PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT / ATTORNEY-CLIENT PRIVILEGED
CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, NY 10166
July 20, 2023
DEPOSITION PREPARATION MEMORANDUM
WITNESS: RAYMOND HESS
PRIVILEGE NOTICE: This memorandum constitutes attorney work product prepared in anticipation of litigation and is protected by the work product doctrine and attorney-client privilege. It reflects the mental impressions, conclusions, opinions, and legal theories of counsel. This memorandum should not be shared with anyone outside the litigation team without the prior written approval of Samuel Eklund, Responsible Partner. If you have received this memorandum in error, please notify Simone Laroche immediately and destroy all copies.
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I. Purpose and Overview
This memorandum is intended to prepare Raymond Hess ("Hess") for his deposition by counsel for plaintiff Vantor Holdings Corp. ("Vantor") in the above-captioned action. The deposition has been noticed for July 27, 2023, and is expected to be taken by Jason Whitford of Caldwell Royce & Shapiro LLP ("CRS"), although Harrison Caldwell or Alina Petrov may participate as well. Patrick Gallagher will defend the deposition on behalf of Stonefield Logistics Group Inc. ("Stonefield" or "SLG").
Hess serves as Director of Contract Compliance at Stonefield, based at the company's headquarters at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102. He is a key fact witness for Stonefield in this litigation. Specifically, Hess authored and issued the Cure Notice dated January 18, 2022, addressed to Sandra Milescu, COO of Vantor Transport Services LLC ("VTS"), which initiated the formal contractual enforcement process that culminated in the termination of the Transportation Services Agreement ("TSA"), Contract Reference No. SLG-VTS-2019-0315. Hess also co-signed, along with General Counsel Tobias Wren, the formal Termination Letter dated March 4, 2022, which terminated the TSA effective immediately for cause pursuant to Section 13.1(a) of the agreement.
Hess's testimony is critical to establishing the central factual propositions underlying Stonefield's defense and counterclaims: namely, that Stonefield's termination of the TSA was both procedurally proper under Section 13.2 (Cure Notice Requirement) and substantively justified under Section 13.1(a) (Termination for Cause). These propositions, if sustained, defeat Vantor's claim for liquidated damages under Section 14.2 of the TSA (which imposes a formula of 75% of Annual Contract Value multiplied by remaining full and partial contract years if termination is other than "for Cause") and support Stonefield's affirmative defense of justified termination.
Based on the pleadings, the discovery record, and the pattern of questioning observed in the Pruitt and Kirkwood depositions already taken, the deposition will likely focus on three core areas:
1. The Cure Notice Drafting Process — including who instructed Hess to issue the Cure Notice, who contributed to or reviewed drafts, and the extent of outside counsel involvement;
2. The Underlying Metric Calculations and Data Sources — including how each of the five SLO metrics cited in the Cure Notice was derived, verified, and documented, and whether VTS had an opportunity to dispute them; and
3. Hess's Communications with Ashford Meridian LLP — Stonefield's commercial and transactional counsel — during the 30-day cure period, which CRS has attempted to probe for privilege-challenge purposes.
In addition, CRS is likely to pursue secondary lines of inquiry regarding Hess's awareness of the upcoming April 2022 rate adjustment under Section 5.3 of the TSA, Hess's knowledge of the September 22, 2021 Kirkwood email discussing the possibility of terminating the VTS relationship, and Hess's assessment of VTS's February 14, 2022 cure response.
This memorandum identifies anticipated lines of questioning across each of these areas, catalogs the key documents Hess should review in advance of the preparation session, flags risk areas requiring careful management during testimony, and provides recommended approaches for each topic. The goal is to prepare Hess to testify truthfully, precisely, and consistently with the documentary record while protecting attorney-client privilege and work product.
II. Witness Background and Role
A. Professional Background
Raymond Hess currently holds the position of Director, Contract Compliance, at Stonefield Logistics Group Inc., where he has served in that capacity since approximately 2017. In this role, Hess reports directly to Carlos Medina, Senior Vice President of Operations.
Hess's responsibilities include monitoring carrier compliance with contractual service level obligations ("SLOs") across Stonefield's portfolio of transportation services agreements, managing cure and remediation processes when carriers fall below contracted performance thresholds, and coordinating with the Legal Department — principally Tobias Wren, General Counsel — on contract enforcement matters, including the issuance of cure notices, default notices, and termination letters. Hess also maintains and administers Stonefield's internal compliance framework, which includes designating a "Contract Administrator" for each significant carrier agreement.
Hess works closely with Janet Kirkwood, Vice President of Carrier Relations, on carrier performance issues. Their respective roles are complementary but distinct: Kirkwood manages the day-to-day commercial relationship with carriers, including VTS, handling matters such as volume allocation, tender management, operational coordination, and informal performance discussions. Hess, by contrast, handles the formal compliance and enforcement side — tracking SLO metrics, issuing performance reports, and initiating contractual remedies when performance deficiencies exceed acceptable thresholds.
