1012-00005 · Stonefield Logistics Group · Correspondence/Client

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

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

CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 554-8200 Facsimile: (212) 554-8201 www.calderwoodharkness.com

June 5, 2023

VIA ELECTRONIC MAIL — CONFIDENTIAL

Tobias Wren, Esq. General Counsel Stonefield Logistics Group Inc. 4200 Commerce Parkway, Suite 800 Fort Worth, Texas 76102

Re: Monthly Status Report — May 2023 Activity Vantor Holdings Corp. v. Stonefield Logistics Group Inc. Case No. 22-cv-07841 (S.D.N.Y.) Before the Honorable Margaret T. Calloway, U.S.D.J. Matter No.: 1012-00005 Reporting Period: May 1, 2023 through May 31, 2023

cc: Samuel Eklund, Responsible Partner, Calderwood & Harkness LLP Linda Osei, Billing Partner, Calderwood & Harkness LLP

Dear Tobias:

We write to provide the monthly status report for the above-captioned litigation, covering activity during the period of May 1, 2023 through May 31, 2023. As discussed below, May was a month of significant progress in the discovery phase of this matter, marked by the completion of initial document productions, the identification of highly favorable evidence in Vantor's production, the receipt and preliminary analysis of Vantor's damages expert report, and the emergence of a discovery dispute that may require court intervention. This report is organized by subject area for ease of reference.

I. EXECUTIVE SUMMARY

May 2023 was one of the most consequential months in this litigation to date. Both parties' initial document productions are now complete: Stonefield produced 42,387 documents (approximately 186,000 pages) on April 14, 2023, and Vantor produced 28,914 documents (approximately 112,000 pages) on April 28, 2023. Our team has been actively engaged in reviewing and analyzing Vantor's production throughout May, and that review has yielded several documents of considerable importance to Stonefield's defense.

Most significantly, we have identified a critical internal email from Sandra Milescu (Chief Operating Officer of Vantor/VTS) to Nikolai Vantorovich (Chief Executive Officer of Vantor), dated November 12, 2021 (Bates No. VHC-008417), in which Milescu expressly acknowledges that VTS unilaterally pulled 85 tractors off the Stonefield dedicated lanes to cover other commitments and states that "SLG won't notice until January." This email is a devastating piece of evidence for Vantor. It directly contradicts Vantor's central narrative that its Q4 2021 performance deficiencies were caused by Stonefield's own volume shortfalls, and it powerfully supports Stonefield's "first-to-breach" defense. A detailed analysis of this document and its implications is set forth in Section V.A below.

On the discovery front, Stonefield served its Second Request for Production of Documents on May 5, 2023, targeting VTS fleet redeployment records and related internal communications from Q3–Q4 2021. Vantor, through its counsel Caldwell Royce & Shapiro LLP ("CRS"), has objected to these requests as overbroad and unduly burdensome. We sent a detailed meet-and-confer letter on May 30, 2023, and the dispute remains pending as of the date of this report. If the dispute cannot be resolved informally, we intend to seek court intervention through a letter brief to Judge Calloway.

On May 15, 2023, Vantor served the expert report of Dr. Philip Trask of Trask Greystone & Associates, which quantifies Vantor's claimed damages at approximately $95.4 million. Our preliminary analysis of the Trask report has identified several significant weaknesses, including the failure to account for mitigation, inflated margin assumptions, and what we believe is an impermissible duplication of liquidated damages and lost profits claims. These weaknesses have been communicated to our rebuttal expert, Dr. Evelyn Rosser of Kensington Analytics Group LLC, whose preliminary view is that — even under the most adverse assumptions — Vantor's maximum recoverable damages would be approximately $8.2 million.

Deposition scheduling is underway. We anticipate depositions of five key fact witnesses — Derek Pruitt and Sandra Milescu of Vantor, and Janet Kirkwood and Raymond Hess of Stonefield, as well as Nikolai Vantorovich — during July and August 2023. A Rule 30(b)(6) deposition notice is being prepared for service in June. Third-party subpoenas to Cascade Freight Systems Inc. and Briarwood Trucking Co. are also being finalized.

The case remains on track with the deadlines established in Judge Calloway's February 17, 2023 Case Management Order: fact discovery closes September 29, 2023; expert discovery closes January 12, 2024; and dispositive motions are due March 1, 2024.

Overall Assessment: Stonefield's litigation posture remains strong and has been materially bolstered by the documents uncovered in Vantor's production, particularly the Milescu email. We continue to recommend an aggressive defense strategy aimed at summary judgment or favorable resolution. The details supporting this assessment are set forth in the sections that follow.

II. DOCKET ACTIVITY AND COURT PROCEEDINGS

No court hearings, conferences, or oral arguments took place during the reporting period of May 2023. No orders were entered by the Court during this period.

The next anticipated court interaction relates to the pending discovery dispute concerning Stonefield's Second Request for Production of Documents. As discussed in greater detail in Section VI below, if Vantor fails to respond substantively to our May 30, 2023 meet-and-confer letter, or if the parties are unable to reach agreement on the scope of production, we intend to file a letter brief with Judge Calloway seeking a discovery conference and/or an order compelling production. We anticipate that this issue will come to a head in early-to-mid June 2023.

All deadlines established by Judge Calloway's Case Management Order of February 17, 2023 remain in effect and unchanged. The key remaining deadlines are as follows:

We continue to monitor the docket closely and will promptly advise you of any new filings, orders, or scheduling developments.

III. DOCUMENT PRODUCTIONS — STATUS

A. Stonefield's Production (Complete)

Stonefield's First Production was served on April 14, 2023 via the Pinnacle Forensics LLC electronic review and production platform (Project ID: PF-SLG-2022-0914). The production consisted of 42,387 documents encompassing approximately 186,000 pages of material, bearing Bates numbers SLG-000001 through SLG-042387. The production was made in response to Vantor's First Request for Production of Documents, which was served on March 20, 2023 and contained 38 individual document requests.

A privilege log accompanied the First Production, identifying 1,247 documents that were withheld in whole or in part on the basis of attorney-client privilege and/or the attorney work product doctrine. The privilege log was prepared and reviewed by Simone Laroche and Thomas Tsao under our supervision and complies with the requirements of Federal Rules of Civil Procedure 26(b)(5) and the Court's Case Management Order.

As of the date of this report, we have not received any deficiency letters or supplementation demands from CRS regarding Stonefield's First Production. We interpret this as an indication that CRS has not identified any material gaps in the production, though we remain vigilant for any such challenge.

We note that a second-phase privilege review of 218 additional documents identified during a supplemental quality-control pass is underway. A supplemental privilege log covering these 218 documents is being finalized and is expected to be completed and served in late June 2023.

B. Vantor's Production (Complete — First Production; Second RFP Responses Pending)

Vantor served its First Production on April 28, 2023, consisting of 28,914 documents and approximately 112,000 pages. Throughout the month of May, our document review team — led by Simone Laroche and Kara Nystrom — has been engaged in a comprehensive review and analysis of Vantor's production.

A preliminary analysis memorandum was circulated internally on May 12, 2023, summarizing the composition of the production, identifying categories of documents produced, and flagging areas of potential deficiency. Building on that analysis, our team compiled a Key Document Index on May 15, 2023, which identifies 87 documents flagged as "hot" documents. These documents are organized by topic area, including: fleet deployment and redeployment decisions, communications with Stonefield, internal Vantor/VTS strategy discussions, and financial records. The Key Document Index has been shared with our expert consultants at Kensington Analytics Group LLC to facilitate their rebuttal analysis.

We have identified several notable gaps in Vantor's production. In particular, fleet redeployment records — specifically, documentation reflecting VTS's decisions to reassign tractors from Stonefield dedicated lanes to other shipper accounts during Q3–Q4 2021 — appear to have been withheld or not collected. Similarly, contracts between VTS and alternative shippers to whom the fleet was redirected are absent from the production. These gaps are the subject of the pending discovery dispute discussed in Section VI below.

Vantor's responses to Stonefield's Second Request for Production of Documents (served May 5, 2023) remain outstanding and are the subject of the ongoing meet-and-confer process.

C. Interrogatory and Request for Admission Responses

As previously reported, Stonefield served its responses and objections to Vantor's First Set of Interrogatories (25 interrogatories), First Request for Production of Documents (38 requests), and First Set of Requests for Admission (25 requests) on April 14, 2023. No motions to compel supplementation have been filed by Vantor, and no deficiency letters have been received.

During May, our team completed its analysis of Vantor's responses to Stonefield's First Set of Interrogatories (25 interrogatories) and First Set of Requests for Admission (30 requests). The results of these analyses are summarized below:

Interrogatory Response Analysis (Memorandum dated May 8, 2023): Our review identified several interrogatory responses that are evasive, incomplete, or non-responsive. Most significantly:

• Interrogatory No. 9 (fleet redeployment decisions): Vantor's response is vague and evasive, stating only that "VTS made fleet management decisions consistent with its operational needs and customer commitments" without identifying the specific redeployment decisions, the dates on which they occurred, the number of tractors redeployed, or the accounts to which they were redirected. This response is plainly deficient and does not comply with the obligation to provide a full and complete answer under Rule 33(b)(3).

• Interrogatory No. 14 (mitigation efforts): Vantor's response generically states that "Vantor undertook commercially reasonable efforts to mitigate its losses following Stonefield's wrongful termination of the TSA" but fails to identify any specific mitigation steps, the dates on which they were taken, the alternative freight volumes secured, or the revenues generated from mitigation activities. This is wholly inadequate and inconsistent with Vantor's burden to demonstrate reasonable mitigation efforts.

We recommend seeking supplementation of these responses through the meet-and-confer process and, if necessary, through a motion to compel. We have included these deficiencies in our May 30, 2023 meet-and-confer letter to CRS.

Request for Admission Analysis (Memorandum dated May 10, 2023): Vantor's responses to the Requests for Admission are characterized by extensive qualifications and equivocal language. However, the responses contain several admissions that will be useful at summary judgment and trial. Most notably:

• Vantor has effectively admitted that the VTS on-time pickup rate during Q4 2021 was 78.2%, which is materially below the 95% Service Level Objective ("SLO") threshold established in Schedule B of the Transportation Services Agreement ("TSA"). While the admission is accompanied by qualifying language attributing the shortfall to Stonefield's alleged volume deficiencies, the admitted metric itself — 78.2% against a 95% SLO — is a powerful fact for Stonefield's defense.

• Several other qualified admissions regarding service level failures in the categories of on-time delivery, tender acceptance, and equipment availability will further support our position at summary judgment and trial.

A comprehensive summary of all admissions and their evidentiary implications has been included in the May 10, 2023 memorandum and will be incorporated into our summary judgment briefing strategy.

