monthly-status-report-mar-2023.docx

1012-00005 · Stonefield Logistics Group · Correspondence/Client

monthly-status-report-mar-2023.docx DOCUMENT Litigation

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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT DO NOT DISTRIBUTE WITHOUT AUTHORIZATION OF GENERAL COUNSEL

CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166

April 4, 2023

MEMORANDUM

TO: Tobias Wren, General Counsel, Stonefield Logistics Group Inc.

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

RE: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.) — Monthly Status Report for March 2023

MATTER NO.: 1012-00005

I. Executive Summary

This memorandum provides the monthly status report for the month of March 2023 in connection with the above-referenced matter. March 2023 was the first full month of active fact discovery following the entry of the Case Management Order ("CMO") by the Honorable Margaret T. Calloway, United States District Judge, Southern District of New York, on February 17, 2023. The month was marked by significant activity on both sides as the parties initiated the formal exchange of written discovery and Stonefield's litigation team commenced document review in preparation for its initial document production.

The key developments during the reporting period are as follows:

1. Stonefield's Affirmative discovery Served. On March 6, 2023, Stonefield served on Vantor its First Set of Interrogatories (25 interrogatories), its First Request for Production of Documents (38 requests), and its First Set of Requests for Admission (30 requests). These written discovery requests were directed to Vantor through its counsel of record, Caldwell Royce & Shapiro LLP. The discovery was carefully drafted to target the core issues in the case, including Vantor's damages calculations, its claimed volume shortfall, the basis for its allegation that Stonefield's termination for Cause was pretextual, and VTS's fleet deployment decisions during the critical Q3–Q4 2021 period. Responses are due from Vantor on or about April 5, 2023.

2. Vantor's discovery Received. On March 20, 2023, Vantor served on Stonefield its First Set of Interrogatories and its First Request for Production of Documents, each through Caldwell Royce & Shapiro LLP. Stonefield's responses are due on or about April 19, 2023. The Calderwood & Harkness team is actively reviewing these requests and preparing substantive responses, including objections where certain requests appear overbroad. Our target is to serve responses and produce responsive, non-privileged documents on or before April 14, 2023 — ahead of the deadline — in order to demonstrate good-faith cooperation and maintain credibility before Judge Calloway.

3. Document Collection Substantially Complete. Internal document collection from the five identified Stonefield custodians — Janet Kirkwood, Raymond Hess, Carlos Medina, Tobias Wren, and Priya Ramachandran — is substantially complete. All collections (including email from Ashgrove Software, shared drive content, and contract management system records) have been transferred to our e-discovery vendor, Pinnacle Forensics LLC (Project ID: PF-SLG-2022-0914), for processing and loading into the hosted review platform.

4. Document Review Commenced. As of the last week of March, the Calderwood & Harkness document review team has commenced first-pass review of the collected and processed documents. Approximately 186,000 pages of documents have been processed, and the estimated universe for first-pass review (after de-duplication and filtering) is approximately 50,000 documents. Our target completion date for first-pass review and initial production is April 14, 2023.

The case remains before Judge Calloway in the Southern District of New York. No court hearings were held, and no orders were entered during the reporting period beyond the previously reported CMO. There are no pending motions on the docket. The discovery plan is tracking on schedule, and no extensions to any CMO deadlines are anticipated at this time.

II. Current Posture of the Case

A. Pleadings Status — Complete

The pleadings phase of this litigation is fully complete. Stonefield's Answer, Affirmative Defenses, and Counterclaim were filed on January 13, 2023. Specifically, Stonefield's Answer asserted fourteen (14) affirmative defenses in response to Vantor's Amended Complaint and included a Counterclaim seeking a declaratory judgment that Stonefield's termination of the Transportation Services Agreement ("TSA") was lawfully effected for Cause as defined in TSA Section 11.2(a). Vantor filed its Answer to Stonefield's Counterclaim on January 27, 2023. With the filing of Vantor's responsive pleading to the Counterclaim, the pleadings are closed as to all parties and all claims.

There are no pending motions on the docket. As previously reported, the Motion to Dismiss that Stonefield filed on October 14, 2022, directed at the original Complaint, was denied as moot by Judge Calloway on December 16, 2022, following Vantor's filing of its Amended Complaint on December 2, 2022. The Amended Complaint superseded the original Complaint in its entirety, rendering the Motion to Dismiss directed at the original pleading without effect. We made the strategic decision, as discussed with you at that time, not to file a renewed motion to dismiss directed at the Amended Complaint, given that the Amended Complaint addressed certain pleading deficiencies that had formed the basis for our original motion and the remaining arguments were better reserved for the summary judgment stage after a developed factual record.

B. Key CMO Deadlines

The Case Management Order entered by Judge Calloway on February 17, 2023 establishes the following key deadlines governing the balance of the litigation:

As of the date of this report, the discovery plan is tracking on schedule with all deadlines set forth in the CMO. No extensions have been requested by either party, and we do not anticipate the need for any extensions at this time. We will continue to monitor the pace of discovery and advise promptly if circumstances change.

The CMO also incorporates the parties' joint discovery plan, which provides for the exchange of initial disclosures (completed in February 2023), the phased production of documents, and the procedures for handling privilege disputes. Additionally, as discussed in Section VI below, the CMO incorporates the parties' stipulation and proposed order regarding the inadvertent production of privileged materials pursuant to Federal Rule of Evidence 502(d).

III. Discovery — Propounded by Stonefield

A. First Set of Interrogatories (Served March 6, 2023)

On March 6, 2023, Stonefield served its First Set of Interrogatories on Vantor, directed to Vantor Holdings Corp. through its counsel of record, Caldwell Royce & Shapiro LLP. The set comprises twenty-five (25) interrogatories, which is the maximum permitted under Federal Rule of Civil Procedure 33(a)(1) absent stipulation or court order.

The interrogatories were drafted to elicit detailed information on the following principal topics:

• Damages Calculations. Interrogatories directed to the methodology, assumptions, and data underlying Vantor's claimed damages, including lost profits, consequential damages, and any other categories of loss asserted in the Amended Complaint. These interrogatories are designed to test the foundation of Vantor's damages claims and to identify areas of vulnerability for later challenge at the summary judgment stage or through expert rebuttal.

• Mitigation Efforts Post-Termination. Interrogatories seeking comprehensive information regarding Vantor's and VTS's efforts to mitigate damages following Stonefield's termination of the TSA on March 4, 2022, including identification of all alternative shipping contracts obtained by VTS, the terms of such contracts, the revenue generated thereunder, and the timeline of mitigation efforts. Vantor's failure to mitigate (or delayed mitigation) is a key element of Stonefield's defense.

• Fleet Deployment Decisions in Q3–Q4 2021. Interrogatories targeting VTS's internal decisions to redeploy tractors and drivers away from Stonefield-dedicated lanes during the critical Q3 and Q4 2021 period, which we believe directly caused the service level failures that constituted Cause for termination under the TSA.

• Basis for Pretext Allegation. Interrogatories requiring Vantor to identify with specificity all facts, documents, and communications that support its allegation that Stonefield's termination for Cause was pretextual — i.e., that Stonefield terminated the TSA not because of genuine performance failures by VTS but rather to avoid the anticipated rate adjustment under TSA Section 5.3 or to shift volume to lower-cost alternative carriers.

• Claimed Volume Shortfall. Interrogatories directed to Vantor's contention that Stonefield failed to tender the minimum monthly freight volumes specified in TSA Section 3.1, including identification of all months in which Vantor claims a shortfall occurred, the volume data supporting such claims, and the alleged financial impact.

Pursuant to Federal Rule of Civil Procedure 33(b)(2), Vantor's responses are due within thirty (30) days of service, which places the response deadline on or about April 5, 2023. We will promptly review Vantor's responses upon receipt and advise you of the substance and adequacy thereof.

B. First Request for Production of Documents (Served March 6, 2023)

Concurrently with the First Set of Interrogatories, Stonefield served its First Request for Production of Documents on Vantor on March 6, 2023. The request comprises thirty-eight (38) individual document requests. The requests were drafted broadly but with sufficient specificity to cover the principal categories of documents relevant to the claims and defenses in this action.

The document requests target the following principal categories of materials:

• Internal communications within VTS and Vantor Holdings regarding the Stonefield Logistics Group account, including all email, memoranda, presentations, and reports referencing or relating to the SLG account, the TSA, or Stonefield's freight volumes;

• Fleet deployment and management records for VTS, with particular emphasis on the Q3 2021 through March 2022 period, including records reflecting decisions to assign, reassign, or remove tractors and drivers from SLG-dedicated lanes;

• Financial statements and financial performance reports for both VTS and Vantor Holdings Corp., including quarterly and annual financial statements, management reports, and board presentations;

• Records of mitigation efforts undertaken by Vantor and VTS following Stonefield's termination of the TSA, including communications with alternative shippers, proposals, bids, and executed agreements for transportation services;

• Board of Directors meeting minutes and related materials for both Vantor Holdings Corp. and VTS, to the extent such materials reference or relate to the Stonefield relationship, the TSA, the termination, or this litigation;

• Expert retention and engagement documents, including engagement letters, fee agreements, communications with retained or consulting experts, and draft and final expert reports.

Vantor's responses to the document requests are due on or about April 5, 2023, consistent with Federal Rule of Civil Procedure 34(b)(2)(A). We anticipate that Vantor will serve its responses and potentially an initial document production on or about that date. We will promptly review Vantor's responses and production upon receipt and will assess the completeness of the production against the scope of our requests.

C. First Set of Requests for Admission (Served March 6, 2023)

Also on March 6, 2023, Stonefield served its First Set of Requests for Admission ("RFAs") on Vantor, comprising thirty (30) individual requests. The RFAs are directed at establishing key factual predicates that will support Stonefield's defense and streamline the issues for summary judgment and trial. The requests are strategically designed to narrow the factual disputes and to obtain binding admissions from Vantor on critical performance metrics and procedural compliance.

