PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
August 3, 2023
CALDERWOOD & HARKNESS LLP
Monthly Litigation Status Report — July 2023
Matter: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
Calderwood & Harkness Matter No.: 1012-00005
Reporting Period: July 1, 2023 – July 31, 2023
From: Patrick Gallagher, Lead Associate, Litigation (General), Calderwood & Harkness LLP
To: Tobias Wren, General Counsel, Stonefield Logistics Group Inc.
CC: Samuel Eklund, Responsible Partner, Calderwood & Harkness LLP (internal copy)
Classification: PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
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1. Executive Summary
July 2023 was a deposition-intensive month in which substantial progress was made in developing Stonefield's factual record for summary judgment and trial. Three fact depositions were completed during the reporting period: Derek Pruitt (VP, Business Development, Vantor) on July 10, Janet Kirkwood (VP, Carrier Relations, Stonefield) on July 14, and Raymond Hess (Director, Contract Compliance, Stonefield) on July 27. A fourth deposition — that of Sandra Milescu (COO, Vantor/VTS) — was completed on August 4, 2023, immediately following the close of the reporting period. Because of its proximity and significance, we have included a preliminary summary of Ms. Milescu's testimony in this report. The partial deposition of Nikolai Vantorovich (CEO, Vantor) is scheduled for August 18, 2023, and preparation for that examination is actively underway.
The rebuttal expert report by Dr. Evelyn Rosser of Kensington Analytics Group LLC is in active preparation. We anticipate receiving a draft from Dr. Rosser by approximately August 10, 2023, and the service deadline under the Case Management Order is August 25, 2023. Our review window is accordingly compressed, and we will prioritize the report review during the August 10–20 period.
On the document discovery front, the review of Vantor's supplemental production (4,218 documents, produced June 22, 2023 pursuant to Judge Calloway's June 9, 2023 order) was completed during July. This review yielded significant favorable evidence, including fleet management records confirming that VTS redirected 85 tractors to a competing shipper — Northwind Distribution Co. — in October 2021, prior to the Q4 2021 performance failures cited in Stonefield's Cure Notice. These documents corroborate the previously identified November 12, 2021 Milescu email (VHC-008417) and are central to our material breach and first-to-breach defenses.
The case remains before the Honorable Margaret T. Calloway, United States District Judge, Southern District of New York. Discovery is proceeding on schedule, with the fact discovery deadline of September 29, 2023 approaching. No motions were filed or decided during the reporting period, and there are no outstanding discovery disputes requiring judicial intervention at this time.
Overall, the developments in July were meaningfully favorable to Stonefield's defense posture. The details are set forth below.
2. Case Background (Standing Section — Abbreviated)
This section is included for continuity across monthly reports and provides a summary of the case background and procedural history.
Vantor Holdings Corp. ("Vantor" or "Plaintiff") filed this action on August 12, 2022, in the United States District Court for the Southern District of New York, alleging that Stonefield Logistics Group Inc. ("Stonefield" or "SLG") wrongfully terminated a five-year Transportation Services Agreement dated March 15, 2019 (Contract Ref. No. SLG-VTS-2019-0315) (the "TSA"). The TSA was between Stonefield Logistics Group Inc., as Shipper-Broker, and Vantor Transport Services LLC ("VTS"), as Carrier-Provider. VTS is a wholly owned subsidiary of Vantor Holdings Corp.
Vantor alleges breach of contract and claims approximately $95.4 million in damages, comprising liquidated damages, lost profits, stranded asset costs, workforce reduction costs, and mitigation costs. Stonefield terminated the TSA effective March 4, 2022, for Cause under Section 13.1(a) of the TSA, citing VTS's sustained failure to meet its Service Level Obligations ("SLOs") during Q4 2021 across all five contractually defined performance metrics. A Cure Notice was issued on January 18, 2022, providing VTS with a 30-day cure period. VTS did not cure the identified deficiencies within the cure period (cure deadline: February 17, 2022), and the termination letter was issued on March 4, 2022 by Tobias Wren, General Counsel of Stonefield.
