1012-00004 · Stonefield Logistics Group · Client Reporting & Governance

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CALDERWOOD & HARKNESS LLP Attorneys at Law

2200 Ross Avenue, Suite 3600 Dallas, Texas 75201

Telephone: (214) 555-9100 Facsimile: (214) 555-9101

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Margaret Hollis, General Counsel, Stonefield Logistics Group Inc. Nathan Okonkwo, Managing Director, Ridgepoint Capital Management LLC

FROM: Bernard Crawford, Responsible Partner, Calderwood & Harkness LLP

DATE: August 1, 2025

RE: Monthly Litigation Status Report — July 2025 Delano v. Stonefield Logistics Group Inc., Case No. 3:25-cv-01847-RBC U.S. District Court for the Northern District of Texas, Dallas Division

CC: Renata Vasquez, Billing Partner, Calderwood & Harkness LLP Aaron Turcotte, Chief People Officer, Stonefield Logistics Group Inc.

I. Executive Summary

This report covers litigation activity for the period July 1–31, 2025, in Delano v. Stonefield Logistics Group Inc., Case No. 3:25-cv-01847-RBC, pending before the Honorable Rebecca Chen of the United States District Court for the Northern District of Texas, Dallas Division, with the Honorable Timothy Farrell serving as assigned magistrate judge.

The most significant development during the reporting period was the filing, on July 14, 2025, of Plaintiff's Motion for Conditional Certification. The motion was filed by Plaintiff's counsel, Claudia Hartwell of Hartwell & Brashear PLLC. Through this motion, Plaintiff Marcus Delano seeks to certify a collective action under 29 U.S.C. § 216(b) encompassing approximately 1,200 current and former delivery drivers who were classified under Independent Contractor Operating Agreements ("ICOAs") across Stonefield Logistics Group Inc.'s ("SLG's") fourteen distribution hubs from April 30, 2022, to the present.

The defense team at Calderwood & Harkness is actively preparing a comprehensive opposition brief, which is due on August 13, 2025. Plaintiff's reply brief is due August 27, 2025. The opposition will be supported by four declarations — from SLG operations and driver relations personnel, a hub manager, and our retained expert — that collectively demonstrate material differences among the putative collective members across SLG's geographically dispersed hub network.

Our expert engagement with Dr. Priya Ramanathan of Corbin Risk Advisors LLC remains on track. Dr. Ramanathan's final expert declaration for the conditional certification opposition was delivered on schedule on July 25, 2025, and is currently undergoing legal review. Her analysis provides substantial statistical support for the defense's position that the proposed collective members are not similarly situated.

Discovery activity continued during the reporting period. Defendant served its Objections and Responses to Plaintiff's First Set of Interrogatories on July 21, 2025. The first-round document production is ongoing, with privilege review being conducted on a rolling basis.

From a financial perspective, cumulative legal billing through July 31, 2025, stands at $142,350 against the Phase 1 legal fees budget of $385,000, with an overall Phase 1 cap (including expert preliminary analysis) of $475,000. The cumulative Phase 1 spend (legal fees plus expert preliminary analysis fees) is $210,850, leaving $264,150 remaining under the Phase 1 cap.

The overall risk assessment and damages exposure remain as previously reported. The total potential exposure, assuming full collective certification and a plaintiff verdict on the merits (including liquidated damages), is approximately $73,958,409.00. This figure does not include potential attorneys' fees or defense costs. As discussed in greater detail below, strategic options — including the timing of a motion to compel individual arbitration for approximately 640 drivers who signed ICOA v3.0 (which contains an arbitration clause with a class/collective action waiver) — remain under active consideration, and we request client guidance on preferred timing by August 15, 2025.

II. Case Status and Procedural Update

A. Motion for Conditional Certification

On July 14, 2025, Plaintiff Marcus Delano, through his counsel Claudia Hartwell of Hartwell & Brashear PLLC, filed a Motion for Conditional Certification pursuant to 29 U.S.C. § 216(b). This motion represents the most consequential procedural development in the case to date and will likely shape the trajectory of this litigation through and beyond the discovery phase.

Plaintiff seeks conditional certification of a collective defined as all individuals who performed delivery driving services for Stonefield Logistics Group Inc. pursuant to an Independent Contractor Operating Agreement at any of SLG's fourteen distribution hubs from April 30, 2022, through the date of final judgment. Plaintiff estimates the collective size at approximately 1,200 current and former drivers. Based on SLG's internal records — which the defense team has reviewed in detail with SLG's operations team — there are 1,187 unique drivers who executed ICOAs during the relevant period. This figure is consistent with Plaintiff's estimate, though it reflects the precise headcount derived from SLG's centralized driver database.

