1006-00005 · Crestline Packaging Solutions LLC · Mediation

mediation-position-statement.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP 1001 Fannin Street, Suite 4200 Houston, Texas 77002

PRIVILEGED AND CONFIDENTIAL — PREPARED FOR MEDIATION PURPOSES ONLY SUBJECT TO TEXAS CIVIL PRACTICE & REMEDIES CODE §154.073

MEDIATION POSITION STATEMENT

I. INTRODUCTION

Plaintiff Crestline Packaging Solutions LLC ("CPS" or "Plaintiff") respectfully submits this confidential Mediation Position Statement to Judge (Ret.) Constance Farr in advance of the mediation session scheduled for November 18, 2021, in the above-referenced matter. This Statement is intended to provide the Mediator with a thorough understanding of the facts, the legal issues, the parties' respective positions, and the framework within which CPS believes a fair and reasonable resolution can be achieved.

This Mediation Position Statement is confidential and is submitted solely for the use of the Mediator in facilitating settlement discussions between the parties. It is subject to the protections afforded by Texas Civil Practice & Remedies Code §154.073, which provides that communications made during and in preparation for an alternative dispute resolution procedure are confidential, are not subject to disclosure, and may not be used as evidence against the participant in any judicial or administrative proceeding. CPS submits this Statement with the express understanding that it shall not be disclosed to opposing counsel or any third party, and that no portion of this Statement shall be admissible in any proceeding, whether in this case or otherwise.

CPS enters this mediation from a position of overwhelming strength. Over the past several months, CPS has developed a comprehensive evidentiary record that establishes, with mathematical precision, systematic overbilling by Ridgeway Freight Services Inc. ("Ridgeway" or "Defendant") totaling $1,847,632.19 over a twenty-six-month period. That evidentiary record includes an independent forensic accounting analysis performed by Meridian Forensic Accounting Group LLC, which has verified the overcharges on an invoice-by-invoice basis against the contractual rate schedule, fuel surcharge formula, delivery documentation, and publicly available Department of Energy diesel price data. In addition, recently produced internal emails authored by Ridgeway's Vice President of Pricing & Rate Management, James Whitford, demonstrate that the overbilling was not the product of inadvertent error or system malfunction — as Ridgeway has claimed — but rather the result of a deliberate and concealed scheme to inflate charges to CPS in order to improve Ridgeway's profit margins.

CPS is prepared to resolve this matter at mediation on terms that reflect the strength of its claims and the weakness of Ridgeway's defenses, while recognizing the inherent value in avoiding the continued time, expense, and uncertainty associated with protracted litigation through trial. CPS approaches this mediation in good faith and with a genuine desire to reach a resolution that is fair and commercially reasonable. At the same time, CPS will not accept any settlement that fails to compensate it for the substantial majority of its documented losses.

CPS is represented in this matter by Calderwood & Harkness LLP. The attorneys principally involved are Francesca Morano, Partner; Samuel Eklund, Partner; Yuki Nakamura, Associate; and Carlos Espinoza, Associate. Ridgeway is represented by Bartlett, Hogue & Sinclair LLP, 801 Cherry Street, Suite 3400, Fort Worth, Texas 76102, with Marcus T. Hogue, Partner, and Reyna Villarreal, Associate, serving as counsel of record.

II. SUMMARY OF THE DISPUTE

A. The Parties

Crestline Packaging Solutions LLC is an Ohio limited liability company headquartered at 4500 Needmore Road, Dayton, Ohio 45424. CPS is a specialty packaging manufacturer and industrial chemical coatings producer that serves customers across a wide range of industries, including automotive, aerospace, consumer products, and industrial manufacturing. CPS reported annual revenue of approximately $218.4 million for fiscal year 2020 and ships approximately 14,000 truckloads per year from five manufacturing facilities located across Ohio, Indiana, and Texas. CPS is a portfolio company of Pinnacle Ridge Capital Partners LP, a middle-market private equity firm that acquired CPS in March 2018 for a total enterprise value of $412 million. As a portfolio company operating under private equity ownership, CPS is subject to rigorous financial controls, reporting obligations, and margin management requirements, which make the magnitude of Ridgeway's overbilling particularly consequential.

Ridgeway Freight Services Inc. is a Texas corporation headquartered at 7200 East Lancaster Avenue, Fort Worth, Texas 76112. Ridgeway is a mid-size regional freight broker and carrier that provides both less-than-truckload ("LTL") and full-truckload ("FTL") freight transportation services across the South Central and Midwestern United States. Ridgeway reported annual revenue of approximately $94 million for fiscal year 2020 and employs approximately 380 individuals across its operations. Ridgeway's chief executive officer is Raymond Calder; its chief operating officer is Brenda Novotny.

B. The Master Transportation Services Agreement

On April 15, 2019, CPS and Ridgeway entered into a Master Transportation Services Agreement (the "MTSA"), a comprehensive three-year agreement with a term running from April 15, 2019 through April 14, 2022. Under the MTSA, Ridgeway served as the exclusive LTL and FTL carrier for CPS's Texas manufacturing facility and as the primary carrier for CPS's Ohio and Indiana manufacturing facilities. The MTSA was the product of extensive negotiation between the parties and was executed by authorized representatives of both CPS and Ridgeway following a competitive bid process in which Ridgeway prevailed based, in significant part, on the attractiveness of its proposed rate schedule.

The MTSA established specific rate schedules that governed all shipments during the contract term. The key pricing terms, set forth in Exhibit B to the MTSA, included the following:

• FTL Base Rates by Lane: Ohio to Texas: $2.18 per mile; Indiana to Texas: $2.04 per mile; Texas to Ohio: $2.22 per mile.

• LTL Rates: $14.60 per hundredweight for Class 70 shipments, with rates for other freight classes set forth in an accompanying schedule.

• Fuel Surcharge Formula: Governed by Exhibit C to the MTSA, which pegged the fuel surcharge to the U.S. Department of Energy ("DOE") Weekly Retail On-Highway Diesel Price for the same week as shipment — not a lagging or averaged index.

• Annual Rate Escalator: A 2.5% annual rate escalator, effective each April 15 during the contract term, applied to base rates only (not to fuel surcharges or accessorial charges).

These rate terms were central to the commercial bargain struck by the parties and were the basis upon which CPS projected its transportation costs for the duration of the contract.

C. The Overbilling Scheme

CPS has brought this action against Ridgeway for systematic overbilling totaling $1,847,632.19 on freight invoices submitted by Ridgeway over a twenty-six-month period from February 2019 through March 2021. The overcharges represent approximately 15.0% of the total amounts invoiced by Ridgeway during that period — $12,318,209.46 invoiced, compared to $10,470,577.27 that would have been correct under the contractual rate schedules. This is not a case involving a handful of billing errors on the margins of a large contract. Rather, the evidence demonstrates a systematic pattern of overbilling across multiple categories, affecting a substantial percentage of all invoices submitted.

D. CPS's Causes of Action

CPS asserts four causes of action against Ridgeway:

1. Breach of Contract — Ridgeway breached the MTSA by invoicing and collecting amounts in excess of the contractual rate schedules.

2. Money Had and Received — Ridgeway received and retained money belonging in equity and good conscience to CPS.

3. Common-Law Fraud — Ridgeway, through its officers and employees, knowingly and intentionally submitted false invoices to CPS and made material misrepresentations regarding the basis for charges, with the intent to induce CPS to pay amounts not owed under the MTSA.

4. Unjust Enrichment — Ridgeway was unjustly enriched by its receipt and retention of $1,847,632.19 in overpayments.

Ridgeway has asserted a counterclaim for $340,000 in alleged lost profits resulting from CPS's early termination of the MTSA. As discussed in detail in Section IV.D below, this counterclaim is meritless.

III. PROCEDURAL HISTORY

The following procedural history provides the Mediator with context for the current posture of the case and the development of the evidentiary record.

October 2020: Patricia Sung, CPS's Vice President of Supply Chain & Logistics, flagged rate discrepancies on certain Ridgeway invoices during CPS's routine third-quarter 2020 budget review. Ms. Sung noted that actual freight costs for certain high-volume lanes were running materially above budgeted rates and directed her team to investigate.

November 12, 2020: Based on Ms. Sung's initial findings, CPS's internal audit team commenced a systematic invoice-by-invoice review of all Ridgeway billings against the contractual rate schedules set forth in the MTSA exhibits.

January 29, 2021: CPS's internal review was completed. The review identified significant and widespread discrepancies between invoiced amounts and contractual rates across multiple billing categories. Dennis Yurkovich, CPS's Chief Financial Officer, reviewed the findings and authorized CPS to initiate a formal dispute with Ridgeway pursuant to the contractual dispute resolution provisions of the MTSA.

February 8, 2021: Harold Inman, CPS's General Counsel, sent a written invoice dispute notice to Ridgeway pursuant to MTSA §11.2, formally identifying $1,412,088.74 in overcharges across the reviewed period. This initial estimate was subsequently refined upward as additional invoices were reviewed and reconciled. The notice demanded full repayment and invoked the thirty-day good-faith resolution period required by §11.2 before either party could pursue further remedies.

February 10, 2021: Brenda Novotny, Ridgeway's Chief Operating Officer, acknowledged receipt of CPS's dispute notice on behalf of Ridgeway.

March 12, 2021: The thirty-day good-faith resolution period under §11.2 expired. During this period, Ridgeway offered only a $218,500.00 "goodwill adjustment" — an amount representing less than 12% of the documented overcharges. Ridgeway denied the existence of systematic overbilling and characterized the discrepancies identified by CPS as "inadvertent system errors" and "authorized rate adjustments" that had been agreed to in the ordinary course of the parties' business relationship. Ridgeway provided no documentation or explanation to support this characterization.