The RFAs focus on the following areas:

VTS Performance Metrics — Q4 2021. The RFAs seek admissions establishing the objective performance failures of VTS during the fourth quarter of 2021 across all five Service Level Objectives ("SLOs") specified in TSA Exhibit B:

These performance metrics are central to Stonefield's defense that objective Cause existed for termination under TSA Section 11.2(a). VTS's failure across all five SLO metrics — each of which independently constitutes a material breach — provides a strong factual foundation for the defense.

Cure Notice and Cure Period. The RFAs further seek admissions that VTS received Stonefield's Cure Notice dated January 18, 2022 (delivered by certified mail and email); that the Cure Notice identified the specific SLO failures constituting the basis for termination; that VTS was afforded the contractually required thirty (30) day cure period; that the cure period expired on February 17, 2022; and that VTS failed to cure the identified deficiencies within the cure period.

Tractor Removal from Dedicated Lanes. The RFAs seek admissions regarding VTS's decision to remove tractors from Stonefield-dedicated lanes, which we believe was the direct cause of the SLO failures.

Force Majeure Clause. The RFAs also address the applicability (or inapplicability) of the force majeure clause in TSA Section 12.1 for the COVID-19 pandemic period (April through September 2020). While Vantor may attempt to invoke force majeure as a defense to VTS's performance failures, the relevant SLO failures occurred in Q3–Q4 2021 — well after the initial pandemic disruption — and we seek admissions establishing the temporal inapplicability of the force majeure clause to the period at issue.

Vantor's responses to the RFAs are due on or about April 5, 2023, pursuant to Federal Rule of Civil Procedure 36(a)(3). Any matter not denied or objected to within thirty days will be deemed admitted. We will carefully analyze Vantor's responses and advise you of the strategic implications.

IV. Discovery — Received from Vantor

A. First Set of Interrogatories (Received March 20, 2023)

On March 20, 2023, Vantor served its First Set of Interrogatories on Stonefield through its counsel of record, Caldwell Royce & Shapiro LLP. The interrogatories were transmitted by Harrison Caldwell and Jason Whitford of that firm. Stonefield's responses are due within thirty (30) days of service, placing the response deadline on or about April 19, 2023.

The Calderwood & Harkness team is currently reviewing the interrogatories and preparing substantive responses in coordination with the relevant Stonefield personnel. Our initial review of the interrogatories indicates that Vantor's questions focus on the following principal areas:

• The internal decision-making process leading to Stonefield's termination of the TSA, including the identity of all individuals involved in the termination decision, the timeline of that decision, and all factors considered;

• The preparation and issuance of the Cure Notice dated January 18, 2022, including who drafted the notice, who approved it, and the basis for the specific SLO metrics cited therein;

• The volume of freight tendered by Stonefield to VTS under the TSA during each month of the contract term, with particular focus on whether Stonefield met its minimum volume commitments under TSA Section 3.1;

• Stonefield's engagement of Cascade Freight Systems Inc. and Briarwood Trucking Co. as alternative carriers, including the date of first contact, the date of first freight tender, the volume of freight tendered to each carrier, the rates paid, and the terms of any written agreements.

We are coordinating with Janet Kirkwood, Raymond Hess, and Carlos Medina to compile the factual information necessary to prepare accurate and complete responses. We will circulate draft responses to you for review and approval before service. We anticipate being in a position to serve responses on or before April 14, 2023, ahead of the April 19 deadline, consistent with our overall target production date.

B. First Request for Production of Documents (Received March 20, 2023)

Also on March 20, 2023, Vantor served its First Request for Production of Documents on Stonefield, comprising thirty-eight (38) individual document requests. Stonefield's responses are due on or about April 19, 2023.

The Calderwood & Harkness team is reviewing the document requests and preparing responses and objections. We note that several of Vantor's requests appear overbroad on their face and are likely to be the subject of objections. In particular:

• Vantor requests "all communications with any third-party carrier" during the period from January 1, 2020 through the present. This request is vastly overbroad in both temporal scope and subject matter, as Stonefield maintains relationships with dozens of carriers across its nationwide logistics operations, and the majority of such communications have no relevance to the claims or defenses in this case. We intend to object to this request and propose a reasonable limitation — e.g., communications with Cascade Freight Systems Inc. and Briarwood Trucking Co. relating to freight lanes or services that were previously serviced by VTS under the TSA.

• Vantor requests "all internal communications regarding the rate adjustment mechanism under TSA Section 5.3." While communications directly addressing the rate adjustment provision are likely relevant and discoverable, the request as framed could sweep in routine internal discussions about freight rates and pricing that bear no connection to the claims in this case. We will object and offer to produce communications that specifically reference or relate to the rate adjustment mechanism under TSA Section 5.3 and the anticipated April 2022 rate adjustment.

Notwithstanding these objections, we intend to produce all responsive, non-privileged documents concurrent with our responses. Our target production date is April 14, 2023, which is ahead of the April 19 response deadline. We believe that early production is in Stonefield's strategic interest, as it demonstrates good-faith cooperation and will help maintain credibility with Judge Calloway, who is known to take a dim view of discovery gamesmanship. Additionally, timely production will position Stonefield favorably in the event of any future discovery disputes.

V. Document Collection and Processing

A. Stonefield Custodial Collections

Document collection from the identified Stonefield custodians is substantially complete as of the end of March 2023. The following custodians have been the subjects of collection:

1. Janet Kirkwood — Vice President, Carrier Relations. Ms. Kirkwood is a key fact witness in this litigation, as she was the primary Stonefield executive who oversaw the day-to-day relationship with Vantor and VTS, monitored VTS's performance against the contractual SLOs, and was directly involved in the decisions leading to the issuance of the Cure Notice and the subsequent termination. Her collection includes email (Ashgrove Software), shared drive files, and records from the contract management system. Ms. Kirkwood's collection is the largest among the five custodians and includes the most substantive communications relating to the Vantor/VTS relationship.

2. Raymond Hess — Director, Contract Compliance. Mr. Hess was responsible for monitoring carrier compliance with contractual service levels and was the author of the Cure Notice dated January 18, 2022. He also co-signed the termination letter dated March 4, 2022 (jointly with you). His collection includes email, compliance monitoring reports, and contract management system records.

3. Carlos Medina — Senior Vice President, Operations. Mr. Medina oversees Stonefield's freight operations nationally and was involved in operational decisions relating to the VTS relationship, including the engagement of alternative carriers. His collection includes email and shared drive files.

4. Tobias Wren — General Counsel. Your collection has been limited to documents directly relating to the Vantor/VTS matter, including legal correspondence, internal memoranda regarding the termination decision, and board-related materials. As we have discussed, communications between you and outside counsel (including Calderwood & Harkness and Ashford Meridian LLP) are being withheld as privileged.

5. Priya Ramachandran — Chief Financial Officer. Ms. Ramachandran's collection is the most limited in scope and consists primarily of financial documents and board-related materials that reference or relate to the Vantor/VTS relationship or this litigation.

All collections include email sourced from Ashgrove Software, documents from shared network drives, and relevant records from Stonefield's contract management system. All five custodians have confirmed their compliance with the litigation hold notice that was issued on September 2, 2022, following the filing of Vantor's original Complaint. Each custodian has signed a written acknowledgment of the litigation hold, and copies of those acknowledgments are on file with Calderwood & Harkness and with David Moretti.

B. Pinnacle Forensics Processing Status

Pinnacle Forensics LLC ("Pinnacle") is serving as the e-discovery vendor for document processing, hosting, and review platform support in this matter. Nathan Billings, Client Engagement Director at Pinnacle, is our primary point of contact. The engagement is tracked under Pinnacle Project ID: PF-SLG-2022-0914.

As of March 31, 2023, Pinnacle has processed and loaded approximately 186,000 pages of documents from the five custodial collections into the Pinnacle-hosted review platform. The processing workflow included the following steps:

• Ingestion and extraction of files from the collected data sources, including email (MSG files from Ashgrove Software), loose files from shared drives, and exports from the contract management system;

• De-duplication at the global level (cross-custodian) to eliminate exact duplicate documents, reducing the volume of documents requiring review;

• Near-duplicate identification to group substantially similar documents for efficient batch review;

• Email threading to consolidate email chains and identify the most inclusive email in each thread, enabling reviewers to prioritize the most complete versions of email conversations;

• Application of date range filters, keyword filters, and file-type filters to further reduce the review population to documents likely to be responsive.

Following the completion of these processing steps, the estimated universe for first-pass review is approximately 50,000 documents (post-deduplication and filtering). This is a manageable volume for the review team and timeline we have in place.

In addition, Pinnacle and David Moretti (Calderwood & Harkness's Litigation Support / eDiscovery Manager) are developing a Technology Assisted Review 2.0 ("TAR 2.0") model to assist with the identification of responsive and non-responsive documents. Seed sets for the TAR 2.0 model have been prepared by Mr. Moretti in consultation with Patrick Gallagher and Simone Laroche. The seed sets were constructed using a combination of richness sampling and judgmental selection of known-relevant documents. The TAR model will be used to prioritize documents for review and to validate the completeness of the review. Recall rate metrics are being tracked by Mr. Moretti and will be documented in the event that the defensibility of the review methodology is challenged.

C. Document Review Status

First-pass document review commenced during the week of March 27, 2023, and is proceeding on schedule. The review team consists of the following personnel:

• Kara Nystrom (Contract Associate) — performing first-pass review for responsiveness and issue coding;

• Helen Tsao (Senior Paralegal) — performing first-pass review, privilege identification, and coding, as well as assisting with privilege log preparation;

• Simone Laroche (Working Associate) — performing quality control review, privilege review, and oversight of the review team's coding decisions.

The document review is governed by the Document Review Protocol Memorandum that was finalized on March 15, 2023 by David Moretti and Patrick Gallagher. The protocol establishes the following:

• Responsiveness Criteria. Detailed definitions of responsive and non-responsive documents, keyed to the claims, defenses, and topics identified in the pleadings and the parties' initial disclosures.

