Contract analysis

I. PRELIMINARY STATEMENT Defendant Stonefield Logistics Group Inc. ("Stonefield" or "SLG") respectfully submits this memorandum of law in support of its motion to dismiss the Complaint filed by Plaintiff Vantor Holdings Corp. ("Vantor") pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the Complaint should be dismissed in its entirety because each of Vantor's damages theories is f

II. STATEMENT OF FACTS The following facts are drawn from the allegations of the Complaint, which Stonefield accepts as true solely for purposes of this motion, and from the TSA itself, which is integral to and incorporated by reference in the Complaint. A. The Parties Stonefield Logistics Group Inc. is a Delaware corporation headquartered at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102. (Compl. ¶ 2.) St

Section 14.2 of the TSA provides the liquidated damages mechanism that is the centerpiece of Vantor's damages claim. The provision states, in relevant part: "In the event that Shipper-Broker terminates this Agreement other than 'for Cause' (as defined in Section 13.1), Shipper-Broker shall pay to Carrier-Provider, as liquidated damages and not as a penalty, an amount equal to seventy-five percent (75%) of the Annual

Section 13.1 of the TSA defines "Cause" for purposes of the Agreement's termination provisions. The section provides that either party may terminate the TSA for "Cause," which is defined to include: (a) A material breach of any provision of the Agreement that remains uncured for thirty (30) calendar days after written notice specifying the breach with reasonable particularity is delivered to the breaching party; (b)

Section 13.2 of the TSA further requires the terminating party to deliver a written Cure Notice specifying with "reasonable particularity" the alleged breach and providing the applicable cure period before any termination for Cause may become effective. (TSA § 13.2.) Stonefield fully complied with these requirements, as set forth below. E. The Consequential Damages Waiver (Section 15.1)

Section 15.1 of the TSA contains a mutual waiver of consequential, incidental, and indirect damages. The provision states: "Except as otherwise expressly provided herein, neither party shall be liable to the other for any consequential, incidental, indirect, special, or punitive damages arising out of or relating to this Agreement or the performance or breach thereof, including but not limited to lost revenue, loss o

III. LEGAL STANDARD A. Rule 12(b)(6) Standard Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed if it "fail[s] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). In evaluating a motion to dismiss, the Court must accept all well-pleaded factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Ashcroft v. Iqbal, 556

IV. ARGUMENT A. THE LIQUIDATED DAMAGES CLAUSE IN SECTION 14.2 IS UNENFORCEABLE AS A PENALTY UNDER NEW YORK LAW The cornerstone of Vantor's Complaint is a claim for $67.23 million in liquidated damages under Section 14.2 of the TSA. This claim must be dismissed because Section 14.2 is an unenforceable penalty as a matter of New York law. The clause produces a damages figure that bears no reasonable relationship to any

1. The Governing Legal Standard for Liquidated Damages Under New York Law. Under New York law, a liquidated damages provision is enforceable if, and only if, two conditions are satisfied: (i) the amount stipulated bears a reasonable proportion to the probable loss at the time the contract was made, and (ii) actual damages would be difficult to determine at the time of contracting. See Truck Rent-A-Ctr., Inc. v. Purdy

2. The Liquidated Damages Formula Bears No Reasonable Relationship to Vantor's Probable Loss. Application of the first prong of the enforceability test — whether the stipulated amount bears a reasonable proportion to the probable loss — demonstrates that Section 14.2 is grossly disproportionate and therefore constitutes a penalty. The Formula. Section 14.2 calculates liquidated damages as 75% of the ACV ($43.2 millio

3. Vantor's Actual Damages Were Not Difficult to Determine at the Time of Contracting. The second prong of the enforceability test requires that actual damages be "incapable or difficult of precise estimation" at the time the contract was made. Truck Rent-A-Ctr., 41 N.Y.2d at 357. This condition is not met here. Transportation and logistics is a mature, data-driven industry with well-established methods for calculati

4. The Clause Operates as a Penalty. The combined effect of the foregoing analysis compels a single conclusion: Section 14.2 of the TSA operates as a penalty and is void under New York law. A contractual provision that requires payment of a sum grossly disproportionate to anticipated harm "calls for a penalty and will not be enforced." Truck Rent-A-Ctr., 41 N.Y.2d at 357. The disproportionality here is extreme and ev

5. Dismissal of the Liquidated Damages Claim Is Appropriate at the Pleading Stage. Stonefield anticipates that Vantor may argue that the enforceability of a liquidated damages clause is a fact-intensive inquiry that cannot be resolved at the pleading stage. That argument fails here. Where, as here, the enforceability of a liquidated damages clause can be determined from the four corners of the contract — which is pro

1. New York Law Requires Lost Profits to Be Pled and Proven with Reasonable Certainty. Under well-settled New York law, lost profits may be recovered for breach of contract only if they are: (i) established with a reasonable degree of certainty; (ii) shown to flow naturally from the breach; and (iii) not unduly speculative. See Kenford Co. v. Cnty. of Erie, 67 N.Y.2d 257, 261 (1986); Ashland Mgmt. Inc. v. Janien, 82

2. Vantor's Complaint Fails to Plead Lost Profits with Any Particularity. Vantor alleges $18.7 million in lost profits. (Compl. ¶ 64.) However, the Complaint provides no factual basis for this figure — it appears as a bare number, untethered to any supporting allegations. The Complaint does not allege: (a) VTS's operating margin on Stonefield freight with any specificity or supporting factual basis beyond a conclusor

3. The Lost Profits Claim Is Duplicative of the Liquidated Damages Claim. Even setting aside the pleading deficiencies, Vantor's lost profits claim fails on an independent ground: it is impermissibly duplicative of the liquidated damages claim. The liquidated damages clause in Section 14.2 was intended by the parties to be the exclusive remedy for termination other than for Cause. See TSA § 14.2 (providing that upon

4. At a Minimum, the Lost Profits Claim Should Be Dismissed as Insufficiently Pled. Even if the Court were to conclude — contrary to Stonefield's arguments — that the liquidated damages claim could survive this motion (which it should not), the independent lost profits claim fails to meet the Twombly/Iqbal pleading standard. As demonstrated above, the lost profits claim rests entirely on conclusory assertions — a bar

Section 15.1 of the TSA contains a broad, mutual waiver of such damages. The clause provides that "neither party shall be liable to the other for any consequential, incidental, indirect, special, or punitive damages arising out of or relating to this Agreement or the performance or breach thereof, including but not limited to lost revenue, loss of business or business opportunities, increased costs of operations, or

V. CONCLUSION For the foregoing reasons, Defendant Stonefield Logistics Group Inc. respectfully requests that the Court grant its motion to dismiss and dismiss the Complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6). In the alternative, Stonefield respectfully requests that the Court: (i) Dismiss Vantor's claim for $67.23 million in liquidated damages under Section 14.2 of the TSA on the gr