In support of the motion, Plaintiff submitted declarations from Marcus Delano and several other current and former drivers. These declarations assert that SLG maintained common policies and practices across its distribution hub network that, Plaintiff contends, establish sufficient commonality to warrant conditional certification. Specifically, the declarants assert that SLG imposed the following requirements on drivers classified as independent contractors:

• Mandatory SLG-branded uniforms during all delivery operations;

• GPS tracking of driver vehicles through SLG's proprietary telematics system;

• Required delivery windows of 7:00 AM to 8:00 PM, Monday through Saturday;

• RouteSync dispatch system assignments dictating delivery routes and sequences;

• A minimum delivery acceptance rate of 85%, below which drivers faced potential termination of their ICOA; and

• A near-total prohibition on subcontracting delivery services to third parties.

Plaintiff further alleges that drivers classified under ICOAs regularly worked between 55 and 65 hours per week but were compensated exclusively on a per-delivery basis, with pay ranging from $14.50 to $38.00 per delivery depending on delivery type, distance, and package characteristics. Plaintiff contends that this per-delivery compensation structure resulted in the systematic denial of overtime compensation in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 207(a).

Pursuant to the briefing schedule established by Judge Chen, Defendant's Response in Opposition to the Motion for Conditional Certification is due August 13, 2025, and Plaintiff's Reply Brief is due August 27, 2025. We anticipate that Judge Chen will take the matter under advisement following the completion of briefing, though the Court may schedule oral argument at its discretion.

B. Key Deadlines

The following deadlines govern the near-term and medium-term procedural trajectory of this matter:

We note that the opt-in deadline will be established by court order only if conditional certification is granted. If the Court grants conditional certification, it will typically also approve a form of notice to be sent to putative collective members, along with a defined opt-in period (commonly 60 to 90 days in the Northern District of Texas). The defense team will be prepared to address the form and content of any proposed notice at the appropriate time.

C. Scheduling Order

The Scheduling Order entered by Judge Chen on June 20, 2025, remains in full force and effect. No modifications to the Scheduling Order have been sought by either party, and none are anticipated at this time. The current schedule provides adequate time for the defense team to complete its opposition work, conduct merits discovery, and prepare for dispositive motions and trial. Should circumstances change — for example, if the scope of discovery expands materially following a conditional certification ruling — we will evaluate whether a modification request is warranted and advise the client accordingly.

III. Conditional Certification Opposition Preparation

A. Brief Drafting

The opposition brief is being drafted by lead associate James Underwood and working associate Devon Archer, under the direct supervision of Bernard Crawford. Drafting commenced promptly following the filing of Plaintiff's motion on July 14, 2025, and is proceeding on schedule for the August 13, 2025 filing deadline.

The defense's opposition will advance four core arguments, each of which is supported by factual evidence drawn from SLG's records and the expert analysis prepared by Dr. Ramanathan:

First, Plaintiff fails to demonstrate that the putative collective members are "similarly situated" as required under 29 U.S.C. § 216(b). Despite Plaintiff's assertion of uniform policies, the evidence demonstrates material variations in operations, working conditions, and levels of driver autonomy across SLG's fourteen distribution hubs, which span four states. These variations are not merely trivial or incidental; they are structural and reflect the decentralized nature of SLG's hub operations. Moreover, the three distinct versions of the ICOA — version 1.0 (original, 2018), version 2.0 (revised, August 2020), and version 3.0 (revised, January 2023) — contain materially different terms governing the relationship between SLG and its drivers, including differences in subcontracting provisions, termination procedures, exclusivity requirements, and, critically, the presence or absence of an arbitration clause.

Second, Plaintiff's declarations are conclusory and insufficient to carry even the modest burden applicable at the conditional certification stage. The declarations submitted by Plaintiff's counsel consist primarily of generalized statements about SLG's alleged policies without addressing the significant hub-by-hub differences in operations, delivery types (e.g., standard parcel delivery versus white-glove specialty delivery), local management practices, and the degree of discretion exercised by individual hub managers in administering driver relationships. Courts in the Fifth Circuit have declined conditional certification where, as here, the plaintiff's evidence fails to account for meaningful operational differences across multiple locations. See, e.g., Swales v. KLLM Transp. Servs., LLC, 985 F.3d 430 (5th Cir. 2021) (emphasizing a more rigorous inquiry into whether putative collective members are similarly situated).

Third, the proposed collective is overbroad. Approximately 640 of the 1,187 drivers identified during the relevant period signed ICOA version 3.0 (January 2023), which contains an arbitration clause with a class and collective action waiver. This clause is enforceable under the Federal Arbitration Act ("FAA") and the Supreme Court's decision in Granite Harbor Systems. v. Lewis, 584 U.S. 497 (2018). The inclusion of these 640 drivers in the proposed collective is inappropriate, as they have individually agreed to resolve disputes with SLG through individual arbitration and have waived their right to participate in collective proceedings. Regardless of whether the defense files a separate motion to compel arbitration at this time, the existence of an enforceable arbitration agreement applicable to more than half of the proposed collective undercuts the propriety of the broad collective Plaintiff seeks.

Fourth, statistical and economic analysis prepared by Dr. Priya Ramanathan of Corbin Risk Advisors LLC demonstrates significant variance in the key factual predicates underlying Plaintiff's misclassification claims. Specifically, Dr. Ramanathan's analysis shows substantial variation in hours worked, effective pay rates, route acceptance rates, route deviation frequency, and multi-platform engagement across hubs and among individual drivers. These variances confirm that the putative collective members are not similarly situated and that individualized inquiries — not collective adjudication — would be necessary to resolve the claims of each driver.

