1012-00005 · Stonefield Logistics Group · Case Assessment & Strategy

memo-exclusivity-analysis-schedule-c.docx DOCUMENT Litigation

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

To: Patrick Gallagher, Lead Associate, Litigation (General), Calderwood & Harkness LLP

From: Simone Laroche, Working Associate, Litigation (General), Calderwood & Harkness LLP

Date: September 30, 2022

Re: Exclusivity Analysis — Schedule C Lanes; Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)

Matter No.: 1012-00005

Client: Stonefield Logistics Group Inc.

I. Purpose and Summary of Conclusions

This memorandum analyzes the exclusivity provisions of Schedule C to the Transportation Services Agreement dated March 15, 2019 (the "TSA," Contract Ref. No. SLG-VTS-2019-0315), entered into between Stonefield Logistics Group Inc. ("Stonefield" or "SLG") as Shipper-Broker, and Vantor Transport Services LLC ("VTS") as Carrier-Provider. The purpose of this analysis is to evaluate whether the conduct challenged by Vantor Holdings Corp. ("Vantor") in its Complaint constitutes a breach of the TSA's exclusivity provisions, and to inform the litigation team's strategy with respect to the exclusivity-based claims.

The analysis is prompted by the allegation set forth in Vantor's Complaint, filed on August 12, 2022, in the United States District Court for the Southern District of New York, Case No. 22-cv-07841, which asserts that Stonefield violated the exclusivity provisions of the TSA by diverting freight volume on certain lanes to competing carriers. Specifically, Vantor alleges that Stonefield engaged Cascade Freight Systems Inc. ("Cascade") and Briarwood Trucking Co. ("Briarwood") to service lanes that were purportedly subject to contractual exclusivity obligations running in favor of VTS.

Additionally, this memorandum addresses the September 22, 2021 internal email from Janet Kirkwood, Vice President of Carrier Relations at Stonefield, to Carlos Medina, Senior Vice President of Operations at Stonefield (the "Kirkwood Email"), which references the movement of freight volume to Cascade and Briarwood on "Lanes 8–14." The Kirkwood Email is a key document in the discovery process because Vantor may seek to characterize it as evidence of (a) deliberate diversion of freight from lanes subject to exclusivity obligations, and (b) a premeditated plan to terminate the TSA in its entirety. This memorandum addresses the first of these two contentions — whether Lanes 8–14 are, in fact, subject to the TSA's exclusivity restrictions. The second contention, concerning pretext and good faith in the context of Stonefield's ultimate termination of the TSA, is addressed separately in the October 7, 2022 Research Memorandum re Pretext and Good Faith in Termination for Cause (Document 22 of this matter file).

Principal Conclusion: Based on a thorough review of the TSA and its schedules, the exclusivity restrictions set forth in Schedule C, Section 2(a), apply only to "Primary Lanes," which are defined as Lanes 1 through 7 in the Lane Table attached to Schedule C. Lanes 8 through 14, which are the lanes referenced in the Kirkwood Email and on which Cascade and Briarwood were engaged, are classified as "Secondary Lanes" under Schedule C, Section 2(b). Section 2(b) expressly provides that no exclusivity obligation shall apply to any Secondary Lane and that Stonefield retains sole discretion to utilize other carriers on those lanes. Accordingly, Stonefield's use of Cascade and Briarwood on Lanes 8–14 does not constitute a breach of the TSA's exclusivity provisions.

Furthermore, even with respect to the Primary Lanes (Lanes 1–7), the exclusivity obligation is conditioned upon VTS's continuous compliance with the Service Level Obligations ("SLOs") set forth in Schedule A to the TSA. As discussed below, by the fourth quarter of 2021, VTS was failing every material SLO metric, which would have independently excused Stonefield from its exclusivity obligations on the Primary Lanes — although, critically, there is no evidence that Stonefield engaged Cascade or Briarwood on any Primary Lane.

II. Background

A. The TSA and Its Structure

The Transportation Services Agreement was executed on March 15, 2019, with an effective date of April 1, 2019, and a stated term running through March 31, 2024, constituting a five-year engagement period. The TSA was drafted by Ashford Meridian LLP, with Lorraine Beckwith, Partner, and Troy Nakamura, Senior Associate, serving as principal drafters on behalf of Stonefield. The agreement is governed by the laws of the State of New York, as specified in Section 17.1 of the TSA, and any disputes arising under the agreement are subject to the exclusive jurisdiction of the federal and state courts located in the County of New York, State of New York, per Section 17.2.

The parties to the TSA are Stonefield Logistics Group Inc., a Delaware corporation with its principal place of business at 8200 Commerce Drive, Suite 500, Fort Worth, Texas 76102, acting in its capacity as "Shipper-Broker," and Vantor Transport Services LLC, a New Jersey limited liability company with its principal place of business at 1600 Industrial Boulevard, Edison, New Jersey 08817, acting in its capacity as "Carrier-Provider." Vantor Holdings Corp., the plaintiff in the pending litigation, is the parent company and sole member of VTS. VTS is the operating entity that performs the actual transportation services under the TSA, while Vantor Holdings Corp. is the holding company that has asserted claims in its own right and derivatively on behalf of VTS.

The TSA establishes a comprehensive framework pursuant to which VTS agreed to provide both dedicated and on-demand truckload transportation services across specified lanes in the Northeast, Mid-Atlantic, and Southeast corridors of the United States. The agreement contemplates a substantial volume of freight — the Annual Committed Volume ("ACV") under Section 4.1 of the TSA is set at forty-three million two hundred thousand dollars ($43,200,000) per contract year, measured by aggregate freight charges billed at the rates established in Schedule B. The ACV represents a minimum volume commitment by Stonefield, subject to certain exceptions and adjustments detailed in Section 4.2.

The TSA is accompanied by a series of schedules that provide the operational detail underlying the framework agreement. The schedules most relevant to this analysis are the following:

Schedule A — Service Level Obligations. Schedule A sets forth the performance standards that VTS is required to maintain throughout the Term, including metrics for on-time pickup rates, on-time delivery rates, tender acceptance rates, equipment availability, and cargo claims ratios. Each SLO is expressed as a minimum (or, in the case of cargo claims, a maximum) threshold, and the schedule establishes a cure period and escalation process for SLO failures. As discussed in Section V.B below, VTS's compliance with these SLOs is a condition precedent to Stonefield's exclusivity obligations on the Primary Lanes.

Schedule B — Rate Structure. Schedule B establishes the per-mile rates applicable to each lane, organized by origin-destination pair and equipment type. The rates are subject to annual adjustment pursuant to the Rate Adjustment Mechanism set forth in Section 5.3 of the TSA. The adjustment formula is indexed to a blended metric comprising seventy percent (70%) of the U.S. Department of Energy's On-Highway Diesel Fuel Price Index and thirty percent (30%) of the Bureau of Labor Statistics' Consumer Price Index for All Urban Consumers (CPI-U), with adjustments calculated and applied as of each April 1 during the Term.

Schedule C — Lane Designations and Exclusivity Provisions. Schedule C is the central document at issue in this memorandum. It defines the "Primary Lanes" and "Secondary Lanes" that constitute the geographic and operational scope of the TSA, and it sets forth the exclusivity commitments (and their limitations) applicable to each category. A detailed analysis of Schedule C follows in Section III below.

B. Vantor's Exclusivity Allegations

Vantor's original Complaint, filed on August 12, 2022, alleges, among other claims, that Stonefield breached the TSA by diverting freight to Cascade Freight Systems Inc. and Briarwood Trucking Co. "in violation of the exclusivity provisions in Schedule C." Cascade Freight Systems Inc. is an Ohio corporation, headquartered at 4700 Lakehurst Court, Columbus, Ohio 43016. Briarwood Trucking Co. is a Virginia corporation, headquartered at 1280 Jefferson Davis Highway, Suite 310, Arlington, Virginia 22202. Both Cascade and Briarwood are regional truckload carriers that operate in geographic areas overlapping with portions of the TSA's lane network.

Notably, the original Complaint does not identify with specificity which lanes were allegedly subject to the exclusivity provisions or which particular lanes Cascade and Briarwood were engaged to service. The Complaint refers broadly to "designated lanes" and "exclusive service territories" without mapping these references to specific entries in the Schedule C Lane Table. This lack of specificity is potentially significant for purposes of a motion to dismiss or, at minimum, for targeted interrogatories compelling Vantor to identify the exact lanes on which it contends exclusivity was breached.

The Amended Complaint, filed on December 2, 2022, further elaborates the exclusivity allegation but does not cure this fundamental deficiency. The Amended Complaint asserts that Stonefield diverted freight to competing carriers on "designated lanes" in violation of Schedule C exclusivity, and it references "14 designated origin-destination pairs" as the contractual scope of the exclusivity obligation. As discussed in detail in Section III.B below, this characterization is inaccurate — the plain text of Schedule C limits the Primary Lane (and thus exclusive) designation to only seven origin-destination pairs (Lanes 1 through 7), not fourteen.

C. The Kirkwood Email (September 22, 2021)

On September 22, 2021, Janet Kirkwood, Vice President of Carrier Relations at Stonefield, sent an internal email to Carlos Medina, Senior Vice President of Operations at Stonefield. The Kirkwood Email states, in its entirety, as follows:

"Carlos — VTS is a mess. We're already moving volume to Cascade and Briarwood on Lanes 8–14. If VTS doesn't get its act together by Q1 I think we pull the plug on the whole contract. — JK"

This email is among the documents identified during the initial stages of document collection for the litigation hold, and it has been flagged as a key document for purposes of discovery and potential motion practice. The email is problematic in two respects. First, Vantor may contend that the email demonstrates a deliberate decision by Stonefield to divert freight volume away from VTS on lanes that were subject to the TSA's exclusivity provisions. Second, the language "pull the plug on the whole contract" may be characterized by Vantor as evidence of a premeditated plan to terminate the TSA — a contention that bears on the good-faith/pretext issues relating to Stonefield's subsequent termination for cause.