This division of responsibilities is important for the deposition because CRS may attempt to conflate Hess's compliance function with Kirkwood's commercial management function, or to attribute Kirkwood's views or communications to Hess. The distinction should be maintained clearly in Hess's testimony.
B. Relationship to the Vantor/VTS Account
Hess has been monitoring VTS performance under the TSA since approximately mid-2020, when early performance concerns began to surface in connection with on-time delivery metrics on several of the Primary Lanes designated in Schedule C of the TSA. At that time, the performance shortfalls were relatively modest and did not rise to the level of material breach warranting formal contractual enforcement action.
Hess was the designated "Contract Administrator" for the TSA under Stonefield's internal compliance framework. In this capacity, he was responsible for compiling and reviewing quarterly performance data, maintaining the compliance file for the TSA, and escalating significant performance issues to Carlos Medina and Tobias Wren as appropriate.
Hess had limited direct interaction with Vantor and VTS personnel. His primary contacts at Vantor/VTS were Sandra Milescu, Chief Operating Officer of Vantor/VTS, and Derek Pruitt, Vice President of Business Development at Vantor, both of whom served as the designated points of contact for formal performance notices under the TSA. Hess's communications with these individuals were largely confined to the issuance of the Cure Notice and related correspondence; day-to-day operational communications with VTS were handled by Kirkwood and her team in Carrier Relations.
Hess's direct involvement in the VTS account escalated significantly in the fourth quarter of 2021 when VTS performance metrics deteriorated sharply and simultaneously across all five SLO categories measured under the TSA. This represented a qualitative departure from the isolated, moderate shortfalls observed in prior quarters and triggered Hess's determination that formal contractual enforcement action was warranted.
III. Key Documents for Witness Review
The following documents should be provided to Hess in advance of the preparation session scheduled for July 24, 2023, with the exception of privilege-protected Ashford Meridian communications, which should be discussed during the session but should not be provided in hard copy to the witness (to avoid any argument that copies in the witness's possession are discoverable). Helen Tsao is responsible for compiling and delivering the document review set to Hess by July 21, 2023.
A. Documents Hess Should Review Before the Preparation Session
1. Transportation Services Agreement (TSA)
The TSA is dated March 15, 2019, and was entered into between Stonefield Logistics Group Inc. (in its capacity as "Shipper-Broker") and Vantor Transport Services LLC (in its capacity as "Carrier-Provider"). The agreement is governed by New York law. Hess should review the TSA in its entirety but should pay particular attention to the following provisions, which are expected to be the subject of detailed questioning:
• Section 5.3 (Rate Adjustment Mechanism): This provision establishes the formula for annual rate adjustments under the TSA, indexed to a blended metric consisting of 70% diesel fuel index and 30% CPI-U, adjusted on April 1 of each contract year. This provision is relevant to the anticipated "cost-saving motive" line of questioning, as CRS is expected to argue that Stonefield timed the termination to avoid a significant rate increase that would have taken effect on April 1, 2022.
• Section 7.4 (Substitute Equipment / Surge Capacity Obligations): This provision required VTS to provide substitute equipment and surge capacity in circumstances where its committed fleet was insufficient to meet tender volume. VTS's chronic failure to provide substitute equipment or surge capacity was cited as one of the material breaches in the Cure Notice.
• Section 13.1 (Termination for Cause): This provision defines the grounds for termination for cause, which include: (a) material breach uncured for 30 calendar days after written notice; (b) insolvency or bankruptcy; (c) failure to maintain required insurance coverage for more than 15 days; and (d) material violation of applicable law, including DOT and FMCSA regulations. Stonefield relied on Section 13.1(a) — material breach uncured after notice — as the basis for termination.
• Section 13.2 (Cure Notice Requirement): This provision requires that the terminating party provide written notice specifying with "reasonable particularity" the alleged breach and afford the breaching party a 30-calendar-day cure period. This is the procedural predicate for termination for cause and is central to Vantor's argument that the Cure Notice was deficient.
• Section 14.2 (Liquidated Damages): This provision imposes liquidated damages on the terminating party if termination is other than "for Cause," calculated as 75% of Annual Contract Value ("ACV") multiplied by the number of remaining full and partial contract years. This provision is the basis for Vantor's principal damages claim.
• Schedule B (Rate Structure): Sets forth per-mile rates by lane for the TSA.
• Schedule C (Exclusivity — Primary Lanes): Designates 14 origin-destination pairs as "Primary Lanes" subject to exclusivity obligations. The distinction between Primary Lanes and Secondary Lanes is relevant to the volume diversion issue.