Stonefield filed its Answer, Affirmative Defenses, and Counterclaim for Declaratory Judgment on January 13, 2023. Stonefield's affirmative defenses include, among others, material breach by VTS, failure to mitigate, the first-to-breach doctrine, and enforceability of the for-cause termination under Section 13.1(a).
The Case Management Order entered by Judge Calloway on February 17, 2023 establishes the following remaining key deadlines:
• Fact discovery Deadline: September 29, 2023
• Expert discovery Deadline: January 12, 2024
• Dispositive Motions Deadline: March 1, 2024
Plaintiff is represented by Caldwell Royce & Shapiro LLP ("CRS"), with Harrison Caldwell as lead partner and Jason Whitford as senior associate. Stonefield is represented by Calderwood & Harkness LLP ("C&H"), with Samuel Eklund as responsible partner, Patrick Gallagher as lead associate, and Simone Laroche as working associate.
3. Depositions Completed During Reporting Period
Three fact depositions were completed during July 2023. Each is discussed in detail below, including a summary of key testimony, assessment of witness performance, and implications for Stonefield's defense.
3.1 Deposition of Derek Pruitt (VP, Business Development, Vantor Holdings Corp.) — July 10, 2023
Duration: Approximately 7 hours (full day, with breaks)
Location: Offices of Caldwell Royce & Shapiro LLP, 1 Liberty Plaza, 22nd Floor, New York, NY 10006
Examined by: Patrick Gallagher (Calderwood & Harkness LLP)
Defending counsel: Jason Whitford (Caldwell Royce & Shapiro LLP)
Court reporter: Apex Litigation Services (Transcript No. APX-230710-DP)
Mr. Pruitt served as Vantor's Vice President of Business Development and was the primary relationship manager responsible for the SLG account throughout the term of the TSA. His testimony was sought to establish Vantor's awareness of its own performance failures, its response (or lack thereof) to Stonefield's concerns, and the adequacy of its post-termination mitigation efforts.
Key topics covered during examination:
• Vantor's awareness of VTS's failure to meet SLO thresholds in Q3 and Q4 2021
• Pruitt's role as the primary business relationship contact between Vantor and Stonefield
• Communications between Pruitt and Janet Kirkwood (VP, Carrier Relations, SLG) regarding VTS performance issues
• Vantor's knowledge of fleet capacity reductions and the reassignment of tractors to other accounts
• Steps taken by Vantor after the March 4, 2022 termination to replace lost Stonefield volume (mitigation)
• The basis for Vantor's damages calculations as they relate to lost business volume
Key admissions and testimony obtained:
1. Fleet Capacity Acknowledgment. Mr. Pruitt acknowledged that VTS "struggled" to maintain the committed fleet capacity of 400 tractors during Q4 2021. While he attempted to attribute this to broader industry-wide driver shortages, he was unable to point to any specific external data or analysis supporting that characterization when pressed. This admission is consistent with the fleet capacity data in the Cure Notice.
2. Failure to Identify Mitigation Steps. When asked to identify specific, concrete steps taken by Vantor after the March 4, 2022 termination to replace the Stonefield volume, Mr. Pruitt was unable to do so. He referenced "general business development efforts" and "outreach to potential new customers," but could not identify any particular customer, contract, or revenue stream that Vantor pursued as a replacement. He was also unable to identify any individual at Vantor who was specifically tasked with mitigation efforts. This testimony is highly favorable for Stonefield's failure-to-mitigate affirmative defense.
3. Acknowledgment of Stonefield Complaints. Mr. Pruitt acknowledged receiving complaints from SLG's carrier relations team — specifically from Janet Kirkwood — regarding tender rejections by VTS in Q3 and Q4 2021. He conceded that these complaints were communicated to him both orally and in writing, though he characterized them as "routine operational discussions" rather than formal complaints.
4. On-Time Pickup Rate Concession. Mr. Pruitt conceded that VTS's on-time pickup rate fell below the 95% SLO threshold during Q4 2021. He attempted to contextualize this by referencing weather disruptions and holiday-season volume spikes, but acknowledged that the metric was, in fact, below the contractual threshold.