For purposes of this memorandum, the focus is limited to the first of these two issues — whether the lanes referenced in the Kirkwood Email (Lanes 8–14) are, in fact, subject to the exclusivity restrictions set forth in Schedule C. As noted above and developed in detail below, they are not. The pretext and good-faith termination issue is addressed separately in the October 7, 2022 Research Memorandum re Pretext and Good Faith in Termination for Cause (Document 22).

Importantly, however, it should be noted at the outset that the Kirkwood Email, while potentially damaging on the motive question, is actually favorable to Stonefield's position on the exclusivity issue. The email's express reference to "Lanes 8–14" confirms that the freight diversion to Cascade and Briarwood was confined to Secondary Lanes — lanes on which Stonefield had an unrestricted contractual right to engage alternative carriers. The email does not reference any Primary Lane (Lanes 1–7), and it is consistent with Kirkwood's subsequent confirmation during the September 15, 2022 strategy session that all alternative carrier usage was limited to non-Primary Lanes.

III. Schedule C — Lane Designations and Exclusivity Provisions

A. Structure of Schedule C

Schedule C to the TSA, entitled "Lane Designations and Exclusivity Provisions," is a six-page document that is organized into three principal sections, each of which plays a distinct role in defining the scope and limitations of the parties' exclusivity arrangements. The structure is as follows:

Section 1 — Definitions. Section 1 defines the key terms used throughout Schedule C, including "Primary Lanes," "Secondary Lanes," "Designated Origin-Destination Pairs," "Lane Table," "Truckload Transportation Services," and "Service Level Obligations" (which cross-references the definitions in Schedule A). These definitions are critical to the exclusivity analysis because they establish the precise scope of the commitments at issue. In particular, the definition of "Primary Lanes" explicitly cross-references the Lane Table and limits the designation to the lanes identified as such in Section 2(a).

Section 2 — Lane Classifications and Exclusivity. Section 2 is the operative provision for purposes of this memorandum. It is divided into two subsections:

Section 2(a) — Primary Lanes. This subsection identifies the specific Designated Origin-Destination Pairs that constitute Primary Lanes and sets forth the exclusivity obligation applicable to those lanes.

Section 2(b) — Secondary Lanes. This subsection designates all remaining lanes in the Lane Table as Secondary Lanes and expressly provides that no exclusivity obligation applies to any Secondary Lane.

Section 3 — Lane Modifications and Additions. Section 3 establishes the procedures by which either party may propose the addition of new lanes to the Lane Table or the reclassification of existing lanes from Secondary to Primary (or vice versa). Any such modification requires the mutual written agreement of both parties, executed as a formal amendment to Schedule C.

B. Primary Lanes — Section 2(a)

Section 2(a) of Schedule C designates specific Designated Origin-Destination Pairs as "Primary Lanes." Although the Lane Table appended to Schedule C numbers all lanes sequentially from Lane 1 through Lane 22, the "Primary Lane" designation applies only to a subset of these entries. Specifically, Section 2(a) provides:

"The following Designated Origin-Destination Pairs shall constitute 'Primary Lanes': Lanes 1 through 7 as set forth in the Lane Table attached hereto."

This language is clear and unequivocal. Only seven origin-destination pairs — those numbered Lane 1 through Lane 7 in the Lane Table — carry the Primary Lane designation. These lanes represent the highest-volume, most strategically significant routes in the TSA's network and were the subject of specific rate negotiations and capacity commitments during the drafting process.

An important clarification is warranted regarding the numbering convention used in Schedule C and the apparent confusion reflected in Vantor's Complaint and Amended Complaint. Vantor's Complaint references "14 designated origin-destination pairs" as purportedly falling within the scope of the exclusivity obligation. This characterization appears to conflate the total number of lane entries in the Lane Table (which exceeds fourteen) with the number of lanes designated as Primary. The Lane Table contains twenty-two (22) entries in total, of which Lanes 1 through 7 are classified as Primary Lanes and Lanes 8 through 22 are classified as Secondary Lanes. Vantor's reference to "14 designated origin-destination pairs" is either (a) a reference to the first fourteen entries in the Lane Table (which would include both Primary and Secondary Lanes), (b) a mischaracterization of the number of Primary Lanes, or (c) a deliberate conflation intended to expand the scope of its exclusivity claim beyond the contractual text. In any event, the reference is inconsistent with the plain language of Section 2(a), which limits Primary Lane status to Lanes 1 through 7.

The exclusivity provision applicable to Primary Lanes is set forth in the second paragraph of Section 2(a), which reads as follows:

"During the Term, Shipper-Broker shall utilize Carrier-Provider as the exclusive provider of truckload transportation services on each Primary Lane, provided that Carrier-Provider maintains the Service Level Obligations set forth in Schedule A with respect to such Primary Lane. For the avoidance of doubt, Shipper-Broker's obligation to utilize Carrier-Provider exclusively on Primary Lanes is conditioned upon Carrier-Provider's continuous compliance with applicable Service Level Obligations."

Several features of this provision bear emphasis in the context of the present analysis:

First, the exclusivity obligation applies only to "Primary Lanes." The provision does not reference Secondary Lanes, and the exclusivity commitment does not extend beyond the lanes specifically designated as Primary in Section 2(a). This textual limitation is unambiguous and is reinforced by the separate treatment of Secondary Lanes in Section 2(b).

Second, the exclusivity obligation is expressly conditional upon VTS "maintain[ing] the Service Level Obligations set forth in Schedule A with respect to such Primary Lane." The inclusion of the proviso clause ("provided that Carrier-Provider maintains...") and the "for the avoidance of doubt" sentence that follows it confirm that the exclusivity is not absolute. Rather, it is a conditional obligation that requires VTS's continuous compliance with the applicable SLOs as a condition precedent. If VTS fails to maintain SLO compliance, the condition is not satisfied, and Stonefield's exclusivity obligation is excused.

Third, the scope of the exclusivity is limited to "truckload transportation services." The provision does not extend to less-than-truckload ("LTL") services, intermodal services, last-mile delivery services, or any other mode of transportation. This limitation is consistent with the overall scope of the TSA, which is structured as a truckload transportation agreement.

C. Secondary Lanes — Section 2(b)

Section 2(b) of Schedule C designates all remaining lanes in the Lane Table — that is, Lanes 8 through 22 — as "Secondary Lanes." The relevant provision reads as follows:

"Carrier-Provider acknowledges that Shipper-Broker may utilize other carriers, brokers, or transportation providers to service Secondary Lanes at Shipper-Broker's sole discretion. No exclusivity obligation shall apply to any Secondary Lane."

The language of Section 2(b) is unambiguous in its import. Two features are particularly significant:

First, the provision is drafted as an acknowledgment by VTS ("Carrier-Provider acknowledges") that Stonefield has the right to use alternative carriers on Secondary Lanes. This acknowledgment is more than a mere negative inference from the absence of exclusivity — it is an affirmative contractual recognition by VTS that Stonefield retains full discretion to engage competing carriers on any Secondary Lane.

Second, the final sentence — "No exclusivity obligation shall apply to any Secondary Lane" — provides an express negation of exclusivity for Secondary Lanes. This sentence eliminates any possible argument that an exclusivity obligation arises by implication, course of dealing, or otherwise with respect to Secondary Lanes. The use of the phrase "any Secondary Lane" is categorical and admits of no exception.

The combined effect of Section 2(a) and Section 2(b) is to create a clear, binary framework: Primary Lanes (Lanes 1–7) are subject to conditional exclusivity; Secondary Lanes (Lanes 8–22) are not subject to any exclusivity whatsoever. This framework is central to Stonefield's defense of the exclusivity allegations.

D. Lane Modification Provisions — Section 3

Section 3 of Schedule C establishes the mechanism by which lanes may be added to the Lane Table or reclassified during the TSA term. The provision contemplates two types of modifications: (a) the addition of new Designated Origin-Destination Pairs to the Lane Table, and (b) the reclassification of an existing lane from Secondary to Primary or from Primary to Secondary. In either case, the modification requires a written proposal by one party, followed by the mutual written agreement of both parties, executed as a formal amendment to Schedule C in accordance with the TSA's amendment procedures set forth in Section 18.3 of the agreement.

This provision is relevant to the present analysis because it forecloses any argument that the classification of Lanes 8–14 as Secondary Lanes was somehow modified during the course of the parties' relationship. We have reviewed Stonefield's contract files, and no amendments to Schedule C have been identified. Similarly, we have consulted with Ashford Meridian LLP (the firm that drafted the TSA), and they have confirmed that their files contain no record of any amendment to the Lane Table or to the lane classifications set forth in Schedule C. There is no evidence that any party proposed or executed a reclassification of any Secondary Lane to a Primary Lane during the TSA term.

Accordingly, the lane classifications as originally set forth in Schedule C — with Lanes 1 through 7 as Primary Lanes and Lanes 8 through 22 as Secondary Lanes — remained in effect throughout the entire TSA term, including during the period in which Stonefield engaged Cascade and Briarwood on Lanes 8–14.

IV. Mapping of Cascade and Briarwood Usage to Lane Classifications

A. Information Sources

The analysis set forth in this section is based on the following sources of information, which have been reviewed and cross-referenced to the extent currently available:

(1) Schedule C Lane Table (attached as Exhibit B to the TSA), which provides the definitive lane numbering and classification for all Designated Origin-Destination Pairs under the agreement;

(2) The Kirkwood Email of September 22, 2021, which expressly references the movement of freight volume to Cascade and Briarwood on "Lanes 8–14" — a reference that is consistent with the Lane Table numbering convention and confirms the specific lanes at issue;

(3) Information provided during the September 15, 2022 strategy session held at Stonefield's Fort Worth offices, at which Janet Kirkwood, Carlos Medina, and other members of Stonefield's operations and legal teams were present. During that session, Kirkwood confirmed that the decision to engage Cascade and Briarwood was limited to "non-Primary Lanes only" and was responsive to VTS's deteriorating tender acceptance performance. She further confirmed that no alternative carriers were engaged on any Primary Lane; and

(4) Stonefield's internal freight management records for the relevant period (Q3 2021 through Q2 2022), which are in the process of being collected for the litigation hold and will be reviewed during the document production phase of discovery. Preliminary review of certain records that have already been collected confirms the lane-level allocation of freight to Cascade and Briarwood on Secondary Lanes, although a comprehensive review has not yet been completed.