IV. KEY DOCUMENTS IDENTIFIED IN VANTOR'S PRODUCTION

A. Milescu-to-Vantorovich Email (VHC-008417) — November 12, 2021

This is the single most significant document identified to date in this litigation. The document is an internal email from Sandra Milescu, Chief Operating Officer of Vantor Transportation Solutions ("VTS"), to Nikolai Vantorovich, Chief Executive Officer of Vantor Holdings Corp., dated November 12, 2021 (Bates No. VHC-008417).

The email contains the following statement:

"We've pulled 85 tractors off the SLG dedicated lanes to cover [redacted] commitments. SLG won't notice until January."

A detailed analysis memorandum was prepared by Simone Laroche on May 14, 2023, addressing the significance, implications, and potential uses of this document. The key conclusions of that analysis are as follows:

(i) Intentional Fleet Reduction. The email demonstrates that VTS intentionally and unilaterally reduced the fleet capacity assigned to the Stonefield account by approximately 85 tractors — from the 400 tractors committed under the TSA to approximately 315 tractors. This represents a reduction of approximately 21.25% of the committed fleet capacity. The reduction was a deliberate business decision by VTS management, not an unavoidable operational circumstance.

(ii) Absence of Notice. The email confirms that the redeployment occurred without notice to Stonefield, in direct violation of Section 7.4 of the TSA, which requires VTS to notify Stonefield of any substitute equipment deployments or capacity changes affecting dedicated lanes and to obtain Stonefield's prior written consent for any reduction in committed fleet capacity exceeding 5%.

(iii) Contradiction of Vantor's Central Narrative. The email directly contradicts Vantor's central litigation theory — namely, that VTS's Q4 2021 performance deficiencies were caused by Stonefield's own volume shortfalls and alleged failure to provide adequate shipping volumes. The Milescu email reveals that the performance failures were, in fact, self-inflicted by VTS's own decision to divert committed fleet resources to other shipper accounts.

(iv) Support for First-to-Breach Defense. VTS's undisclosed fleet reduction occurred in October–November 2021. Stonefield's Cure Notice was not issued until January 18, 2022, and Stonefield's termination of the TSA for Cause did not occur until March 4, 2022. The chronology established by this email strongly supports Stonefield's "first-to-breach" defense — that VTS committed a material breach of the TSA well before any alleged breach by Stonefield, thereby excusing Stonefield's subsequent performance and providing independent grounds for termination.

(v) Evidence of Deliberate Concealment. The statement "SLG won't notice until January" implies that VTS deliberately concealed the fleet reduction from Stonefield. This evidence of intentional concealment may be relevant to claims of unclean hands, and may also be probative on the question of willfulness and bad faith, which could bear on the availability of certain equitable defenses and on the assessment of damages.

We anticipate that supplemental production from Vantor's response to the Second RFP — if and when obtained — may reveal that the 85 tractors were redirected to a competing shipper account, specifically Northwind Distribution Co. If confirmed, this would further bolster Stonefield's position by demonstrating that VTS made a calculated business decision to favor a more profitable shipper relationship at Stonefield's expense.

This email will be a central exhibit in the deposition of Sandra Milescu (anticipated for early August 2023), the deposition of Nikolai Vantorovich (anticipated for mid-to-late August 2023), and at the summary judgment stage. We are building our examination outlines for both depositions around this document and its implications.

B. Other Notable Documents

In addition to the Milescu email, our review of Vantor's production has identified a number of other documents that are favorable to Stonefield's defense. The most significant of these are summarized below:

VTS Q4 2021 Internal Performance Report. This internal report, prepared by VTS operations staff for senior management review, confirms that VTS's actual service metrics during Q4 2021 were materially below the SLO thresholds established in Schedule B of the TSA across all five service level categories. The specific metrics are as follows:

These metrics confirm severe underperformance across every measured service level and corroborate Stonefield's position that VTS was in material breach of the TSA. Notably, the equipment availability figure of 62% (approximately 248 tractors of the 400 committed) is consistent with, and independently corroborates, the Milescu email's disclosure that 85 tractors were pulled from the Stonefield dedicated lanes.

Internal Vantor Communications Regarding Service Level Deterioration. We have identified several internal Vantor communications in which VTS personnel acknowledge the deterioration of service levels on the Stonefield account and discuss strategic decisions regarding fleet allocation. These documents reflect that Vantor's senior management was aware of the declining service metrics and made affirmative decisions regarding the reallocation of resources. These documents will be used in depositions and at summary judgment to demonstrate Vantor's knowledge and intentionality.

Gaps in Production. As noted above, our review has identified significant gaps in Vantor's production. In particular, fleet redeployment records and contracts with alternative shippers to whom VTS redirected the 85 tractors appear to have been withheld or not collected. These documents are directly relevant to Stonefield's first-to-breach defense and to the question of Vantor's mitigation (or failure to mitigate) following termination. The absence of these documents from the production is the subject of the pending discovery dispute discussed in Section VI below.

V. DISCOVERY DISPUTE — STONEFIELD'S SECOND REQUEST FOR PRODUCTION

A. Background

On May 5, 2023, Stonefield served its Second Request for Production of Documents on Vantor, consisting of 12 targeted requests. The requests are narrowly focused on the categories of documents identified as missing or incomplete in Vantor's First Production. Specifically, the Second RFP seeks the following categories of documents:

• Request Nos. 1–5: VTS fleet redeployment records from Q3–Q4 2021, including all documents reflecting decisions to reassign, redeploy, or otherwise remove tractors, trailers, or driver resources from Stonefield dedicated lanes, as well as communications regarding such decisions.

• Request Nos. 6–8: Communications between Sandra Milescu and Nikolai Vantorovich (and/or other VTS senior management) regarding Stonefield dedicated capacity, fleet allocation, and service level performance during the period of July 1, 2021 through March 31, 2022.

• Request Nos. 9–10: VTS contracts, agreements, and communications with shippers to whom fleet capacity was redirected from the Stonefield dedicated lanes, including but not limited to Northwind Distribution Co.

• Request Nos. 11–12: VTS driver termination records, severance agreements, and workforce reduction documentation following Stonefield's termination of the TSA in March 2022.

These documents are critical to establishing the key elements of Stonefield's defense, including: (i) VTS's intentional breach of the TSA through undisclosed fleet redeployment; (ii) Stonefield's first-to-breach defense; (iii) Vantor's failure to mitigate its claimed damages; and (iv) the actual magnitude of VTS's losses, if any, following termination.

B. Vantor's Objections

Vantor, through CRS, has objected to the Second RFP on the grounds that the requests are overbroad, unduly burdensome, and not proportional to the needs of the case. Vantor has specifically refused to produce fleet redeployment records and contracts with alternative shippers, asserting that these documents involve third-party commercial relationships that are proprietary and confidential.

We view Vantor's objections as without merit. The documents sought go to the heart of the disputed issues in this case. Vantor has placed its fleet allocation decisions and post-termination damages directly at issue through its claims and the Trask expert report. Vantor cannot, on the one hand, claim $95.4 million in damages predicated on the loss of the Stonefield contract while simultaneously withholding documents that would reveal the extent to which VTS was already redirecting fleet resources away from Stonefield before termination and the extent to which VTS secured replacement business after termination.

To the extent Vantor has legitimate confidentiality concerns regarding its contracts with third-party shippers, those concerns can be addressed through the Stipulated Protective Order already in place in this action (entered March 8, 2023).

C. Meet-and-Confer

On May 30, 2023, I sent a detailed meet-and-confer letter to Jason Whitford, Senior Associate at CRS, identifying the deficiencies in Vantor's discovery responses and demanding the following:

• Supplemental responses to Interrogatories Nos. 9, 14, and 18, providing the specific information requested rather than generalized, conclusory statements;

• Production of all documents responsive to Second RFP Nos. 1–5 (fleet redeployment records) and Second RFP Nos. 9–10 (contracts with alternative shippers); and

• A meet-and-confer conference to discuss the foregoing issues and any remaining areas of disagreement.

As of the date of this report, CRS has not provided a substantive response to the meet-and-confer letter. We have allowed a reasonable period for response, consistent with the spirit of the Federal Rules and Judge Calloway's standing discovery order, which requires good-faith meet-and-confer efforts prior to any discovery motion.

If the dispute is not resolved through the meet-and-confer process within the next two weeks, we intend to file a letter brief with Judge Calloway requesting either (a) a discovery conference to address the dispute, or (b) an order compelling production. A draft letter brief is currently in preparation. We will circulate the draft for your review before filing.

VI. EXPERT REPORTS — PLAINTIFF'S DAMAGES EXPERT

A. Dr. Philip Trask — Trask Greystone & Associates

On May 15, 2023, Vantor served the expert report of Dr. Philip Trask of Trask Greystone & Associates (400 Madison Avenue, Suite 900, New York, NY 10017). Dr. Trask has been retained by Vantor to opine on the quantum of damages allegedly suffered by Vantor as a result of Stonefield's termination of the TSA.

Dr. Trask's report quantifies Vantor's total claimed damages at approximately $95.4 million, broken down as follows:

The report is approximately 78 pages in length (excluding exhibits) and is accompanied by 14 exhibits, including financial projections, contract analysis schedules, and industry benchmarking data.

B. Preliminary Assessment of Trask Report Weaknesses

An initial 15-page analysis of the Trask report was completed and circulated internally on May 22, 2023. Our analysis has identified several significant weaknesses in Dr. Trask's methodology, assumptions, and conclusions. The key weaknesses are summarized below:

(i) Assumption of Enforceability of Liquidated Damages Clause. Dr. Trask's report assumes — without conducting any legal analysis — that the liquidated damages clause in Section 13.3 of the TSA is fully enforceable. The report does not address the penalty doctrine under New York law, which requires that a liquidated damages provision bear a reasonable relationship to the probable loss at the time of contracting. Given the magnitude of the claimed liquidated damages ($67.23 million, representing more than 155% of the single-year Annual Contract Value), there is a substantial question as to whether this provision would survive scrutiny under the penalty doctrine. While this is ultimately a legal question rather than an expert opinion, Dr. Trask's failure to acknowledge or account for this risk undermines the reliability of his damages model.

(ii) Inflated Operating Margin Assumptions. Dr. Trask uses a 12% operating margin for purposes of calculating lost profits. This figure does not appear to be supported by VTS's own historical financial data. Based on our preliminary review of VTS financial statements produced in discovery, VTS's actual operating margins on the Stonefield account during the 2019–2021 period ranged from approximately 6.5% to 8.2%. Dr. Trask appears to have relied on industry-wide benchmarking data for asset-based carriers rather than VTS's actual financial performance, which significantly inflates the lost profits calculation.

