Tobias and Alison,
I am writing to update you on a significant procedural development in the above-captioned matter and to seek your authorization on a recommended next step.
**Expiration of the December 17 Deadline**
As you will recall, Judge Calloway's October 18, 2023 order granting Caldwell Royce & Shapiro LLP's motion to withdraw as counsel for Vantor Holdings Corp. expressly required Vantor to retain substitute counsel and file a notice of appearance within 60 days — i.e., by December 17, 2023. CRS's withdrawal was reportedly driven by irreconcilable differences with its client; the motion and supporting docket entry referenced a fee dispute, citing approximately $870,000 in unpaid CRS invoices.
That deadline expired yesterday. As of this morning, no new counsel has entered a notice of appearance on behalf of Vantor on the docket. We will continue to monitor the docket closely, but this is a meaningful development that warrants prompt action on our part.
**Significance: Corporate Pro Se Limitation**
This is not a situation where Vantor can simply continue litigating without an attorney. As a New York corporation, Vantor Holdings Corp. cannot appear or prosecute this action pro se in federal court — a corporation must be represented by licensed counsel. Accordingly, Vantor is currently unable to take any action in this case: it cannot file or respond to motions, conduct discovery, or appear at hearings. All deadlines under the February 17, 2023 Case Management Order remain stayed pending a new counsel appearance (the fact discovery deadline was September 29, 2023; the expert discovery deadline is January 12, 2024; and the dispositive motion deadline is March 1, 2024). The case has been effectively stalled since CRS's withdrawal in October, with no prosecution activity for over two months.
**Recommended Next Step: Letter to the Court**
We recommend that Calderwood & Harkness promptly file a letter with Judge Calloway advising the Court that the December 17 deadline has passed without a counsel appearance by Vantor. The letter would request a status conference and invite the Court to consider appropriate relief, including potential dismissal of the action for failure to prosecute under Federal Rule of Civil Procedure 41(b).
Our team has begun drafting this letter. Given the upcoming holiday period, we are targeting a filing date of approximately January 8, 2024, which will give us time to finalize the submission and allow a reasonable interval after the deadline's expiration. We would appreciate your authorization to proceed with this filing.
**FRCP 41(b) Standards**
By way of brief background, courts in the Second Circuit evaluate motions for involuntary dismissal for failure to prosecute under FRCP 41(b) by considering several factors:
1. The duration of the plaintiff's failure to advance the case; 2. Whether the plaintiff received notice that further delay would result in dismissal; 3. Whether the defendant is likely to be prejudiced by further delay; 4. The balance between the court's interest in managing its docket and the plaintiff's interest in having its day in court; and 5. The efficacy of lesser sanctions.
We believe these factors weigh in Stonefield's favor. Judge Calloway's October 18 order placed Vantor on explicit notice of the 60-day deadline, and the failure to comply directly supports a finding under factor (2). The case has seen no prosecution activity for over two months, addressing factor (1). As to prejudice, Stonefield has incurred approximately **$4.42 million** in legal fees and costs defending this matter (approximately $3.8 million in fees and $620,000 in costs and disbursements through October 2023), and continued indefinite delay imposes ongoing prejudice in the form of litigation uncertainty, continued contingent liability disclosure obligations, and the diversion of management time and attention. Importantly, dismissal under Rule 41(b) is typically with prejudice — operating as an adjudication on the merits — unless the Court specifies otherwise. This would be the most favorable outcome for Stonefield, permanently resolving Vantor's $95.4 million claim.
**Alternative Scenarios**
In the interest of setting appropriate expectations, I should note that the Court may, in its discretion, grant Vantor additional time to retain counsel rather than dismissing the case outright. Courts sometimes show leniency in these circumstances, particularly where an individual appears and requests an extension. There is some possibility that Nikolai Vantorovich, Vantor's CEO and approximately 58% owner, could attempt to appear personally on behalf of the corporation. Such an appearance would be improper — a non-attorney cannot represent a corporation in federal court — but it could prompt Judge Calloway to provide a further grace period rather than dismiss immediately.
If the Court does grant additional time, we are prepared. We have a draft FRCP 41(b) motion for involuntary dismissal ready to finalize and file promptly if any renewed deadline passes without compliance.
It is also worth noting that Vantor's difficulty retaining substitute counsel is not surprising. Beyond the fee dispute with CRS, Vantor's litigation posture has weakened considerably through discovery. The Milescu email — in which Vantor's own VP of Operations admitted that VTS pulled 85 tractors off Stonefield dedicated lanes — is extremely damaging to Vantor's claims. The Pruitt deposition produced significant admissions regarding fleet capacity struggles and redeployment to Northwind Distribution Co., undermining Vantor's damages theory. And Dr. Rosser's rebuttal expert report from the Kensington Analytics engagement limits Vantor's maximum alternative exposure to $8.2 million, a fraction of the $95.4 million claimed. Any prospective counsel reviewing this file would recognize these challenges, particularly given what appears to be a client unwilling or unable to pay its legal bills.
**Lender Reporting**
The quarterly litigation update to Lakeshore National Bank (Catherine Devereaux) for Q4 2023 is due in early January. Patrick will prepare a draft for your review, Tobias, reflecting this development and the unchanged exposure assessment. The update should note the plaintiff's counsel withdrawal, the failure to retain substitute counsel within the court-ordered deadline, and the potential for dismissal for failure to prosecute.
**Financial Reporting / Audit Consideration**
This development further supports characterizing the likelihood of a material adverse outcome as "remote" for purposes of Stonefield's financial reporting and audit disclosure with Clarendon Partners LLP (Robert Farraday). I would suggest discussing this updated assessment with Priya Ramachandran at an appropriate time.
**Overall Case Posture**
To step back briefly, Stonefield's overall litigation posture remains strong. Discovery produced highly favorable evidence, including the Milescu "smoking gun" email documenting VTS's fleet redeployment to Northwind Distribution Co., as well as the Pruitt deposition admissions on mitigation failure. Dr. Rosser's rebuttal expert report caps the maximum alternative exposure at $8.2 million. Multiple viable affirmative defenses remain available, including valid termination for Cause under the Agreement, unenforceable penalty, the consequential damages waiver under Section 15.1, failure to mitigate, and the first-to-breach doctrine. I would also note that the Vantorovich deposition was never completed — it was cut short at 4.5 hours on August 18, 2023, and while the Court ordered its completion by October 20, 2023, CRS withdrew before that date. The incomplete deposition record is another factor that weighs against Vantor in any prosecution analysis.
**Next Steps**
I would welcome a brief call with both of you to discuss this development and confirm the recommended approach before the holidays. Please let us know your availability this week or early next.
In the meantime, the team will continue monitoring the docket daily through the holiday period, and we will notify you immediately if any filing is made on Vantor's behalf.
Wishing you both a happy holiday season.
Best regards,
Samuel Eklund Partner Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, NY 10166 T: (212) 555-4100 seklund@calderwoodharkness.com
Matter Ref: 1012-00005
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