March 15, 2021: CPS formally rejected Ridgeway's $218,500.00 offer as wholly inadequate, noting that it bore no reasonable relationship to the documented overcharges and that Ridgeway had failed to provide any substantive basis for its assertion that rate adjustments had been authorized.

March 22, 2021: CPS issued a thirty-day termination notice to Ridgeway under MTSA §9.2, which permits either party to terminate the Agreement upon thirty days' written notice in the event of a material breach by the other party. CPS cited Ridgeway's systematic overbilling, totaling in excess of $1.4 million (the figure then confirmed), as the material breach justifying termination.

April 22, 2021: The MTSA was formally terminated. CPS commenced the transition of its freight operations to Redfield Logistics Corp., headquartered in Indianapolis, Indiana, which CPS had selected through an expedited competitive procurement process.

June 1, 2021: CPS engaged Calderwood & Harkness LLP to represent it in connection with the recovery of overpayments from Ridgeway and related claims.

June 18, 2021: Calderwood & Harkness LLP, on behalf of CPS, sent a detailed pre-suit demand letter to Ridgeway, addressed to Raymond Calder, Chief Executive Officer, demanding payment of $1,847,632.19 in overcharges (the refined figure reflecting completion of the full invoice reconciliation) plus $221,715.86 in contractual interest accrued through the date of the letter, for a total demand of $2,069,348.05. The demand letter provided Ridgeway with a fourteen-day period to make payment in full before CPS would initiate litigation.

July 2, 2021: Ridgeway, through its newly retained counsel Bartlett, Hogue & Sinclair LLP (Marcus T. Hogue, Partner), rejected CPS's demand. Mr. Hogue's letter asserted for the first time that the rate adjustments reflected in the disputed invoices were authorized under a purported oral modification of the MTSA's rate schedules. The letter did not identify the dates, participants, or substance of any oral modification conversations.

July 19, 2021: CPS filed its Original Petition in the 342nd Judicial District Court of Tarrant County, Texas, initiating Cause No. 342-2021-04871-TX. The Petition asserted claims for breach of contract, money had and received, common-law fraud, and unjust enrichment, and sought recovery of $1,847,632.19 in overcharges, contractual interest, attorneys' fees, and exemplary damages.

August 5, 2021: Ridgeway filed its Original Answer and Counterclaim. Ridgeway's Answer asserted affirmative defenses including oral modification, waiver, estoppel, and statute of limitations. Ridgeway's Counterclaim asserted a claim for $340,000 in lost profits allegedly resulting from CPS's early termination of the MTSA.

August 20, 2021: Calderwood & Harkness LLP, on behalf of CPS, retained Meridian Forensic Accounting Group LLC to perform an independent forensic analysis of all invoices submitted by Ridgeway during the contract period. Nathan Crowley, CPA, CFF, served as the Engagement Partner and lead analyst.

September 10, 2021: Meridian Forensic Accounting Group LLC completed its forensic invoice analysis, confirming total overcharges of $1,847,632.19 — consistent with CPS's internal analysis. Meridian's report details the methodology employed, identifies each overcharged invoice, and categorizes the overcharges by type, as discussed in Section IV.A below.

September 15, 2021: CPS served its First Set of Interrogatories (8 interrogatories) and First Requests for Production of Documents (12 document requests) on Ridgeway. The discovery requests were designed to obtain Ridgeway's internal records related to the billing and pricing of CPS shipments, including rate files, billing system records, internal communications, fuel surcharge calculations, accessorial charge documentation, and all documents relating to the purported oral modification.

October 4, 2021: Ridgeway served its responses to CPS's discovery requests. The responses consisted largely of boilerplate objections and a grossly incomplete document production that failed to include key categories of responsive documents. Among the most notable deficiencies, Ridgeway failed to identify James Whitford, its Vice President of Pricing & Rate Management, as a person with knowledge of the rate adjustments at issue; refused to provide any specific details regarding the alleged oral modification (including dates, participants, or substance of the purported conversations); and withheld entire categories of documents, including rate files, internal communications, fuel surcharge data, accessorial charge documentation, and billing system records.

October 15, 2021: CPS filed a Motion to Compel discovery, detailing with specificity the deficiencies in Ridgeway's responses and production. The Motion argued that Ridgeway's blanket objections were improper, that its production was woefully incomplete, and that its failure to provide information regarding the oral modification defense — while continuing to assert that defense — was prejudicial and sanctionable.

October 28, 2021: The Court granted CPS's Motion to Compel and ordered Ridgeway to produce complete billing records, internal communications, rate files, and all other documents responsive to CPS's requests within fourteen days. The Court specifically noted the inadequacy of Ridgeway's prior production and warned that further discovery obstruction would not be tolerated.

November 11, 2021: In compliance with the Court's order, Ridgeway produced supplemental documents. This production included, critically, internal emails authored by James Whitford, Ridgeway's Vice President of Pricing & Rate Management. These emails, which are discussed at length in Section IV.B below, constitute the most significant evidentiary development in this case and dramatically strengthen CPS's claims — particularly the common-law fraud cause of action and CPS's entitlement to exemplary damages.

IV. CPS'S POSITION OF STRENGTH

A. The Overcharges Are Incontrovertible

The overcharges at the heart of this case are not a matter of interpretation, subjective accounting judgment, or reasonable disagreement between the parties about the meaning of contract terms. They are a matter of arithmetic — straightforward calculations that compare the rates actually charged by Ridgeway on each invoice against the rates established in the MTSA's Exhibit B rate schedule and Exhibit C fuel surcharge formula, using publicly available DOE diesel price data. The result of that comparison, verified independently by a qualified forensic accounting expert, is that Ridgeway overcharged CPS by $1,847,632.19 over the twenty-six-month period from February 2019 through March 2021.

Meridian Forensic Accounting Group LLC, an independent forensic accounting firm retained by CPS through counsel, conducted a comprehensive reconciliation of all 9,843 invoices submitted by Ridgeway during the relevant period. Each invoice was compared against the applicable rate from the Exhibit B schedule (including the 2.5% annual escalator where applicable), the fuel surcharge calculated using the Exhibit C formula with the correct DOE Weekly Retail On-Highway Diesel Price for the week of shipment, delivery documentation (bills of lading, proof of delivery, and carrier receipts), and the invoice history to identify duplicates. This was not a sampling exercise or an extrapolation from limited data; every single invoice was individually reviewed and reconciled.

Meridian confirmed total overcharges of $1,847,632.19, broken down across four discrete categories:

To place these figures in context, Ridgeway invoiced CPS a total of $12,318,209.46 during the twenty-six-month period in question. The correct amount, calculated using the contractual rates and formulas, was $10,470,577.27. The overcharge rate was therefore approximately 15.0% of total billings — a staggering figure that cannot plausibly be attributed to inadvertent errors or system glitches.

Meridian's analysis is fully documented in a detailed expert report accompanied by supporting schedules that identify every overcharged invoice by number, date, shipment, lane, contractual rate, actual rate charged, and dollar amount of the overcharge. The report has been prepared in a form suitable for use at trial and complies with the disclosure requirements of Texas Rule of Civil Procedure 194.2(f). Nathan Crowley, CPA, CFF, the Engagement Partner, is prepared to testify at trial as an expert witness regarding Meridian's methodology, findings, and conclusions. Mr. Crowley has over twenty years of experience in forensic accounting and has been qualified as an expert in Texas state courts on numerous occasions.

B. The "Smoking Gun" — The Whitford Emails

On November 11, 2021 — just one week before the scheduled mediation — Ridgeway produced internal emails from James Whitford, Ridgeway's Vice President of Pricing & Rate Management, in compliance with the Court's October 28, 2021 order compelling supplemental production. The significance of these emails to the resolution of this case cannot be overstated. They constitute direct, contemporaneous documentary evidence that the overbilling of CPS was intentional, directed from the highest levels of Ridgeway's pricing organization, and deliberately concealed from CPS.

The Whitford emails span the period from June 2019 through October 2020 and include communications between Whitford and his subordinate rate analysts regarding the pricing of CPS shipments. Two emails are of particular importance.

Key Email #1 — June 14, 2019 (James Whitford to rate analysts):

"Go ahead and bump the CPS lanes to the standard book rate. They're not watching and the margin on this account is too thin at contract rates."

This email is extraordinarily significant because it establishes, in Whitford's own words:

(a) Intentional deviation from contractual rates. Whitford directed his team to apply "standard book rate" pricing — Ridgeway's default, non-contracted rates — rather than the rates CPS had negotiated and memorialized in the MTSA's Exhibit B schedule. This was not an error; it was a deliberate instruction.

(b) Knowledge that the contract required different rates. Whitford's reference to "contract rates" and his acknowledgment that the "margin on this account is too thin at contract rates" demonstrate that he was fully aware of the agreed-upon contractual rates and made a conscious decision to override them.

(c) Deliberate concealment from CPS. Whitford's statement that CPS was "not watching" reveals that the rate increase was undertaken with the specific understanding — and intent — that CPS would not be informed. This was not a negotiated rate adjustment; it was a covert price increase.

(d) Financial motivation. The email makes clear that the overcharging was driven by Ridgeway's desire to improve its profit margins on the CPS account, at CPS's expense.

Key Email #2 — October 2, 2020 (James Whitford, after CPS began raising questions):

"If Crestline pushes back, tell them it's a fuel surcharge adjustment. They won't dig into the math."

This email, sent approximately sixteen months after the initial instruction to inflate rates, is equally devastating. It was written at a time when CPS had begun to raise questions about billing discrepancies during its Q3 2020 budget review. The email establishes:

(a) Awareness that CPS was beginning to question the invoices. Whitford's reference to CPS "push[ing] back" demonstrates that Ridgeway was aware that CPS had identified discrepancies and was beginning to inquire about them.