• Privilege Identification Guidelines. Procedures for identifying and flagging documents potentially protected by the attorney-client privilege, the work product doctrine, or the joint defense privilege (the latter applicable to communications with Ashford Meridian LLP under the Common Interest Agreement dated September 15, 2022). The protocol specifies the criteria for identifying privileged communications and the escalation procedures for ambiguous or borderline documents.

• Coding Taxonomy. A comprehensive coding taxonomy for issue coding, including categories for key topics (e.g., SLO performance, rate adjustment, fleet deployment, mitigation, termination decision, cure notice, force majeure), key custodians, key date ranges, and privilege designations.

• Quality Control Procedures. Random sampling and targeted quality control review by Simone Laroche and Patrick Gallagher to ensure consistency and accuracy in coding decisions. The protocol specifies a minimum quality control rate of 10% of all reviewed documents.

• TAR 2.0 Seed Set Methodology. Procedures for the selection, review, and coding of seed set documents to train the TAR 2.0 model, including the use of control sets for validation.

The target completion date for first-pass review and initial production to Vantor is April 14, 2023. Based on the current pace of review, we are confident that this target is achievable. The anticipated initial production is expected to comprise approximately 42,387 documents (approximately 186,000 pages), bearing Bates numbers SLG-000001 through SLG-042387.

Privilege log preparation is running concurrently with the document review. Simone Laroche and Helen Tsao are identifying and logging all documents withheld on the basis of attorney-client privilege or work product protection. The privilege log will be produced to Vantor concurrent with the initial document production.

D. Pre-Litigation Communications with Ashford Meridian LLP

As you are aware, Ashford Meridian LLP — specifically, Lorraine Beckwith (Partner) and Troy Nakamura (Senior Associate) — served as Stonefield's outside counsel in connection with the original negotiation and drafting of the TSA and provided pre-litigation guidance to Stonefield regarding contractual interpretation, VTS's performance failures, and the potential exercise of Stonefield's termination rights under the TSA. The privilege status of Stonefield's communications with Ashford Meridian is an important issue in the document review, as a number of these communications are responsive to Vantor's discovery requests but are protected from disclosure.

On March 22, 2023, Simone Laroche prepared a detailed privilege review memorandum analyzing the privilege status of Stonefield's pre-litigation communications with Ashford Meridian LLP. The memorandum concluded that these communications are protected by the attorney-client privilege, as they constitute confidential communications between Stonefield (the client) and its attorneys at Ashford Meridian for the purpose of obtaining or providing legal advice regarding Stonefield's contractual rights and obligations under the TSA, the legal significance of VTS's performance failures, and the legal requirements for exercising the termination right under TSA Section 11.2.

Based on Ms. Laroche's analysis, eighty-four (84) documents have been identified for inclusion on the privilege log in connection with the Ashford Meridian communications. These documents include email exchanges, memoranda, and draft correspondence exchanged between Stonefield personnel and Ashford Meridian attorneys during the pre-litigation period. The privilege log entries for these documents are being prepared with sufficient detail to enable Vantor's counsel to assess the basis for the privilege assertion without disclosing the substance of the protected communications.

VI. Clawback / FRE 502(d) Stipulation

The parties' stipulation and proposed order pursuant to Federal Rule of Evidence 502(d) was jointly prepared by Patrick Gallagher and Jason Whitford of Caldwell Royce & Shapiro LLP and was submitted to the Court on February 15, 2023. The stipulation provides, in substance, that the inadvertent production of documents or information protected by the attorney-client privilege or the work product doctrine in connection with this litigation shall not constitute a waiver of such privilege or protection, either in this proceeding or in any other federal or state proceeding. The stipulation further establishes procedures for the notification, return, and sequestration of inadvertently produced privileged documents, consistent with Federal Rule of Civil Procedure 26(b)(5)(B).

Judge Calloway entered the stipulation and proposed order on February 17, 2023, incorporating it into the Case Management Order. The order is binding on the parties and, pursuant to Rule 502(d), is effective to prevent privilege waiver regardless of the provisions of any other federal or state rule of evidence.

The entry of this order provides important protection for Stonefield given the substantial volume of documents under review — more than 186,000 pages — and the inherent risk of inadvertent disclosure in any production of this magnitude. While the review team is exercising care in the identification and withholding of privileged documents, the Rule 502(d) order serves as a critical safety net in the event that a privileged document is inadvertently included in a production.

VII. Expert Retention

Kensington Analytics Group LLC ("KAG") was retained on October 28, 2022 as Stonefield's damages and economics rebuttal expert. The engagement is led by Dr. Evelyn Rosser, Managing Director, and Michael Chung, Senior Analyst. KAG is a well-regarded economic consulting firm with extensive experience in transportation and logistics industry disputes, and Dr. Rosser has been qualified as an expert in numerous federal and state court proceedings involving damages analysis, financial modeling, and economic causation.

The KAG engagement remains on track. Dr. Rosser and her team have been provided with copies of the TSA and all relevant contractual documents (including all amendments and exhibits), as well as the pleadings, the CMO, and relevant correspondence between the parties. As discovery progresses, additional materials — including Vantor's document production, interrogatory responses, and deposition testimony — will be provided to KAG for incorporation into their analysis.

The expert scope memorandum was sent to KAG on November 14, 2022. The memorandum outlined the key issues within the scope of KAG's anticipated expert engagement, including:

• Analysis of the enforceability and applicability of the liquidated damages clause under TSA Section 14.2, including whether the liquidated damages amount constitutes a reasonable estimate of anticipated harm and is not an unenforceable penalty under New York law;

• Development and evaluation of alternative damages models, including a critique of Vantor's expected damages methodology and presentation of alternative approaches that more accurately reflect Stonefield's actual exposure;

• Mitigation analysis, including an assessment of whether Vantor and VTS undertook reasonable efforts to mitigate damages following the termination and the economic impact of any failure to mitigate;

• Analysis of VTS's financial condition and the causation between Stonefield's termination and Vantor's claimed losses, including whether VTS's financial difficulties were attributable to factors independent of the TSA termination.

No expert report is due at this time. The CMO provides that expert discovery shall be completed by January 12, 2024. The specific deadlines for the exchange of opening expert reports and rebuttal expert reports will be established within the expert discovery window, either by agreement of the parties or by further order of the Court. We will work with KAG to ensure that Dr. Rosser's analysis and report are completed well in advance of the applicable deadline.

VIII. Other Case Management Items

A. No Court Activity in March 2023

There were no hearings, conferences, or orders issued by the Court during the reporting period of March 2023. The docket reflects no activity beyond the previously reported entry of the Case Management Order on February 17, 2023.

The next anticipated court interaction will likely be a discovery conference in the event that disputes arise regarding the adequacy of the parties' responses to discovery requests. We will endeavor to resolve any discovery disputes through the meet-and-confer process required by Local Civil Rule 37.2 (S.D.N.Y.) before seeking judicial intervention. However, if Vantor's responses to Stonefield's discovery requests are inadequate or if disputes regarding the scope of Vantor's overbroad requests cannot be resolved informally, we may need to seek a discovery conference with Judge Calloway or file a letter motion pursuant to the Court's Individual Practices.

B. Lender Notification — Lakeshore National Bank

As previously reported, the quarterly litigation update for Q4 2022 was provided to Catherine Devereaux, Senior Vice President, Loan Administration, at Lakeshore National Bank, on January 12, 2023. The content of the update covered the status of the Motion to Dismiss (denied as moot), the anticipated discovery timeline, and the general posture of the case. The update was reviewed and approved by you prior to delivery.

No further update to Lakeshore National Bank is required until the next quarterly reporting cycle, which is anticipated in July 2023 (covering the Q2 2023 period). We will prepare a draft of the next quarterly update for your review in advance of the July reporting date.

For reference, the notification obligation arises under the senior secured credit facility maintained by Stonefield Logistics Group Inc. with Lakeshore National Bank, consisting of a $425 million facility comprised of a $175 million revolving credit facility and a $250 million Term Loan B. The Credit Agreement (Reference No. LNB-SLG-2017-CA-4402) was originally dated October 12, 2017 and was amended and restated on June 30, 2021. Section 6.03(b) of the Credit Agreement requires Stonefield to provide notice to the Administrative Agent (Lakeshore) of any litigation or proceeding involving potential liability in excess of $25 million. Vantor's Amended Complaint seeks damages in excess of that threshold, triggering the notification obligation.

Lakeshore has acknowledged receipt of the Q4 2022 update and has not indicated any concerns regarding the impact of this litigation on facility availability or covenant compliance. No adverse impact on the credit facility has been noted.

IX. Budget and Staffing

A. Fees and Disbursements

The Quarterly Billing Summary for Q1 2023 (covering January through March 2023) is being prepared by Linda Osei, Billing Partner, and will be delivered to you by mid-April 2023. The summary will include a detailed breakdown of fees by timekeeper, a summary of disbursements (including Pinnacle Forensics costs), and a comparison of actual spending against the litigation budget.

On a preliminary basis, we note that March 2023 was a significant ramp-up month for this matter, reflecting the commencement of active fact discovery. The increased activity during March — including the preparation and service of three sets of written discovery, the coordination of document collection from five custodians, the finalization of the document review protocol, and the commencement of first-pass document review — resulted in fees that are expected to be higher than the relatively quieter months of January and February 2023. However, the March fees remain within the budgeted range for the discovery phase of this litigation.

As a reminder, the engagement letter with Stonefield provides for a 10% courtesy discount on all associate billing rates, reflecting the Ridgeline Capital Partners portfolio company discount. This discount applies to the rates for Patrick Gallagher, Simone Laroche, and Kara Nystrom. The current billing rates for the core team members are as follows:

As set forth in the Preliminary Litigation Budget dated September 12, 2022, the estimated total fees for this matter through the summary judgment stage are $3.5 million to $5.2 million, with estimated costs and disbursements (including e-discovery vendor fees, court reporter fees, travel expenses, and other out-of-pocket costs) ranging from $400,000 to $750,000. Current spending remains within these budget projections. We will continue to monitor spending against the budget and will notify you promptly if we anticipate any material variance.

