Contract analysis

I. INTRODUCTION AND PURPOSE The purpose of this memorandum is to present to Stonefield Logistics Group Inc. ("Stonefield" or "SLG") and its stakeholders the comprehensive litigation defense strategy that Calderwood & Harkness LLP ("C&H") recommends for Stonefield's defense in the breach-of-contract action filed by Vantor Holdings Corp. ("Vantor") in the United States District Court for the Southern District of New Yo

II. EXECUTIVE SUMMARY OF CASE POSTURE A. Claims Against Stonefield On August 12, 2022, Vantor Holdings Corp. filed its original Complaint in the United States District Court for the Southern District of New York. The case was assigned to the Honorable Margaret T. Calloway, U.S.D.J., and docketed as Case No. 22-cv-07841. Stonefield was served with the Summons and Complaint on August 16, 2022. Vantor alleges that Stone

III. PILLAR ONE: MOTION TO DISMISS (RULE 12(b)(6)) A. Recommendation C&H recommends that Stonefield file a pre-answer motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) targeting two of Vantor's claims: (i) the liquidated damages claim, on the ground that it is based on an unenforceable penalty clause, and (ii) the lost profits claim, on the ground that it is inadequately pled and duplicative of the liq

Section 14.2 of the TSA provides, in relevant part, that if Stonefield terminates the Agreement for any reason other than "for Cause" (as defined in Section 13.1(a)), Stonefield shall pay to VTS liquidated damages in an amount equal to seventy-five percent (75%) of the Annual Contract Value ($43.2 million), multiplied by the number of full and partial contract years remaining in the initial term or any renewal term t

IV. PILLAR TWO: BUILD FACTUAL RECORD THROUGH DISCOVERY A. Discovery Objectives The overarching objective of Stonefield's discovery strategy is to build a factual record that (i) affirmatively supports Stonefield's defense that the termination was valid for Cause, and (ii) undercuts each element of Vantor's damages claims. To accomplish these objectives, Stonefield's discovery efforts will focus on obtaining Vantor's

V. PILLAR THREE: RETAIN DAMAGES REBUTTAL EXPERT A. Expert Selection C&H recommends that Stonefield retain Kensington Analytics Group LLC ("KAG"), based in Philadelphia, Pennsylvania, to serve as Stonefield's damages rebuttal expert. The engagement would be led by Dr. Evelyn Rosser, Managing Director of KAG, who specializes in transportation economics and contract damages. Dr. Rosser holds a Ph.D. in economics from th

VI. PILLAR FOUR: PURSUE SUMMARY JUDGMENT A. Overview The ultimate litigation objective is to obtain full or partial summary judgment disposing of Vantor's claims and/or establishing Stonefield's entitlement to affirmative declaratory relief. Summary judgment under FRCP 56 is appropriate where there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Given the stren

1. Valid Termination for Cause (Section 13.1(a)). The centerpiece of Stonefield's summary judgment motion will be the argument that VTS's service failures constituted a material breach as a matter of law and that Stonefield's termination was a valid exercise of its contractual rights under Section 13.1(a) of the TSA. The evidence supporting this argument is overwhelming: (a) VTS failed to meet the minimum SLO thresho

2. Unenforceability of Liquidated Damages as Penalty. At the summary judgment stage, the liquidated damages argument will be bolstered by the full factual record and, critically, by the economic analysis of Dr. Rosser. The summary judgment brief will combine the legal argument (under the two-prong test established by Truck Rent-A-Center and its progeny) with Dr. Rosser's expert analysis demonstrating that: (a) actual

3. Bar on Consequential Damages Under TSA Section 15.1. Section 15.1 of the TSA contains a mutual waiver of consequential, incidental, special, and indirect damages. Three of Vantor's five damages categories — stranded assets ($5.2 million), workforce reduction costs ($2.87 million), and mitigation costs ($1.4 million) — are consequential in nature and are therefore barred by this waiver. Stranded asset costs represe

4. Failure to Mitigate. The fourth pillar of the summary judgment motion will address Vantor's failure to mitigate its damages following the termination. Under New York law, a non-breaching party has a duty to take reasonable steps to minimize its losses, and damages that could have been avoided through reasonable mitigation efforts are not recoverable. Through discovery and Dr. Rosser's expert analysis, Stonefield w