Assessment:
Mr. Pruitt's testimony was, on the whole, favorable for Stonefield's defense. His inability to articulate any concrete post-termination mitigation efforts is particularly significant, as it directly supports the failure-to-mitigate affirmative defense and may substantially reduce Vantor's recoverable damages even if the Court were to find for Vantor on liability. His admissions regarding fleet capacity struggles corroborate the material breach alleged in the January 18, 2022 Cure Notice and undermine Vantor's narrative that VTS's performance failures were attributable to factors outside its control.
Mr. Whitford's defense of Mr. Pruitt was competent but unremarkable. He interposed relatively few objections, and his redirect examination did not materially rehabilitate Mr. Pruitt on the key mitigation points.
A detailed deposition summary memorandum was prepared by Simone Laroche and circulated internally on July 17, 2023.
3.2 Deposition of Janet Kirkwood (VP, Carrier Relations, Stonefield Logistics Group Inc.) — July 14, 2023
Duration: Approximately 6.5 hours
Location: Offices of Calderwood & Harkness LLP, 200 Park Avenue, 38th Floor, New York, NY 10166
Examined by: Harrison Caldwell and Jason Whitford (Caldwell Royce & Shapiro LLP)
Defending counsel: Samuel Eklund (Calderwood & Harkness LLP)
Court reporter: Apex Litigation Services (Transcript No. APX-230714-JK)
Ms. Kirkwood is Stonefield's Vice President of Carrier Relations and was centrally involved in managing the VTS relationship, monitoring performance, and ultimately participating in the decision-making process that led to the termination of the TSA. As a key Stonefield witness, her deposition was anticipated to be heavily contested.
Witness Preparation:
A witness preparation session was conducted on July 11, 2023, with Patrick Gallagher and Samuel Eklund present alongside Ms. Kirkwood. The preparation session covered the key risk areas identified in our pre-deposition analysis, including:
• The September 22, 2021 internal email from Ms. Kirkwood to Carlos Medina (SVP, Operations), in which Ms. Kirkwood used the phrase "pull the plug" in reference to the VTS relationship. This email has been identified as a significant risk document because, taken out of context, the language could be used by Vantor to support a narrative of premeditated or pretextual termination.
• The diversion of certain freight volumes to Cascade Freight Systems Inc. and Briarwood Trucking Co., which Vantor may characterize as evidence that Stonefield was already planning to replace VTS.
• Ms. Kirkwood's awareness of the anticipated April 2022 rate adjustment under the TSA's Rate Adjustment Mechanism, which would have increased the weighted average per-mile rate from $2.87/mile to $3.28/mile — a 14.3% increase translating to approximately $6.2 million in additional annual transportation costs.
Key topics covered by Caldwell Royce & Shapiro:
CRS's examination focused heavily on the following areas:
• The September 22, 2021 "pull the plug" email and the circumstances surrounding its creation
• The diversion of freight volumes to Cascade Freight Systems Inc. and Briarwood Trucking Co., and whether this diversion constituted a breach of the exclusivity provisions of the TSA
• Ms. Kirkwood's role in the termination decision-making process
• Her awareness of the upcoming April 2022 rate adjustment and whether cost considerations motivated the termination
• Stonefield's communications with VTS regarding performance failures, including the timing and substance of informal complaints
Key testimony by Ms. Kirkwood:
1. Volume Diversion to Secondary Lanes. Ms. Kirkwood maintained that the diversion of freight volume to Cascade and Briarwood was limited to Lanes 8–14, which are classified as "Secondary Lanes" under Schedule C to the TSA. She testified that Secondary Lanes are expressly excluded from the exclusivity restrictions that apply to the "Primary Lane Network" defined in Schedule B. This testimony, if credited, defeats Vantor's argument that Stonefield's use of alternative carriers constituted a breach of the TSA's exclusivity provisions.
2. Operational Necessity of Diversion. Ms. Kirkwood explained that the diversion to Cascade and Briarwood was operationally necessary because VTS was rejecting tenders on Lanes 8–14 at an unacceptable rate. She cited the Q4 2021 tender acceptance rate of 71.4%, which was well below the 90% SLO threshold. She testified that Stonefield could not leave freight sitting at origin without alternative carrier coverage, and that the use of Cascade and Briarwood was a direct and reasonable response to VTS's refusal to accept tenders.