In addition to these sources, third-party subpoenas to Cascade Freight Systems Inc. and Briarwood Trucking Co. may be appropriate during the discovery phase to obtain independent confirmation of the lane-specific scope of their engagement with Stonefield. Such subpoenas would seek, among other documents, carrier-shipper contracts, rate confirmations, load tenders, bills of lading, and settlement statements that identify the specific origin-destination pairs on which services were provided. These subpoenas were subsequently issued on June 28, 2023, and the returns are pending as of the date of this memorandum's finalization.

B. Cascade Freight Systems Inc.

Cascade Freight Systems Inc. is an Ohio-based truckload carrier with a fleet of approximately three hundred (300) tractors operating primarily in the Midwest, Mid-Atlantic, and Southeast regions. Cascade was engaged by Stonefield under a separate short-term services agreement (not part of the TSA) to provide truckload transportation services on certain lanes within Stonefield's network.

Per Kirkwood's statements during the September 15, 2022 strategy session and preliminary review of Stonefield's freight management records, Cascade was engaged to provide truckload services on the following lanes:

• Lane 8

• Lane 9

• Lane 10

• Lane 11

• Lane 12

All five of these lanes fall squarely within the Secondary Lane classification (Lanes 8 through 22) as defined in Schedule C, Section 2(b). None of these lanes is a Primary Lane. There is no evidence — in the Kirkwood Email, in the strategy session notes, or in the preliminary records review — that Cascade was used on any Primary Lane (Lanes 1 through 7) at any time during the TSA term.

C. Briarwood Trucking Co.

Briarwood Trucking Co. is a Virginia-based trucking company operating primarily in the Mid-Atlantic and Southeast corridors. Briarwood was similarly engaged by Stonefield under a separate arrangement to provide truckload transportation services on certain lanes.

Per Kirkwood's statements and preliminary records review, Briarwood was engaged on the following lanes:

• Lane 10

• Lane 11

• Lane 13

• Lane 14

As with Cascade, all four of these lanes fall within the Secondary Lane classification under Schedule C, Section 2(b). None is a Primary Lane. There is no evidence that Briarwood was used on any Primary Lane (Lanes 1 through 7) at any time during the TSA term. Notably, Lanes 10 and 11 were serviced by both Cascade and Briarwood, reflecting Stonefield's need for redundant capacity on those particular secondary routes due to VTS's declining performance.

D. Summary Lane Mapping Table

The following table summarizes the lane-by-lane classification and carrier usage analysis:

As the table demonstrates, all Cascade and Briarwood usage is confined to Lanes 8 through 14, all of which are classified as Secondary Lanes. No alternative carrier usage occurred on any Primary Lane. Accordingly, no exclusivity obligation was implicated by Stonefield's engagement of Cascade or Briarwood.

E. Context for Diversion

It is important to understand the operational context in which Stonefield's decision to engage alternative carriers on Secondary Lanes arose. As Kirkwood confirmed during the September 15, 2022 strategy session, the decision was driven primarily by VTS's declining tender acceptance rates and overall service performance. By the fourth quarter of 2021, VTS's tender acceptance rate had dropped to approximately 71.4%, well below the 90% threshold established in the SLO. This meant that VTS was rejecting nearly thirty percent (30%) of freight tenders submitted by Stonefield — leaving Stonefield without carrier coverage for a significant portion of its freight volume.

Stonefield faced a practical business necessity: its customers expected reliable transportation services, and VTS's failure to accept tenders on Secondary Lanes created a capacity gap that Stonefield was obligated to fill in order to meet its own customer commitments. Because the TSA's exclusivity provision did not apply to Secondary Lanes, Stonefield had an unqualified contractual right to engage Cascade, Briarwood, or any other carrier to fill that gap. The decision to do so was a commercially reasonable response to VTS's service failures, not an act of contractual breach.

The Kirkwood Email's reference to "pull[ing] the plug on the whole contract" relates to a separate and distinct question — namely, whether Stonefield's subsequent termination of the TSA was motivated by a pretext or was exercised in good faith. That question is addressed in the October 7, 2022 Research Memorandum re Pretext and Good Faith in Termination for Cause and is not part of the exclusivity analysis presented here.

V. Legal Analysis

A. Plain Language of Schedule C

Under well-established New York law, contract interpretation begins — and, where the text is clear, ends — with the plain language of the agreement. See Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002) ("A written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms."); W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d 157, 162 (1990) ("[E]xtrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which is complete and clear and unambiguous upon its face."). The court's role is to give effect to the parties' intentions as expressed in the four corners of the document, and where the contractual language is unambiguous, there is no occasion to look beyond the text. See Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 N.Y.3d 470, 475 (2004).

Here, Schedule C draws an explicit, categorical distinction between Primary Lanes (defined and treated in Section 2(a)) and Secondary Lanes (defined and treated in Section 2(b)). The exclusivity obligation attaches only to Primary Lanes — Lanes 1 through 7 — and only conditionally, subject to VTS's compliance with the SLOs. Section 2(b), by contrast, expressly negates any exclusivity for Secondary Lanes and grants Stonefield "sole discretion" to utilize other carriers, brokers, or transportation providers on those lanes.

Lanes 8 through 14, the lanes on which Cascade and Briarwood were engaged, are unambiguously classified as Secondary Lanes under the Lane Table and Section 2(b). The contractual text is clear, complete, and unambiguous, and it is dispositive of the exclusivity question. No resort to extrinsic evidence is necessary or appropriate.

Even if the Court were to consider extrinsic evidence, however, the result would be the same. The drafting history of the TSA — as reflected in the engagement with Ashford Meridian LLP — confirms that the Primary/Secondary Lane distinction was a negotiated term, with the parties deliberately limiting the exclusivity obligation to the seven highest-volume lanes in the network. The remaining lanes were intentionally left non-exclusive to provide Stonefield with operational flexibility.

B. Conditional Nature of Primary Lane Exclusivity

Even if the Court were to conclude — contrary to the plain text — that the exclusivity provisions extended to some or all of Lanes 8 through 14, a secondary defense exists based on the conditional nature of the exclusivity obligation. As set forth in Section 2(a) of Schedule C, the exclusivity commitment is not absolute. Rather, it is expressly conditioned upon VTS "maintain[ing] the Service Level Obligations set forth in Schedule A with respect to such Primary Lane." The "for the avoidance of doubt" sentence reinforces this point: "Shipper-Broker's obligation to utilize Carrier-Provider exclusively on Primary Lanes is conditioned upon Carrier-Provider's continuous compliance with applicable Service Level Obligations."

This conditional structure operates as a classic condition precedent under New York law. See Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 690 (1995) (defining a condition precedent as "an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises"). Where a condition precedent is not satisfied, the dependent obligation does not arise. Id. at 691.

As of the fourth quarter of 2021 — the period during which Stonefield was engaging Cascade and Briarwood on Lanes 8–14 — VTS was failing all five of its material SLO metrics:

• On-time pickup rate: 78.2% (against a 95% SLO threshold) — a shortfall of 16.8 percentage points.

• On-time delivery rate: 81.6% (against a 93% SLO threshold) — a shortfall of 11.4 percentage points.

• Tender acceptance rate: 71.4% (against a 90% SLO threshold) — a shortfall of 18.6 percentage points, meaning VTS was rejecting nearly 30% of freight tenders.

• Equipment availability: Approximately 62% of the committed fleet was available (approximately 248 of 400 committed tractors), against an 85% SLO threshold — a shortfall of 23 percentage points.

• Cargo claims ratio: 1.07% (against a maximum threshold of 0.5%) — more than double the allowable rate.

These SLO failures were systemic and pervasive, affecting VTS's operations across both Primary and Secondary Lanes. Under the conditional exclusivity provision, VTS's failure to maintain SLO compliance excused Stonefield's exclusivity obligation — even on the Primary Lanes.

Therefore, even if Stonefield had used Cascade or Briarwood on Primary Lanes — which it did not — a strong argument exists that the exclusivity condition precedent was not satisfied due to VTS's SLO failures, and Stonefield's exclusivity obligation was therefore excused. This provides an independent, alternative defense to any exclusivity claim, although we note that this defense is unnecessary with respect to Lanes 8–14 because those lanes are not subject to exclusivity in the first instance.

C. Vantor's Potential Counter-Arguments

It is prudent to anticipate the counter-arguments that Vantor may advance in response to the exclusivity defense. We have identified three principal arguments that Vantor may raise, each of which is addressed below.

1. Argument that all numbered lanes (1–14) are "Primary."

Vantor may contend that the reference in its Complaint and Amended Complaint to "14 designated origin-destination pairs" means that all fourteen of the first lanes in the Lane Table are designated as Primary Lanes, and that exclusivity therefore extends to Lanes 1 through 14. This argument is flatly inconsistent with the plain text of Schedule C, Section 2(a), which limits Primary Lane status to "Lanes 1 through 7 as set forth in the Lane Table attached hereto." The sequential numbering of all twenty-two lanes in the Lane Table does not alter the classification scheme established in Section 2. Vantor's Complaint appears to conflate the number of entries in the Lane Table (or perhaps the first fourteen entries) with the subset of those entries that carry the Primary Lane designation. The contractual text is unambiguous, and Vantor's mischaracterization does not create an ambiguity where none exists. See Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 13 N.Y.3d 398, 404 (2009) (a party's litigation position about a contract's meaning does not render an otherwise unambiguous contract ambiguous).