B. Staffing

The core litigation team assigned to this matter remains unchanged:

• Samuel Eklund — Responsible Partner. Mr. Eklund provides strategic direction and oversight for all aspects of the engagement and is available for escalated issues and client communications.

• Linda Osei — Billing Partner. Ms. Osei oversees billing, budgeting, and financial reporting for the matter.

• Patrick Gallagher — Lead Associate. Mr. Gallagher serves as the day-to-day lead for the litigation, responsible for discovery strategy and execution, briefing, deposition preparation, and regular communication with the client.

• Simone Laroche — Working Associate. Ms. Laroche supports all aspects of the litigation, with particular responsibility for privilege review, document review quality control, legal research, and brief drafting.

• Helen Tsao — Senior Paralegal. Ms. Tsao supports document review, privilege log preparation, deposition logistics, and general case management.

• David Moretti — Litigation Support / eDiscovery Manager. Mr. Moretti manages the e-discovery workflow, including coordination with Pinnacle Forensics, TAR model development, and review platform administration.

• Kara Nystrom — Contract Associate. Ms. Nystrom is assigned to the matter for the duration of the document review phase and is performing first-pass review of the Stonefield document collection.

No staffing changes are anticipated at this time. If additional contract associates are needed to accelerate the document review timeline or to manage Vantor's document production (once received), we will discuss any proposed staffing additions with you in advance.

X. Upcoming Activities — April 2023

The following activities are planned for April 2023:

1. Responses to Vantor's Interrogatories. Finalize and serve Stonefield's Responses to Vantor's First Set of Interrogatories. Target service date: April 14, 2023.

2. Responses to Vantor's Document Requests. Finalize and serve Stonefield's Responses and Objections to Vantor's First Request for Production of Documents. Target service date: April 14, 2023.

3. Initial Document Production. Complete first-pass document review and produce Stonefield's initial document production to Vantor. The production is expected to comprise approximately 42,387 documents (approximately 186,000 pages), bearing Bates numbers SLG-000001 through SLG-042387. The production will be accompanied by a privilege log identifying all documents withheld on the basis of attorney-client privilege or work product protection. Target production date: April 14, 2023.

4. Responses to Vantor's Requests for Admission. Finalize and serve Stonefield's Responses to Vantor's Requests for Admission. Target service date: April 14, 2023. (Note: Vantor's Requests for Admission were not served on March 20; if Vantor serves RFAs in April, response deadlines will be calculated from the date of service.)

5. Analysis of Vantor's discovery Responses. Receive and begin substantive analysis of Vantor's responses to Stonefield's First Set of Interrogatories, First Request for Production of Documents, and First Set of Requests for Admission. Vantor's responses are expected on or about April 5, 2023. We will evaluate the completeness and sufficiency of Vantor's responses and will meet and confer with Vantor's counsel to address any deficiencies before considering motion practice.

6. TAR 2.0 Model Refinement. Continue training and validation of the TAR 2.0 model. David Moretti is tracking recall rate metrics and will report on model performance and defensibility. The TAR model will be particularly important for the efficient review of Vantor's anticipated document production.

7. Deposition Planning. Begin preliminary planning for deposition scheduling, which we anticipate will take place during the summer of 2023. Key fact witnesses anticipated for deposition on the Vantor side include senior executives of VTS involved in fleet deployment decisions, the VTS account manager for the Stonefield relationship, and Vantor Holdings personnel involved in the mitigation strategy. Key Stonefield witnesses (including Janet Kirkwood, Raymond Hess, and Carlos Medina) will require preparation sessions in advance of their depositions. We will provide a preliminary deposition schedule and witness list for your review in the May status report.

XI. Risk Factors and Strategic Notes

We take this opportunity to reiterate the two principal litigation risk factors identified in the Preliminary Case Assessment dated September 9, 2022 and the Defense Strategy Outline dated September 26, 2022. While the overall strength of Stonefield's defense remains strong, these risk factors require ongoing monitoring and management:

Risk Factor 1 — The Kirkwood Email (September 22, 2021). Janet Kirkwood's email to Carlos Medina dated September 22, 2021 remains the single most significant adverse document in Stonefield's files. In that email, Ms. Kirkwood referenced the volume being diverted to Cascade Freight Systems Inc. and Briarwood Trucking Co. and stated: "if VTS doesn't get its act together by Q1 I think we pull the plug on the whole contract." Vantor will undoubtedly seize on this email as evidence of a premeditated decision to terminate the TSA — a decision that, Vantor will argue, preceded and was independent of the objective SLO failures that Stonefield cites as Cause for termination. Vantor will argue that this email demonstrates that Stonefield's termination for Cause was pretextual, i.e., that the real motivation for termination was dissatisfaction with the relationship and a desire to shift volume to lower-cost carriers, rather than genuine concern about VTS's performance failures.

Our defense strategy addresses this risk through several vectors. First, we will contextualize the email as a candid internal assessment of VTS's deteriorating performance — which is consistent with, not contrary to, a later good-faith determination that Cause existed. Second, we will emphasize that the termination did not occur until March 4, 2022, following a formal Cure Notice and a thirty-day cure period, and was based on objective, documented SLO failures across all five metrics. Third, Ms. Kirkwood's deposition preparation will address this email directly, and we will develop testimony that places the email in its proper context.

Risk Factor 2 — The Anticipated Rate Adjustment. Vantor alleges that a principal motivation for Stonefield's termination was to avoid the rate adjustment that was expected to take effect in April 2022 under TSA Section 5.3. The anticipated adjustment would have resulted in a 14.3% increase in the weighted average per-mile rate, from $2.87/mile to $3.28/mile, adding approximately $6.2 million in annual transportation costs to Stonefield's operating expenses. Vantor's theory is that Stonefield terminated the TSA in advance of this rate increase and shifted volume to lower-cost carriers (Cascade Freight Systems and Briarwood Trucking) to achieve cost savings.

Our defense strategy addresses this risk by establishing that objective Cause existed independently of the anticipated rate adjustment. The Q4 2021 SLO failures across all five metrics — each of which independently constitutes a material breach under the TSA — provide a more than sufficient basis for termination, regardless of any secondary economic considerations. Moreover, we will argue that even if Stonefield was aware of the forthcoming rate adjustment, the exercise of a valid contractual termination right for documented Cause does not become pretextual merely because it also happens to serve the terminating party's economic interests. Under New York law, a party exercising a termination-for-cause right is not required to demonstrate that cause was its sole motivation.

Both risk factors are being actively managed through the defense strategy. The discovery responses we receive from Vantor in April 2023 will be critical to our ongoing assessment of these risks. In particular, we will be closely analyzing Vantor's responses for evidence bearing on:

(a) Vantor's and VTS's internal awareness of VTS's own SLO failures during Q3–Q4 2021 and the extent to which Vantor's personnel recognized that the performance failures were attributable to VTS's own decisions (rather than external factors);

(b) VTS's fleet redeployment decisions, with particular emphasis on the November 12, 2021 email from Stefan Milescu (VTS VP of Fleet Operations) to Peter Vantorovich (Vantor Holdings CEO) concerning the decision to pull 85 tractors from Stonefield-dedicated lanes for redeployment to higher-margin accounts — a document referenced in Vantor's Amended Complaint that, if it reads as we anticipate, may actually support Stonefield's position that the SLO failures were the result of VTS's own business decisions, not external forces;

(c) Vantor's mitigation efforts (or lack thereof) following the TSA termination, including the timeline, scope, and financial results of any efforts to replace the Stonefield business.

We will provide an updated risk assessment in the May status report following our review of Vantor's discovery responses.

XII. Conclusion and Next Report

The case is proceeding on schedule within the framework established by the Case Management Order. Fact discovery is well underway, with both sides having served their initial written discovery requests and document collection and processing substantially complete on the Stonefield side. The Calderwood & Harkness team is fully engaged in the preparation of Stonefield's discovery responses and the document review in preparation for the initial production.

There are no immediate action items requiring a decision by the client at this time. However, we will circulate draft responses to Vantor's interrogatories for your review and approval in advance of the April 14 target service date and will keep you apprised of developments as they occur.

The next monthly status report will cover activities during April 2023, including the service of Stonefield's discovery responses, the initial document production, the receipt and analysis of Vantor's discovery responses, and preliminary deposition planning. The April report will be delivered in early May 2023.

As always, please do not hesitate to contact me directly with any questions, comments, or concerns regarding this matter or this report. Samuel Eklund is also available for discussion of escalated or strategic issues at any time.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Patrick Gallagher Lead Associate, Litigation (General) Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166 Tel: (212) 555-8400

Email: pgallagher@calderwoodharkness.com

Matter No. 1012-00005

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

This memorandum and any attachments hereto constitute a privileged and confidential attorney-client communication and/or attorney work product prepared in anticipation of litigation. This document is intended solely for the use of the addressee and should not be disclosed, copied, or distributed to any third party without the prior written consent of General Counsel. Inadvertent disclosure of this memorandum does not constitute a waiver of any applicable privilege or protection.