(iii) Failure to Account for VTS's Own Breaches. Dr. Trask's report does not address — or even acknowledge — VTS's own material breaches of the TSA, including the undisclosed fleet redeployment documented in the Milescu email. The report's damages model assumes that VTS would have continued to perform at full contract capacity for the remainder of the contract term, an assumption that is factually untenable in light of VTS's decision to pull 85 of 400 committed tractors from the Stonefield account. A proper damages analysis must account for the fact that VTS was already operating at reduced capacity — by its own choice — prior to termination.

(iv) No Meaningful Mitigation Analysis. Dr. Trask's report contains no meaningful analysis of Vantor's obligation to mitigate its damages. The report does not address the availability of alternative freight in the spot market during Q1–Q2 2022, when spot rates were elevated approximately 35% above historical averages, creating an unusually favorable environment for carriers seeking replacement business. Nor does the report quantify the revenues, if any, that VTS actually earned from replacement freight following termination. Under New York law, a non-breaching party has an affirmative duty to mitigate its damages, and the failure to do so reduces the recoverable amount. Dr. Trask's failure to address mitigation is a critical omission.

(v) Duplicative Claim for Liquidated Damages and Lost Profits. Dr. Trask's report claims both liquidated damages of $67.23 million and lost profits of $18.7 million, for a combined total of $85.93 million attributable to the loss of contract value. We believe this is duplicative and impermissible under New York law. Both categories of damages seek to compensate Vantor for the same underlying loss — the economic value of the remaining contract term. Under well-established New York precedent, a party may not recover both liquidated damages and expectancy-based lost profits arising from the same breach, as doing so would result in a double recovery. This issue provides strong grounds for a motion in limine or a Daubert challenge at the appropriate stage.

These weaknesses have been communicated to our rebuttal expert team at Kensington Analytics Group LLC via a detailed memorandum dated May 25, 2023. That memorandum also transmitted key documents from discovery — including the Milescu email, the VTS Q4 2021 Performance Report, VTS fleet records produced to date, VTS financial statements, and freight market data — for Dr. Rosser's and Mr. Chung's use in preparing their rebuttal analysis.

VII. REBUTTAL EXPERT — KENSINGTON ANALYTICS GROUP LLC

Kensington Analytics Group LLC ("KAG"), located at 1700 Market Street, Suite 2800, Philadelphia, PA 19103, was retained in October 2022 pursuant to an engagement letter from Samuel Eklund to Dr. Evelyn Rosser, KAG's Managing Director and lead expert on this engagement. Dr. Rosser, an economist with over 25 years of experience in transportation industry litigation and commercial damages analysis, is leading the rebuttal effort, supported by Michael Chung, Senior Analyst.

Dr. Rosser and Mr. Chung have been provided with a comprehensive set of materials to support their analysis, including:

• The complete Trask expert report and all accompanying exhibits;

• Key discovery documents, including the Milescu email (VHC-008417), the VTS Q4 2021 Internal Performance Report, VTS fleet deployment and redeployment records produced to date, and VTS financial statements for fiscal years 2019–2022;

• Freight market data, including Tarrant Software spot rate indices, Truckload Carriers Association industry benchmarking reports, and Dunmore Systems data for Q1–Q2 2022;

• Our May 22, 2023 internal analysis memorandum on the Trask report weaknesses; and

• Our May 25, 2023 supplemental memorandum with directed questions and suggested areas of analysis.

The scope of KAG's rebuttal engagement encompasses the following areas:

(i) Opine on the enforceability and proportionality of the liquidated damages clause, including whether the clause functions as an enforceable liquidated damages provision or an unenforceable penalty under New York law;

(ii) Develop alternative damages models demonstrating that Vantor's maximum recoverable damages — even under the most adverse assumptions for Stonefield — are substantially lower than the $95.4 million claimed by Dr. Trask;

(iii) Analyze Vantor's failure to mitigate its damages, including a quantitative analysis of the replacement freight available to VTS in the Q1–Q2 2022 spot market and the revenues that a reasonable carrier in VTS's position would have been expected to generate through mitigation efforts; and

(iv) Address VTS's financial condition and causation issues, including the impact of VTS's own fleet redeployment decisions on its ability to service the Stonefield contract and the relationship between VTS's self-inflicted capacity constraints and the claimed damages.

Preliminary Indications from KAG. Based on initial discussions with Dr. Rosser and Mr. Chung, their preliminary view of the damages landscape is as follows:

• If the termination is found to be a valid termination for Cause under Section 13.1(a) of the TSA — which is Stonefield's primary defense position — Vantor's recoverable damages are $0, as the liquidated damages clause is triggered only in the event of a termination without Cause or a wrongful termination.

• If the termination is found to be wrongful — argued in the alternative — the maximum damages under a properly calculated lost-profits theory, accounting for mitigation obligations, VTS's own prior breaches and capacity reductions, and market-based adjustments reflecting the robust spot market conditions in Q1–Q2 2022, would be in the range of approximately $8.2 million. This figure represents a reduction of over 91% from the $95.4 million claimed by Dr. Trask.

Dr. Rosser's analysis is ongoing, and these figures may be refined as additional discovery materials become available. KAG's rebuttal expert report is due under the Case Management Order schedule, and we are targeting completion in August 2023 to allow adequate time for review, refinement, and service.

Expert Budget Tracking. KAG invoices to date total approximately $95,000. The original budget estimate for KAG's engagement, as set forth in the October 2022 engagement letter, was $180,000 to $250,000 through the completion of rebuttal report, deposition preparation, and deposition testimony. KAG's spending remains on track against this budget, and no revision to the expert cost estimate is recommended at this time.

VIII. DEPOSITION SCHEDULING

Depositions of key fact witnesses on both sides are being scheduled for July and August 2023. We are coordinating scheduling with CRS through an exchange of availability dates and expect to finalize the deposition calendar in June 2023. The anticipated deposition schedule is as follows:

Stonefield Witness Preparation. For each Stonefield witness to be deposed by CRS (Kirkwood and Hess), we will prepare detailed deposition preparation memoranda addressing the anticipated areas of examination, key documents likely to be used by opposing counsel, potential difficult questions and recommended responses, and areas to be addressed on redirect examination if appropriate. Witness preparation sessions will be scheduled 3–5 business days prior to each deposition to ensure adequate time for preparation and review.

We flag that the Kirkwood deposition requires particular attention. The September 22, 2021 email from Kirkwood to Carlos Medina — in which Kirkwood states "pull the plug on the whole contract" — is a document that CRS will undoubtedly feature prominently. While the email, read in full context, relates to volume adjustments on Secondary Lanes in response to VTS's tender rejections, the quoted phrase is susceptible to a more damaging interpretation. We will work closely with Ms. Kirkwood in preparation to ensure she is prepared to provide full and accurate testimony regarding the context and meaning of this communication.

Vantor Witness Examination. For each Vantor witness to be deposed by Stonefield (Pruitt, Milescu, and Vantorovich), we will prepare detailed examination outlines organized by topic area. These outlines will be structured to build the evidentiary record for summary judgment and to lock in testimony on key factual points. The Milescu deposition, in particular, will be structured around the November 12, 2021 email and the fleet redeployment narrative.

Rule 30(b)(6) Deposition Notice. We are preparing a Rule 30(b)(6) deposition notice designating 12 topics for corporate deposition of Vantor Holdings Corp. and Vantor Transportation Solutions. The topics will cover corporate decision-making regarding fleet allocation, the TSA performance obligations, the cure period, mitigation efforts, damages calculations, and document retention practices. The notice is expected to be served in mid-to-late June 2023.

IX. THIRD-PARTY SUBPOENAS

We are preparing subpoenas duces tecum to the following third-party carriers:

Cascade Freight Systems Inc. 4700 Lakehurst Court Columbus, Ohio 43016

Briarwood Trucking Co. 1280 Jefferson Davis Highway, Suite 310 Arlington, Virginia 22202

The purpose of these subpoenas is to obtain contracts, rate confirmations, load tenders, and communications between these carriers and Stonefield for Lanes 8 through 14 during the relevant period of Q3 2021 through Q1 2022.

These documents are necessary to support Stonefield's defense against Vantor's claim that Stonefield violated the exclusivity provisions set forth in Schedule C of the TSA by engaging alternative carriers on lanes covered by VTS's exclusivity arrangement. Specifically, this evidence will demonstrate that Stonefield's use of Cascade and Briarwood was limited to Lanes 8 through 14, which are designated as "Secondary Lanes" under Schedule C. The exclusivity provisions in Schedule C, Section 2(b) apply only to the 14 designated "Primary Lanes" (Lanes 1 through 7 and Lanes 15 through 21) and do not restrict Stonefield's ability to engage alternative carriers on Secondary Lanes. Accordingly, Stonefield's use of Cascade and Briarwood on these lanes was fully consistent with the TSA.

The subpoenas are in final preparation and are anticipated to be served in late June 2023. We will coordinate service through authorized process servers in the respective jurisdictions and will provide courtesy copies to CRS as required by Rule 45(a)(4).

X. LENDER AND INSURANCE UPDATES

A. Lender Notification

As you are aware, Stonefield's $425 million Senior Secured Credit Facility with Lakeshore National Bank (as Administrative Agent) (Ref. LNB-SLG-2017-CA-4402) requires quarterly litigation updates for matters in which the claimed amount exceeds $25 million. The Q2 2023 quarterly update is currently being prepared and is scheduled for submission in July 2023.

There has been no change in our overall exposure assessment since the Q1 2023 update. Stonefield continues to assess Vantor's claims as lacking merit, and the developments during May 2023 — particularly the Milescu email and the weaknesses identified in the Trask report — have further strengthened our confidence in that assessment. We will coordinate with your office on the preparation and submission of the Q2 2023 update.

B. Insurance Coverage

There has been no change in the insurance coverage status since our last report. As previously reported:

• Graymark Insurance Company declined to provide coverage under Stonefield's Directors & Officers Liability policy (Policy No. GLG-DO-1025-00008) on October 3, 2022, on the grounds that the Vantor claims arise from commercial contract disputes that fall within the policy's contractual liability exclusion. We reviewed Graymark's declination letter and concurred that a coverage challenge would not be productive.

• Brindoval Mutual Insurance Co. Commercial General Liability policy (Policy No. CGL-SLG-2022-11902) does not provide coverage for breach of contract claims. No tender was made under this policy, and none is recommended.

No further action is recommended on the insurance front at this time.

XI. BUDGET AND FEES

A. May 2023 Activity

Significant activity occurred during May 2023 across multiple workstreams, including document review and analysis of Vantor's production, expert report analysis and preparation of rebuttal strategy, discovery dispute preparation and meet-and-confer correspondence, and deposition scheduling and initial preparation. Detailed time entries for the May 2023 billing period will be provided in the Quarterly Billing Summary for Q2 2023, which will cover the period of April through June 2023.