• Service Level Obligations (embedded in the TSA body): The five SLOs measured under the TSA are:
• On-time pickup rate: ≥95%
• On-time delivery rate: ≥93%
• Cargo claims ratio: ≤0.5% of gross revenue
• Tender acceptance rate: ≥90%
• Equipment availability: ≥85% of committed fleet capacity (400 tractors / 1,200 trailers)
2. Cure Notice (January 18, 2022)
The Cure Notice was issued by Raymond Hess to Sandra Milescu (COO, Vantor/VTS). The notice identified the following alleged material breaches based on Q4 2021 performance data:
• On-time pickup rate: 78.2% (vs. 95% SLO threshold)
• On-time delivery rate: 81.6% (vs. 93% SLO threshold)
• Tender acceptance rate: 71.4% (vs. 90% SLO threshold)
• Equipment availability: 62% of committed fleet (approximately 248 tractors available vs. 400 required under the TSA)
• 16 documented cargo claims in November–December 2021 totaling $387,400, yielding a cargo claims ratio of approximately 1.07% (vs. ≤0.5% SLO threshold)
• Chronic failure to provide substitute equipment or surge capacity as required under Section 7.4
The Cure Notice specified a cure deadline of February 17, 2022, which was 30 calendar days from the date of receipt (the notice was sent by overnight courier and email on January 18, 2022).
3. Vantor's Response to Cure Notice (February 14, 2022)
The response was sent by Derek Pruitt (VP, Business Development, Vantor) to Janet Kirkwood (VP, Carrier Relations, Stonefield). The response acknowledged "operational challenges" but asserted that the performance failures were caused by: (i) a nationwide driver shortage affecting the entire transportation industry; (ii) Stonefield's alleged failure to tender the minimum committed volumes under the TSA; and (iii) Stonefield's alleged instructions to divert volume to lower-cost spot market carriers. The response asserted "substantial cure" and disputed the cargo claims data. Notably, the response did not dispute the accuracy of the performance metrics themselves with respect to on-time pickup, on-time delivery, tender acceptance, or equipment availability.
4. Termination Letter (March 4, 2022)
The Termination Letter was issued by Tobias Wren (General Counsel, Stonefield) and addressed to Vantor Holdings Corp. and Vantor Transport Services LLC. The letter stated that VTS had "failed to cure the material breaches identified in the Cure Notice dated January 18, 2022" within the 30-day cure period. The letter terminated the TSA effective immediately pursuant to Section 13.1(a) and expressly reserved all of Stonefield's rights and remedies under the TSA and applicable law. The letter was co-signed by Hess in his capacity as Director of Contract Compliance.
5. VTS Q4 2021 Performance Report
This is an internal VTS document reflecting actual performance metrics for October through December 2021. The document was produced by Vantor in discovery (Bates range VHC-012830 through VHC-012847) and shows actual metrics materially below SLO thresholds across all five categories measured under the TSA. This document corroborates the metrics cited in the Cure Notice and demonstrates that VTS's own internal data confirmed the performance failures.
6. VTS Carrier Performance Portal Data
This is the source data from VTS's own online reporting platform — the VTS Carrier Performance Portal — from which Hess compiled the Q4 2021 performance metrics cited in the Cure Notice. The Portal was maintained by VTS and made available to shipper-broker customers like Stonefield for the purpose of monitoring carrier performance. Hess independently accessed and verified all metrics using this Portal. This data is critical because it demonstrates that the metrics cited in the Cure Notice were derived from VTS's own systems, not from Stonefield's internal tracking alone.
7. Communications Between Hess and Ashford Meridian LLP
During January and February 2022 — the period spanning the issuance of the Cure Notice and the 30-day cure period — Hess communicated with attorneys at Ashford Meridian LLP, specifically Lorraine Beckwith and Troy Nakamura, regarding the interpretation of the TSA's cure provisions, the drafting and finalization of the Cure Notice, and post-cure-period enforcement strategy.
These communications are logged on Stonefield's privilege log. Entries 312 through 318, among others, reflect specific communications during this period. A total of 84 documents involving Ashford Meridian pre-litigation communications have been withheld on privilege grounds, as documented in the Privilege Review Memorandum prepared by this firm on March 22, 2023. Vantor has challenged Entries 312–318 specifically in correspondence with the Court but did not ultimately file a motion to compel. The privilege claims as to these entries remain intact but should be treated as a live issue, as CRS may use the deposition to build a record for a future privilege challenge or motion for in camera review.
Note: Hess should not be provided with copies of the Ashford Meridian communications. The content of these communications should be discussed during the preparation session to refresh Hess's recollection, but physical or electronic copies in Hess's possession could become a target for discovery requests. Hess should be reminded of the content orally during the session.
8. Hess's Internal Emails and Memoranda (Q3–Q4 2021)
Internal correspondence between Hess and Janet Kirkwood (VP, Carrier Relations), Carlos Medina (SVP, Operations), and Tobias Wren (General Counsel) regarding VTS performance deterioration and options for enforcement. These emails document Hess's escalating concerns about VTS performance in the period leading up to the issuance of the Cure Notice and are consistent with the narrative that the Cure Notice was the product of a deliberate, documented compliance process, not a hasty or pretextual action.
