Contract analysis

From: Samuel Eklund <seklund@calderwoodharkness.com> To: Tobias Wren <twren@stonefieldlogistics.com> Cc: Patrick Gallagher <pgallagher@calderwoodharkness.com> Subject: Vantor v. Stonefield (22-cv-07841) — Court Grants CRS Withdrawal; Vantor Has 60 Days to Retain New Counsel

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I am writing to report a significant and favorable procedural development in *Vantor Holdings Corp. v. Stonefield Logistics Group Inc.*, Case No. 22-cv-07841 (S.D.N.Y.) (Matter No. 1012-00005).

Yesterday afternoon, Judge Margaret T. Calloway entered an order granting the motion to withdraw as counsel filed by Caldwell Royce & Shapiro LLP ("CRS") on October 3, 2023. As you may recall, CRS cited "irreconcilable differences" with its client, Vantor Holdings Corp., as the basis for the motion. While the motion papers were somewhat circumspect, the supporting declaration referenced approximately $870,000 in unpa

The key terms of the Court's order are as follows:

- CRS's withdrawal is **effective immediately**. - Vantor Holdings Corp. is **ordered to retain substitute counsel** and have new counsel file a notice of appearance **within sixty (60) days** — i.e., by **December 17, 2023**. - **All pending deadlines are stayed** until new counsel enters an appearance. As you know, fact discovery had already closed pursuant to the September 29, 2023 Case Management Order deadline.

I reviewed the order this morning and wanted to provide you with our analysis and recommended next steps promptly.

**II. Significance and Strategic Implications**

This development is significant for several reasons, and I want to highlight what I view as the most important considerations.

First, a critical procedural point: Vantor Holdings Corp. is a New York corporation. Under well-settled law in the Southern District of New York, **a corporation cannot appear pro se in federal court** — it must be represented by a licensed attorney at all stages of the proceeding. This means that if Vantor fails to retain substitute counsel within the 60-day window (or any extension the Court might grant), it will b

Second, it bears emphasizing that the case was already trending favorably for Stonefield before this development:

- **The Milescu email.** discovery yielded what we have consistently identified as the single most important document in this case — the November 12, 2021 internal email from Ana Milescu (Vantor's SVP, Operations) admitting that Vantor Trucking Solutions ("VTS") had pulled 85 tractors off Stonefield-dedicated lanes to cover other customer commitments, without notifying Stonefield. This contemporaneous admission goes

- **Milescu's deposition testimony.** At her August 4, 2023 deposition, Milescu confirmed under oath that the fleet reassignment was directed to service the Northwind Distribution Co. account, corroborating the email and further undermining Vantor's narrative that the service failures were attributable to driver shortages and market conditions beyond its control.

- **Pruitt's testimony.** Gregory Pruitt, Vantor's VP of Business Development, was unable to identify any specific mitigation steps Vantor undertook following Stonefield's March 4, 2022 termination of the Transportation Services Agreement — a significant gap given that Vantor bears the burden of proving mitigation and its failure to do so is an independent ground for limiting or barring recovery.

- **Expert damages analysis.** Dr. Eleanor Rosser's rebuttal expert report, served August 25, 2023 on behalf of Stonefield through Kensington Analytics Group, opines that Vantor's **maximum provable damages are $8.2 million** under the most plaintiff-favorable alternative theory. This stands in stark contrast to Vantor's claimed damages of **$95.4 million**, which are derived from the liquidated damages formula in TS

- **Performance metrics.** The undisputed performance data from Q4 2021 — which formed the basis for Stonefield's January 18, 2022 Cure Notice — tells the story on its own: on-time pickup at 78.2% (vs. 95% contractual threshold); on-time delivery at 81.6% (vs. 93%); tender acceptance at 71.4% (vs. 90%); equipment availability at 62% (vs. 85%); and cargo claims ratio at 1.07% (vs. the contractual maximum of ≤0.5%). Va

- **Summary judgment roadmap.** As detailed in our September 15, 2023 memorandum, the summary judgment roadmap was being finalized before this development. We remain well-positioned to move forward when the time comes.

Third, and perhaps most practically, the fee dispute and counsel withdrawal suggest **material internal difficulties at Vantor**. The total legal fees incurred by CRS are understood to be approximately $2.1 million, of which $870,000 remains unpaid. A plaintiff that cannot pay its current counsel's invoices will likely face challenges retaining new, competent litigation counsel willing to take on a complex commercial

**III. Contingency Planning — Three Scenarios**

We have identified three primary scenarios and have begun preparing accordingly.