The brief will be supported by a comprehensive statement of facts drawing on SLG's operational records, declarations from company witnesses and the defense expert, and relevant case law from the Fifth Circuit, the Northern District of Texas, and other jurisdictions addressing conditional certification in the independent contractor misclassification context.

B. Supporting Declarations

Four declarations are being prepared for filing with the opposition brief. Each declaration addresses a distinct aspect of the defense's factual showing:

1. Trevor Sandoval, Vice President of Operations, Stonefield Logistics Group Inc. Mr. Sandoval's declaration will address the operational differences across SLG's fourteen distribution hubs, including variations in delivery volume, delivery type (standard parcel, oversized freight, white-glove specialty), driver autonomy in route selection and scheduling, hub-specific protocols for load assignment and dispatch, and the degree to which individual hub managers exercise discretion in administering driver relationships. Mr. Sandoval will also address the evolution of SLG's operational model over time and the rationale for the variations in ICOA versions.

2. Karen Lund, Director of Driver Relations, Stonefield Logistics Group Inc. Ms. Lund's declaration will address the differences among the three ICOA versions, including the addition of subcontracting permissions in version 2.0, the introduction of the arbitration clause and collective action waiver in version 3.0, and the range of driver independence reflected in SLG's centralized records. Ms. Lund will also testify regarding the process by which drivers were onboarded and the extent to which drivers exercised autonomy in determining their work schedules, delivery volumes, and engagement with competing delivery platforms.

3. Dennis Faulkner, Hub Manager, Fort Worth (HUB-01), Stonefield Logistics Group Inc. Mr. Faulkner's declaration will provide hub-specific evidence regarding operations at the Fort Worth distribution hub, where the named plaintiff, Marcus Delano, was based. Mr. Faulkner will address Delano's performance history and work patterns, the flexibility available to drivers at HUB-01 regarding scheduling and route selection, and the ways in which HUB-01's operations differ from those of other hubs in the SLG network. This declaration is particularly important because it will establish that even at the hub most directly relevant to the named plaintiff's claims, drivers exercised meaningful autonomy inconsistent with employee status.

4. Dr. Priya Ramanathan, Corbin Risk Advisors LLC. Dr. Ramanathan's declaration will present the results of her statistical and economic analysis of driver data across all fourteen SLG hubs. The declaration will address variance in weekly hours worked, per-delivery and effective hourly compensation, route acceptance rates, route deviation frequency, and multi-platform engagement. Dr. Ramanathan's analysis draws on RouteSync dispatch logs, GPS telematics data, pay records, and ICOA execution records covering the full relevant period.

All four declarants have been interviewed by the defense team. Draft declarations are currently in review with target finalization by August 8, 2025, to allow sufficient time for incorporation into the opposition brief prior to the August 13, 2025, filing deadline. We are coordinating closely with SLG's in-house legal team and the declarants to ensure accuracy and completeness.

C. Hub-Level Data Compilation

In connection with the opposition brief and the supporting declarations, the defense team is working with SLG's operations team — principally Trevor Sandoval (VP of Operations) and Karen Lund (Director of Driver Relations) — to compile comprehensive hub-by-hub data. This data compilation covers driver counts, delivery volumes, ICOA version distribution, subcontracting approvals, and operational protocols for each of SLG's fourteen distribution hubs.

SLG's fourteen hubs are located across four states: Texas, Oklahoma, Louisiana, and Arkansas. Driver counts during the relevant period (April 30, 2022, to the present) range from a low of 29 drivers at HUB-13 (Lubbock, Texas) to a high of 195 drivers at HUB-03 (Houston, Texas). This significant variation in scale alone illustrates the diversity of operations across the hub network. Additional data regarding delivery types, seasonal volume fluctuations, local market conditions, and hub-specific management practices further underscore the material differences that will be central to our opposition.

The data compilation is substantially complete and has been provided to Dr. Ramanathan for integration into her expert analysis. We anticipate that the hub-level data will also be useful in subsequent phases of the litigation, including merits discovery and any potential motion for decertification.

IV. Expert Engagement — Corbin Risk Advisors LLC

Calderwood & Harkness executed an expert retention agreement with Corbin Risk Advisors LLC on May 8, 2025. Dr. Priya Ramanathan, the firm's principal, was engaged as the defense's expert in statistical and economic analysis. Dr. Ramanathan's billing rate is $550 per hour, and her associates bill at $375 per hour. These rates are consistent with market rates for experts of comparable qualifications in FLSA misclassification litigation.

Dr. Ramanathan has received and is analyzing a comprehensive data set drawn from SLG's operational records, including:

• RouteSync dispatch logs for all fourteen hubs covering the relevant period;

• GPS telematics data reflecting driver vehicle locations, route adherence, and deviation patterns;

• Pay records (per-delivery compensation, delivery type codes, and aggregate payment data) for all 1,187 drivers during the relevant period; and

• ICOA execution records identifying the version executed by each driver, the execution date, and the hub affiliation.

