Contract analysis

I. EXECUTIVE SUMMARY This memorandum analyzes the privilege status of eighty-four (84) documents comprising pre-litigation communications between Stonefield Logistics Group Inc. ("Stonefield" or "SLG") and its regular outside commercial counsel, Ashford Meridian LLP ("Ashford Meridian"), concerning the interpretation and potential termination of the Transportation Services Agreement dated March 15, 2019 (the "TSA," C

II. BACKGROUND A. The Parties and Their Counsel Relationships

1. Stonefield Logistics Group Inc. Stonefield Logistics Group Inc. is a Delaware corporation headquartered at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102. Stonefield is a mid-market freight brokerage and managed transportation company that provides comprehensive logistics services to shippers across the continental United States. In fiscal year 2021, Stonefield reported approximately $1.42 billion in re

2. Ashford Meridian LLP Ashford Meridian LLP is a law firm based at 2200 Ross Avenue, Suite 3600, Dallas, Texas 75201. Ashford Meridian has served as Stonefield's regular outside commercial and transactional counsel since at least 2018. The key personnel at Ashford Meridian involved in the communications at issue are Lorraine Beckwith, a partner in the firm's Commercial Contracts practice group, and Troy Nakamura, a

3. Calderwood & Harkness LLP Our firm, Calderwood & Harkness LLP, was retained as lead defense counsel on September 1, 2022, following the filing of Vantor's original Complaint on August 12, 2022. The engagement was initiated through communications between Tobias Wren and Samuel Eklund, partner in our Litigation (General) practice group. Prior to Calderwood & Harkness's engagement, Ashford Meridian provided the initi

4. Vantor Holdings Corp. and Vantor Transport Services LLC Vantor Holdings Corp. is a New York corporation headquartered at 580 Eighth Avenue, 14th Floor, New York, New York 10018. Vantor Holdings Corp. is the plaintiff in this action. Vantor Transport Services LLC ("VTS") is a wholly owned operating subsidiary of Vantor Holdings Corp. VTS was the signatory counterparty to the TSA, identified in the agreement as the

Section 13.1 — Termination for Cause. This provision permits either party to terminate the TSA upon material breach by the other party that remains uncured for thirty (30) calendar days after the delivery of written notice specifying the breach. Section 13.1 distinguishes termination "for Cause" from termination for convenience, with significantly different financial consequences depending on the basis for terminatio

Section 13.2 — Cure Notice Requirement. This provision sets forth the procedural requirements for a valid termination for Cause. The terminating party must deliver a written Cure Notice that specifies "with reasonable particularity" the alleged breach and provides the applicable cure period. The "reasonable particularity" standard was the subject of extensive analysis by Ashford Meridian during the January 2022 Cure

Section 14.2 — Liquidated Damages. This provision provides that if Stonefield terminates the TSA other than "for Cause," Stonefield is obligated to pay VTS liquidated damages equal to seventy-five percent (75%) of the Annual Contract Value ("ACV," defined as $43.2 million per year) multiplied by the number of remaining contract years. This clause was the subject of detailed enforceability analysis by Ashford Meridian

Section 12.1 — Force Majeure. This provision excuses performance obligations to the extent performance is prevented by events beyond a party's reasonable control, including pandemics, government orders, and similar force majeure events. This provision was relevant because Stonefield had invoked the force majeure clause during the COVID-19 pandemic (approximately April through September 2020) in connection with volume

Section 7.4 — Substitute Equipment. This provision imposes obligations on VTS regarding the provision of substitute equipment in the event of equipment failures, breakdowns, or shortages. VTS's failure to maintain adequate equipment availability was one of the principal performance failures identified in the Cure Notice. Schedule C — Lane Exclusivity. Schedule C to the TSA designates certain freight lanes as "Primary

Section 5.3 — Rate Adjustment Mechanism. This provision establishes an annual rate adjustment mechanism effective each April 1, based on a formula incorporating the Producer Price Index for Long-Distance General Freight Trucking (PPI-LDGFT), diesel fuel cost indices, and driver wage benchmarks. Ashford Meridian's February 2022 analysis projected that the April 2022 adjustment would increase per-mile rates from a weig

III. LEGAL STANDARDS FOR ATTORNEY-CLIENT PRIVILEGE A. General Framework Under federal common law, which governs privilege issues in this diversity action, the attorney-client privilege protects from compelled disclosure confidential communications between a client and its attorney made for the purpose of seeking or providing legal advice. See In re Grand Jury Subpoena Duces Tecum, 731 F.2d 1032, 1036 (2d Cir. 1984);

IV. LEGAL STANDARDS FOR WORK PRODUCT DOCTRINE A. General Framework The work product doctrine, codified in Federal Rule of Civil Procedure 26(b)(3) and rooted in the Supreme Court's decision in Hickman v. Taylor, 329 U.S. 495 (1947), protects from discovery documents and tangible things prepared in anticipation of litigation or for trial by or for a party, or by or for that party's representative (including the party'

V. DOCUMENT-BY-DOCUMENT ANALYSIS A. Category 1: TSA Interpretation and Material Breach Analysis (September – December 2021) — 34 Documents

1. Nature of Documents Category 1 comprises 34 documents consisting of emails, memoranda, and draft analyses exchanged between Ashford Meridian (primarily Lorraine Beckwith and Troy Nakamura) and Stonefield personnel (primarily Tobias Wren and Raymond Hess) during the period from September through December 2021. These communications addressed the interpretation of "material breach" under Section 13.1 of the TSA, the