3. Rate Adjustment Awareness. Ms. Kirkwood acknowledged awareness of the upcoming April 2022 rate adjustment but denied that it influenced the termination decision. She testified that the termination was driven by VTS's sustained operational failures across all five SLO metrics during Q4 2021, and that the rate adjustment was not discussed in any of the internal meetings or communications in which the termination decision was made.
4. Termination Decision Rationale. Ms. Kirkwood stated that the decision to terminate was driven by VTS's sustained operational failures, not cost considerations. She pointed to the consistent pattern of underperformance across Q3 and Q4 2021, the lack of any meaningful remediation by VTS during the cure period, and the operational harm that VTS's failures were causing to Stonefield's own customer relationships.
Assessment:
Ms. Kirkwood performed well under what was, at times, aggressive cross-examination by Mr. Caldwell. Mr. Caldwell focused heavily on the September 22, 2021 email and attempted to establish a narrative of premeditated termination by walking Ms. Kirkwood through a timeline of events from September 2021 through March 2022. Ms. Kirkwood's testimony was consistent with her preparation, and she effectively contextualized the "pull the plug" language by explaining that the email was written in the context of ongoing performance frustrations and that the email itself also references VTS's performance failures as the primary concern.
The September 2021 email remains a risk point for trial. Notwithstanding Ms. Kirkwood's effective testimony, the "pull the plug" language is vivid and could resonate with a jury if presented alongside the rate adjustment evidence. We will continue to develop the factual record to contextualize this document and will address it in the summary judgment roadmap.
Samuel Eklund's defense of the deposition was effective. He preserved objections at appropriate points and redirected on the rate adjustment issue to reinforce that cost was not a motivating factor.
A detailed deposition summary memorandum was prepared by Simone Laroche and circulated on July 20, 2023.
3.3 Deposition of Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.) — July 27, 2023
Duration: Approximately 5 hours
Location: Offices of Calderwood & Harkness LLP, 200 Park Avenue, 38th Floor, New York, NY 10166
Examined by: Jason Whitford (Caldwell Royce & Shapiro LLP)
Defending counsel: Patrick Gallagher (Calderwood & Harkness LLP)
Court reporter: Apex Litigation Services (Transcript No. APX-230727-RH)
Mr. Hess is Stonefield's Director of Contract Compliance and was responsible for monitoring VTS's performance against the SLO metrics, preparing the internal compliance analyses that informed the Cure Notice, and evaluating VTS's response to the Cure Notice.
Witness Preparation:
A witness preparation session was conducted on July 24, 2023, with Simone Laroche present alongside Mr. Hess. The preparation session focused on:
• The process by which the January 18, 2022 Cure Notice was drafted and issued
• The data sources used to calculate the Q4 2021 performance metrics
• Mr. Hess's communications with Lorraine Beckwith of Ashford Meridian LLP during the January–February 2022 cure period (with instructions to preserve attorney-client privilege)
• Mr. Hess's evaluation of VTS's February 14, 2022 response to the Cure Notice
Key topics covered by CRS:
Mr. Whitford's examination focused on the process of drafting and issuing the Cure Notice, the data sources underlying the performance metrics, communications with outside counsel at Ashford Meridian during the cure period, Hess's evaluation of VTS's February 14, 2022 response, and the mechanics of the March 4, 2022 termination letter (which was formally issued by Tobias Wren, General Counsel).
Key testimony by Mr. Hess:
1. Metrics Derived from VTS's Own Portal. Mr. Hess confirmed that all Q4 2021 performance metrics cited in the Cure Notice were derived from VTS's own Carrier Performance Portal, not from Stonefield's internal tracking systems. This is a significant point because it demonstrates that Stonefield relied on Vantor's own self-reported data in making the determination that VTS had failed to meet its SLOs. It substantially undercuts any argument by Vantor that the metrics were inaccurate or that Stonefield manipulated the data to support its termination decision.
2. Specific Metrics. Mr. Hess confirmed the specific Q4 2021 metrics cited in the Cure Notice as follows:
3. VTS Did Not Dispute the Metrics. Mr. Hess testified that VTS did not dispute the accuracy of the performance metrics in its February 14, 2022 response to the Cure Notice. Rather, Vantor's response acknowledged "operational challenges" but did not contest the underlying data. This testimony is critical, as it eliminates a potential defense argument that the termination was based on disputed or inaccurate performance data.