Dr. Ramanathan delivered her preliminary analysis on June 20, 2025, as scheduled. The preliminary findings are favorable to the defense position and provide a strong evidentiary foundation for the argument that the putative collective members are not similarly situated. The key preliminary findings are as follows:

• Weekly hours worked: Statistically significant variance across hubs, with average weekly hours ranging from approximately 42 hours per week (at certain smaller, lower-volume hubs) to approximately 61 hours per week (at larger, higher-volume hubs during peak seasonal periods). The variance is driven by hub size, delivery type mix, seasonal demand fluctuations, and individual driver choices regarding workload.

• Delivery acceptance rates: Meaningful spread across the driver population. While some drivers consistently operated at or near the 85% minimum acceptance rate established by SLG's policies, others maintained acceptance rates of 95% or higher. This variance reflects differing levels of driver engagement and selectivity, which in turn bears on the degree of entrepreneurial opportunity available to each driver.

• Multi-platform engagement: A subset of drivers performed delivery services for competing delivery platforms (including at least two nationally recognized logistics companies) during periods of active engagement with SLG. This multi-platform engagement is relevant to the economic realities test applied in FLSA independent contractor analyses and demonstrates that certain drivers exercised their ICOA-permitted right to perform services for other entities.

• Route deviation frequency: Significant variation by hub and by individual driver. Some drivers adhered closely to RouteSync-suggested routes, while others deviated frequently based on personal knowledge of local traffic patterns, customer preferences, or operational efficiency considerations. This variance supports the defense's position that drivers exercised meaningful discretion in how they performed their work.

The final expert declaration for the conditional certification opposition was targeted for completion by July 25, 2025. Dr. Ramanathan delivered the declaration on schedule, and it is currently under legal review by James Underwood and Bernard Crawford. We anticipate incorporating minor revisions and finalizing the declaration by August 8, 2025, consistent with the broader declaration finalization timeline.

Expert fees incurred to date total approximately $68,500, which falls within the $90,000 Phase 1 preliminary analysis allocation. The full conditional certification phase expert budget is $175,000, of which the $90,000 Phase 1 preliminary component is a subset. The remaining $85,000 is allocated for the expert's final declaration, any supplemental analysis requested by the Court or necessitated by Plaintiff's reply brief, and coordination with the legal team regarding potential deposition of the expert. We do not anticipate exceeding the Phase 1 preliminary analysis allocation and will monitor expert fees closely throughout the conditional certification phase.

V. Discovery Activity

A. Defendant's discovery Responses

On July 21, 2025, Defendant served its Objections and Responses to Plaintiff's First Set of Interrogatories. The responses addressed twenty-five interrogatories propounded by Plaintiff's counsel, covering a broad range of topics relevant to the misclassification claims and the conditional certification motion. Key topics addressed in the interrogatories and responses include:

• SLG's driver population during the relevant period (confirmed as 1,187 unique drivers);

• SLG's classification practices and the basis for classifying drivers as independent contractors rather than employees;

• The three ICOA versions (v1.0, v2.0, and v3.0), including the dates of adoption, the key terms of each version, and the number of drivers who executed each version;

• Control mechanisms and operational requirements, including the RouteSync dispatch system, GPS tracking protocols, delivery windows, uniform requirements, and the 85% minimum acceptance rate;

• Pay data, including per-delivery compensation ranges, payment frequency, and the absence of overtime compensation;

• Subcontracting policy and practice, including the differences across ICOA versions and the extent to which subcontracting was actually utilized by drivers; and

• Hub-level operational differences, including delivery type mix, seasonal volume patterns, and local management practices.

The defense asserted objections to certain interrogatories seeking information protected by the attorney-client privilege, particularly communications between SLG and its prior counsel, Pennfield & Daye LLP, regarding the original independent contractor classification analysis conducted in 2018 and subsequent updates to that analysis through 2024. These communications, which informed the drafting and revision of the ICOA, constitute privileged attorney-client communications and are protected from disclosure. The basis for these objections is detailed in the Phase 1 privilege log discussed below.

B. Document Production

The first-round document production is ongoing. The defense team is collecting, reviewing, and producing documents from SLG's central records repository and hub-level files. The categories of documents currently under production include:

• Template ICOAs for all three versions (v1.0, v2.0, and v3.0);

• Sample executed ICOAs reflecting the signature pages and individual terms for representative drivers across multiple hubs;

• RouteSync system documentation, including system specifications, dispatch algorithms, route assignment protocols, and user manuals;

• GPS telematics protocols, including data collection parameters, reporting requirements, and system administration procedures;

• Driver training materials and onboarding documentation;

• Performance review records, including acceptance rate tracking, customer satisfaction metrics, and any corrective action records; and

• Pay data, including per-delivery compensation schedules, payment processing records, and aggregate payroll reports.