(b) A deliberate strategy to mislead CPS. Rather than correct the overcharges or disclose the true basis for the rate discrepancies, Whitford instructed his team to mischaracterize the inflated per-mile rates as "fuel surcharge adjustments" — a false explanation designed to deflect CPS's inquiry.

(c) Intent to prevent discovery of the overbilling scheme. Whitford's prediction that CPS "won't dig into the math" reveals his expectation — and hope — that a superficially plausible but false explanation would prevent CPS from conducting the detailed analysis that would ultimately expose the full scope of the overcharges.

The Whitford emails are devastating to Ridgeway's position in this case. They accomplish the following:

• Establish scienter. The emails provide direct evidence of knowledge and intent — the essential elements of CPS's common-law fraud claim that are often the most difficult to prove. Here, there is no need for inference or circumstantial reasoning; Whitford's own words establish that the overcharges were knowing and intentional.

• Directly contradict Ridgeway's "oral modification" defense. Throughout this dispute, Ridgeway has maintained that the rate adjustments were "discussed and agreed to verbally" between Ridgeway's operations team and CPS's logistics personnel. The Whitford emails prove this defense is fabricated. Whitford's instruction to "bump" rates because CPS was "not watching" — and his subsequent instruction to mislead CPS if it raised questions — demonstrate unilateral, covert rate increases, not negotiated modifications.

• Support exemplary damages. Under Texas Civil Practice & Remedies Code §41.003, exemplary damages may be awarded if the claimant proves by clear and convincing evidence that the harm resulted from fraud, malice, or gross negligence. The Whitford emails provide precisely the type of clear and convincing evidence of intentional fraud that supports a substantial exemplary damages award.

• Undermine Ridgeway's credibility on every disputed issue. The emails reveal a pattern of dishonesty that extends from the original overbilling to the cover-up. At trial, these emails would cast a shadow over every representation Ridgeway has made in this litigation, from its discovery responses to its affirmative defenses to its counterclaim.

C. Ridgeway's Defenses Have Collapsed

Ridgeway's Answer and its pre-suit correspondence have advanced several defenses to CPS's claims. Each has been fatally undermined by the evidence developed during discovery. CPS addresses each defense in turn.

1. Oral Modification Defense — Fatally Undermined. Ridgeway's principal defense has been that the rate adjustments reflected in the disputed invoices were "discussed and agreed to verbally between Ridgeway's operations team and CPS's logistics personnel." This defense is Ridgeway's sole substantive response to the overcharge claims. It fails on multiple independent grounds.

The MTSA bars oral modifications. Section 15.1 of the MTSA expressly provides:

"This Agreement may not be amended, modified, or supplemented except by a written instrument signed by authorized representatives of both Parties."

Under Texas law, no-oral-modification clauses are generally enforceable, and courts routinely reject claims of oral modification where the contract contains such a clause. See, e.g., Hathaway v. General Mills, Inc., 711 S.W.2d 227, 229 (Tex. 1986) (enforcing written modification requirement); Texas Disposal Sys. Landfill, Inc. v. Waste Mgmt. Holdings, Inc., 219 S.W.3d 563, 590 (Tex. App.—Austin 2007, pet. denied) (same). CPS is not aware of any written amendment to the MTSA's rate schedules, and none has been produced by Ridgeway in discovery.

No CPS personnel authorized rate changes. CPS has obtained sworn declarations from three senior executives — Patricia Sung (Vice President of Supply Chain & Logistics), Harold Inman (General Counsel), and Dennis Yurkovich (Chief Financial Officer) — each confirming that no one at CPS discussed, authorized, or was aware of any rate modifications outside the formal Exhibit B schedule and the 2.5% annual rate escalator. Ms. Sung's declaration is particularly significant because she is the CPS executive with direct responsibility for the company's logistics operations and freight carrier relationships, and she states unequivocally that she never agreed to, was consulted about, or was informed of any deviation from the MTSA rate schedules.

The Whitford emails prove unilateral action. Whitford's June 14, 2019 email directing subordinates to "bump" rates because CPS was "not watching" proves beyond any reasonable doubt that the rate increases were made without CPS's knowledge, let alone its consent. An oral modification, by definition, requires the assent of both parties. Where one party increases prices unilaterally and takes affirmative steps to conceal the increase from the other party, there can be no oral modification. The Whitford emails are a complete refutation of this defense.

Ridgeway failed to identify the purported modification in discovery. In response to CPS's Interrogatory No. 5, which asked Ridgeway to identify the specific dates, participants, substance, and circumstances of the alleged oral modification conversations, Ridgeway provided only a vague, boilerplate response that failed to identify any specific dates, any specific participants, or any specific substance of the purported conversations. This failure is telling. If oral modification conversations had actually occurred, Ridgeway would have been able to identify at least some details. The absence of any specifics confirms what the Whitford emails make clear: no such conversations took place.

2. Waiver / Estoppel Defense — Meritless. Ridgeway has argued that CPS waived its right to dispute the invoiced amounts by paying Ridgeway's invoices without timely objection over a period of many months. This defense is without merit.

CPS identified the overcharges during its Q3 2020 budget review and promptly commenced a systematic internal audit to quantify the scope of the problem. Upon completion of that audit, CPS immediately invoked the MTSA's contractual dispute resolution process by sending a written dispute notice to Ridgeway on February 8, 2021, well within the MTSA's sixty-day dispute window measured from the date of discovery. CPS's conduct throughout this process was diligent and fully consistent with its contractual rights and obligations.

Waiver under Texas law requires the intentional relinquishment of a known right. Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003). CPS never manifested any intent to waive its rights under the MTSA rate schedule. To the contrary, CPS acted promptly to investigate and assert its rights as soon as the discrepancies came to its attention. The fact that CPS paid invoices before discovering the overcharges does not constitute waiver — particularly where, as here, the overcharges were deliberately concealed by Ridgeway. The Whitford emails, in which Whitford instructed his team to mislead CPS about the nature of the charges, demonstrate that Ridgeway actively prevented CPS from discovering the overbilling. A party that conceals the basis for a claim cannot then argue that the opposing party's failure discover the concealed conduct constitutes waiver.

3. Statute of Limitations — Inapplicable. Ridgeway's statute of limitations defense is equally meritless. Texas's four-year statute of limitations for breach of contract, codified at Texas Civil Practice & Remedies Code §16.004, and the four-year statute of limitations for fraud claims are the applicable limitations periods. The earliest overcharge at issue in this case occurred in February 2019. CPS filed its Original Petition on July 19, 2021 — approximately two years and five months later, well within the four-year limitations period for both contract and fraud claims.

Moreover, to the extent the discovery rule applies to CPS's fraud claims — and CPS submits that it does — the limitations period would not begin to run until CPS knew or, in the exercise of reasonable diligence, should have known of the fraudulent conduct. CPS did discover the overcharges until October 2020, when Ms. Sung flagged the discrepancies during the Q3 2020 budget review. Accordingly, even under the most conservative application of the discovery rule, the fraud claims are timely.

D. Ridgeway's Counterclaim Exposure Is Minimal

Ridgeway's counterclaim asserts $340,000 in alleged lost profits resulting from CPS's early termination of the MTSA. This counterclaim is meritless and should be withdrawn as part of any mediated resolution.

The counterclaim fails for the following reasons:

CPS terminated for cause. CPS terminated the MTSA under §9.2 based on Ridgeway's material breach — specifically, the systematic overbilling of $1,847,632.19 over a twenty-six-month period. Under the MTSA's terms, material breach by one party entitles the non-breaching party to terminate the Agreement upon thirty days' written notice. CPS provided the required notice and the termination was fully justified. A party that is terminated for its own material breach cannot recover lost profits arising from that termination.

No credible damages calculation. Even if CPS's termination were wrongful (which it was not), Ridgeway has produced no credible calculation of its alleged lost profits. The $340,000 figure appears to be a rough estimate of Ridgeway's anticipated profit margin on the remaining volume of CPS shipments through the end of the contract term. Ridgeway has not supported this figure with financial projections, profit-and-loss analyses, historical margin data, or expert testimony. Under Texas law, lost profits must be proven with "reasonable certainty" and cannot rest on speculation or conjecture. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992). Ridgeway's unsupported estimate falls far short of this standard.

The counterclaim is a litigation tactic. CPS submits that the counterclaim was asserted primarily as a litigation tactic — to create a perceived bargaining chip in settlement discussions and to shift attention away from the overwhelming evidence of Ridgeway's own wrongdoing. The counterclaim has no independent merit and should receive no weight in the Mediator's assessment of the parties' respective positions.

V. DAMAGES EXPOSURE FOR RIDGEWAY AT TRIAL

CPS respectfully urges the Mediator to ensure that Ridgeway and its counsel fully appreciate the magnitude of Ridgeway's financial exposure if this case proceeds to trial. The table below summarizes CPS's assessment of Ridgeway's potential liability:

Several aspects of this exposure warrant emphasis.

First, the Whitford emails significantly increase the likelihood of a jury awarding exemplary damages. Under Texas Civil Practice & Remedies Code §41.003(a), exemplary damages are available when the claimant proves by clear and convincing evidence that the harm resulted from fraud, malice, or gross negligence. The Whitford emails — in which a senior Ridgeway executive directed subordinates to inflate charges to a customer, acknowledged that the contract required different rates, and instructed his team to mislead CPS if it raised questions — are precisely the type of evidence that establishes fraud by clear and convincing evidence. They are also precisely the type of evidence that inflames juries. A Tarrant County jury presented with these emails — an executive at a freight company deliberately overbilling a customer by nearly $1.85 million while concealing the scheme — is very likely to impose a punitive award at or near the statutory cap of two times economic damages.

