Contract analysis

I. INTRODUCTION AND PURPOSE This letter serves as the quarterly litigation status report submitted by Calderwood & Harkness LLP in its capacity as panel counsel approved by Verdant Mutual Insurance Company ("Verdant") for the defense of the above-captioned matter. This report covers the period from approximately October 1, 2022, through mid-January 2023. It is intended to provide Verdant with a comprehensive update o

II. SUMMARY OF CLAIMS The complaint in this matter was filed on March 15, 2022, by Gerald P. Hess of Hess & Loughlin, P.C., located at 3412 Harlem Avenue, Suite 205, Berwyn, Illinois 60402. Mr. Hess remains plaintiff's counsel of record. The complaint asserts three counts against Nexford, each of which arises out of the same core set of allegations—namely, that Mr. Maciejewski's termination on September 24, 2021, was

1. First Written Warning — May 24, 2021. Mr. Maciejewski received a first written warning for four documented tardiness incidents occurring between approximately late April and mid-May 2021, in accordance with the progressive discipline procedures outlined in Employee Handbook § 4.3.

2. Final Written Warning — August 2, 2021. Mr. Maciejewski received a final written warning for three additional tardiness incidents occurring between approximately late June and late July 2021, again in accordance with Employee Handbook § 4.3.

3. Unexcused Absence — September 20, 2021. Mr. Maciejewski failed to report for his scheduled shift on September 20, 2021, and did not provide timely notification to his supervisor or the Human Resources Department, resulting in the absence being classified as unexcused. The termination meeting was conducted on September 24, 2021, by Plant Manager Frank Bosch and Vice President of Human Resources Catherine Donnelly,

III. DAMAGES CLAIMED AND EXPOSURE ASSESSMENT A. Damages Claimed Plaintiff's complaint seeks the following categories of damages: (a) Back pay from the date of termination (September 24, 2021) through the date of judgment, representing lost wages and benefits; (b) Front pay, representing future lost wages and benefits to the extent reinstatement is impracticable; (c) Compensatory damages for emotional distress in the

IV. OSHA COMPLAINT RESOLUTION As noted above, OSHA Complaint No. 1734892 was filed by Mr. Maciejewski on June 8, 2021, with the OSHA Area Office located at 701 Lee Street, Suite 950, Des Plaines, Illinois 60016. The complaint alleged improper storage of Class 3 flammable liquids—specifically, acetone and isopropanol—in quantities that purportedly exceeded approved storage cabinet capacity limits in Building C of the

V. PROCEDURAL HISTORY AND LITIGATION ACTIVITY A. Pleading Stage The complaint was filed on March 15, 2022, in the Circuit Court of Cook County, Illinois, County Department, Law Division, and was assigned Case No. 2022-L-002847. Service of process was effectuated on March 22, 2022, upon CT Agents Inc., Nexford's registered agent in Illinois. Nexford's General Counsel, Tara Svendsen, promptly forwarded the summons and

VI. DEFENSE ASSESSMENT AND CASE OUTLOOK A. Merits Assessment Calderwood & Harkness continues to assess the defense position as strong on the merits. The principal bases for this assessment are as follows:

1. OSHA No-Citation Closure. OSHA closed Complaint No. 1734892 on August 18, 2021, with no citations issued and no findings of violation. This determination by the federal agency charged with enforcement of workplace safety standards substantially undermines the premise of plaintiff's safety complaints and, by extension, weakens his claim that his termination was retaliatory. While plaintiff's claims do not require p

2. Well-Documented Progressive Discipline. Nexford maintained contemporaneous, well-documented progressive discipline records regarding Mr. Maciejewski's attendance deficiencies. The first written warning (May 24, 2021, for four tardiness incidents), the final written warning (August 2, 2021, for three additional tardiness incidents), and the documentation of the unexcused absence (September 20, 2021) provide a clear

3. Termination Procedures. The termination meeting on September 24, 2021, was conducted by Plant Manager Frank Bosch and VP Human Resources Catherine Donnelly following Nexford's established termination procedures. The involvement of multiple decision-makers and the adherence to established procedures further support the defense position that the termination was a routine consequence of progressive discipline, not re

4. Exhaustion of Administrative Remedies Defense (Count II). Plaintiff's Count II, asserted under Section 11(c) of the OSH Act, 29 U.S.C. § 660(c), is subject to a significant procedural defense. Under Section 11(c), complaints of retaliation must be filed with the Secretary of Labor within 30 days of the alleged adverse action, and the Secretary retains exclusive authority to bring suit in federal district court. Th

5. After-Acquired Evidence Doctrine. Nexford has asserted the after-acquired evidence doctrine as an affirmative defense, which, if applicable, may operate to limit the scope of damages even in the event of an adverse finding on liability. The potential applicability of this doctrine remains to be developed through discovery, which has been impeded by plaintiff's failure to provide discovery responses. B. Current Tra

VII. FEE SUMMARY AND BUDGET STATUS A. Budget The agreed pre-trial litigation budget cap for this matter, as approved by Verdant, is $175,000. B. Fees Incurred The following table summarizes fees incurred by Calderwood & Harkness through the active litigation period (through approximately the end of Q4 2022): Total fees incurred through the current reporting period are approximately $62,300 (rounded). The remaining bu

VIII. LITIGATION HOLD AND DOCUMENT PRESERVATION A litigation hold remains in effect at Nexford with respect to all documents and electronically stored information potentially relevant to the Maciejewski matter. The litigation hold was issued by Nexford's General Counsel, Tara Svendsen, and directed to the following key custodians: • Frank Bosch, Plant Manager, Elgin Facility • Catherine Donnelly, Vice President, Huma

IX. REQUESTS TO VERDANT MUTUAL INSURANCE COMPANY Calderwood & Harkness respectfully requests the following from Verdant:

1. Confirmation of Continued Coverage. We request Verdant's confirmation that coverage under EPLI Policy No. EPLI-VM-2021-04782 remains in effect for ongoing defense costs and any potential indemnity obligations arising from the Maciejewski matter, subject to the terms and conditions of the Policy and Verdant's reservation of rights.

2. Authority to Continue Monitoring. We request authority for Calderwood & Harkness to continue to attend scheduled status conferences and monitor the docket on an ongoing basis. The next scheduled status conference is March 16, 2023, and Nadia Petrov plans to appear on behalf of Nexford.

3. Authorization to File Compulsory discovery Motions. In the event that plaintiff's counsel re-engages and the case resumes an active posture, we request authorization to file a motion to compel plaintiff's outstanding discovery responses and, if warranted, a motion for sanctions under Illinois Supreme Court Rule 219(c).

4. Authorization to Oppose Vacation of Dismissal. In the event the case proceeds to dismissal for want of prosecution and plaintiff subsequently moves to vacate the dismissal, we request authorization to oppose any such motion.

5. Updated Coverage Position. We invite Verdant to provide any updated coverage position or guidance regarding the reservation of rights previously issued, particularly in light of the current dormancy of the case and the favorable case trajectory. We would appreciate Verdant's response to these requests at its earliest convenience, and in any event prior to the March 16, 2023 status conference.

X. CONCLUSION In summary, the Maciejewski v. Nexford Industrial Holdings Inc. matter is largely dormant as of the date of this report. Plaintiff's counsel, Gerald Hess, has been non-responsive since his last communication on October 14, 2022, and failed to appear at the January 12, 2023 status conference before Judge Vasquez-Torres. The Court has directed plaintiff's counsel to appear at the next status conference on