Privilege review of the documents being produced is being conducted by Devon Archer (associate) and Lisa Cheng (paralegal), with oversight from James Underwood. The review is proceeding on a rolling basis, and we are prioritizing documents most directly relevant to the conditional certification opposition. We anticipate that the first-round production will be substantially complete by mid-August 2025.

C. Plaintiff's discovery Responses

Defendant's First Set of Interrogatories and First Set of Requests for Production of Documents were served on Plaintiff Marcus Delano on June 23, 2025. Based on the applicable response deadline under the Federal Rules of Civil Procedure, Plaintiff's responses were due on or about July 23, 2025. As of the date of this report, Plaintiff's responses have not yet been received. We will follow up promptly with Hartwell & Brashear PLLC to inquire regarding the status of Plaintiff's responses and, if necessary, meet and confer regarding any delay. If Plaintiff fails to serve timely responses following our follow-up, we will evaluate whether a motion to compel is appropriate.

D. Privilege Log

The Phase 1 privilege log was prepared on July 1, 2025, and catalogs all documents withheld from production on the basis of attorney-client privilege and/or attorney work product protection. The documents withheld are primarily communications between SLG and its prior outside counsel, Pennfield & Daye LLP, regarding the independent contractor classification analysis originally conducted in 2018 and subsequently updated in connection with the adoption of ICOA versions 2.0 and 3.0. These communications include legal memoranda, email correspondence, and draft agreements reflecting Pennfield & Daye's legal analysis and advice regarding the propriety of SLG's classification of its drivers as independent contractors under the FLSA, state wage and hour laws, and tax regulations.

The privilege log has been reviewed by James Underwood and Bernard Crawford to ensure completeness and accuracy. We anticipate that Plaintiff's counsel may challenge one or more of the privilege designations, and we are prepared to defend the privilege claims if necessary through briefing or in camera review before Magistrate Judge Farrell.

VI. Arbitration Strategy Update

As previously reported, Calderwood & Harkness completed an internal analysis of the enforceability of the arbitration clause and collective action waiver contained in ICOA version 3.0 on May 15, 2025. Our conclusion remains that the clause is likely enforceable under the Federal Arbitration Act and the Supreme Court's decision in Granite Harbor Systems. v. Lewis, 584 U.S. 497 (2018), which held that arbitration agreements containing class and collective action waivers must be enforced as written under the FAA.

However, this conclusion is subject to two potential challenges that Plaintiff may raise:

First, Plaintiff may argue that the FAA's Section 1 exemption for "contracts of employment of . . . workers engaged in foreign or interstate commerce" applies to SLG's drivers, thereby rendering the FAA — and the Ridgeway Services Inc. framework — inapplicable. The scope of the Section 1 exemption following the Supreme Court's decision in New Prime Inc. v. Oliveira, 586 U.S. 105 (2019), extends to independent contractor agreements (not only traditional employment contracts), and courts have applied the exemption to delivery drivers in certain circumstances. Whether SLG's drivers fall within the exemption will depend on the nature and extent of their involvement in interstate commerce, which is a fact-intensive inquiry. Our preliminary assessment is that a meaningful subset of SLG's drivers may be engaged in interstate commerce given SLG's multi-state hub network and the nature of certain deliveries, but this issue requires further factual development.

Second, Plaintiff may challenge the arbitration clause on unconscionability grounds under Texas law, arguing that the clause was imposed on drivers on a take-it-or-leave-it basis without meaningful opportunity to negotiate and that its terms are substantively unconscionable. While Texas courts generally enforce arbitration agreements and apply a high bar for unconscionability challenges, this argument cannot be dismissed entirely.

On June 10, 2025, Calderwood & Harkness delivered a Strategic Timing Memorandum analyzing the relative advantages and disadvantages of filing the motion to compel individual arbitration at three potential junctures: (1) before the conditional certification ruling, (2) concurrently with the conditional certification briefing, or (3) after the conditional certification ruling. Each approach carries distinct strategic implications, which were detailed in the memorandum.

A draft Motion to Compel Individual Arbitration and Dismiss Collective Claims of ICOA v3.0 Signatories has been prepared and is ready for filing. However, the motion is currently being held pending a strategic decision on timing.

If the arbitration clause is enforced for the approximately 640 drivers who signed ICOA v3.0, the proposed collective would be reduced from 1,187 drivers to approximately 547 drivers — a reduction of more than 50%. This reduction would significantly diminish Plaintiff's damages exposure and the scope of any collective proceeding.

It is important to note that the named plaintiff, Marcus Delano, signed the original 2018 ICOA (version 1.0), which does not contain an arbitration clause. Accordingly, a motion to compel arbitration would not apply to Delano personally and would not result in the dismissal of his individual claims.

Recommendation: We continue to recommend deferring the filing of the motion to compel arbitration until after the Court rules on the conditional certification motion. Filing the arbitration motion before or concurrently with the conditional certification opposition carries a risk that the Court may view the motion as a delay tactic, which could adversely affect judicial receptivity to the defense's conditional certification arguments. Instead, we recommend raising the arbitration issue in the opposition brief as a basis for reducing the scope of the proposed collective — arguing that the Court should exclude ICOA v3.0 signatories from any conditionally certified collective — while preserving the standalone motion to compel for filing at an appropriate time following the conditional certification ruling.