2. Specific Topics Addressed The 34 documents in this category address the following legal questions, among others: (a) Whether simultaneous failure across multiple SLO categories constitutes "material breach" under Section 13.1, or whether each SLO category must be assessed independently — i.e., whether the materiality of the breach is measured by the aggregate impact of failures across all performance categories or

3. Privilege Basis Attorney-Client Privilege: Applicable. Each of the 34 documents constitutes a communication between Stonefield personnel and Ashford Meridian attorneys made for the purpose of seeking or providing legal advice on the interpretation of the TSA and the assessment of VTS's contractual compliance. The communications were initiated by Stonefield personnel seeking legal guidance from Ashford Meridian, an

4. Privilege Log Treatment These 34 documents should be logged on the privilege log with entries identifying the date, author/sender, recipient(s) (including cc recipients), a general subject matter description sufficient to allow assessment of the privilege claim without revealing privileged content (e.g., "Legal advice regarding interpretation of TSA performance obligations and material breach standard under Sectio

1. Nature of Documents Category 2 comprises 19 documents consisting of drafts, redlined revisions, legal research memoranda, and email exchanges between Ashford Meridian (Beckwith and Nakamura) and Stonefield (Hess and Wren) created during January 2022 in connection with the preparation and issuance of the January 18, 2022 Cure Notice. These documents reflect the legal advice sought by Stonefield and provided by Ashf

2. Specific Documents The 19 documents in this category include the following: (i) An initial draft of the Cure Notice prepared by Raymond Hess with input from Janet Kirkwood, transmitted to Ashford Meridian for legal review and comment; (ii) Lorraine Beckwith's redlined revisions to the initial draft, adding specific metric references, SLO threshold data, and contractual cross-references to strengthen the "reasonabl

3. Privilege Log Entries 312–318 Seven of the 19 documents in this category correspond to privilege log entries 312 through 318. These entries were specifically challenged by Vantor during the discovery process. The challenged documents are communications between Raymond Hess and Lorraine Beckwith during the January through February 2022 cure period. A separate Privilege Dispute Memorandum dated June 20, 2023 (prepar

4. Privilege Basis Attorney-Client Privilege: Applicable to all 19 documents. The communications in this category are quintessential attorney-client communications: a corporate client consulting with its outside counsel regarding the drafting and legal sufficiency of a formal contractual notice. Each document was created for the purpose of seeking or providing legal advice on the interpretation of the TSA and the pro

5. Privilege Log Treatment The 19 documents in this category should be logged with subject matter descriptions such as "Draft cure notice and legal advice regarding procedural compliance with TSA Section 13.2," "Legal advice regarding sufficiency of cure notice specifications," and "Legal research memorandum regarding 'reasonable particularity' standard for contractual cure notices under New York law." The privilege

1. Nature of Documents Category 3 comprises 14 documents consisting of emails and memoranda exchanged between Ashford Meridian and Stonefield during February 2022, following Vantor's February 14, 2022 response letter. The communications addressed the legal significance of Vantor's response, whether the response constituted adequate cure, and Stonefield's options upon expiration of the cure period.

2. Specific Topics Addressed Vantor's February 14, 2022 response letter, sent by Derek Pruitt (VP, Business Development, Vantor) to Janet Kirkwood, presented a two-part position: first, an acknowledgment of "operational challenges" experienced by VTS; and second, an assertion that the performance deficiencies identified in the Cure Notice were caused by Stonefield's own conduct, specifically alleged volume shortfalls

3. Privilege Basis Attorney-Client Privilege: Applicable to all 14 documents. Each document reflects communications between Stonefield personnel and Ashford Meridian attorneys for the purpose of seeking or providing legal advice on the legal consequences of Vantor's response and the evaluation of Stonefield's contractual options. The communications were confidential and shared only among privileged persons. Work Prod

4. Privilege Log Treatment These 14 documents should be logged with descriptions such as "Legal analysis of sufficiency of Vantor's cure response and advice regarding termination rights," "Legal analysis of Vantor's counter-assertions regarding Stonefield's contractual obligations," and "Legal advice regarding force majeure implications for cure sufficiency analysis." D. Category 4: Termination Decision and Exposure

1. Nature of Documents Category 4 comprises 12 documents consisting of memoranda, draft correspondence, and email exchanges between Ashford Meridian and Stonefield during the period from late February through early March 2022, in which Ashford Meridian advised Stonefield on the legal consequences of proceeding with termination of the TSA.

2. Specific Topics Addressed The 12 documents in this category addressed the following subjects: (i) Liquidated Damages Exposure Analysis. Ashford Meridian prepared a detailed analysis of Stonefield's potential financial exposure under the liquidated damages clause (Section 14.2) in the event that Stonefield's termination were later found not to constitute a valid termination "for Cause." The analysis calculated pote

3. Privilege Basis Attorney-Client Privilege: Applicable to all 12 documents. The communications in this category are core attorney-client communications: Stonefield's counsel providing legal analysis of the client's rights, obligations, and exposure in connection with a major contractual decision with significant legal and financial consequences. The legal character of the advice is evident from its subject matter —

4. Privilege Log Treatment These 12 documents should be logged with descriptions such as "Legal analysis of liquidated damages exposure and enforceability of TSA Section 14.