Contract analysis

From: Samuel Eklund <seklund@calderwoodharkness.com> To: Tobias Wren <twren@stonefieldlogistics.com> Cc: Alison Trang <atrang@ridgelinecapital.com> Date: Sat, 15 Oct 2022 06:47:00 -0000 Subject: Vantor v. Stonefield (22-cv-07841) — Motion to Dismiss Filed; Status Update

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I am writing to confirm that yesterday, October 14, 2022, Calderwood & Harkness filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) on behalf of Stonefield Logistics Group Inc. in the United States District Court for the Southern District of New York, Case No. 22-cv-07841, before the Honorable Margaret T. Calloway, U.S.D.J. Alongside the motion, we filed our supporting Memorandum of Law (28

Below is a summary of the key arguments, anticipated timeline, and next steps.

Our motion advances three principal arguments:

*1. Unenforceability of the Liquidated Damages Clause (Section 14.2 of the TSA).* We argue that the liquidated damages provision constitutes an unenforceable penalty under New York law. Specifically, we contend that Vantor's actual damages from any alleged wrongful termination were readily ascertainable at the time the TSA was executed on March 15, 2019 — the parties had detailed rate schedules, defined volumes (appr

*2. Insufficiency of the Lost Profits Claim ($18.7 Million).* We argue that Vantor's lost profits claim is inadequately pled under New York pleading standards. The complaint relies on conclusory assertions of a 12% operating margin without any supporting factual detail, failing to allege damages with the requisite certainty.

*3. Impermissible Double Recovery.* Finally, we argue that even if the liquidated damages clause were deemed enforceable, Vantor cannot recover both liquidated damages and lost profits. Both categories of damages compensate for the same underlying harm — the lost value of the remaining contract term — and permitting recovery of both would constitute an impermissible double recovery under well-established New York pre

We believe the motion is well-supported, though I want to be candid that the liquidated damages argument will be the most closely contested of the three.

Under Judge Calloway's Individual Rules, Vantor's counsel at Caldwell Royce & Shapiro LLP will have approximately 35 days to file an opposition brief, which we expect around mid-to-late November 2022. We would then have approximately 14 days to file a reply brief. Based on Judge Calloway's typical motion practice and her current docket load, we estimate a ruling within 60 to 90 days after full briefing is complete —

While we await briefing on the motion, our team is not standing still on several fronts:

- *discovery Preparation.* We are simultaneously preparing for the discovery phase in the event the motion is denied in whole or in part. We have begun organizing document collection and are coordinating with Pinnacle Forensics LLC, our eDiscovery vendor, on processing and hosting so that we are positioned to move efficiently if and when discovery obligations commence.

- *Expert Retention.* We are in the process of identifying and vetting a rebuttal damages expert to address Vantor's lost profits methodology and the reasonableness of the liquidated damages formula. We expect to have a recommendation for your consideration shortly.

- *Graymark D&O Coverage.* As you are aware, we received Graymark's declination of coverage on October 3, 2022. Our team has reviewed the declination, and given the policy's contractual liability exclusion, the declination appears defensible. We do not recommend challenging it at this time. Simone Laroche has finalized a detailed analysis memo on this issue, dated October 10, which we will share with you separately i

Our Q4 2022 billing summary will be provided in January per the standard quarterly reporting cycle. With respect to the preliminary litigation budget that we provided on September 12, 2022, I am pleased to report that the motion-to-dismiss phase is tracking within the estimated range.

I would be glad to schedule a call early next week to walk through the motion and our strategy in more detail. Please let me know what works for your schedules. In the meantime, do not hesitate to reach out with any questions — Patrick Gallagher, our lead associate on this matter, is also available for any follow-up on the specific arguments raised in the motion.

Thank you for your continued confidence in our team. We will keep you closely apprised of developments as they arise.

**Samuel Eklund** Partner, Litigation Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, NY 10166 T: (212) 554-7200 | D: (212) 554-7238 E: seklund@calderwoodharkness.com Matter No. 1012-00005

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