We request the client's input on timing preference by August 15, 2025, particularly in light of Ridgepoint Capital Management's potential exit or recapitalization timeline in late 2025 or early 2026. The timing of the arbitration motion may have implications for the overall litigation trajectory and settlement posture that are relevant to Ridgepoint's investment considerations.

VII. Insurance Coverage Update

SLG maintains an Employment Practices Liability Insurance ("EPLI") policy through Broadleaf Insurance Company. The relevant policy details are as follows:

• Carrier: Broadleaf Insurance Company

• Policy Number: BIC-EPL-2024-07831

• Policy Period: January 1, 2025 – January 1, 2026

• Self-Insured Retention ("SIR"): $2,000,000

• Aggregate Policy Limit: $10,000,000

Calderwood & Harkness submitted a formal claim notice to Broadleaf on behalf of SLG on May 5, 2025. On May 19, 2025, Broadleaf issued a reservation of rights letter, in which it acknowledged receipt of the claim but reserved its right to deny coverage on two grounds:

(a) Whether the misclassification claims asserted in Delano v. Stonefield Logistics Group Inc. constitute covered "Employment Practices Wrongful Acts" under the policy. Broadleaf's reservation reflects uncertainty as to whether claims alleging that workers were misclassified as independent contractors (rather than mistreated as employees) fall within the policy's insuring agreement, which is designed to cover traditional employment practices claims such as discrimination, harassment, and wrongful termination.

(b) A potential late-notice defense with respect to pre-policy-period conduct. Because Plaintiff's claims relate back to April 30, 2022, and the current policy period commenced on January 1, 2025, Broadleaf has reserved the right to argue that SLG failed to provide timely notice of circumstances that could give rise to a claim under prior policy periods.

No further communications were received from Broadleaf during the month of July. We will continue to monitor the coverage situation and maintain an active dialogue with the carrier regarding its coverage position. If Broadleaf moves toward a formal coverage denial, we will evaluate SLG's options, including a potential coverage action.

Depending on the outcome of the coverage determination, SLG's financial exposure could be significant. The $2,000,000 SIR represents costs that SLG must bear before any coverage applies, and the $10,000,000 aggregate policy limit — even if fully available — would cover only a fraction of the total potential exposure. Given that the total potential damages exposure is approximately $74 million (under a full collective certification and plaintiff verdict scenario), the EPLI coverage provides only partial protection even if Broadleaf ultimately confirms coverage.

We recommend that SLG and Ridgepoint consider the insurance coverage uncertainty as a factor in evaluating the overall risk profile of this litigation and the potential benefits of early resolution.

VIII. Damages Exposure Summary

The damages exposure analysis set forth below is unchanged from the prior monthly report. We will update this analysis if material developments — such as a conditional certification ruling, a change in the scope of the collective, or new information regarding Plaintiff's damages theory — warrant revision.

Plaintiff's Damages Theory:

Plaintiff contends that SLG's drivers were employees entitled to overtime compensation under the FLSA. Plaintiff's theory posits a per-driver average weekly unpaid overtime of $193.50, calculated as follows:

• Average weekly overtime hours: 18 hours

• FLSA overtime rate: $32.25 per hour (1.5 × $21.50 effective hourly rate)

• Per-week unpaid overtime: 18 hours × ($32.25 − $21.50) = 18 × $10.75 = $193.50

Relevant Period: Approximately 161 weeks (April 30, 2022 – August 2025).

Per-Driver Estimated Damages: $193.50 × 161 weeks = $31,153.50.

The following scenarios illustrate the range of potential exposure:

Additional Exposure Considerations:

• Plaintiff's Attorneys' Fees: If the case were to settle, Plaintiff's counsel would likely seek fees of approximately 33.3% of the recovery. Under Scenario A, this could amount to up to approximately $24.6 million. If the case proceeds to judgment and Plaintiff prevails, Plaintiff would be entitled to reasonable attorneys' fees under 29 U.S.C. § 216(b), which would be determined by the Court based on lodestar and other applicable factors.

• Defense Costs: The exposure figures above do not include SLG's own defense costs, which are estimated at $2.1–$2.8 million in legal fees through trial, plus approximately $450,000 in expert fees. Defense costs incurred within the SIR reduce the SIR but do not reduce the policy limit.

These figures represent the defense team's estimate of the maximum realistic exposure under each scenario. Actual damages, if any, would depend on numerous factors, including the Court's rulings on conditional certification and any motion to compel arbitration, the opt-in rate, the outcome of merits discovery, and the ultimate determination of whether SLG's drivers are properly classified as employees or independent contractors under the FLSA's economic realities test.

