common knowledge" within SLG that many drivers performed delivery or driving services for other companies, and that this was viewed by SLG as consistent with the independent contract

4. Acceptance Rate Data as a Proxy. We analyzed delivery acceptance rate data from the RouteSync platform for the 50-driver sample as an additional proxy for multi-platform engagement. The logic underlying this analysis is that drivers who consistently maintained acceptance rates at or near the 85% minimum threshold — i.e., who declined the maximum number of deliveries permitted without triggering performance review

1. Quantitative Findings. Triangulating across the four categories of indirect evidence described above — RouteSync scheduling gaps, intake questionnaire responses, hub manager reports, and acceptance rate patterns — we identified 16 of the 50 sampled drivers (32.0%) as having performed services for at least one other delivery or logistics company during some portion of the relevant period. We further classified the

2. Hub-Level Variation. The percentage of sampled drivers identified as multi-platform engaged varied significantly across hubs: HUB-09 New Orleans had a notably lower rate of identified multi-platform engagement (10%) compared to the other four hubs. This may reflect the smaller number of competing delivery platforms with a meaningful presence in the New Orleans market, or it may reflect the higher average acceptanc

1. Minimum Acceptance Rate (85%). The 85% minimum acceptance rate is the contractual provision with the most direct impact on drivers' ability to engage in multi-platform work. A driver who is required to accept 85% of offered deliveries during the 7:00 AM – 8:00 PM service availability period has limited flexibility to decline SLG deliveries in favor of a competing delivery for FleetDash or Brightwater Industries. I