9. Sandra Milescu November 12, 2021 Email to Nikolai Vantorovich (VHC-008417)
This email, produced by Vantor in discovery, contains the following language: "We've pulled 85 tractors off the SLG dedicated lanes to cover [redacted] commitments. SLG won't notice until January." This email is significant because it suggests that VTS's equipment availability failure was not the result of the nationwide driver shortage (as claimed in VTS's February 14 cure response) but rather a deliberate redeployment of assets away from the Stonefield account. Hess may be asked about his awareness of this email or the tractor redeployment at the time he drafted the Cure Notice. He should testify truthfully that he was not aware of this email or the fact of the tractor redeployment until the document was produced in discovery in this litigation.
10. Janet Kirkwood September 22, 2021 Email to Carlos Medina
This email contains the following language: "VTS is a mess. We're already moving volume to Cascade and Briarwood on Lanes 8–14. If VTS doesn't get its act together by Q1 I think we pull the plug on the whole contract." This email has already been the subject of significant examination in the Kirkwood deposition (July 14, 2023). CRS is likely to ask Hess whether he was copied on or otherwise aware of this email and whether the sentiment expressed by Kirkwood — suggesting a predetermined desire to terminate the contract — influenced Hess's decision to issue the Cure Notice. Hess should carefully review this email and confirm during the preparation session whether he was a recipient, was copied, or was otherwise made aware of its contents at the time it was sent.
11. Ashford Meridian Rate Adjustment Analysis Memo (February 2022)
This memorandum, prepared by Ashford Meridian LLP in February 2022, analyzes the impact of the April 2022 rate adjustment under Section 5.3 of the TSA. The analysis shows that the rate adjustment would increase per-mile rates from a weighted average of $2.87 to $3.28 — a 14.3% increase — adding approximately $6.2 million in annual transportation costs to Stonefield. CRS is expected to use this memo to argue that the true motivation for terminating the TSA was to avoid this cost increase, not to enforce legitimate performance standards. It is significant that the Cure Notice (January 18, 2022) predates this rate adjustment memo, which mitigates the argument that cost considerations drove the Cure Notice.
B. Deposition Exhibits Likely to Be Used by CRS
Based on the patterns observed in the Pruitt and Kirkwood depositions and CRS's document requests throughout discovery, we anticipate that CRS will use the following documents as deposition exhibits:
• The Cure Notice (January 18, 2022)
• The Termination Letter (March 4, 2022)
• Vantor's February 14, 2022 cure response
• VTS Carrier Performance Portal data and screenshots reflecting Q4 2021 metrics
• Non-privileged internal Stonefield emails involving Hess regarding the termination decision
• The Kirkwood September 22, 2021 email to Carlos Medina (to test Hess's knowledge of and involvement in pre-existing termination discussions)
• The Ashford Meridian February 2022 rate adjustment analysis memo (to explore the cost-saving motive theory)
• Any communications between Hess and Ashford Meridian that are not privileged, or to probe the scope and nature of communications claimed as privileged, for purposes of building a record for a privilege challenge
• The Milescu November 12, 2021 email (VHC-008417) regarding the redeployment of 85 tractors
Hess should be prepared to review and discuss each of these documents at the deposition. During the preparation session, we should walk through each anticipated exhibit and rehearse Hess's responses to likely questions about each document.
IV. Anticipated Lines of Questioning and Recommended Approaches
This section addresses the principal lines of questioning we anticipate CRS will pursue and provides recommended approaches for Hess's testimony on each topic. These recommendations are intended to guide Hess toward truthful, precise, and strategically sound testimony while protecting privilege and avoiding unnecessary risk.
A. Cure Notice Drafting Process
Anticipated Questions:
CRS is expected to devote substantial time to exploring the genesis and drafting of the Cure Notice. The probable areas of inquiry include:
• When did Hess first begin drafting the Cure Notice? What triggered the decision to begin the drafting process?
• Who instructed or directed Hess to draft and issue the Cure Notice? Was it a decision Hess made independently within his compliance function, or did he receive direction from Carlos Medina, Tobias Wren, Marcus Denton (CEO), or others?
• Did Hess draft the Cure Notice alone, or in consultation with others? Specifically, what was the involvement of Tobias Wren (General Counsel), Janet Kirkwood (VP, Carrier Relations), Carlos Medina (SVP, Operations), and outside counsel at Ashford Meridian LLP (Lorraine Beckwith, Troy Nakamura)?
• How many drafts of the Cure Notice were prepared? Were edits or revisions made by outside counsel? If so, what was the nature of those edits?