We note that the Q2 2023 quarter is anticipated to be one of the heaviest spending periods in this engagement, given the intensity of discovery activity, the need to analyze the Trask report and coordinate with KAG, the preparation of meet-and-confer and potentially motion practice on the discovery dispute, and the commencement of deposition preparation. We will continue to manage staffing and work allocation efficiently, consistent with the budget parameters discussed below.

B. Cumulative Fees and Costs

Cumulative fees and costs through the end of Q1 2023 (as previously reported in the Q1 2023 Billing Summary) are as follows:

C. Expert and eDiscovery Costs

Expert costs incurred to date by Kensington Analytics Group LLC total approximately $95,000, which is on track against the original budget estimate of $180,000 to $250,000 for the full engagement through deposition testimony.

eDiscovery costs incurred through Pinnacle Forensics LLC (hosting, processing, and production support) are included in the disbursement figures reported above. Hosting and processing costs are ongoing and will continue through the conclusion of the litigation.

D. Overall Budget Status

The overall engagement remains within the preliminary budget range of $3.5 million to $5.2 million in fees and $400,000 to $750,000 in costs through the summary judgment stage, as established in the September 12, 2022 budget memorandum prepared by Samuel Eklund and approved by your office. No revision to the budget estimate is recommended at this time. We will continue to monitor spending against budget and will promptly advise if any developments suggest the need for a budget revision.

XII. UPCOMING KEY DATES AND ACTION ITEMS

The following table summarizes the key dates and action items for the upcoming period:

We will track these items closely and report on progress in next month's status report.

XIII. OVERALL ASSESSMENT AND RECOMMENDATION

Stonefield's litigation position has materially strengthened during the month of May 2023. The two most significant developments — the identification of the Milescu email (VHC-008417) and the preliminary analysis of the weaknesses in the Trask expert report — have substantially improved Stonefield's posture on both liability and damages.

Liability Assessment. The Milescu email is powerful evidence of an intentional, undisclosed breach by VTS: pulling 85 of the 400 committed tractors from the Stonefield dedicated lanes in October–November 2021 without notice or consent. This unilateral fleet reduction directly caused the Q4 2021 performance failures that formed the basis for Stonefield's Cure Notice of January 18, 2022 and subsequent termination for Cause on March 4, 2022. The email supports multiple defense theories:

(i) Valid termination for Cause under Section 13.1(a) of the TSA, based on VTS's material breach in failing to maintain committed fleet capacity, which was not cured during the cure period;

(ii) The first-to-breach doctrine, as VTS committed a material breach of the TSA (by redeploying committed fleet resources without notice) before any alleged breach by Stonefield, thereby excusing Stonefield's subsequent performance obligations and providing independent grounds for termination; and

(iii) Unclean hands and contributory breach, based on VTS's deliberate concealment of the fleet reduction and the resulting service level deterioration, which VTS then sought to attribute to Stonefield's alleged volume deficiencies.

Damages Assessment. The Trask report's failure to address mitigation, its reliance on inflated margin assumptions, its failure to account for VTS's own breaches, and its duplicative claim structure provide strong grounds for rebuttal by Dr. Rosser and for a potential Daubert challenge at the appropriate stage. KAG's preliminary assessment that the maximum damages exposure — even under the most adverse assumptions — would be approximately $8.2 million (versus the $95.4 million claimed) provides significant comfort regarding Stonefield's potential financial exposure.

Key Risks. While the overall assessment is favorable, we note the following key risks that require continued monitoring and management:

(i) Kirkwood September 22, 2021 Email. The email from Janet Kirkwood (VP, Carrier Relations, Stonefield) to Carlos Medina, in which Kirkwood states "pull the plug on the whole contract," could be construed by Vantor as evidence of a premeditated decision to terminate the TSA and divert volume away from VTS. We expect CRS to feature this email prominently in Kirkwood's deposition and in its opposition to any summary judgment motion. Ms. Kirkwood's expected testimony is that the volume adjustments referenced in the email were limited to Secondary Lanes and were responsive to VTS's repeated tender rejections, not part of any plan to terminate the contract. Thorough witness preparation will be essential to ensure that Ms. Kirkwood provides clear, consistent, and contextually complete testimony on this point.

(ii) Enforceability of Liquidated Damages Clause. The enforceability of the liquidated damages clause under New York law remains an area of moderate legal risk. While we have strong arguments that the clause constitutes an unenforceable penalty — particularly given the $67.23 million claimed amount, which is disproportionate to any reasonable estimate of probable loss — the case law on this issue is fact-specific and the outcome is not certain. We assess the risk of a court finding the clause enforceable as "moderate." However, even if the clause were found enforceable, the remaining weaknesses in the Trask report (inflation, duplication, and failure to account for mitigation and VTS's own breaches) would substantially reduce the recoverable amount.

Recommendation. We continue to recommend an aggressive defense posture with the primary objectives of (a) achieving summary judgment on liability, or (b) achieving a favorable settlement that reflects the strength of Stonefield's position. The settlement authority range of $0 to $4.5 million, as previously discussed and approved, remains appropriate in light of the current assessment. We do not recommend any increase in settlement authority at this time.

We will continue to provide monthly status reports on the first business week of each month and are available to discuss any aspect of this report at your convenience.

XIV. CLOSING

This report was prepared by Patrick Gallagher, Lead Associate, Calderwood & Harkness LLP, with contributions from Simone Laroche, Senior Associate, and Kara Nystrom, Associate, under the supervision of Samuel Eklund, Responsible Partner.

Should you have any questions regarding this report or wish to discuss any of the matters addressed herein, please do not hesitate to contact the undersigned at your convenience:

Patrick Gallagher — (212) 554-8247

The next monthly status report, covering June 2023 activity, will be circulated in early July 2023.

PRIVILEGE DESIGNATION REMINDER: This report constitutes a privileged and confidential attorney-client communication and attorney work product. It is intended solely for the use of the addressee and those persons identified on the distribution list. This report should not be forwarded, distributed, or disclosed to any third party without first consulting Calderwood & Harkness LLP, as any such disclosure could result in a waiver of applicable privileges. Please contact Patrick Gallagher or Samuel Eklund with any questions regarding the scope of this privilege designation.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Patrick Gallagher Lead Associate Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 554-8247

Email: pgallagher@calderwoodharkness.com

Date: June 5, 2023

Deadline	Date
Fact discovery Closes	September 29, 2023
Expert discovery Closes	January 12, 2024
Dispositive Motions Due	March 1, 2024
Service Level Category	Actual Q4 2021 Performance	SLO Threshold	Shortfall
On-Time Pickup Rate	78.2%	95%	-16.8 percentage points
On-Time Delivery Rate	81.6%	93%	-11.4 percentage points
Tender Acceptance Rate	71.4%	90%	-18.6 percentage points
Equipment Availability	62% (~248 tractors of 400 committed)	85% (340 tractors)	-23.0 percentage points
Cargo Claims Ratio	~1.07% ($387,400 across 16 claims, Nov.–Dec. 2021)	≤0.5%	+0.57 percentage points
Damages Category	Amount Claimed	Derivation
Liquidated Damages (2 full remaining years)	$64,800,000	75% × $43.2M Annual Contract Value × 2 years
Liquidated Damages (partial year, 27 days)	$2,430,000	75% × $43.2M × (27/365)
Lost Profits (above-contract margin)	$18,700,000	12% operating margin × remaining committed volume
Stranded Assets & Costs	$5,200,000	Depreciation on dedicated tractors/trailers; lease termination costs
Workforce Reduction Costs	$2,870,000	Severance for approximately 180 drivers and support staff
Mitigation Costs	$1,400,000	Costs incurred seeking replacement freight
Total	$95,400,000
Deponent	Role	Anticipated Date	Est. Duration	Notes
Derek Pruitt	VP, Business Development, Vantor	Early–mid July 2023	7 hours	Primary relationship manager for VTS's engagement with Stonefield. Examination will focus on mitigation efforts, awareness of SLO failures, and communications with SLG personnel regarding service level deterioration.
Janet Kirkwood	VP, Carrier Relations, Stonefield	Mid July 2023	6–7 hours	To be deposed by CRS. Key risk area: September 22, 2021 email to Carlos Medina regarding volume diversion ("pull the plug on the whole contract"); rate adjustment awareness and authority. Witness preparation session to be scheduled 3–5 days in advance.
Raymond Hess	Director, Contract Compliance, Stonefield	Late July 2023	5–6 hours	To be deposed by CRS. Focus areas anticipated: cure notice drafting process, metric calculation methodology, communications with prior outside counsel Ashford Meridian LLP during cure period. Witness preparation session to be scheduled 3–5 days in advance.
Sandra Milescu	COO, Vantor/VTS	Early August 2023	7 hours	Critical deposition. Primary focus: November 12, 2021 email (VHC-008417), fleet redeployment decisions and their impact on Stonefield service levels, redirection of tractors to Northwind Distribution Co., cure period activities and response to Stonefield's Cure Notice.
Nikolai Vantorovich	CEO, Vantor	Mid–late August 2023	7 hours	Corporate decision-making, awareness of SLO failures, authorization of fleet redeployment, mitigation strategy post-termination, and overall Vantor business strategy regarding the Stonefield account.
Period	Fees	Disbursements

Q4 2022 (Oct.–Dec.)	$487,250	$42,180
Q1 2023 (Jan.–Mar.)	$612,400	$78,340
Cumulative through Q1 2023	$1,099,650	$120,520
Target Date	Action Item	Responsible
Early June 2023	Follow up with CRS on meet-and-confer regarding Second RFP; if no substantive response received, prepare letter brief to Judge Calloway seeking court intervention	Gallagher
Mid June 2023	Serve Rule 30(b)(6) deposition notice on Vantor (12 designated topics)	Gallagher
Late June 2023	Serve third-party subpoenas duces tecum on Cascade Freight Systems Inc. and Briarwood Trucking Co.	Laroche
Late June 2023	Finalize and serve supplemental privilege log for second-phase review (218 additional documents)	Laroche, Tsao
July–August 2023	Conduct depositions of Pruitt, Kirkwood, Hess, Milescu, and Vantorovich; complete witness preparation sessions for SLG witnesses	Gallagher, Laroche
July 2023	Prepare and submit Q2 2023 quarterly litigation update to Lakeshore National Bank	Gallagher (draft/review); Wren (finalize/send)
August 2023	Finalize and serve KAG rebuttal expert report (Dr. Rosser)	Gallagher, Eklund
September 29, 2023	Fact discovery Closes (per CMO)	All