2. Argument of implied exclusivity.

Vantor may alternatively argue that the Annual Committed Volume of $43.2 million per year, combined with the parties' course of dealing, created an implied exclusivity obligation that extends across all lanes — including Secondary Lanes. This argument fails for two independent reasons.

First, the TSA contains an express exclusivity provision that is limited in scope to Primary Lanes. Under New York law, where a contract contains an express provision addressing a particular subject, no implied term may be inferred that is inconsistent with or broader than the express provision. See Rowe v. Great Atl. & Pac. Tea Co., 46 N.Y.2d 62, 69 (1978). The parol evidence rule precludes the introduction of extrinsic evidence to add terms to a fully integrated agreement. The TSA is fully integrated, as confirmed by the merger and integration clause in Section 18.1, which provides that the TSA and its schedules "constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior negotiations, representations, warranties, commitments, offers, contracts, and writings, written or oral, with respect to such subject matter." In the face of this integration clause and the express limitation of exclusivity to Primary Lanes, no implied exclusivity obligation can arise with respect to Secondary Lanes.

Second, even if an implied term were permissible, the ACV is a minimum volume commitment — not an exclusivity guarantee. The ACV establishes the floor of freight volume that Stonefield commits to tender to VTS during each contract year, but it does not restrict Stonefield from using other carriers on non-exclusive lanes. These are distinct contractual concepts, and Vantor's attempt to conflate them should be rejected.

3. Argument of course of dealing.

Vantor may argue that Stonefield historically used VTS exclusively on Lanes 8–14 during the first two years of the TSA term (April 2019 through approximately September 2021), and that this historical practice created a course of dealing that effectively modified the contractual terms to impose exclusivity on those lanes. This argument fails under New York law for several reasons.

Under New York law, a course of dealing cannot override express contractual terms. See Rose v. Spa Realty Assocs., 42 N.Y.2d 338, 343 (1977). Where the contract is unambiguous, extrinsic evidence of the parties' course of dealing is inadmissible to vary its terms. See W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d at 163. Moreover, the TSA contains both a merger and integration clause (Section 18.1) and a no-oral-modification clause (Section 18.3), which provides that the TSA "may not be amended, modified, or supplemented except by a written instrument executed by authorized representatives of both parties." These clauses foreclose any argument that the parties' course of performance or course of dealing modified the express terms of Schedule C. See General Obligations Law § 15-301(1) (giving effect to no-oral-modification clauses).

Furthermore, even as a factual matter, the premise of Vantor's argument is questionable. The fact that Stonefield may have historically tendered freight to VTS on Secondary Lanes does not establish that it did so pursuant to an exclusivity obligation. It may simply reflect that VTS was, during the early period of the TSA, the most competitively priced or operationally convenient carrier for those lanes. Stonefield's decision to engage alternative carriers when VTS's performance deteriorated is consistent with the exercise of the contractual discretion expressly reserved in Section 2(b), not with the modification of a contractual right.

VI. Implications for Litigation Strategy

The exclusivity analysis set forth in this memorandum strongly supports Stonefield's position that its engagement of Cascade Freight Systems Inc. and Briarwood Trucking Co. to service Lanes 8 through 14 did not constitute a breach of the TSA's exclusivity provisions. The plain language of Schedule C is clear and dispositive: the exclusivity obligation applies only to Primary Lanes (Lanes 1–7), all alternative carrier usage was confined to Secondary Lanes (Lanes 8–14), and Section 2(b) expressly grants Stonefield sole discretion to use other carriers on Secondary Lanes.

This defense should be asserted prominently in the Answer and Affirmative Defenses to the Amended Complaint. It is recommended that the Answer specifically deny any exclusivity violation with respect to Lanes 8 through 14 and affirmatively plead that those lanes are classified as Secondary Lanes under Schedule C, Section 2(b), and are not subject to any exclusivity obligation. The affirmative defense should be supported by direct citation to the contractual text and should highlight the express negation of exclusivity in Section 2(b).

Third-party subpoenas duces tecum to Cascade Freight Systems Inc. (4700 Lakehurst Court, Columbus, Ohio 43016) and Briarwood Trucking Co. (1280 Jefferson Davis Highway, Suite 310, Arlington, Virginia 22202) should be issued during the discovery phase to obtain independent, lane-specific records confirming the scope of their services for Stonefield. These records — including contracts, rate confirmations, load tenders, bills of lading, and settlement statements — will corroborate that all alternative carrier usage was confined to Secondary Lanes and that no freight was diverted from Primary Lanes.

The conditional nature of the Primary Lane exclusivity (tied to VTS's SLO compliance) provides a robust secondary defense that should be developed in parallel. Even if Vantor attempts to expand the scope of its exclusivity allegations — whether by arguing that all fourteen of the first lanes are Primary or by asserting implied exclusivity — Stonefield can demonstrate that VTS's systemic SLO failures excused the exclusivity obligation even on the Primary Lanes. The SLO performance data for Q4 2021 should be compiled and preserved for use in summary judgment briefing.

Finally, as noted above, the Kirkwood Email of September 22, 2021, while potentially problematic on the pretext and motive issue, actually supports the exclusivity defense. The email's express reference to "Lanes 8–14" confirms that the diversion was limited to Secondary Lanes. If the Kirkwood Email becomes a focus of Vantor's case — as it likely will — the litigation team should emphasize the lane-specific reference as evidence that Stonefield's personnel understood and respected the Primary/Secondary Lane distinction, and that no Primary Lane freight was diverted to alternative carriers.

VII. Recommendations

Based on the foregoing analysis, I recommend the following actions:

1. Incorporate the Schedule C lane classification analysis into the Answer and Affirmative Defenses to the Amended Complaint. The Answer should specifically deny that Stonefield breached any exclusivity provision of the TSA and should affirmatively plead that Lanes 8–14 are classified as Secondary Lanes under Schedule C, Section 2(b), and that no exclusivity obligation applies to those lanes. The affirmative defense should quote the relevant contractual language and should be accompanied by a copy of Schedule C as an exhibit to the Answer or, at minimum, incorporated by reference.

2. Prepare targeted discovery requests to Vantor seeking identification of the specific lanes on which Vantor alleges exclusivity was breached. The current Complaint and Amended Complaint are vague as to the specific lanes at issue. Interrogatories should require Vantor to identify, by lane number and Designated Origin-Destination Pair, each lane on which it contends exclusivity was violated, and to state the factual and contractual basis for its contention that each such lane is subject to exclusivity. This will force Vantor to confront the plain text of Section 2(a) and will narrow the scope of the dispute.

3. Issue third-party subpoenas duces tecum to Cascade Freight Systems Inc. and Briarwood Trucking Co. These subpoenas should seek all contracts, communications, rate confirmations, load tenders, bills of lading, freight settlement statements, and lane-by-lane freight records related to services provided for or on behalf of Stonefield. The subpoenas should be targeted to elicit lane-specific information that will independently confirm that all alternative carrier usage was confined to Secondary Lanes. As noted, these subpoenas were subsequently issued on June 28, 2023.

4. During the deposition of Derek Pruitt (VP, Business Development, Vantor), explore his understanding of the Primary vs. Secondary Lane distinction. Pruitt was the primary relationship manager between Vantor and Stonefield and was involved in the negotiation and ongoing administration of the TSA. His deposition testimony regarding his understanding of the lane classification scheme — and, in particular, whether Vantor ever understood Lanes 8–14 to be subject to exclusivity — will be critical to undermining Vantor's exclusivity claims. Additionally, Pruitt should be questioned regarding whether Vantor ever sought to reclassify any Secondary Lane as a Primary Lane under Section 3 of Schedule C. If Vantor never sought reclassification, this fact undercuts any argument that the parties understood Lanes 8–14 to be exclusive.

5. Coordinate with the pretext/good faith analysis (separate memorandum) regarding the Kirkwood Email. The lane-specific reference in the Kirkwood Email ("Lanes 8–14") is favorable for the exclusivity defense and should be emphasized if the email becomes a focus of Vantor's case. However, the email's reference to "pull[ing] the plug on the whole contract" raises distinct issues regarding pretext and good faith in the termination context. The litigation team should develop a unified strategy for addressing both aspects of the Kirkwood Email — leveraging the favorable lane reference for the exclusivity defense while managing the risk posed by the termination language. This coordination should be guided by the analysis in the October 7, 2022 Research Memorandum re Pretext and Good Faith in Termination for Cause (Document 22).

VIII. Exhibits / Attachments Referenced

The following exhibits are referenced in this memorandum and are attached hereto or available in the matter file:

• Exhibit A: Schedule C to the Transportation Services Agreement (Contract Ref. No. SLG-VTS-2019-0315), including the Lane Table and Sections 1 through 3 (Lane Designations and Exclusivity Provisions).

• Exhibit B: Email from Janet Kirkwood (VP, Carrier Relations, Stonefield Logistics Group Inc.) to Carlos Medina (SVP, Operations, Stonefield Logistics Group Inc.), dated September 22, 2021.

• Exhibit C: Preliminary Lane-by-Lane Freight Records reflecting Cascade Freight Systems Inc. and Briarwood Trucking Co. usage on Lanes 8–14, for the period Q3 2021 through Q4 2021 (compiled from Stonefield internal freight management system; subject to completion and verification during the document production process).

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

This memorandum was prepared by Calderwood & Harkness LLP in anticipation of litigation and for the purpose of providing legal advice to the client. It is protected by the attorney-client privilege and the work product doctrine. It should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.

Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, NY 10166

Matter No. 1012-00005 Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)

Lane No.	Classification	Cascade Usage	Briarwood Usage	Exclusivity Applies?
1–7	Primary Lane	No	No	Yes (conditional on SLO compliance)
8	Secondary Lane	Yes	No	No
9	Secondary Lane	Yes	No	No
10	Secondary Lane	Yes	Yes	No
11	Secondary Lane	Yes	Yes	No
12	Secondary Lane	Yes	No	No
13	Secondary Lane	No	Yes	No
14	Secondary Lane	No	Yes	No
15–22	Secondary Lane	No	No	No

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
To: Patrick Gallagher, Lead Associate, Litigation (General), Calderwood & Harkness LLP
From: Simone Laroche, Working Associate, Litigation (General), Calderwood & Harkness LLP
Date: September 30, 2022
Re: Exclusivity Analysis — Schedule C Lanes; Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
Matter No.: 1012-00005
Client: Stonefield Logistics Group Inc.
I. Purpose and Summary of Conclusions
This memorandum analyzes the exclusivity provisions of Schedule C to the Transportation Services Agreement dated March 15, 2019 (the "TSA," Contract Ref. No. SLG-VTS-2019-0315), entered into between Stonefield Logistics Group Inc. ("Stonefield" or "SLG") as Shipper-Broker, and Vantor Transport Services LLC ("VTS") as Carrier-Provider. The purpose of this analysis is to evaluate whether the conduct challenged by Vantor Holdings Corp. ("Vantor") in its Complaint constitutes a breach of the TSA's exclusivity provisions, and to inform the litigation team's strategy with respect to the exclusivity-based claims.
The analysis is prompted by the allegation set forth in Vantor's Complaint, filed on August 12, 2022, in the United States District Court for the Southern District of New York, Case No. 22-cv-07841, which asserts that Stonefield violated the exclusivity provisions of the TSA by diverting freight volume on certain lanes to competing carriers. Specifically, Vantor alleges that Stonefield engaged Cascade Freight Systems Inc. ("Cascade") and Briarwood Trucking Co. ("Briarwood") to service lanes that were purportedly subject to contractual exclusivity obligations running in favor of VTS.
Additionally, this memorandum addresses the September 22, 2021 internal email from Janet Kirkwood, Vice President of Carrier Relations at Stonefield, to Carlos Medina, Senior Vice President of Operations at Stonefield (the "Kirkwood Email"), which references the movement of freight volume to Cascade and Briarwood on "Lanes 8–14." The Kirkwood Email is a key document in the discovery process because Vantor may seek to characterize it as evidence of (a) deliberate diversion of freight from lanes subject to exclusivity obligations, and (b) a premeditated plan to terminate the TSA in its entirety. This memorandum addresses the first of these two contentions — whether Lanes 8–14 are, in fact, subject to the TSA's exclusivity restrictions. The second contention, concerning pretext and good faith in the context of Stonefield's ultimate termination of the TSA, is addressed separately in the October 7, 2022 Research Memorandum re Pretext and Good Faith in Termination for Cause (Document 22 of this matter file).
Principal Conclusion: Based on a thorough review of the TSA and its schedules, the exclusivity restrictions set forth in Schedule C, Section 2(a), apply only to "Primary Lanes," which are defined as Lanes 1 through 7 in the Lane Table attached to Schedule C. Lanes 8 through 14, which are the lanes referenced in the Kirkwood Email and on which Cascade and Briarwood were engaged, are classified as "Secondary Lanes" under Schedule C, Section 2(b). Section 2(b) expressly provides that no exclusivity obligation shall apply to any Secondary Lane and that Stonefield retains sole discretion to utilize other carriers on those lanes. Accordingly, Stonefield's use of Cascade and Briarwood on Lanes 8–14 does not constitute a breach of the TSA's exclusivity provisions.
Furthermore, even with respect to the Primary Lanes (Lanes 1–7), the exclusivity obligation is conditioned upon VTS's continuous compliance with the Service Level Obligations ("SLOs") set forth in Schedule A to the TSA. As discussed below, by the fourth quarter of 2021, VTS was failing every material SLO metric, which would have independently excused Stonefield from its exclusivity obligations on the Primary Lanes — although, critically, there is no evidence that Stonefield engaged Cascade or Briarwood on any Primary Lane.
II. Background
A. The TSA and Its Structure
The Transportation Services Agreement was executed on March 15, 2019, with an effective date of April 1, 2019, and a stated term running through March 31, 2024, constituting a five-year engagement period. The TSA was drafted by Ashford Meridian LLP, with Lorraine Beckwith, Partner, and Troy Nakamura, Senior Associate, serving as principal drafters on behalf of Stonefield. The agreement is governed by the laws of the State of New York, as specified in Section 17.1 of the TSA, and any disputes arising under the agreement are subject to the exclusive jurisdiction of the federal and state courts located in the County of New York, State of New York, per Section 17.2.
The parties to the TSA are Stonefield Logistics Group Inc., a Delaware corporation with its principal place of business at 8200 Commerce Drive, Suite 500, Fort Worth, Texas 76102, acting in its capacity as "Shipper-Broker," and Vantor Transport Services LLC, a New Jersey limited liability company with its principal place of business at 1600 Industrial Boulevard, Edison, New Jersey 08817, acting in its capacity as "Carrier-Provider." Vantor Holdings Corp., the plaintiff in the pending litigation, is the parent company and sole member of VTS. VTS is the operating entity that performs the actual transportation services under the TSA, while Vantor Holdings Corp. is the holding company that has asserted claims in its own right and derivatively on behalf of VTS.
The TSA establishes a comprehensive framework pursuant to which VTS agreed to provide both dedicated and on-demand truckload transportation services across specified lanes in the Northeast, Mid-Atlantic, and Southeast corridors of the United States. The agreement contemplates a substantial volume of freight — the Annual Committed Volume ("ACV") under Section 4.1 of the TSA is set at forty-three million two hundred thousand dollars ($43,200,000) per contract year, measured by aggregate freight charges billed at the rates established in Schedule B. The ACV represents a minimum volume commitment by Stonefield, subject to certain exceptions and adjustments detailed in Section 4.2.
The TSA is accompanied by a series of schedules that provide the operational detail underlying the framework agreement. The schedules most relevant to this analysis are the following:
Schedule A — Service Level Obligations. Schedule A sets forth the performance standards that VTS is required to maintain throughout the Term, including metrics for on-time pickup rates, on-time delivery rates, tender acceptance rates, equipment availability, and cargo claims ratios. Each SLO is expressed as a minimum (or, in the case of cargo claims, a maximum) threshold, and the schedule establishes a cure period and escalation process for SLO failures. As discussed in Section V.B below, VTS's compliance with these SLOs is a condition precedent to Stonefield's exclusivity obligations on the Primary Lanes.
Schedule B — Rate Structure. Schedule B establishes the per-mile rates applicable to each lane, organized by origin-destination pair and equipment type. The rates are subject to annual adjustment pursuant to the Rate Adjustment Mechanism set forth in Section 5.3 of the TSA. The adjustment formula is indexed to a blended metric comprising seventy percent (70%) of the U.S. Department of Energy's On-Highway Diesel Fuel Price Index and thirty percent (30%) of the Bureau of Labor Statistics' Consumer Price Index for All Urban Consumers (CPI-U), with adjustments calculated and applied as of each April 1 during the Term.
Schedule C — Lane Designations and Exclusivity Provisions. Schedule C is the central document at issue in this memorandum. It defines the "Primary Lanes" and "Secondary Lanes" that constitute the geographic and operational scope of the TSA, and it sets forth the exclusivity commitments (and their limitations) applicable to each category. A detailed analysis of Schedule C follows in Section III below.
B. Vantor's Exclusivity Allegations
Vantor's original Complaint, filed on August 12, 2022, alleges, among other claims, that Stonefield breached the TSA by diverting freight to Cascade Freight Systems Inc. and Briarwood Trucking Co. "in violation of the exclusivity provisions in Schedule C." Cascade Freight Systems Inc. is an Ohio corporation, headquartered at 4700 Lakehurst Court, Columbus, Ohio 43016. Briarwood Trucking Co. is a Virginia corporation, headquartered at 1280 Jefferson Davis Highway, Suite 310, Arlington, Virginia 22202. Both Cascade and Briarwood are regional truckload carriers that operate in geographic areas overlapping with portions of the TSA's lane network.
Notably, the original Complaint does not identify with specificity which lanes were allegedly subject to the exclusivity provisions or which particular lanes Cascade and Briarwood were engaged to service. The Complaint refers broadly to "designated lanes" and "exclusive service territories" without mapping these references to specific entries in the Schedule C Lane Table. This lack of specificity is potentially significant for purposes of a motion to dismiss or, at minimum, for targeted interrogatories compelling Vantor to identify the exact lanes on which it contends exclusivity was breached.
The Amended Complaint, filed on December 2, 2022, further elaborates the exclusivity allegation but does not cure this fundamental deficiency. The Amended Complaint asserts that Stonefield diverted freight to competing carriers on "designated lanes" in violation of Schedule C exclusivity, and it references "14 designated origin-destination pairs" as the contractual scope of the exclusivity obligation. As discussed in detail in Section III.B below, this characterization is inaccurate — the plain text of Schedule C limits the Primary Lane (and thus exclusive) designation to only seven origin-destination pairs (Lanes 1 through 7), not fourteen.
C. The Kirkwood Email (September 22, 2021)
On September 22, 2021, Janet Kirkwood, Vice President of Carrier Relations at Stonefield, sent an internal email to Carlos Medina, Senior Vice President of Operations at Stonefield. The Kirkwood Email states, in its entirety, as follows:
"Carlos — VTS is a mess. We're already moving volume to Cascade and Briarwood on Lanes 8–14. If VTS doesn't get its act together by Q1 I think we pull the plug on the whole contract. — JK"
This email is among the documents identified during the initial stages of document collection for the litigation hold, and it has been flagged as a key document for purposes of discovery and potential motion practice. The email is problematic in two respects. First, Vantor may contend that the email demonstrates a deliberate decision by Stonefield to divert freight volume away from VTS on lanes that were subject to the TSA's exclusivity provisions. Second, the language "pull the plug on the whole contract" may be characterized by Vantor as evidence of a premeditated plan to terminate the TSA — a contention that bears on the good-faith/pretext issues relating to Stonefield's subsequent termination for cause.