Second, the statutory cap on exemplary damages under Texas Civil Practice & Remedies Code §41.008(b) permits an award of the greater of (i) two times the amount of economic damages plus an amount equal to any noneconomic damages (up to $750,000), or (ii) $200,000. CPS's economic damages of $1,847,632.19 would support an exemplary damages award of up to $3,695,264.38 (two times economic damages), even without any noneconomic damages component.

Third, in addition to the direct financial exposure summarized above, Ridgeway faces significant reputational risk if this case proceeds to a public trial. The Whitford emails, if introduced into evidence in open court — as they certainly would be — would become a matter of public record. The revelation that a senior Ridgeway pricing executive directed his team to overbill a major customer and to mislead that customer about the nature of the overcharges would be devastating to Ridgeway's business reputation in the freight and logistics industry. Such revelations could trigger scrutiny of Ridgeway's billing practices by other current and former customers, potentially giving rise to additional claims and the loss of future business relationships. This reputational exposure is difficult to quantify but is undeniably real and should be a significant factor in Ridgeway's assessment of the value of a confidential settlement.

VI. CPS'S SETTLEMENT POSITION

CPS is prepared to resolve this matter at mediation in a single session on November 18, 2021. CPS approaches this mediation in good faith, with the authority and desire to conclude a binding settlement agreement if terms acceptable to both parties can be reached.

CPS has strong incentives to settle this matter. A negotiated resolution would eliminate the continued litigation costs associated with completing discovery, preparing for and conducting trial, and any post-trial proceedings. It would provide CPS with certainty of recovery — an important consideration given the inherent unpredictability of any litigation, regardless of the strength of one's position. And it would free CPS's management team — in particular, Ms. Sung, Mr. Inman, and Mr. Yurkovich — from the significant time demands associated with continued involvement in this litigation. This last consideration is of particular importance given CPS's status as a portfolio company of Pinnacle Ridge Capital Partners LP, with the attendant reporting obligations, governance requirements, and management attention demands that private equity ownership entails.

However, CPS will not accept any resolution that fails to compensate it for the substantial majority of its documented overcharges. The evidence in this case is overwhelming, CPS's legal position is strong, and the value of CPS's claims at trial — taking into account contractual interest, attorneys' fees, and the substantial likelihood of an exemplary damages award — far exceeds the principal amount of the overcharges.

CPS's opening settlement demand is as follows:

CPS submits that this demand is eminently reasonable in light of the evidence and the legal landscape. It seeks recovery of 100% of the documented overcharges — which CPS views as the absolute minimum acceptable outcome — plus a contribution toward the contractual interest and attorneys' fees that CPS would recover at trial. Notably, CPS's opening demand does not include any component for exemplary damages, notwithstanding the strong basis for such an award at trial. CPS views the omission of exemplary damages from its opening demand as a significant concession that reflects its genuine interest in reaching a resolution.

In exchange for payment of the full demand amount, CPS would agree to the following terms:

• Mutual general releases of all claims, counterclaims, and causes of action between the parties arising out of or relating to the MTSA and the transactions and events at issue in this litigation.

• Dismissal of all claims and counterclaims with prejudice, with each party to bear its own costs except as otherwise provided in the settlement agreement.

• Confidentiality provisions prohibiting both parties from disclosing the terms and amount of the settlement to any third party, except as required by law, regulation, or legal process, or as necessary for legitimate internal business purposes (including CPS's reporting obligations to Pinnacle Ridge Capital Partners LP).

• No admission of liability by either party. The settlement agreement would provide that it is entered into solely for the purpose of resolving a disputed claim and does not constitute an admission of wrongdoing or liability by either party.

CPS is mindful of the litigation risks inherent in any case, including the risk that a jury might not award the full amount of damages sought, the time value of money, and collection risk. With respect to collection risk, CPS notes that Ridgeway reported annual revenue of approximately $94 million in fiscal year 2020, indicating that the amounts at issue in this case, while material, are within Ridgeway's ability to pay. CPS is prepared to negotiate in good faith around the structure and timing of payment, and expects that discussion of a reasonable payment schedule may be appropriate. However, CPS expects the substantial majority of any settlement to be paid promptly — within thirty days of execution of a settlement agreement — and will not agree to a protracted installment arrangement that effectively converts a settlement into a financing arrangement.

Finally, CPS wishes to make clear that it will not accept any resolution that:

• Fails to provide recovery of the substantial majority of CPS's documented overcharges of $1,847,632.19;

• Requires CPS to make any payment on Ridgeway's meritless counterclaim for $340,000 in lost profits; or

• Permits Ridgeway to characterize the settlement as a "goodwill adjustment," a "commercial accommodation," or any other formulation that minimizes or obscures the seriousness of Ridgeway's conduct.

VII. CONCLUSION

CPS respectfully submits that the record in this case — the forensic accounting analysis, the Whitford emails, the declarations of CPS's senior executives, and Ridgeway's failure to substantiate any of its defenses — points overwhelmingly in one direction. CPS summarizes its position as follows:

1. CPS has a virtually airtight breach-of-contract claim supported by an independent forensic analysis that has verified, invoice by invoice, overcharges totaling $1,847,632.19 across 9,843 invoices and four discrete categories of overbilling.

2. CPS has strong common-law fraud claims bolstered by newly discovered documentary evidence — the Whitford emails — that establish intentional, systematic overbilling and deliberate concealment of that overbilling from CPS.

3. CPS has a clear path to recovery of attorneys' fees under Texas Civil Practice & Remedies Code §38.001, which provides for the recovery of reasonable attorneys' fees by the prevailing party in a breach-of-contract action.

4. Ridgeway's defenses — oral modification, waiver, estoppel, and statute of limitations — have collapsed, particularly in light of the Whitford emails and the MTSA's express no-oral-modification clause. Ridgeway has no viable defense to CPS's breach-of-contract claim and no credible answer to CPS's fraud claim.

5. Ridgeway faces total trial exposure exceeding $6.2 million, including up to $3,695,264.38 in exemplary damages that a jury would be permitted to award under Texas law upon proof of fraud by clear and convincing evidence — a standard that the Whitford emails readily satisfy.

6. Ridgeway's counterclaim for $340,000 in lost profits is meritless. CPS terminated the MTSA for cause based on Ridgeway's material breach, and Ridgeway has produced no credible calculation of its alleged damages. This counterclaim should be withdrawn as part of any mediated resolution.

CPS urges Ridgeway and its counsel to approach this mediation realistically and to recognize that the evidentiary record — particularly the Whitford emails — has fundamentally altered the landscape of this case. CPS's opening demand of $2,097,632.19 is reasonable, is well below CPS's total trial exposure assessment, and provides Ridgeway with significant value in the form of a confidential resolution that avoids the reputational and financial risks of trial. CPS is prepared to negotiate in good faith and looks forward to a productive mediation session on November 18, 2021.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Yuki Nakamura Texas Bar No. 24098712

Francesca Morano Ohio Bar No. 0087431

Calderwood & Harkness LLP 1001 Fannin Street, Suite 4200 Houston, Texas 77002 Telephone: (713) 555-0140

Email: ynakamura@calderwoodharkness.com

Email: fmorano@calderwoodharkness.com

ATTORNEYS FOR PLAINTIFF CRESTLINE PACKAGING SOLUTIONS LLC

Case:	Crestline Packaging Solutions LLC v. Ridgeway Freight Services Inc., Cause No. 342-2021-04871-TX
Court:	342nd Judicial District Court, Tarrant County, Texas
Mediator:	Judge (Ret.) Constance Farr
Mediation Date:	November 18, 2021
Mediation Venue:	Lone Star Dispute Resolution Center, 300 Throckmorton Street, Suite 1200, Fort Worth, TX 76102
Submitted by:	Calderwood & Harkness LLP, on behalf of Plaintiff Crestline Packaging Solutions LLC
Date of Submission:	November 12, 2021
C&H Matter No.:	1006-00005
Category	Amount	Detail
Inflated Per-Mile Rates	$1,104,891.53	4,217 of 9,843 invoices (42.8%) applied per-mile rates 8–12% above the Exhibit B schedule for the applicable lane
Improper Fuel Surcharge Calculation	$387,412.66	Ridgeway used a 7-day lagging DOE index instead of the same-week index required by Exhibit C; this methodology systematically inflated surcharges during periods of falling diesel prices, as the lagging index captured higher prices from the prior week
Unauthorized Accessorial Charges	$241,008.00	Liftgate, detention, and re-delivery fees were billed without supporting delivery documentation (e.g., no signed detention logs, no liftgate service confirmation) and without contractual authorization under the MTSA
Duplicate Invoices	$114,320.00	83 invoices were submitted and paid twice; in each case, the duplicate was assigned a different invoice number but referenced the same shipment, BOL number, and delivery date
Total	$1,847,632.19	Sum check: $1,104,891.53 + $387,412.66 + $241,008.00 + $114,320.00 = $1,847,632.19
Component	Amount / Range	Basis
Overcharges (principal)	$1,847,632.19	Forensic invoice-by-invoice analysis by Meridian Forensic Accounting Group LLC
Contractual interest (1.5% per month, accruing from each overpayment date)	~$330,000 through estimated trial date	MTSA §10.3; rolling calculation based on date of each overpayment
Attorneys' fees (recoverable by prevailing party in breach-of-contract action)	~$350,000+	Tex. Civ. Prac. & Rem. Code §38.001; estimate based on fees incurred through anticipated trial
Exemplary damages (if fraud proven by clear and convincing evidence)	Up to $3,695,264.38	2× economic damages per Tex. Civ. Prac. & Rem. Code §41.008(b)
Total potential trial exposure	Over $6,222,896 (estimated)
Component	Amount
Overcharges (principal)	$1,847,632.19
Toward contractual interest and attorneys' fees	$250,000.00
Total opening demand	$2,097,632.19