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION AND ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 554-8200 Facsimile: (212) 554-8201 www.calderwoodharkness.com
June 5, 2023
VIA ELECTRONIC MAIL — CONFIDENTIAL
Tobias Wren, Esq. General Counsel Stonefield Logistics Group Inc. 4200 Commerce Parkway, Suite 800 Fort Worth, Texas 76102
Re: Monthly Status Report — May 2023 Activity Vantor Holdings Corp. v. Stonefield Logistics Group Inc. Case No. 22-cv-07841 (S.D.N.Y.) Before the Honorable Margaret T. Calloway, U.S.D.J. Matter No.: 1012-00005 Reporting Period: May 1, 2023 through May 31, 2023
cc: Samuel Eklund, Responsible Partner, Calderwood & Harkness LLP Linda Osei, Billing Partner, Calderwood & Harkness LLP
Dear Tobias:
We write to provide the monthly status report for the above-captioned litigation, covering activity during the period of May 1, 2023 through May 31, 2023. As discussed below, May was a month of significant progress in the discovery phase of this matter, marked by the completion of initial document productions, the identification of highly favorable evidence in Vantor's production, the receipt and preliminary analysis of Vantor's damages expert report, and the emergence of a discovery dispute that may require court intervention. This report is organized by subject area for ease of reference.
I. EXECUTIVE SUMMARY
May 2023 was one of the most consequential months in this litigation to date. Both parties' initial document productions are now complete: Stonefield produced 42,387 documents (approximately 186,000 pages) on April 14, 2023, and Vantor produced 28,914 documents (approximately 112,000 pages) on April 28, 2023. Our team has been actively engaged in reviewing and analyzing Vantor's production throughout May, and that review has yielded several documents of considerable importance to Stonefield's defense.
Most significantly, we have identified a critical internal email from Sandra Milescu (Chief Operating Officer of Vantor/VTS) to Nikolai Vantorovich (Chief Executive Officer of Vantor), dated November 12, 2021 (Bates No. VHC-008417), in which Milescu expressly acknowledges that VTS unilaterally pulled 85 tractors off the Stonefield dedicated lanes to cover other commitments and states that "SLG won't notice until January." This email is a devastating piece of evidence for Vantor. It directly contradicts Vantor's central narrative that its Q4 2021 performance deficiencies were caused by Stonefield's own volume shortfalls, and it powerfully supports Stonefield's "first-to-breach" defense. A detailed analysis of this document and its implications is set forth in Section V.A below.
On the discovery front, Stonefield served its Second Request for Production of Documents on May 5, 2023, targeting VTS fleet redeployment records and related internal communications from Q3–Q4 2021. Vantor, through its counsel Caldwell Royce & Shapiro LLP ("CRS"), has objected to these requests as overbroad and unduly burdensome. We sent a detailed meet-and-confer letter on May 30, 2023, and the dispute remains pending as of the date of this report. If the dispute cannot be resolved informally, we intend to seek court intervention through a letter brief to Judge Calloway.
On May 15, 2023, Vantor served the expert report of Dr. Philip Trask of Trask Greystone & Associates, which quantifies Vantor's claimed damages at approximately $95.4 million. Our preliminary analysis of the Trask report has identified several significant weaknesses, including the failure to account for mitigation, inflated margin assumptions, and what we believe is an impermissible duplication of liquidated damages and lost profits claims. These weaknesses have been communicated to our rebuttal expert, Dr. Evelyn Rosser of Kensington Analytics Group LLC, whose preliminary view is that — even under the most adverse assumptions — Vantor's maximum recoverable damages would be approximately $8.2 million.
Deposition scheduling is underway. We anticipate depositions of five key fact witnesses — Derek Pruitt and Sandra Milescu of Vantor, and Janet Kirkwood and Raymond Hess of Stonefield, as well as Nikolai Vantorovich — during July and August 2023. A Rule 30(b)(6) deposition notice is being prepared for service in June. Third-party subpoenas to Cascade Freight Systems Inc. and Briarwood Trucking Co. are also being finalized.
The case remains on track with the deadlines established in Judge Calloway's February 17, 2023 Case Management Order: fact discovery closes September 29, 2023; expert discovery closes January 12, 2024; and dispositive motions are due March 1, 2024.
Overall Assessment: Stonefield's litigation posture remains strong and has been materially bolstered by the documents uncovered in Vantor's production, particularly the Milescu email. We continue to recommend an aggressive defense strategy aimed at summary judgment or favorable resolution. The details supporting this assessment are set forth in the sections that follow.
II. DOCKET ACTIVITY AND COURT PROCEEDINGS
No court hearings, conferences, or oral arguments took place during the reporting period of May 2023. No orders were entered by the Court during this period.
The next anticipated court interaction relates to the pending discovery dispute concerning Stonefield's Second Request for Production of Documents. As discussed in greater detail in Section VI below, if Vantor fails to respond substantively to our May 30, 2023 meet-and-confer letter, or if the parties are unable to reach agreement on the scope of production, we intend to file a letter brief with Judge Calloway seeking a discovery conference and/or an order compelling production. We anticipate that this issue will come to a head in early-to-mid June 2023.
All deadlines established by Judge Calloway's Case Management Order of February 17, 2023 remain in effect and unchanged. The key remaining deadlines are as follows:
We continue to monitor the docket closely and will promptly advise you of any new filings, orders, or scheduling developments.
III. DOCUMENT PRODUCTIONS — STATUS
A. Stonefield's Production (Complete)
Stonefield's First Production was served on April 14, 2023 via the Pinnacle Forensics LLC electronic review and production platform (Project ID: PF-SLG-2022-0914). The production consisted of 42,387 documents encompassing approximately 186,000 pages of material, bearing Bates numbers SLG-000001 through SLG-042387. The production was made in response to Vantor's First Request for Production of Documents, which was served on March 20, 2023 and contained 38 individual document requests.
A privilege log accompanied the First Production, identifying 1,247 documents that were withheld in whole or in part on the basis of attorney-client privilege and/or the attorney work product doctrine. The privilege log was prepared and reviewed by Simone Laroche and Thomas Tsao under our supervision and complies with the requirements of Federal Rules of Civil Procedure 26(b)(5) and the Court's Case Management Order.
As of the date of this report, we have not received any deficiency letters or supplementation demands from CRS regarding Stonefield's First Production. We interpret this as an indication that CRS has not identified any material gaps in the production, though we remain vigilant for any such challenge.
We note that a second-phase privilege review of 218 additional documents identified during a supplemental quality-control pass is underway. A supplemental privilege log covering these 218 documents is being finalized and is expected to be completed and served in late June 2023.
B. Vantor's Production (Complete — First Production; Second RFP Responses Pending)
Vantor served its First Production on April 28, 2023, consisting of 28,914 documents and approximately 112,000 pages. Throughout the month of May, our document review team — led by Simone Laroche and Kara Nystrom — has been engaged in a comprehensive review and analysis of Vantor's production.
A preliminary analysis memorandum was circulated internally on May 12, 2023, summarizing the composition of the production, identifying categories of documents produced, and flagging areas of potential deficiency. Building on that analysis, our team compiled a Key Document Index on May 15, 2023, which identifies 87 documents flagged as "hot" documents. These documents are organized by topic area, including: fleet deployment and redeployment decisions, communications with Stonefield, internal Vantor/VTS strategy discussions, and financial records. The Key Document Index has been shared with our expert consultants at Kensington Analytics Group LLC to facilitate their rebuttal analysis.
We have identified several notable gaps in Vantor's production. In particular, fleet redeployment records — specifically, documentation reflecting VTS's decisions to reassign tractors from Stonefield dedicated lanes to other shipper accounts during Q3–Q4 2021 — appear to have been withheld or not collected. Similarly, contracts between VTS and alternative shippers to whom the fleet was redirected are absent from the production. These gaps are the subject of the pending discovery dispute discussed in Section VI below.
Vantor's responses to Stonefield's Second Request for Production of Documents (served May 5, 2023) remain outstanding and are the subject of the ongoing meet-and-confer process.
C. Interrogatory and Request for Admission Responses
As previously reported, Stonefield served its responses and objections to Vantor's First Set of Interrogatories (25 interrogatories), First Request for Production of Documents (38 requests), and First Set of Requests for Admission (25 requests) on April 14, 2023. No motions to compel supplementation have been filed by Vantor, and no deficiency letters have been received.
During May, our team completed its analysis of Vantor's responses to Stonefield's First Set of Interrogatories (25 interrogatories) and First Set of Requests for Admission (30 requests). The results of these analyses are summarized below:
Interrogatory Response Analysis (Memorandum dated May 8, 2023): Our review identified several interrogatory responses that are evasive, incomplete, or non-responsive. Most significantly:
•  Interrogatory No. 9 (fleet redeployment decisions): Vantor's response is vague and evasive, stating only that "VTS made fleet management decisions consistent with its operational needs and customer commitments" without identifying the specific redeployment decisions, the dates on which they occurred, the number of tractors redeployed, or the accounts to which they were redirected. This response is plainly deficient and does not comply with the obligation to provide a full and complete answer under Rule 33(b)(3).
•  Interrogatory No. 14 (mitigation efforts): Vantor's response generically states that "Vantor undertook commercially reasonable efforts to mitigate its losses following Stonefield's wrongful termination of the TSA" but fails to identify any specific mitigation steps, the dates on which they were taken, the alternative freight volumes secured, or the revenues generated from mitigation activities. This is wholly inadequate and inconsistent with Vantor's burden to demonstrate reasonable mitigation efforts.
We recommend seeking supplementation of these responses through the meet-and-confer process and, if necessary, through a motion to compel. We have included these deficiencies in our May 30, 2023 meet-and-confer letter to CRS.
Request for Admission Analysis (Memorandum dated May 10, 2023): Vantor's responses to the Requests for Admission are characterized by extensive qualifications and equivocal language. However, the responses contain several admissions that will be useful at summary judgment and trial. Most notably:
•  Vantor has effectively admitted that the VTS on-time pickup rate during Q4 2021 was 78.2%, which is materially below the 95% Service Level Objective ("SLO") threshold established in Schedule B of the Transportation Services Agreement ("TSA"). While the admission is accompanied by qualifying language attributing the shortfall to Stonefield's alleged volume deficiencies, the admitted metric itself — 78.2% against a 95% SLO — is a powerful fact for Stonefield's defense.
•  Several other qualified admissions regarding service level failures in the categories of on-time delivery, tender acceptance, and equipment availability will further support our position at summary judgment and trial.