4. Ashford Meridian Involvement. Mr. Hess testified that the Cure Notice was drafted with input from Ashford Meridian LLP, Stonefield's then-outside counsel. Mr. Hess preserved attorney-client privilege throughout his testimony — he acknowledged the involvement of outside counsel but did not disclose the substance or content of any legal advice received. Mr. Whitford pressed on this point, but Patrick Gallagher's objections were sustained and the privilege was preserved.
5. Cure Period and Determination. Mr. Hess explained the 30-day cure period established by Section 13.1(a) of the TSA (cure deadline: February 17, 2022). He described the process by which Stonefield evaluated whether VTS had achieved cure, including the review of updated performance data for the period following the issuance of the Cure Notice. Mr. Hess testified that VTS's performance did not meaningfully improve during the cure period and that the determination that cure had not been achieved was made based on objective performance data.
Assessment:
Mr. Hess's testimony was strong and methodical. He presented as a credible, detail-oriented witness with a thorough understanding of the compliance process and the contractual framework. His confirmation that the performance data originated from VTS's own Carrier Performance Portal is a particularly important evidentiary point — it significantly undercuts any potential challenge to the accuracy or reliability of the metrics that formed the basis for the termination. Mr. Whitford did not effectively impeach Mr. Hess's testimony on any material point.
A deposition summary memorandum was prepared by Simone Laroche and circulated on August 1, 2023.
4. Depositions Completed or Scheduled After Reporting Period
4.1 Deposition of Sandra Milescu (COO, Vantor Holdings Corp. / Vantor Transport Services LLC) — August 4, 2023
Note: This deposition occurred on August 4, 2023, after the close of the July reporting period. It is included in this report because of its proximity and its significant implications for Stonefield's defense. A full deposition summary memorandum will be circulated by mid-August.
Duration: Approximately 7 hours (full day, with breaks)
Location: Offices of Caldwell Royce & Shapiro LLP, 1 Liberty Plaza, 22nd Floor, New York, NY 10006
Examined by: Patrick Gallagher (Calderwood & Harkness LLP)
Defending counsel: Harrison Caldwell (Caldwell Royce & Shapiro LLP)
Court reporter: Apex Litigation Services (Transcript No. APX-230804-SM)
Ms. Milescu serves as Chief Operating Officer of both Vantor Holdings Corp. and Vantor Transport Services LLC and was directly responsible for fleet management, operational decision-making, and the day-to-day execution of the TSA.
Key focus areas of examination:
• The November 12, 2021 internal email (Bates No. VHC-008417), in which Ms. Milescu informed Nikolai Vantorovich (CEO, Vantor) that VTS had "pulled 85 tractors off the SLG dedicated lanes"
• The fleet redeployment decisions made in October 2021, including the reassignment of tractors to the Northwind Distribution Co. account
• The relationship between VTS and Northwind Distribution Co., including the timing and commercial terms of that engagement
• Activities undertaken by VTS during the January 18 – February 17, 2022 cure period, including whether VTS took concrete steps to remediate the SLO failures identified in the Cure Notice
Key testimony (preliminary, based on day-of-deposition notes):
1. Confirmation of 85-Tractor Reassignment. Ms. Milescu confirmed that 85 tractors were reassigned from SLG-dedicated lanes to the Northwind Distribution Co. account in October 2021. This is a critical admission that directly corroborates the November 12, 2021 email and the fleet management documents identified in Vantor's supplemental production.
2. Characterization as "Temporary." Ms. Milescu characterized the reassignment as "temporary" and stated that it was driven by "commercial necessity" due to what she described as Stonefield's volume shortfalls. She asserted that SLG was not providing sufficient freight volume to justify maintaining the full committed fleet of 400 tractors on SLG-dedicated lanes, and that Vantor had to redeploy assets to maintain driver utilization and revenue.