CALDERWOOD & HARKNESS LLP 1001 Fannin Street, Suite 4200 Houston, Texas 77002
PRIVILEGED AND CONFIDENTIAL — PREPARED FOR MEDIATION PURPOSES ONLY SUBJECT TO TEXAS CIVIL PRACTICE & REMEDIES CODE §154.073
MEDIATION POSITION STATEMENT
I. INTRODUCTION
Plaintiff Crestline Packaging Solutions LLC ("CPS" or "Plaintiff") respectfully submits this confidential Mediation Position Statement to Judge (Ret.) Constance Farr in advance of the mediation session scheduled for November 18, 2021, in the above-referenced matter. This Statement is intended to provide the Mediator with a thorough understanding of the facts, the legal issues, the parties' respective positions, and the framework within which CPS believes a fair and reasonable resolution can be achieved.
This Mediation Position Statement is confidential and is submitted solely for the use of the Mediator in facilitating settlement discussions between the parties. It is subject to the protections afforded by Texas Civil Practice & Remedies Code §154.073, which provides that communications made during and in preparation for an alternative dispute resolution procedure are confidential, are not subject to disclosure, and may not be used as evidence against the participant in any judicial or administrative proceeding. CPS submits this Statement with the express understanding that it shall not be disclosed to opposing counsel or any third party, and that no portion of this Statement shall be admissible in any proceeding, whether in this case or otherwise.
CPS enters this mediation from a position of overwhelming strength. Over the past several months, CPS has developed a comprehensive evidentiary record that establishes, with mathematical precision, systematic overbilling by Ridgeway Freight Services Inc. ("Ridgeway" or "Defendant") totaling $1,847,632.19 over a twenty-six-month period. That evidentiary record includes an independent forensic accounting analysis performed by Meridian Forensic Accounting Group LLC, which has verified the overcharges on an invoice-by-invoice basis against the contractual rate schedule, fuel surcharge formula, delivery documentation, and publicly available Department of Energy diesel price data. In addition, recently produced internal emails authored by Ridgeway's Vice President of Pricing & Rate Management, James Whitford, demonstrate that the overbilling was not the product of inadvertent error or system malfunction — as Ridgeway has claimed — but rather the result of a deliberate and concealed scheme to inflate charges to CPS in order to improve Ridgeway's profit margins.
CPS is prepared to resolve this matter at mediation on terms that reflect the strength of its claims and the weakness of Ridgeway's defenses, while recognizing the inherent value in avoiding the continued time, expense, and uncertainty associated with protracted litigation through trial. CPS approaches this mediation in good faith and with a genuine desire to reach a resolution that is fair and commercially reasonable. At the same time, CPS will not accept any settlement that fails to compensate it for the substantial majority of its documented losses.
CPS is represented in this matter by Calderwood & Harkness LLP. The attorneys principally involved are Francesca Morano, Partner; Samuel Eklund, Partner; Yuki Nakamura, Associate; and Carlos Espinoza, Associate. Ridgeway is represented by Bartlett, Hogue & Sinclair LLP, 801 Cherry Street, Suite 3400, Fort Worth, Texas 76102, with Marcus T. Hogue, Partner, and Reyna Villarreal, Associate, serving as counsel of record.
II. SUMMARY OF THE DISPUTE
A. The Parties
Crestline Packaging Solutions LLC is an Ohio limited liability company headquartered at 4500 Needmore Road, Dayton, Ohio 45424. CPS is a specialty packaging manufacturer and industrial chemical coatings producer that serves customers across a wide range of industries, including automotive, aerospace, consumer products, and industrial manufacturing. CPS reported annual revenue of approximately $218.4 million for fiscal year 2020 and ships approximately 14,000 truckloads per year from five manufacturing facilities located across Ohio, Indiana, and Texas. CPS is a portfolio company of Pinnacle Ridge Capital Partners LP, a middle-market private equity firm that acquired CPS in March 2018 for a total enterprise value of $412 million. As a portfolio company operating under private equity ownership, CPS is subject to rigorous financial controls, reporting obligations, and margin management requirements, which make the magnitude of Ridgeway's overbilling particularly consequential.
Ridgeway Freight Services Inc. is a Texas corporation headquartered at 7200 East Lancaster Avenue, Fort Worth, Texas 76112. Ridgeway is a mid-size regional freight broker and carrier that provides both less-than-truckload ("LTL") and full-truckload ("FTL") freight transportation services across the South Central and Midwestern United States. Ridgeway reported annual revenue of approximately $94 million for fiscal year 2020 and employs approximately 380 individuals across its operations. Ridgeway's chief executive officer is Raymond Calder; its chief operating officer is Brenda Novotny.
B. The Master Transportation Services Agreement
On April 15, 2019, CPS and Ridgeway entered into a Master Transportation Services Agreement (the "MTSA"), a comprehensive three-year agreement with a term running from April 15, 2019 through April 14, 2022. Under the MTSA, Ridgeway served as the exclusive LTL and FTL carrier for CPS's Texas manufacturing facility and as the primary carrier for CPS's Ohio and Indiana manufacturing facilities. The MTSA was the product of extensive negotiation between the parties and was executed by authorized representatives of both CPS and Ridgeway following a competitive bid process in which Ridgeway prevailed based, in significant part, on the attractiveness of its proposed rate schedule.
The MTSA established specific rate schedules that governed all shipments during the contract term. The key pricing terms, set forth in Exhibit B to the MTSA, included the following:
• FTL Base Rates by Lane: Ohio to Texas: $2.18 per mile; Indiana to Texas: $2.04 per mile; Texas to Ohio: $2.22 per mile.
• LTL Rates: $14.60 per hundredweight for Class 70 shipments, with rates for other freight classes set forth in an accompanying schedule.
• Fuel Surcharge Formula: Governed by Exhibit C to the MTSA, which pegged the fuel surcharge to the U.S. Department of Energy ("DOE") Weekly Retail On-Highway Diesel Price for the same week as shipment — not a lagging or averaged index.
• Annual Rate Escalator: A 2.5% annual rate escalator, effective each April 15 during the contract term, applied to base rates only (not to fuel surcharges or accessorial charges).
These rate terms were central to the commercial bargain struck by the parties and were the basis upon which CPS projected its transportation costs for the duration of the contract.
C. The Overbilling Scheme
CPS has brought this action against Ridgeway for systematic overbilling totaling $1,847,632.19 on freight invoices submitted by Ridgeway over a twenty-six-month period from February 2019 through March 2021. The overcharges represent approximately 15.0% of the total amounts invoiced by Ridgeway during that period — $12,318,209.46 invoiced, compared to $10,470,577.27 that would have been correct under the contractual rate schedules. This is not a case involving a handful of billing errors on the margins of a large contract. Rather, the evidence demonstrates a systematic pattern of overbilling across multiple categories, affecting a substantial percentage of all invoices submitted.
D. CPS's Causes of Action
CPS asserts four causes of action against Ridgeway:
1. Breach of Contract — Ridgeway breached the MTSA by invoicing and collecting amounts in excess of the contractual rate schedules.
2. Money Had and Received — Ridgeway received and retained money belonging in equity and good conscience to CPS.
3. Common-Law Fraud — Ridgeway, through its officers and employees, knowingly and intentionally submitted false invoices to CPS and made material misrepresentations regarding the basis for charges, with the intent to induce CPS to pay amounts not owed under the MTSA.
4. Unjust Enrichment — Ridgeway was unjustly enriched by its receipt and retention of $1,847,632.19 in overpayments.
Ridgeway has asserted a counterclaim for $340,000 in alleged lost profits resulting from CPS's early termination of the MTSA. As discussed in detail in Section IV.D below, this counterclaim is meritless.
III. PROCEDURAL HISTORY
The following procedural history provides the Mediator with context for the current posture of the case and the development of the evidentiary record.
October 2020: Patricia Sung, CPS's Vice President of Supply Chain & Logistics, flagged rate discrepancies on certain Ridgeway invoices during CPS's routine third-quarter 2020 budget review. Ms. Sung noted that actual freight costs for certain high-volume lanes were running materially above budgeted rates and directed her team to investigate.
November 12, 2020: Based on Ms. Sung's initial findings, CPS's internal audit team commenced a systematic invoice-by-invoice review of all Ridgeway billings against the contractual rate schedules set forth in the MTSA exhibits.
January 29, 2021: CPS's internal review was completed. The review identified significant and widespread discrepancies between invoiced amounts and contractual rates across multiple billing categories. Dennis Yurkovich, CPS's Chief Financial Officer, reviewed the findings and authorized CPS to initiate a formal dispute with Ridgeway pursuant to the contractual dispute resolution provisions of the MTSA.
February 8, 2021: Harold Inman, CPS's General Counsel, sent a written invoice dispute notice to Ridgeway pursuant to MTSA §11.2, formally identifying $1,412,088.74 in overcharges across the reviewed period. This initial estimate was subsequently refined upward as additional invoices were reviewed and reconciled. The notice demanded full repayment and invoked the thirty-day good-faith resolution period required by §11.2 before either party could pursue further remedies.
February 10, 2021: Brenda Novotny, Ridgeway's Chief Operating Officer, acknowledged receipt of CPS's dispute notice on behalf of Ridgeway.
March 12, 2021: The thirty-day good-faith resolution period under §11.2 expired. During this period, Ridgeway offered only a $218,500.00 "goodwill adjustment" — an amount representing less than 12% of the documented overcharges. Ridgeway denied the existence of systematic overbilling and characterized the discrepancies identified by CPS as "inadvertent system errors" and "authorized rate adjustments" that had been agreed to in the ordinary course of the parties' business relationship. Ridgeway provided no documentation or explanation to support this characterization.
March 15, 2021: CPS formally rejected Ridgeway's $218,500.00 offer as wholly inadequate, noting that it bore no reasonable relationship to the documented overcharges and that Ridgeway had failed to provide any substantive basis for its assertion that rate adjustments had been authorized.