For purposes of this memorandum, the focus is limited to the first of these two issues — whether the lanes referenced in the Kirkwood Email (Lanes 8–14) are, in fact, subject to the exclusivity restrictions set forth in Schedule C. As noted above and developed in detail below, they are not. The pretext and good-faith termination issue is addressed separately in the October 7, 2022 Research Memorandum re Pretext and Good Faith in Termination for Cause (Document 22).
Importantly, however, it should be noted at the outset that the Kirkwood Email, while potentially damaging on the motive question, is actually favorable to Stonefield's position on the exclusivity issue. The email's express reference to "Lanes 8–14" confirms that the freight diversion to Cascade and Briarwood was confined to Secondary Lanes — lanes on which Stonefield had an unrestricted contractual right to engage alternative carriers. The email does not reference any Primary Lane (Lanes 1–7), and it is consistent with Kirkwood's subsequent confirmation during the September 15, 2022 strategy session that all alternative carrier usage was limited to non-Primary Lanes.
III. Schedule C — Lane Designations and Exclusivity Provisions
A. Structure of Schedule C
Schedule C to the TSA, entitled "Lane Designations and Exclusivity Provisions," is a six-page document that is organized into three principal sections, each of which plays a distinct role in defining the scope and limitations of the parties' exclusivity arrangements. The structure is as follows:
Section 1 — Definitions. Section 1 defines the key terms used throughout Schedule C, including "Primary Lanes," "Secondary Lanes," "Designated Origin-Destination Pairs," "Lane Table," "Truckload Transportation Services," and "Service Level Obligations" (which cross-references the definitions in Schedule A). These definitions are critical to the exclusivity analysis because they establish the precise scope of the commitments at issue. In particular, the definition of "Primary Lanes" explicitly cross-references the Lane Table and limits the designation to the lanes identified as such in Section 2(a).
Section 2 — Lane Classifications and Exclusivity. Section 2 is the operative provision for purposes of this memorandum. It is divided into two subsections:
Section 2(a) — Primary Lanes. This subsection identifies the specific Designated Origin-Destination Pairs that constitute Primary Lanes and sets forth the exclusivity obligation applicable to those lanes.
Section 2(b) — Secondary Lanes. This subsection designates all remaining lanes in the Lane Table as Secondary Lanes and expressly provides that no exclusivity obligation applies to any Secondary Lane.
Section 3 — Lane Modifications and Additions. Section 3 establishes the procedures by which either party may propose the addition of new lanes to the Lane Table or the reclassification of existing lanes from Secondary to Primary (or vice versa). Any such modification requires the mutual written agreement of both parties, executed as a formal amendment to Schedule C.
B. Primary Lanes — Section 2(a)
Section 2(a) of Schedule C designates specific Designated Origin-Destination Pairs as "Primary Lanes." Although the Lane Table appended to Schedule C numbers all lanes sequentially from Lane 1 through Lane 22, the "Primary Lane" designation applies only to a subset of these entries. Specifically, Section 2(a) provides:
"The following Designated Origin-Destination Pairs shall constitute 'Primary Lanes': Lanes 1 through 7 as set forth in the Lane Table attached hereto."
This language is clear and unequivocal. Only seven origin-destination pairs — those numbered Lane 1 through Lane 7 in the Lane Table — carry the Primary Lane designation. These lanes represent the highest-volume, most strategically significant routes in the TSA's network and were the subject of specific rate negotiations and capacity commitments during the drafting process.
An important clarification is warranted regarding the numbering convention used in Schedule C and the apparent confusion reflected in Vantor's Complaint and Amended Complaint. Vantor's Complaint references "14 designated origin-destination pairs" as purportedly falling within the scope of the exclusivity obligation. This characterization appears to conflate the total number of lane entries in the Lane Table (which exceeds fourteen) with the number of lanes designated as Primary. The Lane Table contains twenty-two (22) entries in total, of which Lanes 1 through 7 are classified as Primary Lanes and Lanes 8 through 22 are classified as Secondary Lanes. Vantor's reference to "14 designated origin-destination pairs" is either (a) a reference to the first fourteen entries in the Lane Table (which would include both Primary and Secondary Lanes), (b) a mischaracterization of the number of Primary Lanes, or (c) a deliberate conflation intended to expand the scope of its exclusivity claim beyond the contractual text. In any event, the reference is inconsistent with the plain language of Section 2(a), which limits Primary Lane status to Lanes 1 through 7.
The exclusivity provision applicable to Primary Lanes is set forth in the second paragraph of Section 2(a), which reads as follows:
"During the Term, Shipper-Broker shall utilize Carrier-Provider as the exclusive provider of truckload transportation services on each Primary Lane, provided that Carrier-Provider maintains the Service Level Obligations set forth in Schedule A with respect to such Primary Lane. For the avoidance of doubt, Shipper-Broker's obligation to utilize Carrier-Provider exclusively on Primary Lanes is conditioned upon Carrier-Provider's continuous compliance with applicable Service Level Obligations."
Several features of this provision bear emphasis in the context of the present analysis:
First, the exclusivity obligation applies only to "Primary Lanes." The provision does not reference Secondary Lanes, and the exclusivity commitment does not extend beyond the lanes specifically designated as Primary in Section 2(a). This textual limitation is unambiguous and is reinforced by the separate treatment of Secondary Lanes in Section 2(b).
Second, the exclusivity obligation is expressly conditional upon VTS "maintain[ing] the Service Level Obligations set forth in Schedule A with respect to such Primary Lane." The inclusion of the proviso clause ("provided that Carrier-Provider maintains...") and the "for the avoidance of doubt" sentence that follows it confirm that the exclusivity is not absolute. Rather, it is a conditional obligation that requires VTS's continuous compliance with the applicable SLOs as a condition precedent. If VTS fails to maintain SLO compliance, the condition is not satisfied, and Stonefield's exclusivity obligation is excused.
Third, the scope of the exclusivity is limited to "truckload transportation services." The provision does not extend to less-than-truckload ("LTL") services, intermodal services, last-mile delivery services, or any other mode of transportation. This limitation is consistent with the overall scope of the TSA, which is structured as a truckload transportation agreement.
C. Secondary Lanes — Section 2(b)
Section 2(b) of Schedule C designates all remaining lanes in the Lane Table — that is, Lanes 8 through 22 — as "Secondary Lanes." The relevant provision reads as follows:
"Carrier-Provider acknowledges that Shipper-Broker may utilize other carriers, brokers, or transportation providers to service Secondary Lanes at Shipper-Broker's sole discretion. No exclusivity obligation shall apply to any Secondary Lane."
The language of Section 2(b) is unambiguous in its import. Two features are particularly significant:
First, the provision is drafted as an acknowledgment by VTS ("Carrier-Provider acknowledges") that Stonefield has the right to use alternative carriers on Secondary Lanes. This acknowledgment is more than a mere negative inference from the absence of exclusivity — it is an affirmative contractual recognition by VTS that Stonefield retains full discretion to engage competing carriers on any Secondary Lane.
Second, the final sentence — "No exclusivity obligation shall apply to any Secondary Lane" — provides an express negation of exclusivity for Secondary Lanes. This sentence eliminates any possible argument that an exclusivity obligation arises by implication, course of dealing, or otherwise with respect to Secondary Lanes. The use of the phrase "any Secondary Lane" is categorical and admits of no exception.
The combined effect of Section 2(a) and Section 2(b) is to create a clear, binary framework: Primary Lanes (Lanes 1–7) are subject to conditional exclusivity; Secondary Lanes (Lanes 8–22) are not subject to any exclusivity whatsoever. This framework is central to Stonefield's defense of the exclusivity allegations.
D. Lane Modification Provisions — Section 3
Section 3 of Schedule C establishes the mechanism by which lanes may be added to the Lane Table or reclassified during the TSA term. The provision contemplates two types of modifications: (a) the addition of new Designated Origin-Destination Pairs to the Lane Table, and (b) the reclassification of an existing lane from Secondary to Primary or from Primary to Secondary. In either case, the modification requires a written proposal by one party, followed by the mutual written agreement of both parties, executed as a formal amendment to Schedule C in accordance with the TSA's amendment procedures set forth in Section 18.3 of the agreement.
This provision is relevant to the present analysis because it forecloses any argument that the classification of Lanes 8–14 as Secondary Lanes was somehow modified during the course of the parties' relationship. We have reviewed Stonefield's contract files, and no amendments to Schedule C have been identified. Similarly, we have consulted with Ashford Meridian LLP (the firm that drafted the TSA), and they have confirmed that their files contain no record of any amendment to the Lane Table or to the lane classifications set forth in Schedule C. There is no evidence that any party proposed or executed a reclassification of any Secondary Lane to a Primary Lane during the TSA term.
Accordingly, the lane classifications as originally set forth in Schedule C — with Lanes 1 through 7 as Primary Lanes and Lanes 8 through 22 as Secondary Lanes — remained in effect throughout the entire TSA term, including during the period in which Stonefield engaged Cascade and Briarwood on Lanes 8–14.
IV. Mapping of Cascade and Briarwood Usage to Lane Classifications
A. Information Sources
The analysis set forth in this section is based on the following sources of information, which have been reviewed and cross-referenced to the extent currently available:
(1) Schedule C Lane Table (attached as Exhibit B to the TSA), which provides the definitive lane numbering and classification for all Designated Origin-Destination Pairs under the agreement;
(2) The Kirkwood Email of September 22, 2021, which expressly references the movement of freight volume to Cascade and Briarwood on "Lanes 8–14" — a reference that is consistent with the Lane Table numbering convention and confirms the specific lanes at issue;
(3) Information provided during the September 15, 2022 strategy session held at Stonefield's Fort Worth offices, at which Janet Kirkwood, Carlos Medina, and other members of Stonefield's operations and legal teams were present. During that session, Kirkwood confirmed that the decision to engage Cascade and Briarwood was limited to "non-Primary Lanes only" and was responsive to VTS's deteriorating tender acceptance performance. She further confirmed that no alternative carriers were engaged on any Primary Lane; and