Milestone	Deadline
Completion of Fact discovery	September 29, 2023
Completion of Expert discovery	January 12, 2024
Dispositive Motions	March 1, 2024
SLO Metric	Q4 2021 Actual	TSA SLO Requirement
On-Time Pickup Rate	78.2%	95%
On-Time Delivery Rate	81.6%	93%
Tender Acceptance Rate	71.4%	90%
Equipment Availability	62%	85%
Cargo Claims Ratio	1.07%	≤ 0.5%
Timekeeper	Role	Standard Rate	discounted Rate
Samuel Eklund	Responsible Partner	$1,275/hr	$1,275/hr
Linda Osei	Billing Partner	$1,175/hr	$1,175/hr
Patrick Gallagher	Lead Associate	$825/hr	$742.50/hr
Simone Laroche	Working Associate	$650/hr	$585/hr
Kara Nystrom	Contract Associate	$425/hr	$382.50/hr
Helen Tsao	Senior Paralegal	$375/hr	$375/hr

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT DO NOT DISTRIBUTE WITHOUT AUTHORIZATION OF GENERAL COUNSEL
CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166
April 4, 2023
MEMORANDUM
TO: Tobias Wren, General Counsel, Stonefield Logistics Group Inc.
FROM: Patrick Gallagher, Lead Associate, Litigation (General), Calderwood & Harkness LLP
RE: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.) — Monthly Status Report for March 2023
MATTER NO.: 1012-00005
I. Executive Summary
This memorandum provides the monthly status report for the month of March 2023 in connection with the above-referenced matter. March 2023 was the first full month of active fact discovery following the entry of the Case Management Order ("CMO") by the Honorable Margaret T. Calloway, United States District Judge, Southern District of New York, on February 17, 2023. The month was marked by significant activity on both sides as the parties initiated the formal exchange of written discovery and Stonefield's litigation team commenced document review in preparation for its initial document production.
The key developments during the reporting period are as follows:
1. Stonefield's Affirmative discovery Served. On March 6, 2023, Stonefield served on Vantor its First Set of Interrogatories (25 interrogatories), its First Request for Production of Documents (38 requests), and its First Set of Requests for Admission (30 requests). These written discovery requests were directed to Vantor through its counsel of record, Caldwell Royce & Shapiro LLP. The discovery was carefully drafted to target the core issues in the case, including Vantor's damages calculations, its claimed volume shortfall, the basis for its allegation that Stonefield's termination for Cause was pretextual, and VTS's fleet deployment decisions during the critical Q3–Q4 2021 period. Responses are due from Vantor on or about April 5, 2023.
2. Vantor's discovery Received. On March 20, 2023, Vantor served on Stonefield its First Set of Interrogatories and its First Request for Production of Documents, each through Caldwell Royce & Shapiro LLP. Stonefield's responses are due on or about April 19, 2023. The Calderwood & Harkness team is actively reviewing these requests and preparing substantive responses, including objections where certain requests appear overbroad. Our target is to serve responses and produce responsive, non-privileged documents on or before April 14, 2023 — ahead of the deadline — in order to demonstrate good-faith cooperation and maintain credibility before Judge Calloway.
3. Document Collection Substantially Complete. Internal document collection from the five identified Stonefield custodians — Janet Kirkwood, Raymond Hess, Carlos Medina, Tobias Wren, and Priya Ramachandran — is substantially complete. All collections (including email from Ashgrove Software, shared drive content, and contract management system records) have been transferred to our e-discovery vendor, Pinnacle Forensics LLC (Project ID: PF-SLG-2022-0914), for processing and loading into the hosted review platform.
4. Document Review Commenced. As of the last week of March, the Calderwood & Harkness document review team has commenced first-pass review of the collected and processed documents. Approximately 186,000 pages of documents have been processed, and the estimated universe for first-pass review (after de-duplication and filtering) is approximately 50,000 documents. Our target completion date for first-pass review and initial production is April 14, 2023.
The case remains before Judge Calloway in the Southern District of New York. No court hearings were held, and no orders were entered during the reporting period beyond the previously reported CMO. There are no pending motions on the docket. The discovery plan is tracking on schedule, and no extensions to any CMO deadlines are anticipated at this time.
II. Current Posture of the Case
A. Pleadings Status — Complete
The pleadings phase of this litigation is fully complete. Stonefield's Answer, Affirmative Defenses, and Counterclaim were filed on January 13, 2023. Specifically, Stonefield's Answer asserted fourteen (14) affirmative defenses in response to Vantor's Amended Complaint and included a Counterclaim seeking a declaratory judgment that Stonefield's termination of the Transportation Services Agreement ("TSA") was lawfully effected for Cause as defined in TSA Section 11.2(a). Vantor filed its Answer to Stonefield's Counterclaim on January 27, 2023. With the filing of Vantor's responsive pleading to the Counterclaim, the pleadings are closed as to all parties and all claims.
There are no pending motions on the docket. As previously reported, the Motion to Dismiss that Stonefield filed on October 14, 2022, directed at the original Complaint, was denied as moot by Judge Calloway on December 16, 2022, following Vantor's filing of its Amended Complaint on December 2, 2022. The Amended Complaint superseded the original Complaint in its entirety, rendering the Motion to Dismiss directed at the original pleading without effect. We made the strategic decision, as discussed with you at that time, not to file a renewed motion to dismiss directed at the Amended Complaint, given that the Amended Complaint addressed certain pleading deficiencies that had formed the basis for our original motion and the remaining arguments were better reserved for the summary judgment stage after a developed factual record.
B. Key CMO Deadlines
The Case Management Order entered by Judge Calloway on February 17, 2023 establishes the following key deadlines governing the balance of the litigation:
As of the date of this report, the discovery plan is tracking on schedule with all deadlines set forth in the CMO. No extensions have been requested by either party, and we do not anticipate the need for any extensions at this time. We will continue to monitor the pace of discovery and advise promptly if circumstances change.
The CMO also incorporates the parties' joint discovery plan, which provides for the exchange of initial disclosures (completed in February 2023), the phased production of documents, and the procedures for handling privilege disputes. Additionally, as discussed in Section VI below, the CMO incorporates the parties' stipulation and proposed order regarding the inadvertent production of privileged materials pursuant to Federal Rule of Evidence 502(d).
III. Discovery — Propounded by Stonefield
A. First Set of Interrogatories (Served March 6, 2023)
On March 6, 2023, Stonefield served its First Set of Interrogatories on Vantor, directed to Vantor Holdings Corp. through its counsel of record, Caldwell Royce & Shapiro LLP. The set comprises twenty-five (25) interrogatories, which is the maximum permitted under Federal Rule of Civil Procedure 33(a)(1) absent stipulation or court order.
The interrogatories were drafted to elicit detailed information on the following principal topics:
• Damages Calculations. Interrogatories directed to the methodology, assumptions, and data underlying Vantor's claimed damages, including lost profits, consequential damages, and any other categories of loss asserted in the Amended Complaint. These interrogatories are designed to test the foundation of Vantor's damages claims and to identify areas of vulnerability for later challenge at the summary judgment stage or through expert rebuttal.
• Mitigation Efforts Post-Termination. Interrogatories seeking comprehensive information regarding Vantor's and VTS's efforts to mitigate damages following Stonefield's termination of the TSA on March 4, 2022, including identification of all alternative shipping contracts obtained by VTS, the terms of such contracts, the revenue generated thereunder, and the timeline of mitigation efforts. Vantor's failure to mitigate (or delayed mitigation) is a key element of Stonefield's defense.
• Fleet Deployment Decisions in Q3–Q4 2021. Interrogatories targeting VTS's internal decisions to redeploy tractors and drivers away from Stonefield-dedicated lanes during the critical Q3 and Q4 2021 period, which we believe directly caused the service level failures that constituted Cause for termination under the TSA.
• Basis for Pretext Allegation. Interrogatories requiring Vantor to identify with specificity all facts, documents, and communications that support its allegation that Stonefield's termination for Cause was pretextual — i.e., that Stonefield terminated the TSA not because of genuine performance failures by VTS but rather to avoid the anticipated rate adjustment under TSA Section 5.3 or to shift volume to lower-cost alternative carriers.
• Claimed Volume Shortfall. Interrogatories directed to Vantor's contention that Stonefield failed to tender the minimum monthly freight volumes specified in TSA Section 3.1, including identification of all months in which Vantor claims a shortfall occurred, the volume data supporting such claims, and the alleged financial impact.
Pursuant to Federal Rule of Civil Procedure 33(b)(2), Vantor's responses are due within thirty (30) days of service, which places the response deadline on or about April 5, 2023. We will promptly review Vantor's responses upon receipt and advise you of the substance and adequacy thereof.
B. First Request for Production of Documents (Served March 6, 2023)
Concurrently with the First Set of Interrogatories, Stonefield served its First Request for Production of Documents on Vantor on March 6, 2023. The request comprises thirty-eight (38) individual document requests. The requests were drafted broadly but with sufficient specificity to cover the principal categories of documents relevant to the claims and defenses in this action.
The document requests target the following principal categories of materials:
• Internal communications within VTS and Vantor Holdings regarding the Stonefield Logistics Group account, including all email, memoranda, presentations, and reports referencing or relating to the SLG account, the TSA, or Stonefield's freight volumes;
• Fleet deployment and management records for VTS, with particular emphasis on the Q3 2021 through March 2022 period, including records reflecting decisions to assign, reassign, or remove tractors and drivers from SLG-dedicated lanes;
• Financial statements and financial performance reports for both VTS and Vantor Holdings Corp., including quarterly and annual financial statements, management reports, and board presentations;
• Records of mitigation efforts undertaken by Vantor and VTS following Stonefield's termination of the TSA, including communications with alternative shippers, proposals, bids, and executed agreements for transportation services;
• Board of Directors meeting minutes and related materials for both Vantor Holdings Corp. and VTS, to the extent such materials reference or relate to the Stonefield relationship, the TSA, the termination, or this litigation;
• Expert retention and engagement documents, including engagement letters, fee agreements, communications with retained or consulting experts, and draft and final expert reports.
Vantor's responses to the document requests are due on or about April 5, 2023, consistent with Federal Rule of Civil Procedure 34(b)(2)(A). We anticipate that Vantor will serve its responses and potentially an initial document production on or about that date. We will promptly review Vantor's responses and production upon receipt and will assess the completeness of the production against the scope of our requests.
C. First Set of Requests for Admission (Served March 6, 2023)