March 22, 2021: CPS issued a thirty-day termination notice to Ridgeway under MTSA §9.2, which permits either party to terminate the Agreement upon thirty days' written notice in the event of a material breach by the other party. CPS cited Ridgeway's systematic overbilling, totaling in excess of $1.4 million (the figure then confirmed), as the material breach justifying termination.
April 22, 2021: The MTSA was formally terminated. CPS commenced the transition of its freight operations to Redfield Logistics Corp., headquartered in Indianapolis, Indiana, which CPS had selected through an expedited competitive procurement process.
June 1, 2021: CPS engaged Calderwood & Harkness LLP to represent it in connection with the recovery of overpayments from Ridgeway and related claims.
June 18, 2021: Calderwood & Harkness LLP, on behalf of CPS, sent a detailed pre-suit demand letter to Ridgeway, addressed to Raymond Calder, Chief Executive Officer, demanding payment of $1,847,632.19 in overcharges (the refined figure reflecting completion of the full invoice reconciliation) plus $221,715.86 in contractual interest accrued through the date of the letter, for a total demand of $2,069,348.05. The demand letter provided Ridgeway with a fourteen-day period to make payment in full before CPS would initiate litigation.
July 2, 2021: Ridgeway, through its newly retained counsel Bartlett, Hogue & Sinclair LLP (Marcus T. Hogue, Partner), rejected CPS's demand. Mr. Hogue's letter asserted for the first time that the rate adjustments reflected in the disputed invoices were authorized under a purported oral modification of the MTSA's rate schedules. The letter did not identify the dates, participants, or substance of any oral modification conversations.
July 19, 2021: CPS filed its Original Petition in the 342nd Judicial District Court of Tarrant County, Texas, initiating Cause No. 342-2021-04871-TX. The Petition asserted claims for breach of contract, money had and received, common-law fraud, and unjust enrichment, and sought recovery of $1,847,632.19 in overcharges, contractual interest, attorneys' fees, and exemplary damages.
August 5, 2021: Ridgeway filed its Original Answer and Counterclaim. Ridgeway's Answer asserted affirmative defenses including oral modification, waiver, estoppel, and statute of limitations. Ridgeway's Counterclaim asserted a claim for $340,000 in lost profits allegedly resulting from CPS's early termination of the MTSA.
August 20, 2021: Calderwood & Harkness LLP, on behalf of CPS, retained Meridian Forensic Accounting Group LLC to perform an independent forensic analysis of all invoices submitted by Ridgeway during the contract period. Nathan Crowley, CPA, CFF, served as the Engagement Partner and lead analyst.
September 10, 2021: Meridian Forensic Accounting Group LLC completed its forensic invoice analysis, confirming total overcharges of $1,847,632.19 — consistent with CPS's internal analysis. Meridian's report details the methodology employed, identifies each overcharged invoice, and categorizes the overcharges by type, as discussed in Section IV.A below.
September 15, 2021: CPS served its First Set of Interrogatories (8 interrogatories) and First Requests for Production of Documents (12 document requests) on Ridgeway. The discovery requests were designed to obtain Ridgeway's internal records related to the billing and pricing of CPS shipments, including rate files, billing system records, internal communications, fuel surcharge calculations, accessorial charge documentation, and all documents relating to the purported oral modification.
October 4, 2021: Ridgeway served its responses to CPS's discovery requests. The responses consisted largely of boilerplate objections and a grossly incomplete document production that failed to include key categories of responsive documents. Among the most notable deficiencies, Ridgeway failed to identify James Whitford, its Vice President of Pricing & Rate Management, as a person with knowledge of the rate adjustments at issue; refused to provide any specific details regarding the alleged oral modification (including dates, participants, or substance of the purported conversations); and withheld entire categories of documents, including rate files, internal communications, fuel surcharge data, accessorial charge documentation, and billing system records.
October 15, 2021: CPS filed a Motion to Compel discovery, detailing with specificity the deficiencies in Ridgeway's responses and production. The Motion argued that Ridgeway's blanket objections were improper, that its production was woefully incomplete, and that its failure to provide information regarding the oral modification defense — while continuing to assert that defense — was prejudicial and sanctionable.
October 28, 2021: The Court granted CPS's Motion to Compel and ordered Ridgeway to produce complete billing records, internal communications, rate files, and all other documents responsive to CPS's requests within fourteen days. The Court specifically noted the inadequacy of Ridgeway's prior production and warned that further discovery obstruction would not be tolerated.
November 11, 2021: In compliance with the Court's order, Ridgeway produced supplemental documents. This production included, critically, internal emails authored by James Whitford, Ridgeway's Vice President of Pricing & Rate Management. These emails, which are discussed at length in Section IV.B below, constitute the most significant evidentiary development in this case and dramatically strengthen CPS's claims — particularly the common-law fraud cause of action and CPS's entitlement to exemplary damages.
IV. CPS'S POSITION OF STRENGTH
A. The Overcharges Are Incontrovertible
The overcharges at the heart of this case are not a matter of interpretation, subjective accounting judgment, or reasonable disagreement between the parties about the meaning of contract terms. They are a matter of arithmetic — straightforward calculations that compare the rates actually charged by Ridgeway on each invoice against the rates established in the MTSA's Exhibit B rate schedule and Exhibit C fuel surcharge formula, using publicly available DOE diesel price data. The result of that comparison, verified independently by a qualified forensic accounting expert, is that Ridgeway overcharged CPS by $1,847,632.19 over the twenty-six-month period from February 2019 through March 2021.
Meridian Forensic Accounting Group LLC, an independent forensic accounting firm retained by CPS through counsel, conducted a comprehensive reconciliation of all 9,843 invoices submitted by Ridgeway during the relevant period. Each invoice was compared against the applicable rate from the Exhibit B schedule (including the 2.5% annual escalator where applicable), the fuel surcharge calculated using the Exhibit C formula with the correct DOE Weekly Retail On-Highway Diesel Price for the week of shipment, delivery documentation (bills of lading, proof of delivery, and carrier receipts), and the invoice history to identify duplicates. This was not a sampling exercise or an extrapolation from limited data; every single invoice was individually reviewed and reconciled.
Meridian confirmed total overcharges of $1,847,632.19, broken down across four discrete categories:
To place these figures in context, Ridgeway invoiced CPS a total of $12,318,209.46 during the twenty-six-month period in question. The correct amount, calculated using the contractual rates and formulas, was $10,470,577.27. The overcharge rate was therefore approximately 15.0% of total billings — a staggering figure that cannot plausibly be attributed to inadvertent errors or system glitches.
Meridian's analysis is fully documented in a detailed expert report accompanied by supporting schedules that identify every overcharged invoice by number, date, shipment, lane, contractual rate, actual rate charged, and dollar amount of the overcharge. The report has been prepared in a form suitable for use at trial and complies with the disclosure requirements of Texas Rule of Civil Procedure 194.2(f). Nathan Crowley, CPA, CFF, the Engagement Partner, is prepared to testify at trial as an expert witness regarding Meridian's methodology, findings, and conclusions. Mr. Crowley has over twenty years of experience in forensic accounting and has been qualified as an expert in Texas state courts on numerous occasions.
B. The "Smoking Gun" — The Whitford Emails
On November 11, 2021 — just one week before the scheduled mediation — Ridgeway produced internal emails from James Whitford, Ridgeway's Vice President of Pricing & Rate Management, in compliance with the Court's October 28, 2021 order compelling supplemental production. The significance of these emails to the resolution of this case cannot be overstated. They constitute direct, contemporaneous documentary evidence that the overbilling of CPS was intentional, directed from the highest levels of Ridgeway's pricing organization, and deliberately concealed from CPS.
The Whitford emails span the period from June 2019 through October 2020 and include communications between Whitford and his subordinate rate analysts regarding the pricing of CPS shipments. Two emails are of particular importance.
Key Email #1 — June 14, 2019 (James Whitford to rate analysts):
"Go ahead and bump the CPS lanes to the standard book rate. They're not watching and the margin on this account is too thin at contract rates."
This email is extraordinarily significant because it establishes, in Whitford's own words:
(a) Intentional deviation from contractual rates. Whitford directed his team to apply "standard book rate" pricing — Ridgeway's default, non-contracted rates — rather than the rates CPS had negotiated and memorialized in the MTSA's Exhibit B schedule. This was not an error; it was a deliberate instruction.
(b) Knowledge that the contract required different rates. Whitford's reference to "contract rates" and his acknowledgment that the "margin on this account is too thin at contract rates" demonstrate that he was fully aware of the agreed-upon contractual rates and made a conscious decision to override them.
(c) Deliberate concealment from CPS. Whitford's statement that CPS was "not watching" reveals that the rate increase was undertaken with the specific understanding — and intent — that CPS would not be informed. This was not a negotiated rate adjustment; it was a covert price increase.
(d) Financial motivation. The email makes clear that the overcharging was driven by Ridgeway's desire to improve its profit margins on the CPS account, at CPS's expense.
Key Email #2 — October 2, 2020 (James Whitford, after CPS began raising questions):
"If Crestline pushes back, tell them it's a fuel surcharge adjustment. They won't dig into the math."
This email, sent approximately sixteen months after the initial instruction to inflate rates, is equally devastating. It was written at a time when CPS had begun to raise questions about billing discrepancies during its Q3 2020 budget review. The email establishes:
(a) Awareness that CPS was beginning to question the invoices. Whitford's reference to CPS "push[ing] back" demonstrates that Ridgeway was aware that CPS had identified discrepancies and was beginning to inquire about them.
(b) A deliberate strategy to mislead CPS. Rather than correct the overcharges or disclose the true basis for the rate discrepancies, Whitford instructed his team to mischaracterize the inflated per-mile rates as "fuel surcharge adjustments" — a false explanation designed to deflect CPS's inquiry.