(4) Stonefield's internal freight management records for the relevant period (Q3 2021 through Q2 2022), which are in the process of being collected for the litigation hold and will be reviewed during the document production phase of discovery. Preliminary review of certain records that have already been collected confirms the lane-level allocation of freight to Cascade and Briarwood on Secondary Lanes, although a comprehensive review has not yet been completed.
In addition to these sources, third-party subpoenas to Cascade Freight Systems Inc. and Briarwood Trucking Co. may be appropriate during the discovery phase to obtain independent confirmation of the lane-specific scope of their engagement with Stonefield. Such subpoenas would seek, among other documents, carrier-shipper contracts, rate confirmations, load tenders, bills of lading, and settlement statements that identify the specific origin-destination pairs on which services were provided. These subpoenas were subsequently issued on June 28, 2023, and the returns are pending as of the date of this memorandum's finalization.
B. Cascade Freight Systems Inc.
Cascade Freight Systems Inc. is an Ohio-based truckload carrier with a fleet of approximately three hundred (300) tractors operating primarily in the Midwest, Mid-Atlantic, and Southeast regions. Cascade was engaged by Stonefield under a separate short-term services agreement (not part of the TSA) to provide truckload transportation services on certain lanes within Stonefield's network.
Per Kirkwood's statements during the September 15, 2022 strategy session and preliminary review of Stonefield's freight management records, Cascade was engaged to provide truckload services on the following lanes:
•  Lane 8
•  Lane 9
•  Lane 10
•  Lane 11
•  Lane 12
All five of these lanes fall squarely within the Secondary Lane classification (Lanes 8 through 22) as defined in Schedule C, Section 2(b). None of these lanes is a Primary Lane. There is no evidence — in the Kirkwood Email, in the strategy session notes, or in the preliminary records review — that Cascade was used on any Primary Lane (Lanes 1 through 7) at any time during the TSA term.
C. Briarwood Trucking Co.
Briarwood Trucking Co. is a Virginia-based trucking company operating primarily in the Mid-Atlantic and Southeast corridors. Briarwood was similarly engaged by Stonefield under a separate arrangement to provide truckload transportation services on certain lanes.
Per Kirkwood's statements and preliminary records review, Briarwood was engaged on the following lanes:
•  Lane 10
•  Lane 11
•  Lane 13
•  Lane 14
As with Cascade, all four of these lanes fall within the Secondary Lane classification under Schedule C, Section 2(b). None is a Primary Lane. There is no evidence that Briarwood was used on any Primary Lane (Lanes 1 through 7) at any time during the TSA term. Notably, Lanes 10 and 11 were serviced by both Cascade and Briarwood, reflecting Stonefield's need for redundant capacity on those particular secondary routes due to VTS's declining performance.
D. Summary Lane Mapping Table
The following table summarizes the lane-by-lane classification and carrier usage analysis:
As the table demonstrates, all Cascade and Briarwood usage is confined to Lanes 8 through 14, all of which are classified as Secondary Lanes. No alternative carrier usage occurred on any Primary Lane. Accordingly, no exclusivity obligation was implicated by Stonefield's engagement of Cascade or Briarwood.
E. Context for Diversion
It is important to understand the operational context in which Stonefield's decision to engage alternative carriers on Secondary Lanes arose. As Kirkwood confirmed during the September 15, 2022 strategy session, the decision was driven primarily by VTS's declining tender acceptance rates and overall service performance. By the fourth quarter of 2021, VTS's tender acceptance rate had dropped to approximately 71.4%, well below the 90% threshold established in the SLO. This meant that VTS was rejecting nearly thirty percent (30%) of freight tenders submitted by Stonefield — leaving Stonefield without carrier coverage for a significant portion of its freight volume.
Stonefield faced a practical business necessity: its customers expected reliable transportation services, and VTS's failure to accept tenders on Secondary Lanes created a capacity gap that Stonefield was obligated to fill in order to meet its own customer commitments. Because the TSA's exclusivity provision did not apply to Secondary Lanes, Stonefield had an unqualified contractual right to engage Cascade, Briarwood, or any other carrier to fill that gap. The decision to do so was a commercially reasonable response to VTS's service failures, not an act of contractual breach.
The Kirkwood Email's reference to "pull[ing] the plug on the whole contract" relates to a separate and distinct question — namely, whether Stonefield's subsequent termination of the TSA was motivated by a pretext or was exercised in good faith. That question is addressed in the October 7, 2022 Research Memorandum re Pretext and Good Faith in Termination for Cause and is not part of the exclusivity analysis presented here.
V. Legal Analysis
A. Plain Language of Schedule C
Under well-established New York law, contract interpretation begins — and, where the text is clear, ends — with the plain language of the agreement. See Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002) ("A written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms."); W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d 157, 162 (1990) ("[E]xtrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which is complete and clear and unambiguous upon its face."). The court's role is to give effect to the parties' intentions as expressed in the four corners of the document, and where the contractual language is unambiguous, there is no occasion to look beyond the text. See Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 N.Y.3d 470, 475 (2004).
Here, Schedule C draws an explicit, categorical distinction between Primary Lanes (defined and treated in Section 2(a)) and Secondary Lanes (defined and treated in Section 2(b)). The exclusivity obligation attaches only to Primary Lanes — Lanes 1 through 7 — and only conditionally, subject to VTS's compliance with the SLOs. Section 2(b), by contrast, expressly negates any exclusivity for Secondary Lanes and grants Stonefield "sole discretion" to utilize other carriers, brokers, or transportation providers on those lanes.
Lanes 8 through 14, the lanes on which Cascade and Briarwood were engaged, are unambiguously classified as Secondary Lanes under the Lane Table and Section 2(b). The contractual text is clear, complete, and unambiguous, and it is dispositive of the exclusivity question. No resort to extrinsic evidence is necessary or appropriate.
Even if the Court were to consider extrinsic evidence, however, the result would be the same. The drafting history of the TSA — as reflected in the engagement with Ashford Meridian LLP — confirms that the Primary/Secondary Lane distinction was a negotiated term, with the parties deliberately limiting the exclusivity obligation to the seven highest-volume lanes in the network. The remaining lanes were intentionally left non-exclusive to provide Stonefield with operational flexibility.
B. Conditional Nature of Primary Lane Exclusivity
Even if the Court were to conclude — contrary to the plain text — that the exclusivity provisions extended to some or all of Lanes 8 through 14, a secondary defense exists based on the conditional nature of the exclusivity obligation. As set forth in Section 2(a) of Schedule C, the exclusivity commitment is not absolute. Rather, it is expressly conditioned upon VTS "maintain[ing] the Service Level Obligations set forth in Schedule A with respect to such Primary Lane." The "for the avoidance of doubt" sentence reinforces this point: "Shipper-Broker's obligation to utilize Carrier-Provider exclusively on Primary Lanes is conditioned upon Carrier-Provider's continuous compliance with applicable Service Level Obligations."
This conditional structure operates as a classic condition precedent under New York law. See Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 690 (1995) (defining a condition precedent as "an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises"). Where a condition precedent is not satisfied, the dependent obligation does not arise. Id. at 691.
As of the fourth quarter of 2021 — the period during which Stonefield was engaging Cascade and Briarwood on Lanes 8–14 — VTS was failing all five of its material SLO metrics:
•  On-time pickup rate: 78.2% (against a 95% SLO threshold) — a shortfall of 16.8 percentage points.
•  On-time delivery rate: 81.6% (against a 93% SLO threshold) — a shortfall of 11.4 percentage points.
•  Tender acceptance rate: 71.4% (against a 90% SLO threshold) — a shortfall of 18.6 percentage points, meaning VTS was rejecting nearly 30% of freight tenders.
•  Equipment availability: Approximately 62% of the committed fleet was available (approximately 248 of 400 committed tractors), against an 85% SLO threshold — a shortfall of 23 percentage points.
•  Cargo claims ratio: 1.07% (against a maximum threshold of 0.5%) — more than double the allowable rate.
These SLO failures were systemic and pervasive, affecting VTS's operations across both Primary and Secondary Lanes. Under the conditional exclusivity provision, VTS's failure to maintain SLO compliance excused Stonefield's exclusivity obligation — even on the Primary Lanes.
Therefore, even if Stonefield had used Cascade or Briarwood on Primary Lanes — which it did not — a strong argument exists that the exclusivity condition precedent was not satisfied due to VTS's SLO failures, and Stonefield's exclusivity obligation was therefore excused. This provides an independent, alternative defense to any exclusivity claim, although we note that this defense is unnecessary with respect to Lanes 8–14 because those lanes are not subject to exclusivity in the first instance.
C. Vantor's Potential Counter-Arguments
It is prudent to anticipate the counter-arguments that Vantor may advance in response to the exclusivity defense. We have identified three principal arguments that Vantor may raise, each of which is addressed below.
1. Argument that all numbered lanes (1–14) are "Primary."
Vantor may contend that the reference in its Complaint and Amended Complaint to "14 designated origin-destination pairs" means that all fourteen of the first lanes in the Lane Table are designated as Primary Lanes, and that exclusivity therefore extends to Lanes 1 through 14. This argument is flatly inconsistent with the plain text of Schedule C, Section 2(a), which limits Primary Lane status to "Lanes 1 through 7 as set forth in the Lane Table attached hereto." The sequential numbering of all twenty-two lanes in the Lane Table does not alter the classification scheme established in Section 2. Vantor's Complaint appears to conflate the number of entries in the Lane Table (or perhaps the first fourteen entries) with the subset of those entries that carry the Primary Lane designation. The contractual text is unambiguous, and Vantor's mischaracterization does not create an ambiguity where none exists. See Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 13 N.Y.3d 398, 404 (2009) (a party's litigation position about a contract's meaning does not render an otherwise unambiguous contract ambiguous).
2. Argument of implied exclusivity.
Vantor may alternatively argue that the Annual Committed Volume of $43.2 million per year, combined with the parties' course of dealing, created an implied exclusivity obligation that extends across all lanes — including Secondary Lanes. This argument fails for two independent reasons.