• Was the decision to issue the Cure Notice a unilateral compliance decision within Hess's authority, or did it involve senior management, including Marcus Denton (CEO) or representatives of Ridgeline Capital Partners (the PE sponsor)?
• Did anyone at Stonefield discuss alternatives to issuing a Cure Notice, such as informal remediation, renegotiation of SLOs, rate concessions, or a phased reduction in volume allocation?
Recommended Approach:
Hess should testify truthfully that he initiated the Cure Notice process in his capacity as the designated Contract Administrator for the TSA. He did so upon determining, based on Q4 2021 performance data, that VTS had failed all five SLOs simultaneously — a level of performance failure that, in his professional judgment as compliance director, constituted a material breach warranting formal contractual enforcement action.
Hess should acknowledge that he consulted with Tobias Wren (General Counsel) on the decision to issue a formal Cure Notice as opposed to an informal warning or other lesser measure. Hess can explain that it was standard practice within Stonefield's compliance framework to coordinate with the Legal Department before initiating formal contractual enforcement proceedings. Wren directed Hess to engage outside counsel at Ashford Meridian LLP for guidance on the requirements of Section 13.2 of the TSA, specifically the "reasonable particularity" standard for cure notices.
Hess should acknowledge that Ashford Meridian, and specifically Lorraine Beckwith, provided input on the form and content of the Cure Notice to ensure that it met the contractual requirements of Section 13.2. This fact — that outside counsel was consulted — is not itself privileged. However, the substance of the legal advice received from Ashford Meridian is privileged and must not be disclosed.
Privilege Caution: This is a critical area. Hess must not disclose the substance of any legal advice received from Ashford Meridian LLP or from Tobias Wren. If CRS asks Hess about the content of communications with counsel — for example, "What did Lorraine Beckwith tell you about the Cure Notice?" or "What advice did you receive from Ashford Meridian?" — Hess should respond with words to the following effect:
"I communicated with our legal team regarding this matter, but I've been instructed not to disclose the content of those communications on advice of counsel."
Patrick Gallagher should be prepared to interpose objections and, where appropriate, instruct the witness not to answer questions that seek the content, substance, or nature of privileged communications. If CRS persists, Gallagher should state the privilege objection clearly on the record and instruct Hess not to answer.
Hess should be prepared to describe the factual process — gathering data from the VTS portal, identifying the specific SLO breaches, determining the cure deadline based on the 30-calendar-day period prescribed in Section 13.2, and transmitting the Cure Notice to Sandra Milescu — without characterizing or disclosing any legal advice he received along the way. The distinction between factual process and legal advice must be maintained throughout the testimony.
The 84 pre-litigation Ashford Meridian communications on the privilege log remain a live issue. The seven entries that Vantor specifically challenged (Entries 312–318) relate to the January–February 2022 cure period. CRS may attempt to use the deposition to probe the scope and content of these communications to build a factual record for a future motion for in camera review or a challenge to the privilege designations. Gallagher should be alert to this tactic and should not allow CRS to conduct a backdoor privilege review through the witness.
B. Metric Calculations and Data Sources
Anticipated Questions:
CRS is expected to challenge the reliability and methodology of the performance metrics cited in the Cure Notice. The probable areas of inquiry include:
• How did Hess calculate each of the five performance metrics cited in the Cure Notice?
• What data sources did he use? Were the metrics derived from Stonefield's internal systems, VTS's systems, or a combination of both?
• Did Hess request or receive data directly from VTS before issuing the Cure Notice?
• How was the cargo claims ratio calculated? What revenue figure was used as the denominator?
• Were the metrics verified by any independent third party or auditor?
• Did VTS dispute these metrics in its February 14, 2022 cure response?
• Were there performance deficiencies before Q4 2021? If so, why was no Cure Notice issued in earlier quarters?
Recommended Approach:
Hess should testify clearly and specifically that he derived all Q4 2021 performance metrics from VTS's own Carrier Performance Portal. The Portal was an online platform maintained and operated by VTS to report performance data to shipper-broker customers, including Stonefield. Hess accessed the Portal independently and downloaded the relevant reports covering the October through December 2021 period. He did not rely solely on Stonefield's internal tracking systems, although he cross-referenced the Portal data against Stonefield's internal records for consistency.
The specific metric derivations should be presented as follows:
• On-time pickup rate: 78.2% — Calculated from the VTS Portal "Pickup Compliance" report for the period October 1 through December 31, 2021. This report measured the percentage of loads picked up within the contractually defined pickup window.
• On-time delivery rate: 81.6% — Calculated from the VTS Portal "Delivery Compliance" report for the same October through December 2021 period. This report measured the percentage of loads delivered within the contractually defined delivery window.
• Tender acceptance rate: 71.4% — Calculated from the VTS Portal "Tender Response" report for the same period. This report tracked the percentage of tendered loads accepted by VTS versus those rejected or not responded to within the contractually required timeframe.