3. Failure to Notify Stonefield. Ms. Milescu could not explain why Stonefield was not notified of the fleet reassignment, despite the TSA's express requirement that VTS maintain a minimum fleet capacity of 400 tractors and 1,200 trailers dedicated to the SLG account. She acknowledged that no written notice was provided to SLG and was unable to identify any oral communication in which SLG was informed of the redeployment. This failure to notify is particularly significant in light of the TSA's reporting and notification requirements.
4. Timing Undermines Causation Argument. Ms. Milescu acknowledged, under questioning, that the reassignment of the 85 tractors occurred in October 2021 — that is, before the Q4 2021 performance failures cited in the Cure Notice and before the period in which Vantor claims that Stonefield's alleged volume shortfalls caused VTS's underperformance. This chronology directly undermines Vantor's argument that SLG's conduct caused VTS's performance deficiencies. VTS unilaterally reduced its fleet capacity before the alleged triggering events.
Assessment:
Ms. Milescu's admission of the undisclosed 85-tractor reassignment to Northwind Distribution Co. is extremely helpful for Stonefield's defense. It directly supports the "first-to-breach" doctrine argument: VTS unilaterally reduced fleet capacity in October 2021 before Stonefield's alleged volume shortfalls or termination. It also undermines Vantor's causation theory by establishing that VTS's fleet reduction — a voluntary, commercially motivated decision — preceded and likely caused the Q4 2021 performance failures that formed the basis for the Cure Notice and termination.
Mr. Caldwell's defense of Ms. Milescu was vigorous, particularly on the "commercial necessity" characterization, but Ms. Milescu's inability to explain the failure to notify Stonefield was a significant vulnerability that Mr. Caldwell could not rehabilitate on redirect.
A full deposition summary memorandum will be prepared by Simone Laroche and circulated by mid-August.
4.2 Deposition of Nikolai Vantorovich (CEO, Vantor Holdings Corp.) — Scheduled August 18, 2023
The deposition of Mr. Vantorovich is scheduled for August 18, 2023 and is the final scheduled fact deposition for adverse witnesses. Preparation is actively underway:
• Preparation Memorandum: Being prepared by Simone Laroche, with an expected completion date of August 10, 2023. The memorandum will identify key documents for use during examination, prior testimony by other Vantor witnesses that may be used for impeachment, and risk areas.
• Examination Outline: Being prepared by Patrick Gallagher, with an expected completion date of August 14, 2023.
Key anticipated topics for examination:
• Mr. Vantorovich's overall role in corporate decision-making at Vantor, including his involvement in (or awareness of) the October 2021 fleet redeployment decisions
• His knowledge of VTS's SLO failures in Q3 and Q4 2021
• The November 12, 2021 email from Sandra Milescu (VHC-008417) informing him of the 85-tractor reassignment — his response and any directives issued
• His awareness of and involvement in VTS's relationship with Northwind Distribution Co.
• Vantor's relationship with Caldwell Royce & Shapiro LLP, including the timing of retention and litigation planning (to the extent not privileged)
• Post-termination mitigation efforts, or the lack thereof, at the executive level
• Vantor's financial condition following the termination of the TSA
We will provide a full report on the Vantorovich deposition in the August 2023 monthly status report.
5. Discovery Update
5.1 Document Productions — Status
The document production status as of the end of July 2023 is summarized below:
Stonefield's Productions:
Stonefield completed its first (and to date, only) document production on April 14, 2023, comprising 42,387 documents (approximately 186,000 pages). The documents bear Bates numbers SLG-000001 through SLG-042387 and are hosted on the Pinnacle Forensics platform under Project ID: PF-SLG-2022-0914. No supplemental production by Stonefield has been requested or required.
Vantor's Productions:
• First Production: Vantor's initial document production was completed on April 28, 2023, comprising 28,914 documents (approximately 112,000 pages).
• Supplemental Production: Pursuant to Judge Calloway's June 9, 2023 order granting in part Stonefield's motion to compel, Vantor produced an additional 4,218 documents on June 22, 2023 (Bates range VHC-029001 through VHC-033218). This supplemental production was compelled after Stonefield demonstrated that Vantor had improperly withheld fleet management records, internal communications regarding the Northwind Distribution Co. relationship, and financial data related to VTS's post-termination operations.