A comprehensive summary of all admissions and their evidentiary implications has been included in the May 10, 2023 memorandum and will be incorporated into our summary judgment briefing strategy.
IV. KEY DOCUMENTS IDENTIFIED IN VANTOR'S PRODUCTION
A. Milescu-to-Vantorovich Email (VHC-008417) — November 12, 2021
This is the single most significant document identified to date in this litigation. The document is an internal email from Sandra Milescu, Chief Operating Officer of Vantor Transportation Solutions ("VTS"), to Nikolai Vantorovich, Chief Executive Officer of Vantor Holdings Corp., dated November 12, 2021 (Bates No. VHC-008417).
The email contains the following statement:
"We've pulled 85 tractors off the SLG dedicated lanes to cover [redacted] commitments. SLG won't notice until January."
A detailed analysis memorandum was prepared by Simone Laroche on May 14, 2023, addressing the significance, implications, and potential uses of this document. The key conclusions of that analysis are as follows:
(i) Intentional Fleet Reduction. The email demonstrates that VTS intentionally and unilaterally reduced the fleet capacity assigned to the Stonefield account by approximately 85 tractors — from the 400 tractors committed under the TSA to approximately 315 tractors. This represents a reduction of approximately 21.25% of the committed fleet capacity. The reduction was a deliberate business decision by VTS management, not an unavoidable operational circumstance.
(ii) Absence of Notice. The email confirms that the redeployment occurred without notice to Stonefield, in direct violation of Section 7.4 of the TSA, which requires VTS to notify Stonefield of any substitute equipment deployments or capacity changes affecting dedicated lanes and to obtain Stonefield's prior written consent for any reduction in committed fleet capacity exceeding 5%.
(iii) Contradiction of Vantor's Central Narrative. The email directly contradicts Vantor's central litigation theory — namely, that VTS's Q4 2021 performance deficiencies were caused by Stonefield's own volume shortfalls and alleged failure to provide adequate shipping volumes. The Milescu email reveals that the performance failures were, in fact, self-inflicted by VTS's own decision to divert committed fleet resources to other shipper accounts.
(iv) Support for First-to-Breach Defense. VTS's undisclosed fleet reduction occurred in October–November 2021. Stonefield's Cure Notice was not issued until January 18, 2022, and Stonefield's termination of the TSA for Cause did not occur until March 4, 2022. The chronology established by this email strongly supports Stonefield's "first-to-breach" defense — that VTS committed a material breach of the TSA well before any alleged breach by Stonefield, thereby excusing Stonefield's subsequent performance and providing independent grounds for termination.
(v) Evidence of Deliberate Concealment. The statement "SLG won't notice until January" implies that VTS deliberately concealed the fleet reduction from Stonefield. This evidence of intentional concealment may be relevant to claims of unclean hands, and may also be probative on the question of willfulness and bad faith, which could bear on the availability of certain equitable defenses and on the assessment of damages.
We anticipate that supplemental production from Vantor's response to the Second RFP — if and when obtained — may reveal that the 85 tractors were redirected to a competing shipper account, specifically Northwind Distribution Co. If confirmed, this would further bolster Stonefield's position by demonstrating that VTS made a calculated business decision to favor a more profitable shipper relationship at Stonefield's expense.
This email will be a central exhibit in the deposition of Sandra Milescu (anticipated for early August 2023), the deposition of Nikolai Vantorovich (anticipated for mid-to-late August 2023), and at the summary judgment stage. We are building our examination outlines for both depositions around this document and its implications.
B. Other Notable Documents
In addition to the Milescu email, our review of Vantor's production has identified a number of other documents that are favorable to Stonefield's defense. The most significant of these are summarized below:
VTS Q4 2021 Internal Performance Report. This internal report, prepared by VTS operations staff for senior management review, confirms that VTS's actual service metrics during Q4 2021 were materially below the SLO thresholds established in Schedule B of the TSA across all five service level categories. The specific metrics are as follows:
These metrics confirm severe underperformance across every measured service level and corroborate Stonefield's position that VTS was in material breach of the TSA. Notably, the equipment availability figure of 62% (approximately 248 tractors of the 400 committed) is consistent with, and independently corroborates, the Milescu email's disclosure that 85 tractors were pulled from the Stonefield dedicated lanes.
Internal Vantor Communications Regarding Service Level Deterioration. We have identified several internal Vantor communications in which VTS personnel acknowledge the deterioration of service levels on the Stonefield account and discuss strategic decisions regarding fleet allocation. These documents reflect that Vantor's senior management was aware of the declining service metrics and made affirmative decisions regarding the reallocation of resources. These documents will be used in depositions and at summary judgment to demonstrate Vantor's knowledge and intentionality.
Gaps in Production. As noted above, our review has identified significant gaps in Vantor's production. In particular, fleet redeployment records and contracts with alternative shippers to whom VTS redirected the 85 tractors appear to have been withheld or not collected. These documents are directly relevant to Stonefield's first-to-breach defense and to the question of Vantor's mitigation (or failure to mitigate) following termination. The absence of these documents from the production is the subject of the pending discovery dispute discussed in Section VI below.
V. DISCOVERY DISPUTE — STONEFIELD'S SECOND REQUEST FOR PRODUCTION
A. Background
On May 5, 2023, Stonefield served its Second Request for Production of Documents on Vantor, consisting of 12 targeted requests. The requests are narrowly focused on the categories of documents identified as missing or incomplete in Vantor's First Production. Specifically, the Second RFP seeks the following categories of documents:
•  Request Nos. 1–5: VTS fleet redeployment records from Q3–Q4 2021, including all documents reflecting decisions to reassign, redeploy, or otherwise remove tractors, trailers, or driver resources from Stonefield dedicated lanes, as well as communications regarding such decisions.
•  Request Nos. 6–8: Communications between Sandra Milescu and Nikolai Vantorovich (and/or other VTS senior management) regarding Stonefield dedicated capacity, fleet allocation, and service level performance during the period of July 1, 2021 through March 31, 2022.
•  Request Nos. 9–10: VTS contracts, agreements, and communications with shippers to whom fleet capacity was redirected from the Stonefield dedicated lanes, including but not limited to Northwind Distribution Co.
•  Request Nos. 11–12: VTS driver termination records, severance agreements, and workforce reduction documentation following Stonefield's termination of the TSA in March 2022.
These documents are critical to establishing the key elements of Stonefield's defense, including: (i) VTS's intentional breach of the TSA through undisclosed fleet redeployment; (ii) Stonefield's first-to-breach defense; (iii) Vantor's failure to mitigate its claimed damages; and (iv) the actual magnitude of VTS's losses, if any, following termination.
B. Vantor's Objections
Vantor, through CRS, has objected to the Second RFP on the grounds that the requests are overbroad, unduly burdensome, and not proportional to the needs of the case. Vantor has specifically refused to produce fleet redeployment records and contracts with alternative shippers, asserting that these documents involve third-party commercial relationships that are proprietary and confidential.
We view Vantor's objections as without merit. The documents sought go to the heart of the disputed issues in this case. Vantor has placed its fleet allocation decisions and post-termination damages directly at issue through its claims and the Trask expert report. Vantor cannot, on the one hand, claim $95.4 million in damages predicated on the loss of the Stonefield contract while simultaneously withholding documents that would reveal the extent to which VTS was already redirecting fleet resources away from Stonefield before termination and the extent to which VTS secured replacement business after termination.
To the extent Vantor has legitimate confidentiality concerns regarding its contracts with third-party shippers, those concerns can be addressed through the Stipulated Protective Order already in place in this action (entered March 8, 2023).
C. Meet-and-Confer
On May 30, 2023, I sent a detailed meet-and-confer letter to Jason Whitford, Senior Associate at CRS, identifying the deficiencies in Vantor's discovery responses and demanding the following:
•  Supplemental responses to Interrogatories Nos. 9, 14, and 18, providing the specific information requested rather than generalized, conclusory statements;
•  Production of all documents responsive to Second RFP Nos. 1–5 (fleet redeployment records) and Second RFP Nos. 9–10 (contracts with alternative shippers); and
•  A meet-and-confer conference to discuss the foregoing issues and any remaining areas of disagreement.
As of the date of this report, CRS has not provided a substantive response to the meet-and-confer letter. We have allowed a reasonable period for response, consistent with the spirit of the Federal Rules and Judge Calloway's standing discovery order, which requires good-faith meet-and-confer efforts prior to any discovery motion.
If the dispute is not resolved through the meet-and-confer process within the next two weeks, we intend to file a letter brief with Judge Calloway requesting either (a) a discovery conference to address the dispute, or (b) an order compelling production. A draft letter brief is currently in preparation. We will circulate the draft for your review before filing.
VI. EXPERT REPORTS — PLAINTIFF'S DAMAGES EXPERT
A. Dr. Philip Trask — Trask Greystone & Associates
On May 15, 2023, Vantor served the expert report of Dr. Philip Trask of Trask Greystone & Associates (400 Madison Avenue, Suite 900, New York, NY 10017). Dr. Trask has been retained by Vantor to opine on the quantum of damages allegedly suffered by Vantor as a result of Stonefield's termination of the TSA.
Dr. Trask's report quantifies Vantor's total claimed damages at approximately $95.4 million, broken down as follows:
The report is approximately 78 pages in length (excluding exhibits) and is accompanied by 14 exhibits, including financial projections, contract analysis schedules, and industry benchmarking data.
B. Preliminary Assessment of Trask Report Weaknesses
An initial 15-page analysis of the Trask report was completed and circulated internally on May 22, 2023. Our analysis has identified several significant weaknesses in Dr. Trask's methodology, assumptions, and conclusions. The key weaknesses are summarized below:
(i) Assumption of Enforceability of Liquidated Damages Clause. Dr. Trask's report assumes — without conducting any legal analysis — that the liquidated damages clause in Section 13.3 of the TSA is fully enforceable. The report does not address the penalty doctrine under New York law, which requires that a liquidated damages provision bear a reasonable relationship to the probable loss at the time of contracting. Given the magnitude of the claimed liquidated damages ($67.23 million, representing more than 155% of the single-year Annual Contract Value), there is a substantial question as to whether this provision would survive scrutiny under the penalty doctrine. While this is ultimately a legal question rather than an expert opinion, Dr. Trask's failure to acknowledge or account for this risk undermines the reliability of his damages model.