(c) Intent to prevent discovery of the overbilling scheme. Whitford's prediction that CPS "won't dig into the math" reveals his expectation — and hope — that a superficially plausible but false explanation would prevent CPS from conducting the detailed analysis that would ultimately expose the full scope of the overcharges.
The Whitford emails are devastating to Ridgeway's position in this case. They accomplish the following:
• Establish scienter. The emails provide direct evidence of knowledge and intent — the essential elements of CPS's common-law fraud claim that are often the most difficult to prove. Here, there is no need for inference or circumstantial reasoning; Whitford's own words establish that the overcharges were knowing and intentional.
• Directly contradict Ridgeway's "oral modification" defense. Throughout this dispute, Ridgeway has maintained that the rate adjustments were "discussed and agreed to verbally" between Ridgeway's operations team and CPS's logistics personnel. The Whitford emails prove this defense is fabricated. Whitford's instruction to "bump" rates because CPS was "not watching" — and his subsequent instruction to mislead CPS if it raised questions — demonstrate unilateral, covert rate increases, not negotiated modifications.
• Support exemplary damages. Under Texas Civil Practice & Remedies Code §41.003, exemplary damages may be awarded if the claimant proves by clear and convincing evidence that the harm resulted from fraud, malice, or gross negligence. The Whitford emails provide precisely the type of clear and convincing evidence of intentional fraud that supports a substantial exemplary damages award.
• Undermine Ridgeway's credibility on every disputed issue. The emails reveal a pattern of dishonesty that extends from the original overbilling to the cover-up. At trial, these emails would cast a shadow over every representation Ridgeway has made in this litigation, from its discovery responses to its affirmative defenses to its counterclaim.
C. Ridgeway's Defenses Have Collapsed
Ridgeway's Answer and its pre-suit correspondence have advanced several defenses to CPS's claims. Each has been fatally undermined by the evidence developed during discovery. CPS addresses each defense in turn.
1. Oral Modification Defense — Fatally Undermined. Ridgeway's principal defense has been that the rate adjustments reflected in the disputed invoices were "discussed and agreed to verbally between Ridgeway's operations team and CPS's logistics personnel." This defense is Ridgeway's sole substantive response to the overcharge claims. It fails on multiple independent grounds.
The MTSA bars oral modifications. Section 15.1 of the MTSA expressly provides:
"This Agreement may not be amended, modified, or supplemented except by a written instrument signed by authorized representatives of both Parties."
Under Texas law, no-oral-modification clauses are generally enforceable, and courts routinely reject claims of oral modification where the contract contains such a clause. See, e.g., Hathaway v. General Mills, Inc., 711 S.W.2d 227, 229 (Tex. 1986) (enforcing written modification requirement); Texas Disposal Sys. Landfill, Inc. v. Waste Mgmt. Holdings, Inc., 219 S.W.3d 563, 590 (Tex. App.—Austin 2007, pet. denied) (same). CPS is not aware of any written amendment to the MTSA's rate schedules, and none has been produced by Ridgeway in discovery.
No CPS personnel authorized rate changes. CPS has obtained sworn declarations from three senior executives — Patricia Sung (Vice President of Supply Chain & Logistics), Harold Inman (General Counsel), and Dennis Yurkovich (Chief Financial Officer) — each confirming that no one at CPS discussed, authorized, or was aware of any rate modifications outside the formal Exhibit B schedule and the 2.5% annual rate escalator. Ms. Sung's declaration is particularly significant because she is the CPS executive with direct responsibility for the company's logistics operations and freight carrier relationships, and she states unequivocally that she never agreed to, was consulted about, or was informed of any deviation from the MTSA rate schedules.
The Whitford emails prove unilateral action. Whitford's June 14, 2019 email directing subordinates to "bump" rates because CPS was "not watching" proves beyond any reasonable doubt that the rate increases were made without CPS's knowledge, let alone its consent. An oral modification, by definition, requires the assent of both parties. Where one party increases prices unilaterally and takes affirmative steps to conceal the increase from the other party, there can be no oral modification. The Whitford emails are a complete refutation of this defense.
Ridgeway failed to identify the purported modification in discovery. In response to CPS's Interrogatory No. 5, which asked Ridgeway to identify the specific dates, participants, substance, and circumstances of the alleged oral modification conversations, Ridgeway provided only a vague, boilerplate response that failed to identify any specific dates, any specific participants, or any specific substance of the purported conversations. This failure is telling. If oral modification conversations had actually occurred, Ridgeway would have been able to identify at least some details. The absence of any specifics confirms what the Whitford emails make clear: no such conversations took place.
2. Waiver / Estoppel Defense — Meritless. Ridgeway has argued that CPS waived its right to dispute the invoiced amounts by paying Ridgeway's invoices without timely objection over a period of many months. This defense is without merit.
CPS identified the overcharges during its Q3 2020 budget review and promptly commenced a systematic internal audit to quantify the scope of the problem. Upon completion of that audit, CPS immediately invoked the MTSA's contractual dispute resolution process by sending a written dispute notice to Ridgeway on February 8, 2021, well within the MTSA's sixty-day dispute window measured from the date of discovery. CPS's conduct throughout this process was diligent and fully consistent with its contractual rights and obligations.
Waiver under Texas law requires the intentional relinquishment of a known right. Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003). CPS never manifested any intent to waive its rights under the MTSA rate schedule. To the contrary, CPS acted promptly to investigate and assert its rights as soon as the discrepancies came to its attention. The fact that CPS paid invoices before discovering the overcharges does not constitute waiver — particularly where, as here, the overcharges were deliberately concealed by Ridgeway. The Whitford emails, in which Whitford instructed his team to mislead CPS about the nature of the charges, demonstrate that Ridgeway actively prevented CPS from discovering the overbilling. A party that conceals the basis for a claim cannot then argue that the opposing party's failure discover the concealed conduct constitutes waiver.
3. Statute of Limitations — Inapplicable. Ridgeway's statute of limitations defense is equally meritless. Texas's four-year statute of limitations for breach of contract, codified at Texas Civil Practice & Remedies Code §16.004, and the four-year statute of limitations for fraud claims are the applicable limitations periods. The earliest overcharge at issue in this case occurred in February 2019. CPS filed its Original Petition on July 19, 2021 — approximately two years and five months later, well within the four-year limitations period for both contract and fraud claims.
Moreover, to the extent the discovery rule applies to CPS's fraud claims — and CPS submits that it does — the limitations period would not begin to run until CPS knew or, in the exercise of reasonable diligence, should have known of the fraudulent conduct. CPS did discover the overcharges until October 2020, when Ms. Sung flagged the discrepancies during the Q3 2020 budget review. Accordingly, even under the most conservative application of the discovery rule, the fraud claims are timely.
D. Ridgeway's Counterclaim Exposure Is Minimal
Ridgeway's counterclaim asserts $340,000 in alleged lost profits resulting from CPS's early termination of the MTSA. This counterclaim is meritless and should be withdrawn as part of any mediated resolution.
The counterclaim fails for the following reasons:
CPS terminated for cause. CPS terminated the MTSA under §9.2 based on Ridgeway's material breach — specifically, the systematic overbilling of $1,847,632.19 over a twenty-six-month period. Under the MTSA's terms, material breach by one party entitles the non-breaching party to terminate the Agreement upon thirty days' written notice. CPS provided the required notice and the termination was fully justified. A party that is terminated for its own material breach cannot recover lost profits arising from that termination.
No credible damages calculation. Even if CPS's termination were wrongful (which it was not), Ridgeway has produced no credible calculation of its alleged lost profits. The $340,000 figure appears to be a rough estimate of Ridgeway's anticipated profit margin on the remaining volume of CPS shipments through the end of the contract term. Ridgeway has not supported this figure with financial projections, profit-and-loss analyses, historical margin data, or expert testimony. Under Texas law, lost profits must be proven with "reasonable certainty" and cannot rest on speculation or conjecture. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992). Ridgeway's unsupported estimate falls far short of this standard.
The counterclaim is a litigation tactic. CPS submits that the counterclaim was asserted primarily as a litigation tactic — to create a perceived bargaining chip in settlement discussions and to shift attention away from the overwhelming evidence of Ridgeway's own wrongdoing. The counterclaim has no independent merit and should receive no weight in the Mediator's assessment of the parties' respective positions.
V. DAMAGES EXPOSURE FOR RIDGEWAY AT TRIAL
CPS respectfully urges the Mediator to ensure that Ridgeway and its counsel fully appreciate the magnitude of Ridgeway's financial exposure if this case proceeds to trial. The table below summarizes CPS's assessment of Ridgeway's potential liability:
Several aspects of this exposure warrant emphasis.
First, the Whitford emails significantly increase the likelihood of a jury awarding exemplary damages. Under Texas Civil Practice & Remedies Code §41.003(a), exemplary damages are available when the claimant proves by clear and convincing evidence that the harm resulted from fraud, malice, or gross negligence. The Whitford emails — in which a senior Ridgeway executive directed subordinates to inflate charges to a customer, acknowledged that the contract required different rates, and instructed his team to mislead CPS if it raised questions — are precisely the type of evidence that establishes fraud by clear and convincing evidence. They are also precisely the type of evidence that inflames juries. A Tarrant County jury presented with these emails — an executive at a freight company deliberately overbilling a customer by nearly $1.85 million while concealing the scheme — is very likely to impose a punitive award at or near the statutory cap of two times economic damages.