IX. Financial Summary — Billing and Budget

A. Fee Summary Through July 31, 2025

The following table summarizes cumulative legal fees billed through the end of the reporting period:

Note: Rounding adjustments in the billing system result in a reported cumulative total of $142,350 (per billing system reconciliation). The $25 variance reflects standard rounding conventions applied by the firm's billing platform and does not represent an error or discrepancy.

Expert Fees Incurred (Corbin Risk Advisors LLC): Approximately $68,500 incurred to date. Expert fees are billed separately from legal fees and are allocated against the $90,000 Phase 1 expert preliminary analysis budget.

B. Phase 1 Budget Tracking

The $332,650 figure referenced in the Executive Summary reflects cumulative legal spend of $142,350 against the combined Phase 1 cap of $475,000. For more granular tracking purposes, the table above separates legal fees and expert fees, showing that the defense team has incurred approximately 37% of the Phase 1 legal fees budget and approximately 76% of the Phase 1 expert preliminary analysis budget.

Expert fees for the full conditional certification phase are budgeted at $175,000 (Corbin Risk Advisors LLC). The $90,000 Phase 1 preliminary component falls within the Phase 1 cap. The remaining $85,000 — allocated for Dr. Ramanathan's final declaration, any supplemental analysis, and potential deposition preparation — falls within the broader expert budget for later phases of the litigation and is not subject to the Phase 1 cap.

Projected Total Costs Through Trial (If No Settlement):

• Estimated total legal fees through trial: $2.1–$2.8 million

• Estimated total expert fees through trial: $450,000

• Combined estimated total through trial: $2.55–$3.25 million

These projections assume that the case proceeds through merits discovery, dispositive motions, and trial. The actual total will depend on numerous variables, including the outcome of the conditional certification motion, the scope of the conditionally certified collective (if any), the volume and complexity of merits discovery, and whether the case resolves through settlement or mediation prior to trial.

C. Billing Narrative

Billing during July 2025 was driven primarily by the following activities:

• Drafting of the opposition brief in response to Plaintiff's Motion for Conditional Certification;

• Preparation of the four supporting declarations (Sandoval, Lund, Faulkner, and Dr. Ramanathan);

• Coordination with Dr. Ramanathan and the Corbin Risk Advisors team regarding finalization of the expert declaration;

• Preparation and service of Defendant's Objections and Responses to Plaintiff's First Set of Interrogatories;

• Ongoing document collection, review, and privilege analysis in connection with the first-round document production; and

• General case management, client communications, and strategic planning.

We anticipate significant billing in August 2025, driven by the finalization and filing of the opposition brief and supporting declarations on or before August 13, 2025, as well as continued document production and privilege review work. We will monitor billing closely against the Phase 1 budget and will provide advance notice if we anticipate that spending may approach or exceed the budget cap.

X. Key Action Items and Next Steps

The following action items represent the defense team's priorities for the near-term period:

1. August 8, 2025 — Finalize Declarations. Finalize all four supporting declarations (Trevor Sandoval, Karen Lund, Dennis Faulkner, and Dr. Priya Ramanathan) for filing with the opposition brief. This includes completing legal review, incorporating any final revisions from the declarants, and obtaining executed signature pages.

2. August 13, 2025 — File Opposition Brief. File Defendant's Response in Opposition to Plaintiff's Motion for Conditional Certification, together with all supporting declarations and exhibits, in the United States District Court for the Northern District of Texas.

3. August 27, 2025 — Review Plaintiff's Reply. Review and analyze Plaintiff's reply brief upon filing. Assess whether a sur-reply is warranted and, if so, seek leave of Court to file.

4. Ongoing — Follow Up on Plaintiff's discovery Responses. Follow up with Hartwell & Brashear PLLC regarding Plaintiff's overdue discovery responses to Defendant's First Set of Interrogatories and First Set of Requests for Production of Documents (served June 23, 2025). If responses are not forthcoming after meet-and-confer efforts, evaluate the appropriateness of a motion to compel.

5. Ongoing — Continue Document Production and Privilege Review. Continue the first-round document production on a rolling basis, with priority given to documents most directly relevant to the conditional certification briefing and merits discovery.

6. Strategic Decision Needed — Arbitration Motion Timing. The defense team requests client guidance by August 15, 2025, regarding the timing of the draft Motion to Compel Individual Arbitration and Dismiss Collective Claims of ICOA v3.0 Signatories. As discussed in Section VI above, our recommendation is to defer filing until after the conditional certification ruling, but we seek the client's confirmation or alternative direction, particularly in light of Ridgepoint's potential exit/recapitalization timeline.

7. Settlement/Mediation Posture. The Board Update Memorandum was delivered on July 25, 2025. A draft mediation position statement was prepared on July 20, 2025, at Ridgepoint's request. No mediation is currently scheduled. We recommend revisiting the settlement posture after the Court rules on the conditional certification motion, as that ruling will significantly affect the litigation dynamics and the parties' relative leverage in any settlement discussions.

8. Insurance — Continue Monitoring. Continue monitoring Broadleaf Insurance Company's coverage position. Consider preparing a supplemental submission to Broadleaf addressing the two grounds identified in the reservation of rights letter to advocate for coverage confirmation. We will coordinate with SLG's in-house legal team regarding the timing and content of any such submission.

