Contract analysis

From: Samuel Eklund <seklund@calderwoodharkness.com> To: Tobias Wren <twren@stonefieldlogistics.com> Cc: Patrick Gallagher <pgallagher@calderwoodharkness.com> Date: Sat, 15 Jul 2023 08:47:00 -0000 Subject: Kirkwood Deposition — Debrief and Assessment [PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT]

I wanted to get you a debrief while things are fresh. Janet Kirkwood's deposition took place yesterday, Friday, July 14, at our offices at 200 Park Avenue. The examination ran approximately six and a half hours. Harrison Caldwell of Caldwell Royce & Shapiro conducted the questioning, with Jason Whitford assisting. On our side, Patrick defended the deposition, with Simone Laroche attending as well. The bottom line: Ja

**1. The September 22, 2021 Email (Kirkwood to Medina)**

No surprise — Caldwell spent significant time on this, at least a full hour. As you'll recall, this is the email in which Janet wrote to Carlos Medina that "VTS is a mess," that Stonefield was "already moving volume to Cascade and Briarwood on Lanes 8–14," and that if VTS didn't improve by Q1 she thought you should "pull the plug on the whole contract." Caldwell's objective was transparent: he wanted to establish tha

Janet was steady throughout. She testified clearly that the email was expressing her frustration with VTS's declining tender acceptance rates and service quality — not laying out a corporate decision or plan to terminate. On the volume diversion to Cascade Freight Systems and Briarwood Trucking, she consistently maintained that it was limited to Lanes 8–14, which are classified as "Secondary Lanes" under Schedule C,

Caldwell pressed hard on whether Stonefield terminated the TSA to avoid the April 2022 rate adjustment under the Rate Adjustment Mechanism in TSA Section 5.3. He introduced the Ashford Meridian rate adjustment analysis memo from February 2022, which projected a 14.3% per-mile rate increase (from a weighted average of $2.87/mile to $3.28/mile), adding approximately $6.2 million in annual transportation costs.

Janet acknowledged she was aware of the upcoming rate adjustment, as it had been discussed internally — she did not try to minimize that, which was the right approach. But she denied that it influenced the termination decision. She testified that the termination was driven by VTS's sustained service failures across all five SLO categories in Q4 2021:

- On-time pickup: 78.2% vs. 95% threshold - On-time delivery: 81.6% vs. 93% threshold - Tender acceptance: 71.4% vs. 90% threshold - Equipment availability: 62% vs. 85% threshold - Cargo claims ratio: 1.07% vs. 0.5% threshold

She stated that the decision to issue the Cure Notice in January 2022 was based on Q4 2021 performance data compiled by Raymond Hess and had been under discussion since late November/early December 2021 — before the rate adjustment analysis was completed. That timeline is important and well supported in the documentary record.

**3. Volume Shortfall / ACV Allegations**

Caldwell explored whether Stonefield's own failure to tender the Annual Committed Volume contributed to VTS's performance decline. Janet acknowledged that volumes were lower during the COVID-19 period (April–September 2020) but explained that Stonefield invoked force majeure under TSA Section 12.1, which was proper. On Contract Year 2 (April 2020–March 2021), she testified that Stonefield's actual tenders totaled $31

On Contract Year 3 (April 2021 onward), she was less granular but noted that volume tenders were $36.5 million through January 2022 and that the shortfall Vantor alleges ($6.7 million against the full $43.2 million ACV) does not account for the fact that the contract was terminated effective March 4, 2022, meaning CY3 was not a full year. This is a point we will need to develop more precisely through Raymond Hess.

Caldwell tried to draw a link between lower volumes and VTS's decision to reassign fleet assets. Janet pushed back effectively, noting that VTS never raised volume shortfalls as a justification for reducing dedicated capacity until after the Cure Notice was issued. That's a strong fact for us.

**4. Relationship with Derek Pruitt / Prior Communications**

There was some questioning regarding Janet's communications with Derek Pruitt, VTS's VP of Business Development and the primary relationship manager. Janet testified their communications were professional and that she had raised service concerns with Pruitt verbally on multiple occasions in Q3 and Q4 2021, before the formal Cure Notice. This is consistent with Pruitt's own deposition testimony from July 10, where he

I want to be candid about two areas that warrant continued attention:

First, the September 22, 2021 email remains a litigation risk. Caldwell will undoubtedly feature it prominently in any opposition to summary judgment and at trial as evidence of premeditated termination. That said, Janet's testimony provides important context: the email was a candid internal assessment of a deteriorating carrier relationship, not a strategic plan, and the volume diversion it references was limited to

Second, the rate adjustment motive is a concern — the temporal proximity between the February 2022 rate memo and the March 4, 2022 termination is something Vantor will highlight. However, our position remains strong. Objective Cause existed at the time of termination: VTS failed all five SLOs and did not cure within the 30-day period. Under New York law, the existence of a concurrent financial motive does not invalid

Raymond Hess is scheduled for July 27 (we anticipate approximately 5 hours). Ray will be a strong witness on the cure notice process and metric verification — he compiled the underlying data and is comfortable with the details.

Sandra Milescu (COO, Vantor/VTS) is scheduled for August 4. This one will be critical, particularly regarding the November 12, 2021 email in which Milescu informed Vantorovich that VTS had "pulled 85 tractors off the SLG dedicated lanes" to cover other commitments. That email is potentially very significant for us on the causation question. Patrick and Simone are preparing detailed outlines for both depositions.

Please let me know if you have any questions or if you'd like to get on a call to discuss any of this further. A more detailed written deposition summary will follow from Simone in the coming days.

Samuel Eklund Partner Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, NY 10166 Tel: (212) 555-4100 seklund@calderwoodharkness.com

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