First, the TSA contains an express exclusivity provision that is limited in scope to Primary Lanes. Under New York law, where a contract contains an express provision addressing a particular subject, no implied term may be inferred that is inconsistent with or broader than the express provision. See Rowe v. Great Atl. & Pac. Tea Co., 46 N.Y.2d 62, 69 (1978). The parol evidence rule precludes the introduction of extrinsic evidence to add terms to a fully integrated agreement. The TSA is fully integrated, as confirmed by the merger and integration clause in Section 18.1, which provides that the TSA and its schedules "constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior negotiations, representations, warranties, commitments, offers, contracts, and writings, written or oral, with respect to such subject matter." In the face of this integration clause and the express limitation of exclusivity to Primary Lanes, no implied exclusivity obligation can arise with respect to Secondary Lanes.
Second, even if an implied term were permissible, the ACV is a minimum volume commitment — not an exclusivity guarantee. The ACV establishes the floor of freight volume that Stonefield commits to tender to VTS during each contract year, but it does not restrict Stonefield from using other carriers on non-exclusive lanes. These are distinct contractual concepts, and Vantor's attempt to conflate them should be rejected.
3. Argument of course of dealing.
Vantor may argue that Stonefield historically used VTS exclusively on Lanes 8–14 during the first two years of the TSA term (April 2019 through approximately September 2021), and that this historical practice created a course of dealing that effectively modified the contractual terms to impose exclusivity on those lanes. This argument fails under New York law for several reasons.
Under New York law, a course of dealing cannot override express contractual terms. See Rose v. Spa Realty Assocs., 42 N.Y.2d 338, 343 (1977). Where the contract is unambiguous, extrinsic evidence of the parties' course of dealing is inadmissible to vary its terms. See W.W.W. Assocs., Inc. v. Giancontieri, 77 N.Y.2d at 163. Moreover, the TSA contains both a merger and integration clause (Section 18.1) and a no-oral-modification clause (Section 18.3), which provides that the TSA "may not be amended, modified, or supplemented except by a written instrument executed by authorized representatives of both parties." These clauses foreclose any argument that the parties' course of performance or course of dealing modified the express terms of Schedule C. See General Obligations Law § 15-301(1) (giving effect to no-oral-modification clauses).
Furthermore, even as a factual matter, the premise of Vantor's argument is questionable. The fact that Stonefield may have historically tendered freight to VTS on Secondary Lanes does not establish that it did so pursuant to an exclusivity obligation. It may simply reflect that VTS was, during the early period of the TSA, the most competitively priced or operationally convenient carrier for those lanes. Stonefield's decision to engage alternative carriers when VTS's performance deteriorated is consistent with the exercise of the contractual discretion expressly reserved in Section 2(b), not with the modification of a contractual right.
VI. Implications for Litigation Strategy
The exclusivity analysis set forth in this memorandum strongly supports Stonefield's position that its engagement of Cascade Freight Systems Inc. and Briarwood Trucking Co. to service Lanes 8 through 14 did not constitute a breach of the TSA's exclusivity provisions. The plain language of Schedule C is clear and dispositive: the exclusivity obligation applies only to Primary Lanes (Lanes 1–7), all alternative carrier usage was confined to Secondary Lanes (Lanes 8–14), and Section 2(b) expressly grants Stonefield sole discretion to use other carriers on Secondary Lanes.
This defense should be asserted prominently in the Answer and Affirmative Defenses to the Amended Complaint. It is recommended that the Answer specifically deny any exclusivity violation with respect to Lanes 8 through 14 and affirmatively plead that those lanes are classified as Secondary Lanes under Schedule C, Section 2(b), and are not subject to any exclusivity obligation. The affirmative defense should be supported by direct citation to the contractual text and should highlight the express negation of exclusivity in Section 2(b).
Third-party subpoenas duces tecum to Cascade Freight Systems Inc. (4700 Lakehurst Court, Columbus, Ohio 43016) and Briarwood Trucking Co. (1280 Jefferson Davis Highway, Suite 310, Arlington, Virginia 22202) should be issued during the discovery phase to obtain independent, lane-specific records confirming the scope of their services for Stonefield. These records — including contracts, rate confirmations, load tenders, bills of lading, and settlement statements — will corroborate that all alternative carrier usage was confined to Secondary Lanes and that no freight was diverted from Primary Lanes.
The conditional nature of the Primary Lane exclusivity (tied to VTS's SLO compliance) provides a robust secondary defense that should be developed in parallel. Even if Vantor attempts to expand the scope of its exclusivity allegations — whether by arguing that all fourteen of the first lanes are Primary or by asserting implied exclusivity — Stonefield can demonstrate that VTS's systemic SLO failures excused the exclusivity obligation even on the Primary Lanes. The SLO performance data for Q4 2021 should be compiled and preserved for use in summary judgment briefing.
Finally, as noted above, the Kirkwood Email of September 22, 2021, while potentially problematic on the pretext and motive issue, actually supports the exclusivity defense. The email's express reference to "Lanes 8–14" confirms that the diversion was limited to Secondary Lanes. If the Kirkwood Email becomes a focus of Vantor's case — as it likely will — the litigation team should emphasize the lane-specific reference as evidence that Stonefield's personnel understood and respected the Primary/Secondary Lane distinction, and that no Primary Lane freight was diverted to alternative carriers.
VII. Recommendations
Based on the foregoing analysis, I recommend the following actions:
1.  Incorporate the Schedule C lane classification analysis into the Answer and Affirmative Defenses to the Amended Complaint. The Answer should specifically deny that Stonefield breached any exclusivity provision of the TSA and should affirmatively plead that Lanes 8–14 are classified as Secondary Lanes under Schedule C, Section 2(b), and that no exclusivity obligation applies to those lanes. The affirmative defense should quote the relevant contractual language and should be accompanied by a copy of Schedule C as an exhibit to the Answer or, at minimum, incorporated by reference.
2.  Prepare targeted discovery requests to Vantor seeking identification of the specific lanes on which Vantor alleges exclusivity was breached. The current Complaint and Amended Complaint are vague as to the specific lanes at issue. Interrogatories should require Vantor to identify, by lane number and Designated Origin-Destination Pair, each lane on which it contends exclusivity was violated, and to state the factual and contractual basis for its contention that each such lane is subject to exclusivity. This will force Vantor to confront the plain text of Section 2(a) and will narrow the scope of the dispute.
3.  Issue third-party subpoenas duces tecum to Cascade Freight Systems Inc. and Briarwood Trucking Co. These subpoenas should seek all contracts, communications, rate confirmations, load tenders, bills of lading, freight settlement statements, and lane-by-lane freight records related to services provided for or on behalf of Stonefield. The subpoenas should be targeted to elicit lane-specific information that will independently confirm that all alternative carrier usage was confined to Secondary Lanes. As noted, these subpoenas were subsequently issued on June 28, 2023.
4.  During the deposition of Derek Pruitt (VP, Business Development, Vantor), explore his understanding of the Primary vs. Secondary Lane distinction. Pruitt was the primary relationship manager between Vantor and Stonefield and was involved in the negotiation and ongoing administration of the TSA. His deposition testimony regarding his understanding of the lane classification scheme — and, in particular, whether Vantor ever understood Lanes 8–14 to be subject to exclusivity — will be critical to undermining Vantor's exclusivity claims. Additionally, Pruitt should be questioned regarding whether Vantor ever sought to reclassify any Secondary Lane as a Primary Lane under Section 3 of Schedule C. If Vantor never sought reclassification, this fact undercuts any argument that the parties understood Lanes 8–14 to be exclusive.
5.  Coordinate with the pretext/good faith analysis (separate memorandum) regarding the Kirkwood Email. The lane-specific reference in the Kirkwood Email ("Lanes 8–14") is favorable for the exclusivity defense and should be emphasized if the email becomes a focus of Vantor's case. However, the email's reference to "pull[ing] the plug on the whole contract" raises distinct issues regarding pretext and good faith in the termination context. The litigation team should develop a unified strategy for addressing both aspects of the Kirkwood Email — leveraging the favorable lane reference for the exclusivity defense while managing the risk posed by the termination language. This coordination should be guided by the analysis in the October 7, 2022 Research Memorandum re Pretext and Good Faith in Termination for Cause (Document 22).
VIII. Exhibits / Attachments Referenced
The following exhibits are referenced in this memorandum and are attached hereto or available in the matter file:
•  Exhibit A: Schedule C to the Transportation Services Agreement (Contract Ref. No. SLG-VTS-2019-0315), including the Lane Table and Sections 1 through 3 (Lane Designations and Exclusivity Provisions).
•  Exhibit B: Email from Janet Kirkwood (VP, Carrier Relations, Stonefield Logistics Group Inc.) to Carlos Medina (SVP, Operations, Stonefield Logistics Group Inc.), dated September 22, 2021.
•  Exhibit C: Preliminary Lane-by-Lane Freight Records reflecting Cascade Freight Systems Inc. and Briarwood Trucking Co. usage on Lanes 8–14, for the period Q3 2021 through Q4 2021 (compiled from Stonefield internal freight management system; subject to completion and verification during the document production process).
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
This memorandum was prepared by Calderwood & Harkness LLP in anticipation of litigation and for the purpose of providing legal advice to the client. It is protected by the attorney-client privilege and the work product doctrine. It should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, NY 10166
Matter No. 1012-00005 Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
Lane No. | Classification | Cascade Usage | Briarwood Usage | Exclusivity Applies?
1–7 | Primary Lane | No | No | Yes (conditional on SLO compliance)
8 | Secondary Lane | Yes | No | No
9 | Secondary Lane | Yes | No | No
10 | Secondary Lane | Yes | Yes | No
11 | Secondary Lane | Yes | Yes | No
12 | Secondary Lane | Yes | No | No
13 | Secondary Lane | No | Yes | No
14 | Secondary Lane | No | Yes | No
15–22 | Secondary Lane | No | No | No

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