XI. Risk Assessment

Overall Risk Level: Moderate-High

The defense team's assessment of the overall risk level in this matter remains at Moderate-High, consistent with prior reports. This assessment reflects a balanced evaluation of the strengths and vulnerabilities of the defense position, the procedural posture of the case, and external factors affecting the litigation trajectory.

Conditional Certification Standard. Conditional certification under 29 U.S.C. § 216(b) is decided under a standard that, while more rigorous in the Fifth Circuit following Swales v. KLLM Transport Services, LLC, 985 F.3d 430 (5th Cir. 2021), still generally favors plaintiffs at this early stage. Plaintiff has a reasonable — though not certain — likelihood of obtaining conditional certification of some form of collective. We believe the defense has strong arguments for denying certification as to ICOA v3.0 signatories and for narrowing the scope of any certified collective, but we cannot predict with certainty how Judge Chen will rule.

Historical Opt-In Rates. If conditional certification is granted, the opt-in rate will be a critical determinant of the case's practical scope and settlement value. In comparable logistics and delivery driver misclassification cases in the Northern District of Texas, opt-in rates have historically ranged from 15% to 35%. The actual opt-in rate will depend on the form and content of the notice, the length of the opt-in period, Plaintiff's counsel's outreach efforts, and drivers' individual assessments of the costs and benefits of participation.

Strongest Defense Arguments:

1. Arbitration clause in ICOA v3.0. Approximately 640 drivers (54% of the putative collective) signed ICOA v3.0, which contains an enforceable arbitration clause with a class and collective action waiver. Enforcement of this clause would reduce the collective by more than half and significantly diminish Plaintiff's damages exposure and litigation leverage.

2. Material hub-by-hub operational differences. SLG's fourteen distribution hubs operate with meaningful differences in delivery types, volumes, management practices, and levels of driver autonomy. These differences undermine Plaintiff's claim that all putative collective members are "similarly situated" and support an argument that individualized inquiries — rather than collective adjudication — would be necessary to resolve each driver's claims.

3. Evidence of driver entrepreneurial opportunity. The defense has evidence that a subset of drivers engaged with competing delivery platforms during their engagement with SLG, owned their own delivery vehicles, had the ability to set their own schedules (within the framework of available delivery windows), and exercised discretion over route selection and delivery sequencing. These factors support independent contractor classification under the FLSA's economic realities test.

Key Risk Factors:

1. Significant operational controls. SLG's exercise of operational controls over its drivers — including mandatory uniforms, GPS tracking, required delivery windows (7:00 AM–8:00 PM, Monday through Saturday), RouteSync dispatch assignments, the 85% minimum acceptance rate, and the near-total prohibition on subcontracting — weighs against independent contractor classification and provides Plaintiff with strong factual support for the claim that SLG treated its drivers as employees in all but name.

2. Per-delivery pay without negotiation ability. The per-delivery compensation structure ($14.50–$38.00 per delivery), set unilaterally by SLG without any ability for individual drivers to negotiate rates, weakens the defense's entrepreneurial opportunity argument and supports Plaintiff's contention that the economic relationship between SLG and its drivers was more akin to employment than independent contracting.

3. Insurance coverage uncertainty. Broadleaf's reservation of rights creates meaningful uncertainty regarding the availability of EPLI coverage for this matter. If coverage is denied, SLG would bear the full cost of any judgment or settlement, which could be substantial.

4. Ridgepoint exit/recapitalization timeline. Ridgepoint Capital Management's potential exit or recapitalization in late 2025 or early 2026 creates additional urgency to manage the litigation trajectory proactively. An adverse conditional certification ruling, a large-scale opt-in, or an unresolved insurance coverage dispute could complicate transaction diligence and valuation. Early resolution options — including mediation and structured settlement discussions — should be actively considered in light of this timeline.

We will continue to monitor these risk factors and will update our assessment as material developments occur.

XII. Confidentiality Notice

This memorandum constitutes a privileged and confidential attorney-client communication and attorney work product prepared by Calderwood & Harkness LLP in anticipation of litigation and for the purpose of providing legal advice to Stonefield Logistics Group Inc. and Ridgepoint Capital Management LLC in connection with Delano v. Stonefield Logistics Group Inc., Case No. 3:25-cv-01847-RBC.

Distribution of this memorandum is strictly limited to the addressees and copied parties identified on the first page. This memorandum, and the information contained herein, is not to be shared with, disclosed to, or discussed with any third party without the prior written approval of Calderwood & Harkness LLP. Unauthorized disclosure of this memorandum or its contents may result in a waiver of applicable privileges and protections.

Any questions regarding this report, the matters discussed herein, or the Delano litigation generally should be directed to:

Bernard Crawford Responsible Partner Calderwood & Harkness LLP 2200 Ross Avenue, Suite 3600 Dallas, Texas 75201 Telephone: (214) 555-9100

Email: bcrawford@calderwoodharkness.com