• Equipment availability: 62% of committed fleet — Determined by comparing VTS's reported available tractor count, which showed approximately 248 tractors available for Stonefield-dedicated service, to the TSA-committed fleet capacity of 400 tractors. This represents a shortfall of approximately 152 tractors, or 38% of the committed fleet.
• Cargo claims ratio: 1.07% — Calculated as $387,400 in documented cargo claims (16 individual claims filed in November and December 2021) divided by approximately $36.2 million in annualized Q4 2021 gross revenue under the TSA. The SLO threshold of ≤0.5% was more than doubled. The denominator of $36.2 million was derived from the actual billing records for the quarter, annualized to provide a consistent basis of comparison with the contractual threshold.
Hess should emphasize that VTS's February 14, 2022 cure response — submitted by Derek Pruitt — did not dispute the accuracy of the performance metrics themselves. While the response disputed certain cargo claims data and attributed the performance failures to external factors (the nationwide driver shortage) and to Stonefield's own alleged conduct (failure to tender minimum committed volumes and alleged diversion of volume to spot market carriers), Pruitt did not challenge the underlying performance figures for on-time pickup, on-time delivery, tender acceptance, or equipment availability. This is significant because it tends to corroborate the accuracy of the metrics Hess cited.
On the question of why no Cure Notice was issued before Q4 2021 despite some performance softness in earlier quarters, Hess should explain that Q4 2021 represented a qualitative and quantitative escalation in VTS's performance failures. While there had been isolated or minor shortfalls in individual SLO categories in prior quarters, those shortfalls did not individually or collectively rise to the level of "material breach" as that term is used in Section 13.1(a) of the TSA. Q4 2021 was the first quarter in which VTS failed all five SLOs simultaneously, and the magnitude of the failures — in some cases more than 15 percentage points below threshold — was unprecedented in the history of the TSA. Hess's professional judgment, informed by his years of experience in contract compliance, was that the Q4 2021 performance data reflected a systemic breakdown, not an isolated or temporary lapse.
Hess should avoid volunteering information about the Milescu November 12, 2021 email (VHC-008417) regarding VTS's decision to pull 85 tractors off SLG-dedicated lanes. Hess was not aware of this email or the underlying tractor redeployment at the time he drafted the Cure Notice. He learned of this document only when it was produced by Vantor in discovery in this litigation. If CRS raises this email, Hess should state clearly that he was not aware of it at the time and that his Cure Notice was based on the performance data available to him through the VTS Portal. Hess should not speculate about whether his analysis or conclusions would have been different had he known about the tractor redeployment — that is a hypothetical question that calls for speculation.
C. Communications with Ashford Meridian LLP During the Cure Period
Anticipated Questions:
This topic is the most likely vehicle for CRS to probe the boundaries of privilege. The probable areas of inquiry include:
• Did Hess communicate with attorneys at Ashford Meridian LLP during the 30-day cure period (January 18 through February 17, 2022)?
• How frequently did those communications occur? Were they by email, telephone, or in-person meeting?
• What was discussed in those communications? Did Ashford Meridian advise Hess on whether VTS's February 14, 2022 cure response constituted "substantial cure" under the TSA or applicable law?
• Did Ashford Meridian participate in or influence the decision to proceed with termination after the cure period expired?
• Did Ashford Meridian draft, review, or revise the March 4, 2022 Termination Letter?
• Was Ashford Meridian engaged to provide legal advice, or were they functioning as business consultants in connection with the termination decision?
Recommended Approach:
This is the highest-risk area for privilege issues in the deposition, and it requires the most careful management. CRS is likely to probe this topic extensively — not necessarily to elicit admissible evidence at the deposition itself, but to test the scope and strength of Stonefield's privilege claims and to build a factual record that could support a future motion for in camera review of the 84 withheld Ashford Meridian communications or a targeted challenge to Entries 312–318 on the privilege log.
Hess should acknowledge that he did communicate with Ashford Meridian LLP — specifically, with Lorraine Beckwith and Troy Nakamura — during the cure period. The fact that communications occurred is not itself privileged. Hess may also acknowledge the general timeframe and mode of those communications (e.g., email and telephone) without disclosing content.
Hess should not disclose the substance, content, or nature of the legal advice provided by Ashford Meridian. He should not characterize the advice, summarize it, or describe it even in general terms (e.g., he should not say "they advised us that the cure was insufficient" or "they recommended we proceed with termination"). Any such disclosure would risk waiver of the privilege as to the specific communication disclosed and could open the door to broader subject-matter waiver.
If asked about the purpose of his communications with Ashford Meridian, Hess should state that the communications were for the purpose of obtaining legal advice regarding Stonefield's rights and obligations under the TSA. He should not elaborate further.