Second, the statutory cap on exemplary damages under Texas Civil Practice & Remedies Code §41.008(b) permits an award of the greater of (i) two times the amount of economic damages plus an amount equal to any noneconomic damages (up to $750,000), or (ii) $200,000. CPS's economic damages of $1,847,632.19 would support an exemplary damages award of up to $3,695,264.38 (two times economic damages), even without any noneconomic damages component.
Third, in addition to the direct financial exposure summarized above, Ridgeway faces significant reputational risk if this case proceeds to a public trial. The Whitford emails, if introduced into evidence in open court — as they certainly would be — would become a matter of public record. The revelation that a senior Ridgeway pricing executive directed his team to overbill a major customer and to mislead that customer about the nature of the overcharges would be devastating to Ridgeway's business reputation in the freight and logistics industry. Such revelations could trigger scrutiny of Ridgeway's billing practices by other current and former customers, potentially giving rise to additional claims and the loss of future business relationships. This reputational exposure is difficult to quantify but is undeniably real and should be a significant factor in Ridgeway's assessment of the value of a confidential settlement.
VI. CPS'S SETTLEMENT POSITION
CPS is prepared to resolve this matter at mediation in a single session on November 18, 2021. CPS approaches this mediation in good faith, with the authority and desire to conclude a binding settlement agreement if terms acceptable to both parties can be reached.
CPS has strong incentives to settle this matter. A negotiated resolution would eliminate the continued litigation costs associated with completing discovery, preparing for and conducting trial, and any post-trial proceedings. It would provide CPS with certainty of recovery — an important consideration given the inherent unpredictability of any litigation, regardless of the strength of one's position. And it would free CPS's management team — in particular, Ms. Sung, Mr. Inman, and Mr. Yurkovich — from the significant time demands associated with continued involvement in this litigation. This last consideration is of particular importance given CPS's status as a portfolio company of Pinnacle Ridge Capital Partners LP, with the attendant reporting obligations, governance requirements, and management attention demands that private equity ownership entails.
However, CPS will not accept any resolution that fails to compensate it for the substantial majority of its documented overcharges. The evidence in this case is overwhelming, CPS's legal position is strong, and the value of CPS's claims at trial — taking into account contractual interest, attorneys' fees, and the substantial likelihood of an exemplary damages award — far exceeds the principal amount of the overcharges.
CPS's opening settlement demand is as follows:
CPS submits that this demand is eminently reasonable in light of the evidence and the legal landscape. It seeks recovery of 100% of the documented overcharges — which CPS views as the absolute minimum acceptable outcome — plus a contribution toward the contractual interest and attorneys' fees that CPS would recover at trial. Notably, CPS's opening demand does not include any component for exemplary damages, notwithstanding the strong basis for such an award at trial. CPS views the omission of exemplary damages from its opening demand as a significant concession that reflects its genuine interest in reaching a resolution.
In exchange for payment of the full demand amount, CPS would agree to the following terms:
• Mutual general releases of all claims, counterclaims, and causes of action between the parties arising out of or relating to the MTSA and the transactions and events at issue in this litigation.
• Dismissal of all claims and counterclaims with prejudice, with each party to bear its own costs except as otherwise provided in the settlement agreement.
• Confidentiality provisions prohibiting both parties from disclosing the terms and amount of the settlement to any third party, except as required by law, regulation, or legal process, or as necessary for legitimate internal business purposes (including CPS's reporting obligations to Pinnacle Ridge Capital Partners LP).
• No admission of liability by either party. The settlement agreement would provide that it is entered into solely for the purpose of resolving a disputed claim and does not constitute an admission of wrongdoing or liability by either party.
CPS is mindful of the litigation risks inherent in any case, including the risk that a jury might not award the full amount of damages sought, the time value of money, and collection risk. With respect to collection risk, CPS notes that Ridgeway reported annual revenue of approximately $94 million in fiscal year 2020, indicating that the amounts at issue in this case, while material, are within Ridgeway's ability to pay. CPS is prepared to negotiate in good faith around the structure and timing of payment, and expects that discussion of a reasonable payment schedule may be appropriate. However, CPS expects the substantial majority of any settlement to be paid promptly — within thirty days of execution of a settlement agreement — and will not agree to a protracted installment arrangement that effectively converts a settlement into a financing arrangement.
Finally, CPS wishes to make clear that it will not accept any resolution that:
• Fails to provide recovery of the substantial majority of CPS's documented overcharges of $1,847,632.19;
• Requires CPS to make any payment on Ridgeway's meritless counterclaim for $340,000 in lost profits; or
• Permits Ridgeway to characterize the settlement as a "goodwill adjustment," a "commercial accommodation," or any other formulation that minimizes or obscures the seriousness of Ridgeway's conduct.
VII. CONCLUSION
CPS respectfully submits that the record in this case — the forensic accounting analysis, the Whitford emails, the declarations of CPS's senior executives, and Ridgeway's failure to substantiate any of its defenses — points overwhelmingly in one direction. CPS summarizes its position as follows:
1. CPS has a virtually airtight breach-of-contract claim supported by an independent forensic analysis that has verified, invoice by invoice, overcharges totaling $1,847,632.19 across 9,843 invoices and four discrete categories of overbilling.
2. CPS has strong common-law fraud claims bolstered by newly discovered documentary evidence — the Whitford emails — that establish intentional, systematic overbilling and deliberate concealment of that overbilling from CPS.
3. CPS has a clear path to recovery of attorneys' fees under Texas Civil Practice & Remedies Code §38.001, which provides for the recovery of reasonable attorneys' fees by the prevailing party in a breach-of-contract action.
4. Ridgeway's defenses — oral modification, waiver, estoppel, and statute of limitations — have collapsed, particularly in light of the Whitford emails and the MTSA's express no-oral-modification clause. Ridgeway has no viable defense to CPS's breach-of-contract claim and no credible answer to CPS's fraud claim.
5. Ridgeway faces total trial exposure exceeding $6.2 million, including up to $3,695,264.38 in exemplary damages that a jury would be permitted to award under Texas law upon proof of fraud by clear and convincing evidence — a standard that the Whitford emails readily satisfy.
6. Ridgeway's counterclaim for $340,000 in lost profits is meritless. CPS terminated the MTSA for cause based on Ridgeway's material breach, and Ridgeway has produced no credible calculation of its alleged damages. This counterclaim should be withdrawn as part of any mediated resolution.
CPS urges Ridgeway and its counsel to approach this mediation realistically and to recognize that the evidentiary record — particularly the Whitford emails — has fundamentally altered the landscape of this case. CPS's opening demand of $2,097,632.19 is reasonable, is well below CPS's total trial exposure assessment, and provides Ridgeway with significant value in the form of a confidential resolution that avoids the reputational and financial risks of trial. CPS is prepared to negotiate in good faith and looks forward to a productive mediation session on November 18, 2021.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Yuki Nakamura Texas Bar No. 24098712
Francesca Morano Ohio Bar No. 0087431
Calderwood & Harkness LLP 1001 Fannin Street, Suite 4200 Houston, Texas 77002 Telephone: (713) 555-0140
Email: ynakamura@calderwoodharkness.com
Email: fmorano@calderwoodharkness.com
ATTORNEYS FOR PLAINTIFF CRESTLINE PACKAGING SOLUTIONS LLC
Case: | Crestline Packaging Solutions LLC v. Ridgeway Freight Services Inc., Cause No. 342-2021-04871-TX
Court: | 342nd Judicial District Court, Tarrant County, Texas
Mediator: | Judge (Ret.) Constance Farr
Mediation Date: | November 18, 2021
Mediation Venue: | Lone Star Dispute Resolution Center, 300 Throckmorton Street, Suite 1200, Fort Worth, TX 76102
Submitted by: | Calderwood & Harkness LLP, on behalf of Plaintiff Crestline Packaging Solutions LLC
Date of Submission: | November 12, 2021
C&H Matter No.: | 1006-00005
Category | Amount | Detail
Inflated Per-Mile Rates | $1,104,891.53 | 4,217 of 9,843 invoices (42.8%) applied per-mile rates 8–12% above the Exhibit B schedule for the applicable lane
Improper Fuel Surcharge Calculation | $387,412.66 | Ridgeway used a 7-day lagging DOE index instead of the same-week index required by Exhibit C; this methodology systematically inflated surcharges during periods of falling diesel prices, as the lagging index captured higher prices from the prior week
Unauthorized Accessorial Charges | $241,008.00 | Liftgate, detention, and re-delivery fees were billed without supporting delivery documentation (e.g., no signed detention logs, no liftgate service confirmation) and without contractual authorization under the MTSA
Duplicate Invoices | $114,320.00 | 83 invoices were submitted and paid twice; in each case, the duplicate was assigned a different invoice number but referenced the same shipment, BOL number, and delivery date
Total | $1,847,632.19 | Sum check: $1,104,891.53 + $387,412.66 + $241,008.00 + $114,320.00 = $1,847,632.19
Component | Amount / Range | Basis
Overcharges (principal) | $1,847,632.19 | Forensic invoice-by-invoice analysis by Meridian Forensic Accounting Group LLC
Contractual interest (1.5% per month, accruing from each overpayment date) | ~$330,000 through estimated trial date | MTSA §10.3; rolling calculation based on date of each overpayment
Attorneys' fees (recoverable by prevailing party in breach-of-contract action) | ~$350,000+ | Tex. Civ. Prac. & Rem. Code §38.001; estimate based on fees incurred through anticipated trial
Exemplary damages (if fraud proven by clear and convincing evidence) | Up to $3,695,264.38 | 2× economic damages per Tex. Civ. Prac. & Rem. Code §41.008(b)
Total potential trial exposure | Over $6,222,896 (estimated)
Component | Amount
Overcharges (principal) | $1,847,632.19
Toward contractual interest and attorneys' fees | $250,000.00
Total opening demand | $2,097,632.19