Review of Vantor's Supplemental Production:
The review of Vantor's supplemental production was completed during July 2023. An analysis memorandum summarizing the review findings was circulated on July 3, 2023, prepared by Kara Nystrom and Simone Laroche. A key document index identifying 34 additional "hot" documents was compiled and circulated on July 5, 2023.
The most significant findings from the supplemental production were fleet management documents that confirm VTS redirected 85 tractors to the Northwind Distribution Co. account in October 2021. These documents — which include fleet allocation spreadsheets, driver reassignment notices, and internal operational memoranda — corroborate the November 12, 2021 Milescu email (VHC-008417), which was identified as a "smoking gun" document during the review of Vantor's initial production. The supplemental production documents provide additional granularity regarding the timing, scope, and internal justification for the redeployment, and they will be incorporated into the examination outline for the Vantorovich deposition and the rebuttal expert report.
5.2 Third-Party Subpoena Responses
Subpoenas duces tecum were served on June 28, 2023 on the following third parties:
• Cascade Freight Systems Inc., 4700 Lakehurst Court, Columbus, OH 43016
• Briarwood Trucking Co., 1280 Jefferson Davis Highway, Suite 310, Arlington, VA 22202
Responses from both entities are expected in early August 2023. No objections or motions to quash have been received to date. Upon receipt, the documents will be reviewed and analyzed by the C&H document review team, and the results will be reported in the next monthly status report.
The purpose of these subpoenas is to confirm that Stonefield's use of Cascade and Briarwood as alternative carriers was limited to Lanes 8–14, which are classified as "Secondary Lanes" under Schedule C to the TSA. Secondary Lanes are not subject to the exclusivity restrictions that apply to the Primary Lane Network defined in Schedule B. Documentary confirmation from Cascade and Briarwood's own records would support Stonefield's non-exclusivity defense and corroborate Janet Kirkwood's deposition testimony on this point.
5.3 Privilege Issues
A supplemental privilege log identifying 218 additional documents was served by Stonefield on June 30, 2023. This supplemental log was prepared in connection with Stonefield's review of documents involving communications between Stonefield personnel and Ashford Meridian LLP (Lorraine Beckwith) during the cure period and termination process.
Vantor has informally challenged privilege log entries 312–318, which relate to communications between Raymond Hess and Lorraine Beckwith of Ashford Meridian during the January–February 2022 cure period. Our internal analysis, completed on June 20, 2023, concludes that these entries are properly logged as attorney-client privileged communications. The communications at issue were made for the purpose of obtaining legal advice regarding the interpretation of the TSA's cure and termination provisions, and they involve substantive legal analysis by Ms. Beckwith. To date, Vantor has not filed a formal motion to compel production of these documents or to challenge the privilege designation.
No new privilege disputes arose during July 2023. We will continue to monitor the status of Vantor's challenge to entries 312–318 and will be prepared to defend the privilege designations if a formal motion is filed.
5.4 Outstanding discovery
The fact discovery deadline under the Case Management Order is September 29, 2023. The following discovery items remain outstanding:
1. Completion of the Nikolai Vantorovich deposition (scheduled August 18, 2023)
2. Receipt and analysis of subpoena responses from Cascade Freight Systems Inc. and Briarwood Trucking Co. (expected early August)
3. Any supplemental interrogatory responses from Vantor, if compelled (no pending motion at this time)
We do not anticipate any difficulty in completing the remaining discovery within the September 29, 2023 deadline. Should any issues arise — for example, if Cascade or Briarwood fail to comply with the subpoenas — we will promptly assess the need for enforcement action.