**Scenario A: Vantor Retains New Counsel Within 60 Days**

This remains the most likely scenario, though the probability has decreased in light of the fee dispute. If new counsel appears by December 17, 2023, we would expect the following dynamics:

- New counsel would need substantial time to get up to speed. The record in this case is extensive — over 75,000 documents produced by both sides, six fact depositions taken, and two expert reports served. Any competent attorney inheriting this matter would need weeks, if not months, to review the record and assess the merits. - We would anticipate a motion to extend the stayed deadlines, likely seeking 90–120 additi

**Scenario B: Vantor Fails to Retain Counsel by December 17, 2023**

If the deadline passes without a notice of appearance, the consequences are significant:

- Calderwood & Harkness would promptly notify the Court by letter and request either a status conference or leave to file an appropriate motion. - Grounds for **dismissal for failure to prosecute under FRCP 41(b)** would ripen. The relevant factors in the S.D.N.Y. include: (i) the duration of the plaintiff's delay, (ii) whether the plaintiff was on notice that further delay would result in dismissal, (iii) the prejud

It is worth noting that shortly before the withdrawal motion was filed, on September 25, 2023, Harrison Caldwell of CRS reached out to me and suggested that Vantor "would be open to discussing resolution," proposing mediation. At the time, we declined the overture, as it was evident that the counsel-client relationship was fracturing and we did not believe the conditions were conducive to productive settlement discus

With Vantor now unrepresented, any direct communications require careful handling. I want to flag the ethical framework: once counsel has formally withdrawn and no new counsel has appeared, the no-contact rule under RPC 4.2 would not prohibit communications with Vantor or Vantorovich, because they are no longer "represented" persons. However, **RPC 4.3** — governing dealings with unrepresented persons — would apply,

My recommendation: **if Vantor or Vantorovich reaches out directly to anyone at Stonefield or Ridgeline regarding the litigation, do not engage substantively.** Channel any such communication through Tobias or directly to Calderwood & Harkness. We will handle any response in a manner consistent with the applicable ethical rules and our strategic interests.

On settlement parameters, the **previously approved settlement authority of $0–$4.5 million** (per the November 8, 2022 memorandum, as updated on August 30, 2023 following the close of fact discovery) remains in place. Given the current case posture — the strength of our summary judgment position, the devastating discovery record, the massive gap between claimed and provable damages, and Vantor's evident financial an

1. **No immediate action is required from the Stonefield or Ridgeline teams.** Calderwood & Harkness will monitor the docket daily through the December 17 deadline for any new counsel appearance, motions, or other filings.

2. **Internally**, Patrick Gallagher and Claire Laroche will continue refining the summary judgment and Daubert materials so that we are prepared to move promptly if new counsel appears and deadlines are reset.

3. **Patrick Gallagher will prepare a draft FRCP 41(b) motion** for failure to prosecute, to be held in reserve and available for prompt filing if Vantor fails to comply with the Court's order.

4. **Quarterly update to Lakeshore National Bank.** Tobias, the next quarterly update to Catherine Devereaux at Lakeshore is due in early January 2024. You should plan to include a summary of the counsel withdrawal and current case status. I would suggest language along the following lines: *"Plaintiff's counsel of record has withdrawn from the case due to irreconcilable differences with its client. The Court has ord

5. **Financial reporting — Clarendon Partners LLP.** For year-end audit purposes, I expect Robert Farraday at Clarendon will inquire about litigation contingencies as part of the FY2023 audit cycle. Our recommendation is to **continue characterizing the contingent liability posture as unchanged**: management's assessment is that the claims are without merit and the likelihood of a material adverse outcome remains rem

6. **No direct contact with Vantor.** I want to underscore this point: **no one from Stonefield or Ridgeline should contact Vantor Holdings, VTS, or Dmitri Vantorovich directly about the litigation** without first consulting Calderwood & Harkness. Even well-intentioned outreach could create complications — ethical, evidentiary, or strategic. Please ensure that this message is communicated to anyone at your organizati

A brief note on spend. Total fees and costs incurred through October 2023 are approximately **$4.42 million**, broken down as follows:

- **Attorney fees:** ~$3.8 million - **Costs and disbursements:** ~$620,000, including expert fees paid to Kensington Analytics Group (Dr. Rosser and team), eDiscovery hosting and processing through Pinnacle Forensics, deposition reporting and videography costs, and travel expenses

During the monitoring/dormancy period while we await developments on the counsel front, costs will be **minimal** — limited to periodic docket checks, case maintenance, and contingency motion preparation.

Looking ahead, if the case proceeds to summary judgment with new Vantor counsel, our September 20, 2023 semi-annual risk assessment estimated total spend through disposition at **$5.5–$7.2 million**, depending on the scope of any renewed discovery and the extent of post-briefing proceedings (oral argument, potential trial if summary judgment is not fully granted). If, however, the case is **dismissed for failure to p

I am happy to circulate the Court's October 18 order if any of you would like to review it in full. For reference, the key background documents are the September 20, 2023 semi-annual risk assessment, the September 15, 2023 summary judgment roadmap memorandum, and the approved settlement authority memorandum (November 8, 2022, as updated August 30, 2023).

This development, while requiring patience over the next 60 days, represents a **meaningfully positive shift in the overall litigation posture**. A plaintiff that cannot retain or pay its lawyers faces a difficult path forward, particularly in a case where the merits were already trending strongly in the defendant's favor. We will, of course, remain vigilant and prepared for all contingencies.

I am available to discuss any of this by phone at your convenience. If it would be helpful, I am also happy to schedule a call with the full group — Tobias, Marcus, Alison, and any colleagues from Ridgeline (Elizabeth Whitmore and/or James Carey) you would like to include — to walk through strategy in more detail. Please let me know what works best.

**Samuel Eklund** Partner, Litigation Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, NY 10166 Direct: (212) 554-7180 seklund@calderwoodharkness.com

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