(ii) Inflated Operating Margin Assumptions. Dr. Trask uses a 12% operating margin for purposes of calculating lost profits. This figure does not appear to be supported by VTS's own historical financial data. Based on our preliminary review of VTS financial statements produced in discovery, VTS's actual operating margins on the Stonefield account during the 2019–2021 period ranged from approximately 6.5% to 8.2%. Dr. Trask appears to have relied on industry-wide benchmarking data for asset-based carriers rather than VTS's actual financial performance, which significantly inflates the lost profits calculation.
(iii) Failure to Account for VTS's Own Breaches. Dr. Trask's report does not address — or even acknowledge — VTS's own material breaches of the TSA, including the undisclosed fleet redeployment documented in the Milescu email. The report's damages model assumes that VTS would have continued to perform at full contract capacity for the remainder of the contract term, an assumption that is factually untenable in light of VTS's decision to pull 85 of 400 committed tractors from the Stonefield account. A proper damages analysis must account for the fact that VTS was already operating at reduced capacity — by its own choice — prior to termination.
(iv) No Meaningful Mitigation Analysis. Dr. Trask's report contains no meaningful analysis of Vantor's obligation to mitigate its damages. The report does not address the availability of alternative freight in the spot market during Q1–Q2 2022, when spot rates were elevated approximately 35% above historical averages, creating an unusually favorable environment for carriers seeking replacement business. Nor does the report quantify the revenues, if any, that VTS actually earned from replacement freight following termination. Under New York law, a non-breaching party has an affirmative duty to mitigate its damages, and the failure to do so reduces the recoverable amount. Dr. Trask's failure to address mitigation is a critical omission.
(v) Duplicative Claim for Liquidated Damages and Lost Profits. Dr. Trask's report claims both liquidated damages of $67.23 million and lost profits of $18.7 million, for a combined total of $85.93 million attributable to the loss of contract value. We believe this is duplicative and impermissible under New York law. Both categories of damages seek to compensate Vantor for the same underlying loss — the economic value of the remaining contract term. Under well-established New York precedent, a party may not recover both liquidated damages and expectancy-based lost profits arising from the same breach, as doing so would result in a double recovery. This issue provides strong grounds for a motion in limine or a Daubert challenge at the appropriate stage.
These weaknesses have been communicated to our rebuttal expert team at Kensington Analytics Group LLC via a detailed memorandum dated May 25, 2023. That memorandum also transmitted key documents from discovery — including the Milescu email, the VTS Q4 2021 Performance Report, VTS fleet records produced to date, VTS financial statements, and freight market data — for Dr. Rosser's and Mr. Chung's use in preparing their rebuttal analysis.
VII. REBUTTAL EXPERT — KENSINGTON ANALYTICS GROUP LLC
Kensington Analytics Group LLC ("KAG"), located at 1700 Market Street, Suite 2800, Philadelphia, PA 19103, was retained in October 2022 pursuant to an engagement letter from Samuel Eklund to Dr. Evelyn Rosser, KAG's Managing Director and lead expert on this engagement. Dr. Rosser, an economist with over 25 years of experience in transportation industry litigation and commercial damages analysis, is leading the rebuttal effort, supported by Michael Chung, Senior Analyst.
Dr. Rosser and Mr. Chung have been provided with a comprehensive set of materials to support their analysis, including:
•  The complete Trask expert report and all accompanying exhibits;
•  Key discovery documents, including the Milescu email (VHC-008417), the VTS Q4 2021 Internal Performance Report, VTS fleet deployment and redeployment records produced to date, and VTS financial statements for fiscal years 2019–2022;
•  Freight market data, including Tarrant Software spot rate indices, Truckload Carriers Association industry benchmarking reports, and Dunmore Systems data for Q1–Q2 2022;
•  Our May 22, 2023 internal analysis memorandum on the Trask report weaknesses; and
•  Our May 25, 2023 supplemental memorandum with directed questions and suggested areas of analysis.
The scope of KAG's rebuttal engagement encompasses the following areas:
(i) Opine on the enforceability and proportionality of the liquidated damages clause, including whether the clause functions as an enforceable liquidated damages provision or an unenforceable penalty under New York law;
(ii) Develop alternative damages models demonstrating that Vantor's maximum recoverable damages — even under the most adverse assumptions for Stonefield — are substantially lower than the $95.4 million claimed by Dr. Trask;
(iii) Analyze Vantor's failure to mitigate its damages, including a quantitative analysis of the replacement freight available to VTS in the Q1–Q2 2022 spot market and the revenues that a reasonable carrier in VTS's position would have been expected to generate through mitigation efforts; and
(iv) Address VTS's financial condition and causation issues, including the impact of VTS's own fleet redeployment decisions on its ability to service the Stonefield contract and the relationship between VTS's self-inflicted capacity constraints and the claimed damages.
Preliminary Indications from KAG. Based on initial discussions with Dr. Rosser and Mr. Chung, their preliminary view of the damages landscape is as follows:
•  If the termination is found to be a valid termination for Cause under Section 13.1(a) of the TSA — which is Stonefield's primary defense position — Vantor's recoverable damages are $0, as the liquidated damages clause is triggered only in the event of a termination without Cause or a wrongful termination.
•  If the termination is found to be wrongful — argued in the alternative — the maximum damages under a properly calculated lost-profits theory, accounting for mitigation obligations, VTS's own prior breaches and capacity reductions, and market-based adjustments reflecting the robust spot market conditions in Q1–Q2 2022, would be in the range of approximately $8.2 million. This figure represents a reduction of over 91% from the $95.4 million claimed by Dr. Trask.
Dr. Rosser's analysis is ongoing, and these figures may be refined as additional discovery materials become available. KAG's rebuttal expert report is due under the Case Management Order schedule, and we are targeting completion in August 2023 to allow adequate time for review, refinement, and service.
Expert Budget Tracking. KAG invoices to date total approximately $95,000. The original budget estimate for KAG's engagement, as set forth in the October 2022 engagement letter, was $180,000 to $250,000 through the completion of rebuttal report, deposition preparation, and deposition testimony. KAG's spending remains on track against this budget, and no revision to the expert cost estimate is recommended at this time.
VIII. DEPOSITION SCHEDULING
Depositions of key fact witnesses on both sides are being scheduled for July and August 2023. We are coordinating scheduling with CRS through an exchange of availability dates and expect to finalize the deposition calendar in June 2023. The anticipated deposition schedule is as follows:
Stonefield Witness Preparation. For each Stonefield witness to be deposed by CRS (Kirkwood and Hess), we will prepare detailed deposition preparation memoranda addressing the anticipated areas of examination, key documents likely to be used by opposing counsel, potential difficult questions and recommended responses, and areas to be addressed on redirect examination if appropriate. Witness preparation sessions will be scheduled 3–5 business days prior to each deposition to ensure adequate time for preparation and review.
We flag that the Kirkwood deposition requires particular attention. The September 22, 2021 email from Kirkwood to Carlos Medina — in which Kirkwood states "pull the plug on the whole contract" — is a document that CRS will undoubtedly feature prominently. While the email, read in full context, relates to volume adjustments on Secondary Lanes in response to VTS's tender rejections, the quoted phrase is susceptible to a more damaging interpretation. We will work closely with Ms. Kirkwood in preparation to ensure she is prepared to provide full and accurate testimony regarding the context and meaning of this communication.
Vantor Witness Examination. For each Vantor witness to be deposed by Stonefield (Pruitt, Milescu, and Vantorovich), we will prepare detailed examination outlines organized by topic area. These outlines will be structured to build the evidentiary record for summary judgment and to lock in testimony on key factual points. The Milescu deposition, in particular, will be structured around the November 12, 2021 email and the fleet redeployment narrative.
Rule 30(b)(6) Deposition Notice. We are preparing a Rule 30(b)(6) deposition notice designating 12 topics for corporate deposition of Vantor Holdings Corp. and Vantor Transportation Solutions. The topics will cover corporate decision-making regarding fleet allocation, the TSA performance obligations, the cure period, mitigation efforts, damages calculations, and document retention practices. The notice is expected to be served in mid-to-late June 2023.
IX. THIRD-PARTY SUBPOENAS
We are preparing subpoenas duces tecum to the following third-party carriers:
Cascade Freight Systems Inc. 4700 Lakehurst Court Columbus, Ohio 43016
Briarwood Trucking Co. 1280 Jefferson Davis Highway, Suite 310 Arlington, Virginia 22202
The purpose of these subpoenas is to obtain contracts, rate confirmations, load tenders, and communications between these carriers and Stonefield for Lanes 8 through 14 during the relevant period of Q3 2021 through Q1 2022.
These documents are necessary to support Stonefield's defense against Vantor's claim that Stonefield violated the exclusivity provisions set forth in Schedule C of the TSA by engaging alternative carriers on lanes covered by VTS's exclusivity arrangement. Specifically, this evidence will demonstrate that Stonefield's use of Cascade and Briarwood was limited to Lanes 8 through 14, which are designated as "Secondary Lanes" under Schedule C. The exclusivity provisions in Schedule C, Section 2(b) apply only to the 14 designated "Primary Lanes" (Lanes 1 through 7 and Lanes 15 through 21) and do not restrict Stonefield's ability to engage alternative carriers on Secondary Lanes. Accordingly, Stonefield's use of Cascade and Briarwood on these lanes was fully consistent with the TSA.
The subpoenas are in final preparation and are anticipated to be served in late June 2023. We will coordinate service through authorized process servers in the respective jurisdictions and will provide courtesy copies to CRS as required by Rule 45(a)(4).
X. LENDER AND INSURANCE UPDATES
A. Lender Notification
As you are aware, Stonefield's $425 million Senior Secured Credit Facility with Lakeshore National Bank (as Administrative Agent) (Ref. LNB-SLG-2017-CA-4402) requires quarterly litigation updates for matters in which the claimed amount exceeds $25 million. The Q2 2023 quarterly update is currently being prepared and is scheduled for submission in July 2023.
There has been no change in our overall exposure assessment since the Q1 2023 update. Stonefield continues to assess Vantor's claims as lacking merit, and the developments during May 2023 — particularly the Milescu email and the weaknesses identified in the Trask report — have further strengthened our confidence in that assessment. We will coordinate with your office on the preparation and submission of the Q2 2023 update.
B. Insurance Coverage
There has been no change in the insurance coverage status since our last report. As previously reported:
•  Graymark Insurance Company declined to provide coverage under Stonefield's Directors & Officers Liability policy (Policy No. GLG-DO-1025-00008) on October 3, 2022, on the grounds that the Vantor claims arise from commercial contract disputes that fall within the policy's contractual liability exclusion. We reviewed Graymark's declination letter and concurred that a coverage challenge would not be productive.
•  Brindoval Mutual Insurance Co. Commercial General Liability policy (Policy No. CGL-SLG-2022-11902) does not provide coverage for breach of contract claims. No tender was made under this policy, and none is recommended.