6. Expert discovery Update
6.1 Plaintiff's Expert — Dr. Philip Trask (Trask Greystone & Associates)
Vantor served the expert report of Dr. Philip Trask of Trask Greystone & Associates on May 15, 2023. Dr. Trask opines on Vantor's claimed damages of $95.4 million, broken down as follows:
Calderwood & Harkness completed a detailed 15-page analysis of Dr. Trask's report on May 22, 2023 (prepared by Patrick Gallagher and Simone Laroche). The analysis identified several significant methodological weaknesses in Dr. Trask's opinion:
(i) Dr. Trask assumes the enforceability of the full liquidated damages amount without conducting any legal analysis of the liquidated damages clause under New York law, including the question of whether a $67.23 million liquidated damages award is a reasonable estimate of anticipated harm or an unenforceable penalty;
(ii) Dr. Trask uses inflated margin assumptions for his lost-profits calculation. His 12% operating margin assumption is based on VTS's historical margins during 2019–2020, which were peak periods; he does not adjust for the margin compression experienced by carriers in 2021 or for VTS's declining operational efficiency;
(iii) Dr. Trask fails to account for VTS's own breaches — specifically the undisclosed fleet redeployment — in his damages model. His calculation assumes that VTS was performing in full compliance with the TSA and that all losses are attributable solely to Stonefield's termination;
(iv) Dr. Trask's report contains no meaningful mitigation analysis. He does not assess the freight market conditions prevailing in Q1–Q2 2022 (a period of historically elevated spot rates) or evaluate whether Vantor could have and should have replaced the lost Stonefield volume with alternative customers or spot market opportunities.
We are evaluating a potential Daubert challenge to Dr. Trask's methodology, which could be presented either as a standalone motion or incorporated into the summary judgment briefing. A research memorandum on the Daubert challenge is being prepared by Simone Laroche and is expected in September 2023.
6.2 Defendant's Rebuttal Expert — Dr. Evelyn Rosser (Kensington Analytics Group LLC)
Retention and Rates:
Kensington Analytics Group LLC ("KAG") was retained on October 28, 2022. The engagement is led by Dr. Evelyn Rosser (Managing Director), with support from Michael Chung (Senior Analyst). Current hourly rates are:
• Dr. Evelyn Rosser: $625/hour
• Michael Chung: $375/hour
Rebuttal Report Preparation:
A rebuttal issues memorandum was transmitted to KAG on May 25, 2023, directing Dr. Rosser's analysis to the following specific areas:
(a) The enforceability and proportionality of the liquidated damages clause, including analysis of whether the $67.23 million figure bears a reasonable relationship to the actual harm from termination;
(b) Alternative damages models using market-based calculations that account for prevailing freight rates, spot market conditions, and VTS's actual cost structure;
(c) Mitigation analysis, including an assessment of the freight market conditions during Q1–Q2 2022. Spot rates during this period were elevated approximately 35% above historical averages, indicating robust replacement opportunities for a carrier of VTS's size and capability. Dr. Rosser's analysis is expected to demonstrate that Vantor had ample opportunity to mitigate its losses through spot market participation and the solicitation of replacement contract business;
(d) VTS's financial condition and the causal relationship between the termination and VTS's claimed losses, including the extent to which VTS's financial difficulties may be attributable to its own operational decisions (e.g., the fleet redeployment to Northwind Distribution Co.) rather than the termination.
Timeline:
• Draft report expected: Approximately August 10, 2023
• C&H review period: August 10–20, 2023 (review for privilege, work product consistency, factual accuracy, and alignment with our legal theories)
• Service deadline per CMO: August 25, 2023
Given the compressed review window, we have blocked time for Samuel Eklund and Patrick Gallagher to conduct a concentrated review during the August 10–20 period. We will coordinate with Dr. Rosser on any revisions or supplementation needed to finalize the report for service.
Anticipated Opinions:
Based on our ongoing discussions with Dr. Rosser and KAG, we anticipate the rebuttal report will opine as follows:
• If the termination was valid for Cause under Section 13.1(a) of the TSA, Vantor is entitled to $0 in damages, as the termination was contractually authorized and no breach by Stonefield occurred.
• Under an alternative lost-profits theory — assuming arguendo that the termination constituted a wrongful breach by Stonefield — the maximum recoverable damages would be approximately $8.2 million, after adjusting for (i) VTS's own material breaches (including the undisclosed fleet redeployment), (ii) Vantor's failure to mitigate its losses in a favorable freight market, and (iii) the application of proper market-based calculation methodologies rather than the inflated assumptions used by Dr. Trask.
This alternative damages figure represents a reduction of approximately 91% from Dr. Trask's $95.4 million estimate and provides substantial leverage for both dispositive motion practice and settlement negotiations.
Expert Costs: