Contract analysis

I. Executive Summary This memorandum analyzes the validity and timeliness of Stonefield Logistics Group Inc.'s ("Stonefield" or "SLG") invocation of the force majeure clause set forth in Section 12.1 of the Transportation Services Agreement dated March 15, 2019 (the "TSA," Contract Reference No. SLG-VTS-2019-0315) in response to the claim advanced by Vantor Holdings Corp. ("Vantor") and its subsidiary Vantor Transpor

II. Background A. The TSA and ACV Obligation On March 15, 2019, Stonefield Logistics Group Inc., acting in its capacity as "Shipper-Broker," and Vantor Transport Services LLC, acting in its capacity as "Carrier-Provider," entered into the Transportation Services Agreement that is the subject of the present litigation. The TSA was drafted by Ashford Meridian LLP on behalf of Stonefield, following approximately four mo

III. The Force Majeure Clause — Section 12.1 A. Text of Section 12.1 The force majeure provision of the TSA is set forth in Section 12.1, the full text of which should be confirmed against the executed version of the TSA attached as Exhibit A to the Declaration of Samuel Eklund filed October 14, 2022 in support of the Motion to Dismiss. Based on our review of the working copy of the TSA in the case file, Section 12.1

Section 12.1 — Force Majeure. Neither party shall be liable for any failure or delay in performing its obligations under this Agreement to the extent that such failure or delay is caused by, arises out of, or results from a Force Majeure Event, provided that the affected party has complied with the notice requirements set forth in this Section. For purposes of this Agreement, a "Force Majeure Event" shall mean any ev

IV. Analysis: Timeliness and Propriety of Invocation A. COVID-19 as a Force Majeure Event The threshold question in any force majeure analysis is whether the event invoked by the affected party qualifies as a "Force Majeure Event" under the applicable contractual definition. Here, that question is easily answered. The COVID-19 pandemic is squarely within the definition of a Force Majeure Event under Section 12.1 of t

Section 12.1 of the TSA requires the affected party to provide written notice to the other party within a specified period — believed to be 10 or 15 business days, though the exact contractual period must be confirmed against the executed TSA — of the occurrence of the Force Majeure Event. The notice must describe the event and its anticipated impact on the affected party's performance. Based on the initial client di

V. Adjusted ACV Calculation for CY2 A. Methodology The force majeure analysis leads to a straightforward mathematical adjustment of the CY2 ACV. The calculation proceeds as follows: • Full CY2 ACV: $43,200,000 (representing the twelve-month period from April 1, 2020 through March 31, 2021). • Force majeure period: Six months (April 1, 2020 through September 30, 2020). • Non-force-majeure months in CY2: Six months (Oc

VI. Anticipated Counterarguments by Vantor We anticipate that Vantor will advance several counterarguments in response to Stonefield's force majeure defense. Each is addressed below. A. Force Majeure Notice Was Untimely or Deficient Vantor may argue that Stonefield's force majeure notice was delivered late (i.e., outside the contractual notice window), lacked sufficient specificity, or was not delivered in compliance

VII. Implications for CY3 (April 2021 – March 2022) Although this memorandum focuses primarily on the CY2 force majeure defense, a brief discussion of the CY3 allegations is warranted, as Vantor's Amended Complaint asserts a separate shortfall claim for that period. Vantor alleges that during CY3 — defined as the period from April 1, 2021 through the effective termination of the TSA — Stonefield tendered only $36,500

VIII. Recommendations Based on the foregoing analysis, we recommend the following action items:

1. Obtain and preserve the force majeure notice. This is the highest-priority action item. We must confirm with Tobias Wren (General Counsel) and Raymond Hess (Director of Carrier Relations) the exact date, content, and method of delivery of Stonefield's force majeure notice to VTS. The notice letter should be located within Stonefield's contract administration files, correspondence files, or email archives. We shoul

2. Compile supporting market data. We should gather industry data corroborating the COVID-19 pandemic's impact on freight demand during the April–September 2020 force majeure period. Relevant sources include the Dunmore Systems, the Brightmoor Software load-to-truck ratio data, ATA tonnage reports, the Bureau of Labor Statistics employment data for the transportation sector, Department of Energy diesel fuel price ind

3. Incorporate into Answer and Affirmative Defenses. The force majeure defense should be affirmatively pleaded in Stonefield's Answer to the Amended Complaint, which we anticipate filing in January 2023 (following resolution of the pending Motion to Dismiss, or in the alternative, as directed by the Court's scheduling order). Specifically, the Answer should assert as an affirmative defense that Stonefield's invocatio

4. Use in discovery. We should develop discovery requests — both interrogatories and document requests — that probe Vantor's own experience during the pandemic period. Relevant inquiries include: (a) whether Vantor or VTS experienced its own volume declines during April–September 2020; (b) whether VTS's other customers invoked force majeure or reduced freight volumes during this period; (c) whether Vantor or VTS itse

5. Preserve for summary judgment. The force majeure defense, combined with the $10.2 million CY2 overage, is an excellent candidate for partial summary judgment on Vantor's CY2 volume shortfall claim. The material facts are largely undisputed: (i) the COVID-19 pandemic occurred; (ii) the TSA's force majeure clause expressly encompasses pandemics; (iii) Stonefield invoked the force majeure provision for the period Apr

IX. Conclusion Based on the analysis set forth in this memorandum, we conclude as follows: Stonefield's invocation of force majeure under Section 12.1 of the TSA for the period April 2020 through September 2020 was timely and proper. The COVID-19 pandemic is an expressly enumerated Force Majeure Event under the TSA, and its impact on freight demand during the six-month invocation period is well documented and beyond