No further action is recommended on the insurance front at this time.
XI. BUDGET AND FEES
A. May 2023 Activity
Significant activity occurred during May 2023 across multiple workstreams, including document review and analysis of Vantor's production, expert report analysis and preparation of rebuttal strategy, discovery dispute preparation and meet-and-confer correspondence, and deposition scheduling and initial preparation. Detailed time entries for the May 2023 billing period will be provided in the Quarterly Billing Summary for Q2 2023, which will cover the period of April through June 2023.
We note that the Q2 2023 quarter is anticipated to be one of the heaviest spending periods in this engagement, given the intensity of discovery activity, the need to analyze the Trask report and coordinate with KAG, the preparation of meet-and-confer and potentially motion practice on the discovery dispute, and the commencement of deposition preparation. We will continue to manage staffing and work allocation efficiently, consistent with the budget parameters discussed below.
B. Cumulative Fees and Costs
Cumulative fees and costs through the end of Q1 2023 (as previously reported in the Q1 2023 Billing Summary) are as follows:
C. Expert and eDiscovery Costs
Expert costs incurred to date by Kensington Analytics Group LLC total approximately $95,000, which is on track against the original budget estimate of $180,000 to $250,000 for the full engagement through deposition testimony.
eDiscovery costs incurred through Pinnacle Forensics LLC (hosting, processing, and production support) are included in the disbursement figures reported above. Hosting and processing costs are ongoing and will continue through the conclusion of the litigation.
D. Overall Budget Status
The overall engagement remains within the preliminary budget range of $3.5 million to $5.2 million in fees and $400,000 to $750,000 in costs through the summary judgment stage, as established in the September 12, 2022 budget memorandum prepared by Samuel Eklund and approved by your office. No revision to the budget estimate is recommended at this time. We will continue to monitor spending against budget and will promptly advise if any developments suggest the need for a budget revision.
XII. UPCOMING KEY DATES AND ACTION ITEMS
The following table summarizes the key dates and action items for the upcoming period:
We will track these items closely and report on progress in next month's status report.
XIII. OVERALL ASSESSMENT AND RECOMMENDATION
Stonefield's litigation position has materially strengthened during the month of May 2023. The two most significant developments — the identification of the Milescu email (VHC-008417) and the preliminary analysis of the weaknesses in the Trask expert report — have substantially improved Stonefield's posture on both liability and damages.
Liability Assessment. The Milescu email is powerful evidence of an intentional, undisclosed breach by VTS: pulling 85 of the 400 committed tractors from the Stonefield dedicated lanes in October–November 2021 without notice or consent. This unilateral fleet reduction directly caused the Q4 2021 performance failures that formed the basis for Stonefield's Cure Notice of January 18, 2022 and subsequent termination for Cause on March 4, 2022. The email supports multiple defense theories:
(i) Valid termination for Cause under Section 13.1(a) of the TSA, based on VTS's material breach in failing to maintain committed fleet capacity, which was not cured during the cure period;
(ii) The first-to-breach doctrine, as VTS committed a material breach of the TSA (by redeploying committed fleet resources without notice) before any alleged breach by Stonefield, thereby excusing Stonefield's subsequent performance obligations and providing independent grounds for termination; and
(iii) Unclean hands and contributory breach, based on VTS's deliberate concealment of the fleet reduction and the resulting service level deterioration, which VTS then sought to attribute to Stonefield's alleged volume deficiencies.
Damages Assessment. The Trask report's failure to address mitigation, its reliance on inflated margin assumptions, its failure to account for VTS's own breaches, and its duplicative claim structure provide strong grounds for rebuttal by Dr. Rosser and for a potential Daubert challenge at the appropriate stage. KAG's preliminary assessment that the maximum damages exposure — even under the most adverse assumptions — would be approximately $8.2 million (versus the $95.4 million claimed) provides significant comfort regarding Stonefield's potential financial exposure.
Key Risks. While the overall assessment is favorable, we note the following key risks that require continued monitoring and management:
(i) Kirkwood September 22, 2021 Email. The email from Janet Kirkwood (VP, Carrier Relations, Stonefield) to Carlos Medina, in which Kirkwood states "pull the plug on the whole contract," could be construed by Vantor as evidence of a premeditated decision to terminate the TSA and divert volume away from VTS. We expect CRS to feature this email prominently in Kirkwood's deposition and in its opposition to any summary judgment motion. Ms. Kirkwood's expected testimony is that the volume adjustments referenced in the email were limited to Secondary Lanes and were responsive to VTS's repeated tender rejections, not part of any plan to terminate the contract. Thorough witness preparation will be essential to ensure that Ms. Kirkwood provides clear, consistent, and contextually complete testimony on this point.
(ii) Enforceability of Liquidated Damages Clause. The enforceability of the liquidated damages clause under New York law remains an area of moderate legal risk. While we have strong arguments that the clause constitutes an unenforceable penalty — particularly given the $67.23 million claimed amount, which is disproportionate to any reasonable estimate of probable loss — the case law on this issue is fact-specific and the outcome is not certain. We assess the risk of a court finding the clause enforceable as "moderate." However, even if the clause were found enforceable, the remaining weaknesses in the Trask report (inflation, duplication, and failure to account for mitigation and VTS's own breaches) would substantially reduce the recoverable amount.
Recommendation. We continue to recommend an aggressive defense posture with the primary objectives of (a) achieving summary judgment on liability, or (b) achieving a favorable settlement that reflects the strength of Stonefield's position. The settlement authority range of $0 to $4.5 million, as previously discussed and approved, remains appropriate in light of the current assessment. We do not recommend any increase in settlement authority at this time.
We will continue to provide monthly status reports on the first business week of each month and are available to discuss any aspect of this report at your convenience.
XIV. CLOSING
This report was prepared by Patrick Gallagher, Lead Associate, Calderwood & Harkness LLP, with contributions from Simone Laroche, Senior Associate, and Kara Nystrom, Associate, under the supervision of Samuel Eklund, Responsible Partner.
Should you have any questions regarding this report or wish to discuss any of the matters addressed herein, please do not hesitate to contact the undersigned at your convenience:
Patrick Gallagher — (212) 554-8247 | pgallagher@calderwoodharkness.com Samuel Eklund — (212) 554-8210 | seklund@calderwoodharkness.com
The next monthly status report, covering June 2023 activity, will be circulated in early July 2023.
PRIVILEGE DESIGNATION REMINDER: This report constitutes a privileged and confidential attorney-client communication and attorney work product. It is intended solely for the use of the addressee and those persons identified on the distribution list. This report should not be forwarded, distributed, or disclosed to any third party without first consulting Calderwood & Harkness LLP, as any such disclosure could result in a waiver of applicable privileges. Please contact Patrick Gallagher or Samuel Eklund with any questions regarding the scope of this privilege designation.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Patrick Gallagher Lead Associate Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 554-8247
Email: pgallagher@calderwoodharkness.com
Date: June 5, 2023
Deadline | Date
Fact discovery Closes | September 29, 2023
Expert discovery Closes | January 12, 2024
Dispositive Motions Due | March 1, 2024
Service Level Category | Actual Q4 2021 Performance | SLO Threshold | Shortfall
On-Time Pickup Rate | 78.2% | 95% | -16.8 percentage points
On-Time Delivery Rate | 81.6% | 93% | -11.4 percentage points
Tender Acceptance Rate | 71.4% | 90% | -18.6 percentage points
Equipment Availability | 62% (~248 tractors of 400 committed) | 85% (340 tractors) | -23.0 percentage points
Cargo Claims Ratio | ~1.07% ($387,400 across 16 claims, Nov.–Dec. 2021) | ≤0.5% | +0.57 percentage points
Damages Category | Amount Claimed | Derivation
Liquidated Damages (2 full remaining years) | $64,800,000 | 75% × $43.2M Annual Contract Value × 2 years
Liquidated Damages (partial year, 27 days) | $2,430,000 | 75% × $43.2M × (27/365)
Lost Profits (above-contract margin) | $18,700,000 | 12% operating margin × remaining committed volume
Stranded Assets & Costs | $5,200,000 | Depreciation on dedicated tractors/trailers; lease termination costs
Workforce Reduction Costs | $2,870,000 | Severance for approximately 180 drivers and support staff
Mitigation Costs | $1,400,000 | Costs incurred seeking replacement freight
Total | $95,400,000
Deponent | Role | Anticipated Date | Est. Duration | Notes
Derek Pruitt | VP, Business Development, Vantor | Early–mid July 2023 | 7 hours | Primary relationship manager for VTS's engagement with Stonefield. Examination will focus on mitigation efforts, awareness of SLO failures, and communications with SLG personnel regarding service level deterioration.
Janet Kirkwood | VP, Carrier Relations, Stonefield | Mid July 2023 | 6–7 hours | To be deposed by CRS. Key risk area: September 22, 2021 email to Carlos Medina regarding volume diversion ("pull the plug on the whole contract"); rate adjustment awareness and authority. Witness preparation session to be scheduled 3–5 days in advance.
Raymond Hess | Director, Contract Compliance, Stonefield | Late July 2023 | 5–6 hours | To be deposed by CRS. Focus areas anticipated: cure notice drafting process, metric calculation methodology, communications with prior outside counsel Ashford Meridian LLP during cure period. Witness preparation session to be scheduled 3–5 days in advance.
Sandra Milescu | COO, Vantor/VTS | Early August 2023 | 7 hours | Critical deposition. Primary focus: November 12, 2021 email (VHC-008417), fleet redeployment decisions and their impact on Stonefield service levels, redirection of tractors to Northwind Distribution Co., cure period activities and response to Stonefield's Cure Notice.
Nikolai Vantorovich | CEO, Vantor | Mid–late August 2023 | 7 hours | Corporate decision-making, awareness of SLO failures, authorization of fleet redeployment, mitigation strategy post-termination, and overall Vantor business strategy regarding the Stonefield account.
Period | Fees | Disbursements
Q4 2022 (Oct.–Dec.) | $487,250 | $42,180
Q1 2023 (Jan.–Mar.) | $612,400 | $78,340
Cumulative through Q1 2023 | $1,099,650 | $120,520
Target Date | Action Item | Responsible
Early June 2023 | Follow up with CRS on meet-and-confer regarding Second RFP; if no substantive response received, prepare letter brief to Judge Calloway seeking court intervention | Gallagher
Mid June 2023 | Serve Rule 30(b)(6) deposition notice on Vantor (12 designated topics) | Gallagher
Late June 2023 | Serve third-party subpoenas duces tecum on Cascade Freight Systems Inc. and Briarwood Trucking Co. | Laroche
Late June 2023 | Finalize and serve supplemental privilege log for second-phase review (218 additional documents) | Laroche, Tsao
July–August 2023 | Conduct depositions of Pruitt, Kirkwood, Hess, Milescu, and Vantorovich; complete witness preparation sessions for SLG witnesses | Gallagher, Laroche
July 2023 | Prepare and submit Q2 2023 quarterly litigation update to Lakeshore National Bank | Gallagher (draft/review); Wren (finalize/send)
August 2023 | Finalize and serve KAG rebuttal expert report (Dr. Rosser) | Gallagher, Eklund
September 29, 2023 | Fact discovery Closes (per CMO) | All