Also on March 6, 2023, Stonefield served its First Set of Requests for Admission ("RFAs") on Vantor, comprising thirty (30) individual requests. The RFAs are directed at establishing key factual predicates that will support Stonefield's defense and streamline the issues for summary judgment and trial. The requests are strategically designed to narrow the factual disputes and to obtain binding admissions from Vantor on critical performance metrics and procedural compliance.
The RFAs focus on the following areas:
VTS Performance Metrics — Q4 2021. The RFAs seek admissions establishing the objective performance failures of VTS during the fourth quarter of 2021 across all five Service Level Objectives ("SLOs") specified in TSA Exhibit B:
These performance metrics are central to Stonefield's defense that objective Cause existed for termination under TSA Section 11.2(a). VTS's failure across all five SLO metrics — each of which independently constitutes a material breach — provides a strong factual foundation for the defense.
Cure Notice and Cure Period. The RFAs further seek admissions that VTS received Stonefield's Cure Notice dated January 18, 2022 (delivered by certified mail and email); that the Cure Notice identified the specific SLO failures constituting the basis for termination; that VTS was afforded the contractually required thirty (30) day cure period; that the cure period expired on February 17, 2022; and that VTS failed to cure the identified deficiencies within the cure period.
Tractor Removal from Dedicated Lanes. The RFAs seek admissions regarding VTS's decision to remove tractors from Stonefield-dedicated lanes, which we believe was the direct cause of the SLO failures.
Force Majeure Clause. The RFAs also address the applicability (or inapplicability) of the force majeure clause in TSA Section 12.1 for the COVID-19 pandemic period (April through September 2020). While Vantor may attempt to invoke force majeure as a defense to VTS's performance failures, the relevant SLO failures occurred in Q3–Q4 2021 — well after the initial pandemic disruption — and we seek admissions establishing the temporal inapplicability of the force majeure clause to the period at issue.
Vantor's responses to the RFAs are due on or about April 5, 2023, pursuant to Federal Rule of Civil Procedure 36(a)(3). Any matter not denied or objected to within thirty days will be deemed admitted. We will carefully analyze Vantor's responses and advise you of the strategic implications.
IV. Discovery — Received from Vantor
A. First Set of Interrogatories (Received March 20, 2023)
On March 20, 2023, Vantor served its First Set of Interrogatories on Stonefield through its counsel of record, Caldwell Royce & Shapiro LLP. The interrogatories were transmitted by Harrison Caldwell and Jason Whitford of that firm. Stonefield's responses are due within thirty (30) days of service, placing the response deadline on or about April 19, 2023.
The Calderwood & Harkness team is currently reviewing the interrogatories and preparing substantive responses in coordination with the relevant Stonefield personnel. Our initial review of the interrogatories indicates that Vantor's questions focus on the following principal areas:
• The internal decision-making process leading to Stonefield's termination of the TSA, including the identity of all individuals involved in the termination decision, the timeline of that decision, and all factors considered;
• The preparation and issuance of the Cure Notice dated January 18, 2022, including who drafted the notice, who approved it, and the basis for the specific SLO metrics cited therein;
• The volume of freight tendered by Stonefield to VTS under the TSA during each month of the contract term, with particular focus on whether Stonefield met its minimum volume commitments under TSA Section 3.1;
• Stonefield's engagement of Cascade Freight Systems Inc. and Briarwood Trucking Co. as alternative carriers, including the date of first contact, the date of first freight tender, the volume of freight tendered to each carrier, the rates paid, and the terms of any written agreements.
We are coordinating with Janet Kirkwood, Raymond Hess, and Carlos Medina to compile the factual information necessary to prepare accurate and complete responses. We will circulate draft responses to you for review and approval before service. We anticipate being in a position to serve responses on or before April 14, 2023, ahead of the April 19 deadline, consistent with our overall target production date.
B. First Request for Production of Documents (Received March 20, 2023)
Also on March 20, 2023, Vantor served its First Request for Production of Documents on Stonefield, comprising thirty-eight (38) individual document requests. Stonefield's responses are due on or about April 19, 2023.
The Calderwood & Harkness team is reviewing the document requests and preparing responses and objections. We note that several of Vantor's requests appear overbroad on their face and are likely to be the subject of objections. In particular:
• Vantor requests "all communications with any third-party carrier" during the period from January 1, 2020 through the present. This request is vastly overbroad in both temporal scope and subject matter, as Stonefield maintains relationships with dozens of carriers across its nationwide logistics operations, and the majority of such communications have no relevance to the claims or defenses in this case. We intend to object to this request and propose a reasonable limitation — e.g., communications with Cascade Freight Systems Inc. and Briarwood Trucking Co. relating to freight lanes or services that were previously serviced by VTS under the TSA.
• Vantor requests "all internal communications regarding the rate adjustment mechanism under TSA Section 5.3." While communications directly addressing the rate adjustment provision are likely relevant and discoverable, the request as framed could sweep in routine internal discussions about freight rates and pricing that bear no connection to the claims in this case. We will object and offer to produce communications that specifically reference or relate to the rate adjustment mechanism under TSA Section 5.3 and the anticipated April 2022 rate adjustment.
Notwithstanding these objections, we intend to produce all responsive, non-privileged documents concurrent with our responses. Our target production date is April 14, 2023, which is ahead of the April 19 response deadline. We believe that early production is in Stonefield's strategic interest, as it demonstrates good-faith cooperation and will help maintain credibility with Judge Calloway, who is known to take a dim view of discovery gamesmanship. Additionally, timely production will position Stonefield favorably in the event of any future discovery disputes.
V. Document Collection and Processing
A. Stonefield Custodial Collections
Document collection from the identified Stonefield custodians is substantially complete as of the end of March 2023. The following custodians have been the subjects of collection:
1. Janet Kirkwood — Vice President, Carrier Relations. Ms. Kirkwood is a key fact witness in this litigation, as she was the primary Stonefield executive who oversaw the day-to-day relationship with Vantor and VTS, monitored VTS's performance against the contractual SLOs, and was directly involved in the decisions leading to the issuance of the Cure Notice and the subsequent termination. Her collection includes email (Ashgrove Software), shared drive files, and records from the contract management system. Ms. Kirkwood's collection is the largest among the five custodians and includes the most substantive communications relating to the Vantor/VTS relationship.
2. Raymond Hess — Director, Contract Compliance. Mr. Hess was responsible for monitoring carrier compliance with contractual service levels and was the author of the Cure Notice dated January 18, 2022. He also co-signed the termination letter dated March 4, 2022 (jointly with you). His collection includes email, compliance monitoring reports, and contract management system records.
3. Carlos Medina — Senior Vice President, Operations. Mr. Medina oversees Stonefield's freight operations nationally and was involved in operational decisions relating to the VTS relationship, including the engagement of alternative carriers. His collection includes email and shared drive files.
4. Tobias Wren — General Counsel. Your collection has been limited to documents directly relating to the Vantor/VTS matter, including legal correspondence, internal memoranda regarding the termination decision, and board-related materials. As we have discussed, communications between you and outside counsel (including Calderwood & Harkness and Ashford Meridian LLP) are being withheld as privileged.
5. Priya Ramachandran — Chief Financial Officer. Ms. Ramachandran's collection is the most limited in scope and consists primarily of financial documents and board-related materials that reference or relate to the Vantor/VTS relationship or this litigation.
All collections include email sourced from Ashgrove Software, documents from shared network drives, and relevant records from Stonefield's contract management system. All five custodians have confirmed their compliance with the litigation hold notice that was issued on September 2, 2022, following the filing of Vantor's original Complaint. Each custodian has signed a written acknowledgment of the litigation hold, and copies of those acknowledgments are on file with Calderwood & Harkness and with David Moretti.
B. Pinnacle Forensics Processing Status
Pinnacle Forensics LLC ("Pinnacle") is serving as the e-discovery vendor for document processing, hosting, and review platform support in this matter. Nathan Billings, Client Engagement Director at Pinnacle, is our primary point of contact. The engagement is tracked under Pinnacle Project ID: PF-SLG-2022-0914.
As of March 31, 2023, Pinnacle has processed and loaded approximately 186,000 pages of documents from the five custodial collections into the Pinnacle-hosted review platform. The processing workflow included the following steps:
• Ingestion and extraction of files from the collected data sources, including email (MSG files from Ashgrove Software), loose files from shared drives, and exports from the contract management system;
• De-duplication at the global level (cross-custodian) to eliminate exact duplicate documents, reducing the volume of documents requiring review;
• Near-duplicate identification to group substantially similar documents for efficient batch review;
• Email threading to consolidate email chains and identify the most inclusive email in each thread, enabling reviewers to prioritize the most complete versions of email conversations;
• Application of date range filters, keyword filters, and file-type filters to further reduce the review population to documents likely to be responsive.
Following the completion of these processing steps, the estimated universe for first-pass review is approximately 50,000 documents (post-deduplication and filtering). This is a manageable volume for the review team and timeline we have in place.
In addition, Pinnacle and David Moretti (Calderwood & Harkness's Litigation Support / eDiscovery Manager) are developing a Technology Assisted Review 2.0 ("TAR 2.0") model to assist with the identification of responsive and non-responsive documents. Seed sets for the TAR 2.0 model have been prepared by Mr. Moretti in consultation with Patrick Gallagher and Simone Laroche. The seed sets were constructed using a combination of richness sampling and judgmental selection of known-relevant documents. The TAR model will be used to prioritize documents for review and to validate the completeness of the review. Recall rate metrics are being tracked by Mr. Moretti and will be documented in the event that the defensibility of the review methodology is challenged.
C. Document Review Status
First-pass document review commenced during the week of March 27, 2023, and is proceeding on schedule. The review team consists of the following personnel:
• Kara Nystrom (Contract Associate) — performing first-pass review for responsiveness and issue coding;
• Helen Tsao (Senior Paralegal) — performing first-pass review, privilege identification, and coding, as well as assisting with privilege log preparation;
• Simone Laroche (Working Associate) — performing quality control review, privilege review, and oversight of the review team's coding decisions.
The document review is governed by the Document Review Protocol Memorandum that was finalized on March 15, 2023 by David Moretti and Patrick Gallagher. The protocol establishes the following:
• Responsiveness Criteria. Detailed definitions of responsive and non-responsive documents, keyed to the claims, defenses, and topics identified in the pleadings and the parties' initial disclosures.
• Privilege Identification Guidelines. Procedures for identifying and flagging documents potentially protected by the attorney-client privilege, the work product doctrine, or the joint defense privilege (the latter applicable to communications with Ashford Meridian LLP under the Common Interest Agreement dated September 15, 2022). The protocol specifies the criteria for identifying privileged communications and the escalation procedures for ambiguous or borderline documents.
• Coding Taxonomy. A comprehensive coding taxonomy for issue coding, including categories for key topics (e.g., SLO performance, rate adjustment, fleet deployment, mitigation, termination decision, cure notice, force majeure), key custodians, key date ranges, and privilege designations.
• Quality Control Procedures. Random sampling and targeted quality control review by Simone Laroche and Patrick Gallagher to ensure consistency and accuracy in coding decisions. The protocol specifies a minimum quality control rate of 10% of all reviewed documents.
• TAR 2.0 Seed Set Methodology. Procedures for the selection, review, and coding of seed set documents to train the TAR 2.0 model, including the use of control sets for validation.
The target completion date for first-pass review and initial production to Vantor is April 14, 2023. Based on the current pace of review, we are confident that this target is achievable. The anticipated initial production is expected to comprise approximately 42,387 documents (approximately 186,000 pages), bearing Bates numbers SLG-000001 through SLG-042387.
Privilege log preparation is running concurrently with the document review. Simone Laroche and Helen Tsao are identifying and logging all documents withheld on the basis of attorney-client privilege or work product protection. The privilege log will be produced to Vantor concurrent with the initial document production.
D. Pre-Litigation Communications with Ashford Meridian LLP
As you are aware, Ashford Meridian LLP — specifically, Lorraine Beckwith (Partner) and Troy Nakamura (Senior Associate) — served as Stonefield's outside counsel in connection with the original negotiation and drafting of the TSA and provided pre-litigation guidance to Stonefield regarding contractual interpretation, VTS's performance failures, and the potential exercise of Stonefield's termination rights under the TSA. The privilege status of Stonefield's communications with Ashford Meridian is an important issue in the document review, as a number of these communications are responsive to Vantor's discovery requests but are protected from disclosure.
On March 22, 2023, Simone Laroche prepared a detailed privilege review memorandum analyzing the privilege status of Stonefield's pre-litigation communications with Ashford Meridian LLP. The memorandum concluded that these communications are protected by the attorney-client privilege, as they constitute confidential communications between Stonefield (the client) and its attorneys at Ashford Meridian for the purpose of obtaining or providing legal advice regarding Stonefield's contractual rights and obligations under the TSA, the legal significance of VTS's performance failures, and the legal requirements for exercising the termination right under TSA Section 11.2.
Based on Ms. Laroche's analysis, eighty-four (84) documents have been identified for inclusion on the privilege log in connection with the Ashford Meridian communications. These documents include email exchanges, memoranda, and draft correspondence exchanged between Stonefield personnel and Ashford Meridian attorneys during the pre-litigation period. The privilege log entries for these documents are being prepared with sufficient detail to enable Vantor's counsel to assess the basis for the privilege assertion without disclosing the substance of the protected communications.
VI. Clawback / FRE 502(d) Stipulation
The parties' stipulation and proposed order pursuant to Federal Rule of Evidence 502(d) was jointly prepared by Patrick Gallagher and Jason Whitford of Caldwell Royce & Shapiro LLP and was submitted to the Court on February 15, 2023. The stipulation provides, in substance, that the inadvertent production of documents or information protected by the attorney-client privilege or the work product doctrine in connection with this litigation shall not constitute a waiver of such privilege or protection, either in this proceeding or in any other federal or state proceeding. The stipulation further establishes procedures for the notification, return, and sequestration of inadvertently produced privileged documents, consistent with Federal Rule of Civil Procedure 26(b)(5)(B).
Judge Calloway entered the stipulation and proposed order on February 17, 2023, incorporating it into the Case Management Order. The order is binding on the parties and, pursuant to Rule 502(d), is effective to prevent privilege waiver regardless of the provisions of any other federal or state rule of evidence.
The entry of this order provides important protection for Stonefield given the substantial volume of documents under review — more than 186,000 pages — and the inherent risk of inadvertent disclosure in any production of this magnitude. While the review team is exercising care in the identification and withholding of privileged documents, the Rule 502(d) order serves as a critical safety net in the event that a privileged document is inadvertently included in a production.
VII. Expert Retention
Kensington Analytics Group LLC ("KAG") was retained on October 28, 2022 as Stonefield's damages and economics rebuttal expert. The engagement is led by Dr. Evelyn Rosser, Managing Director, and Michael Chung, Senior Analyst. KAG is a well-regarded economic consulting firm with extensive experience in transportation and logistics industry disputes, and Dr. Rosser has been qualified as an expert in numerous federal and state court proceedings involving damages analysis, financial modeling, and economic causation.
The KAG engagement remains on track. Dr. Rosser and her team have been provided with copies of the TSA and all relevant contractual documents (including all amendments and exhibits), as well as the pleadings, the CMO, and relevant correspondence between the parties. As discovery progresses, additional materials — including Vantor's document production, interrogatory responses, and deposition testimony — will be provided to KAG for incorporation into their analysis.
The expert scope memorandum was sent to KAG on November 14, 2022. The memorandum outlined the key issues within the scope of KAG's anticipated expert engagement, including:
• Analysis of the enforceability and applicability of the liquidated damages clause under TSA Section 14.2, including whether the liquidated damages amount constitutes a reasonable estimate of anticipated harm and is not an unenforceable penalty under New York law;
• Development and evaluation of alternative damages models, including a critique of Vantor's expected damages methodology and presentation of alternative approaches that more accurately reflect Stonefield's actual exposure;
• Mitigation analysis, including an assessment of whether Vantor and VTS undertook reasonable efforts to mitigate damages following the termination and the economic impact of any failure to mitigate;
• Analysis of VTS's financial condition and the causation between Stonefield's termination and Vantor's claimed losses, including whether VTS's financial difficulties were attributable to factors independent of the TSA termination.
No expert report is due at this time. The CMO provides that expert discovery shall be completed by January 12, 2024. The specific deadlines for the exchange of opening expert reports and rebuttal expert reports will be established within the expert discovery window, either by agreement of the parties or by further order of the Court. We will work with KAG to ensure that Dr. Rosser's analysis and report are completed well in advance of the applicable deadline.
VIII. Other Case Management Items
A. No Court Activity in March 2023
There were no hearings, conferences, or orders issued by the Court during the reporting period of March 2023. The docket reflects no activity beyond the previously reported entry of the Case Management Order on February 17, 2023.
The next anticipated court interaction will likely be a discovery conference in the event that disputes arise regarding the adequacy of the parties' responses to discovery requests. We will endeavor to resolve any discovery disputes through the meet-and-confer process required by Local Civil Rule 37.2 (S.D.N.Y.) before seeking judicial intervention. However, if Vantor's responses to Stonefield's discovery requests are inadequate or if disputes regarding the scope of Vantor's overbroad requests cannot be resolved informally, we may need to seek a discovery conference with Judge Calloway or file a letter motion pursuant to the Court's Individual Practices.
B. Lender Notification — Lakeshore National Bank
As previously reported, the quarterly litigation update for Q4 2022 was provided to Catherine Devereaux, Senior Vice President, Loan Administration, at Lakeshore National Bank, on January 12, 2023. The content of the update covered the status of the Motion to Dismiss (denied as moot), the anticipated discovery timeline, and the general posture of the case. The update was reviewed and approved by you prior to delivery.
No further update to Lakeshore National Bank is required until the next quarterly reporting cycle, which is anticipated in July 2023 (covering the Q2 2023 period). We will prepare a draft of the next quarterly update for your review in advance of the July reporting date.
For reference, the notification obligation arises under the senior secured credit facility maintained by Stonefield Logistics Group Inc. with Lakeshore National Bank, consisting of a $425 million facility comprised of a $175 million revolving credit facility and a $250 million Term Loan B. The Credit Agreement (Reference No. LNB-SLG-2017-CA-4402) was originally dated October 12, 2017 and was amended and restated on June 30, 2021. Section 6.03(b) of the Credit Agreement requires Stonefield to provide notice to the Administrative Agent (Lakeshore) of any litigation or proceeding involving potential liability in excess of $25 million. Vantor's Amended Complaint seeks damages in excess of that threshold, triggering the notification obligation.
Lakeshore has acknowledged receipt of the Q4 2022 update and has not indicated any concerns regarding the impact of this litigation on facility availability or covenant compliance. No adverse impact on the credit facility has been noted.
IX. Budget and Staffing
A. Fees and Disbursements
The Quarterly Billing Summary for Q1 2023 (covering January through March 2023) is being prepared by Linda Osei, Billing Partner, and will be delivered to you by mid-April 2023. The summary will include a detailed breakdown of fees by timekeeper, a summary of disbursements (including Pinnacle Forensics costs), and a comparison of actual spending against the litigation budget.
On a preliminary basis, we note that March 2023 was a significant ramp-up month for this matter, reflecting the commencement of active fact discovery. The increased activity during March — including the preparation and service of three sets of written discovery, the coordination of document collection from five custodians, the finalization of the document review protocol, and the commencement of first-pass document review — resulted in fees that are expected to be higher than the relatively quieter months of January and February 2023. However, the March fees remain within the budgeted range for the discovery phase of this litigation.
As a reminder, the engagement letter with Stonefield provides for a 10% courtesy discount on all associate billing rates, reflecting the Ridgeline Capital Partners portfolio company discount. This discount applies to the rates for Patrick Gallagher, Simone Laroche, and Kara Nystrom. The current billing rates for the core team members are as follows:
As set forth in the Preliminary Litigation Budget dated September 12, 2022, the estimated total fees for this matter through the summary judgment stage are $3.5 million to $5.2 million, with estimated costs and disbursements (including e-discovery vendor fees, court reporter fees, travel expenses, and other out-of-pocket costs) ranging from $400,000 to $750,000. Current spending remains within these budget projections. We will continue to monitor spending against the budget and will notify you promptly if we anticipate any material variance.
B. Staffing
The core litigation team assigned to this matter remains unchanged:
• Samuel Eklund — Responsible Partner. Mr. Eklund provides strategic direction and oversight for all aspects of the engagement and is available for escalated issues and client communications.
• Linda Osei — Billing Partner. Ms. Osei oversees billing, budgeting, and financial reporting for the matter.
• Patrick Gallagher — Lead Associate. Mr. Gallagher serves as the day-to-day lead for the litigation, responsible for discovery strategy and execution, briefing, deposition preparation, and regular communication with the client.
• Simone Laroche — Working Associate. Ms. Laroche supports all aspects of the litigation, with particular responsibility for privilege review, document review quality control, legal research, and brief drafting.
• Helen Tsao — Senior Paralegal. Ms. Tsao supports document review, privilege log preparation, deposition logistics, and general case management.
• David Moretti — Litigation Support / eDiscovery Manager. Mr. Moretti manages the e-discovery workflow, including coordination with Pinnacle Forensics, TAR model development, and review platform administration.
• Kara Nystrom — Contract Associate. Ms. Nystrom is assigned to the matter for the duration of the document review phase and is performing first-pass review of the Stonefield document collection.
No staffing changes are anticipated at this time. If additional contract associates are needed to accelerate the document review timeline or to manage Vantor's document production (once received), we will discuss any proposed staffing additions with you in advance.
X. Upcoming Activities — April 2023
The following activities are planned for April 2023:
1. Responses to Vantor's Interrogatories. Finalize and serve Stonefield's Responses to Vantor's First Set of Interrogatories. Target service date: April 14, 2023.
2. Responses to Vantor's Document Requests. Finalize and serve Stonefield's Responses and Objections to Vantor's First Request for Production of Documents. Target service date: April 14, 2023.
3. Initial Document Production. Complete first-pass document review and produce Stonefield's initial document production to Vantor. The production is expected to comprise approximately 42,387 documents (approximately 186,000 pages), bearing Bates numbers SLG-000001 through SLG-042387. The production will be accompanied by a privilege log identifying all documents withheld on the basis of attorney-client privilege or work product protection. Target production date: April 14, 2023.
4. Responses to Vantor's Requests for Admission. Finalize and serve Stonefield's Responses to Vantor's Requests for Admission. Target service date: April 14, 2023. (Note: Vantor's Requests for Admission were not served on March 20; if Vantor serves RFAs in April, response deadlines will be calculated from the date of service.)
5. Analysis of Vantor's discovery Responses. Receive and begin substantive analysis of Vantor's responses to Stonefield's First Set of Interrogatories, First Request for Production of Documents, and First Set of Requests for Admission. Vantor's responses are expected on or about April 5, 2023. We will evaluate the completeness and sufficiency of Vantor's responses and will meet and confer with Vantor's counsel to address any deficiencies before considering motion practice.
6. TAR 2.0 Model Refinement. Continue training and validation of the TAR 2.0 model. David Moretti is tracking recall rate metrics and will report on model performance and defensibility. The TAR model will be particularly important for the efficient review of Vantor's anticipated document production.
7. Deposition Planning. Begin preliminary planning for deposition scheduling, which we anticipate will take place during the summer of 2023. Key fact witnesses anticipated for deposition on the Vantor side include senior executives of VTS involved in fleet deployment decisions, the VTS account manager for the Stonefield relationship, and Vantor Holdings personnel involved in the mitigation strategy. Key Stonefield witnesses (including Janet Kirkwood, Raymond Hess, and Carlos Medina) will require preparation sessions in advance of their depositions. We will provide a preliminary deposition schedule and witness list for your review in the May status report.
XI. Risk Factors and Strategic Notes
We take this opportunity to reiterate the two principal litigation risk factors identified in the Preliminary Case Assessment dated September 9, 2022 and the Defense Strategy Outline dated September 26, 2022. While the overall strength of Stonefield's defense remains strong, these risk factors require ongoing monitoring and management:
Risk Factor 1 — The Kirkwood Email (September 22, 2021). Janet Kirkwood's email to Carlos Medina dated September 22, 2021 remains the single most significant adverse document in Stonefield's files. In that email, Ms. Kirkwood referenced the volume being diverted to Cascade Freight Systems Inc. and Briarwood Trucking Co. and stated: "if VTS doesn't get its act together by Q1 I think we pull the plug on the whole contract." Vantor will undoubtedly seize on this email as evidence of a premeditated decision to terminate the TSA — a decision that, Vantor will argue, preceded and was independent of the objective SLO failures that Stonefield cites as Cause for termination. Vantor will argue that this email demonstrates that Stonefield's termination for Cause was pretextual, i.e., that the real motivation for termination was dissatisfaction with the relationship and a desire to shift volume to lower-cost carriers, rather than genuine concern about VTS's performance failures.
Our defense strategy addresses this risk through several vectors. First, we will contextualize the email as a candid internal assessment of VTS's deteriorating performance — which is consistent with, not contrary to, a later good-faith determination that Cause existed. Second, we will emphasize that the termination did not occur until March 4, 2022, following a formal Cure Notice and a thirty-day cure period, and was based on objective, documented SLO failures across all five metrics. Third, Ms. Kirkwood's deposition preparation will address this email directly, and we will develop testimony that places the email in its proper context.
Risk Factor 2 — The Anticipated Rate Adjustment. Vantor alleges that a principal motivation for Stonefield's termination was to avoid the rate adjustment that was expected to take effect in April 2022 under TSA Section 5.3. The anticipated adjustment would have resulted in a 14.3% increase in the weighted average per-mile rate, from $2.87/mile to $3.28/mile, adding approximately $6.2 million in annual transportation costs to Stonefield's operating expenses. Vantor's theory is that Stonefield terminated the TSA in advance of this rate increase and shifted volume to lower-cost carriers (Cascade Freight Systems and Briarwood Trucking) to achieve cost savings.
Our defense strategy addresses this risk by establishing that objective Cause existed independently of the anticipated rate adjustment. The Q4 2021 SLO failures across all five metrics — each of which independently constitutes a material breach under the TSA — provide a more than sufficient basis for termination, regardless of any secondary economic considerations. Moreover, we will argue that even if Stonefield was aware of the forthcoming rate adjustment, the exercise of a valid contractual termination right for documented Cause does not become pretextual merely because it also happens to serve the terminating party's economic interests. Under New York law, a party exercising a termination-for-cause right is not required to demonstrate that cause was its sole motivation.
Both risk factors are being actively managed through the defense strategy. The discovery responses we receive from Vantor in April 2023 will be critical to our ongoing assessment of these risks. In particular, we will be closely analyzing Vantor's responses for evidence bearing on:
(a) Vantor's and VTS's internal awareness of VTS's own SLO failures during Q3–Q4 2021 and the extent to which Vantor's personnel recognized that the performance failures were attributable to VTS's own decisions (rather than external factors);
(b) VTS's fleet redeployment decisions, with particular emphasis on the November 12, 2021 email from Stefan Milescu (VTS VP of Fleet Operations) to Peter Vantorovich (Vantor Holdings CEO) concerning the decision to pull 85 tractors from Stonefield-dedicated lanes for redeployment to higher-margin accounts — a document referenced in Vantor's Amended Complaint that, if it reads as we anticipate, may actually support Stonefield's position that the SLO failures were the result of VTS's own business decisions, not external forces;
(c) Vantor's mitigation efforts (or lack thereof) following the TSA termination, including the timeline, scope, and financial results of any efforts to replace the Stonefield business.
We will provide an updated risk assessment in the May status report following our review of Vantor's discovery responses.
XII. Conclusion and Next Report
The case is proceeding on schedule within the framework established by the Case Management Order. Fact discovery is well underway, with both sides having served their initial written discovery requests and document collection and processing substantially complete on the Stonefield side. The Calderwood & Harkness team is fully engaged in the preparation of Stonefield's discovery responses and the document review in preparation for the initial production.
There are no immediate action items requiring a decision by the client at this time. However, we will circulate draft responses to Vantor's interrogatories for your review and approval in advance of the April 14 target service date and will keep you apprised of developments as they occur.
The next monthly status report will cover activities during April 2023, including the service of Stonefield's discovery responses, the initial document production, the receipt and analysis of Vantor's discovery responses, and preliminary deposition planning. The April report will be delivered in early May 2023.
As always, please do not hesitate to contact me directly with any questions, comments, or concerns regarding this matter or this report. Samuel Eklund is also available for discussion of escalated or strategic issues at any time.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Patrick Gallagher Lead Associate, Litigation (General) Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166 Tel: (212) 555-8400
Email: pgallagher@calderwoodharkness.com
Matter No. 1012-00005
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
This memorandum and any attachments hereto constitute a privileged and confidential attorney-client communication and/or attorney work product prepared in anticipation of litigation. This document is intended solely for the use of the addressee and should not be disclosed, copied, or distributed to any third party without the prior written consent of General Counsel. Inadvertent disclosure of this memorandum does not constitute a waiver of any applicable privilege or protection.
Milestone | Deadline
Completion of Fact discovery | September 29, 2023
Completion of Expert discovery | January 12, 2024
Dispositive Motions | March 1, 2024
SLO Metric | Q4 2021 Actual | TSA SLO Requirement
On-Time Pickup Rate | 78.2% | 95%
On-Time Delivery Rate | 81.6% | 93%
Tender Acceptance Rate | 71.4% | 90%
Equipment Availability | 62% | 85%
Cargo Claims Ratio | 1.07% | ≤ 0.5%
Timekeeper | Role | Standard Rate | discounted Rate
Samuel Eklund | Responsible Partner | $1,275/hr | $1,275/hr
Linda Osei | Billing Partner | $1,175/hr | $1,175/hr
Patrick Gallagher | Lead Associate | $825/hr | $742.50/hr
Simone Laroche | Working Associate | $650/hr | $585/hr
Kara Nystrom | Contract Associate | $425/hr | $382.50/hr
Helen Tsao | Senior Paralegal | $375/hr | $375/hr

MEMORANDUM

MATTER NO.: 1012-00005

CALDERWOOD & HARKNESS LLP

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