If CRS attempts to characterize Ashford Meridian's involvement as "business consulting" rather than "legal advice" — a common tactic to pierce the attorney-client privilege — Hess should clarify that Ashford Meridian LLP is a law firm, that the firm was engaged by Stonefield as legal counsel, and that Hess understood his communications with the firm to be for the purpose of obtaining legal advice. Hess should not be drawn into a debate about the distinction between legal advice and business advice; if CRS presses this line, Patrick Gallagher should object and instruct the witness as appropriate.
Patrick Gallagher should be prepared to instruct the witness not to answer any question that calls for the disclosure of privileged communications. Gallagher should assert the attorney-client privilege clearly on the record each time such a question is posed, and should preserve the objection by stating the specific basis for the instruction (attorney-client privilege and/or work product doctrine).
Regarding the Termination Letter specifically, Hess can confirm that Tobias Wren (General Counsel) issued the formal Termination Letter dated March 4, 2022, and that Hess co-signed the letter. Hess may acknowledge that he provided factual input into the letter — specifically, confirming from a compliance standpoint that the breaches identified in the Cure Notice remained uncured as of the expiration of the 30-day cure period on February 17, 2022. However, Hess should not disclose any legal strategy, analysis, or advice regarding the decision to terminate, the timing of the termination, or the drafting of the Termination Letter.
D. Awareness of Rate Adjustment and Cost-Saving Motive
Anticipated Questions:
CRS's theory of the case includes a "pretextual termination" narrative — the argument that Stonefield terminated the TSA not because of genuine performance concerns but to avoid a significant rate increase that would have taken effect on April 1, 2022. CRS is expected to pursue this theory through the following lines of inquiry:
• Was Hess aware of the upcoming April 2022 rate adjustment under Section 5.3 of the TSA at the time he drafted the Cure Notice (January 2022) or during the cure period (January 18 through February 17, 2022)?
• Did anyone at Stonefield — including Carlos Medina, Tobias Wren, Marcus Denton, Janet Kirkwood, or any representative of Ridgeline Capital Partners — discuss the rate adjustment as a factor in the decision to issue the Cure Notice or to terminate the TSA?
• Was Hess aware of the Ashford Meridian February 2022 rate adjustment analysis memo showing a projected 14.3% rate increase (from a weighted average of $2.87 per mile to $3.28 per mile), which would add approximately $6.2 million in annual transportation costs to Stonefield?
• Did cost considerations play any role in Hess's compliance determinations or in the timing of the Cure Notice?
Recommended Approach:
Hess should testify clearly and consistently that his role as Director of Contract Compliance was focused on performance compliance — monitoring SLOs, identifying breaches, and administering the contractual enforcement process. His role did not encompass pricing, rate negotiation, or cost analysis. Those functions fall within the purview of Carrier Relations (Kirkwood), Finance, and senior management.
If Hess was genuinely not involved in rate adjustment discussions and was not aware of the cost implications of the April 2022 rate increase at the time he drafted the Cure Notice, he should say so clearly and unequivocally. His compliance function was focused on performance data, not on pricing.
If, on the other hand, Hess had some general awareness of the upcoming rate adjustment — for example, because it was discussed in a general operations meeting or mentioned in passing — he should acknowledge that awareness honestly, but should make clear that the rate adjustment was not a motivating factor in his decision to initiate the Cure Notice process. The Cure Notice was driven by documented, objective, and verifiable performance failures across all five SLOs in Q4 2021.
Hess should not speculate about the motivations of others. If asked whether Marcus Denton, Tobias Wren, Janet Kirkwood, Carlos Medina, or any Ridgeline Capital Partners representative was motivated by cost considerations, Hess should state that he cannot speak to the motivations of others and can only testify about his own role, which was limited to contract compliance.
A key chronological point should be emphasized: The Cure Notice was issued on January 18, 2022, based on Q4 2021 performance data. The Ashford Meridian rate adjustment analysis memo was prepared in February 2022 — after the Cure Notice had already been issued. This chronology significantly undermines the argument that the Cure Notice was motivated by cost-saving considerations, because the formal analysis quantifying the rate increase did not exist at the time Hess drafted and issued the Cure Notice.
E. Interaction with Janet Kirkwood and the September 22, 2021 Email
Anticipated Questions:
CRS devoted substantial time to the Kirkwood September 22, 2021 email during Kirkwood's own deposition on July 14, 2023, and is expected to revisit this topic with Hess:
• Was Hess aware of or copied on Kirkwood's September 22, 2021 email to Carlos Medina stating "VTS is a mess" and referencing the possibility of "pull[ing] the plug on the whole contract"?
• Did Hess discuss the possibility of terminating the VTS relationship with Kirkwood or anyone else before Q4 2021 data was compiled?
• Did Kirkwood's views or the sentiment expressed in her September 2021 email influence Hess's decision to issue the Cure Notice?
• Was there a consensus within Stonefield management, prior to Q4 2021, that the VTS relationship should be terminated?
Recommended Approach:
This topic requires careful preparation during the July 24 session. Hess should review the September 22, 2021 email and confirm whether he was a direct recipient, was copied (on the "to" or "cc" line), was forwarded a copy, or otherwise became aware of the email's contents at or around the time it was sent. If Hess was not a recipient and was not aware of the email, his testimony should be clear and unequivocal to that effect. If he was aware of it, he should acknowledge that fact honestly but place it in proper context.
Regardless of his awareness of the Kirkwood email, Hess should maintain consistently that the Cure Notice was driven by objective, documented SLO failures reflected in the Q4 2021 performance data. The formal Cure Notice process was triggered by the data, not by Kirkwood's opinions, frustrations, or informal assessments of the VTS relationship.
If Hess did have conversations with Kirkwood about VTS's deteriorating performance in the Q3 2021 timeframe, he can acknowledge those conversations as normal, routine discussions within his compliance function. Hess worked closely with Kirkwood on carrier performance issues, and it would be natural for them to discuss a carrier whose performance was declining. However, Hess should emphasize that there is a material difference between informal internal discussions about a carrier's performance trajectory and the formal initiation of the contractual Cure Notice process, which requires a documented determination of material breach based on objective performance data.
Hess should also clarify the distinction between his role and Kirkwood's role. Kirkwood managed the day-to-day commercial relationship and expressed commercial frustration with VTS's performance in her September 2021 email. Hess's function was compliance-focused and data-driven. The Cure Notice was a product of Hess's compliance function, not of Kirkwood's commercial relationship management.
F. Vantor's February 14, 2022 Response — Assessment of Cure
Anticipated Questions:
CRS is expected to explore Hess's assessment of VTS's cure response and the determination that VTS had not cured the identified breaches:
• How did Hess assess whether VTS had cured the identified breaches during the 30-day cure period?
• Did Hess review VTS's February 14, 2022 response letter? What was his assessment of it?
• What specific steps, if any, did VTS take during the cure period to remediate the performance failures?
• Did Hess verify post-cure-period performance data — that is, did he check whether VTS performance improved during January and February 2022?
• Why did Stonefield conclude that VTS had not "cured" the breaches?
• Does the concept of "substantial cure" apply under Section 13.1(a) of the TSA?
Recommended Approach:
Hess should testify that he reviewed VTS's February 14, 2022 response upon receiving it. His assessment was that the response acknowledged "operational challenges" but primarily attributed the performance failures to external factors (the nationwide driver shortage) and to Stonefield's own alleged conduct (volume shortfalls and volume diversion), rather than presenting concrete evidence of remediation or corrective action. The response did not include any specific remediation plan, timeline, or milestones. It did not identify any specific steps VTS had taken or would take to restore committed fleet capacity, improve on-time performance, increase tender acceptance rates, or address cargo claims procedures. In Hess's assessment, the response was more in the nature of an explanation and defense than a demonstration of cure.
Hess should further testify that he checked the VTS Carrier Performance Portal for January and February 2022 data and found that VTS's performance had not materially improved by the expiration of the cure period on February 17, 2022. During the preparation session, we should confirm the specific post-cure-period metrics with Hess so that he can cite them precisely if asked. If the data shows continued failure across the SLO categories, this is powerful evidence that VTS did not cure the breaches.
On the legal question of whether VTS's response constituted "substantial cure," Hess should limit his testimony to factual observations: the metrics did not improve, no remediation plan was presented, no concrete corrective actions were identified or implemented. Hess should avoid offering legal conclusions about the doctrine of substantial cure — whether that doctrine applies under the TSA, what standard of cure is required, and whether VTS's response met that standard are legal arguments for counsel to make, not for the fact witness to opine upon. If CRS presses Hess for a legal conclusion, Hess should state that he assessed cure from a compliance standpoint based on the data, and that questions of legal interpretation are better addressed to counsel.
As with the Cure Notice drafting process, any communications between Hess and Ashford Meridian or Tobias Wren regarding the legal assessment of cure adequacy are privileged and must not be disclosed.
G. The Termination Letter (March 4, 2022)
Anticipated Questions:
CRS is expected to probe the circumstances surrounding the issuance of the Termination Letter:
• Who made the final decision to terminate the TSA? Was it Hess, Tobias Wren, Carlos Medina, Marcus Denton, or the Ridgeline Capital Partners board representatives?
• What was Hess's specific role in the termination process?
• Why was the Termination Letter issued on March 4, 2022 — approximately two weeks after the cure period expired on February 17, 2022? What happened during those two weeks?
• Was the delay between cure expiration and termination a deliberate tactical choice?
• Was the decision to terminate unanimous, or did anyone within Stonefield oppose or question the termination?
Recommended Approach:
Hess should clarify the chain of authority. The formal Termination Letter was issued by Tobias Wren (General Counsel) on behalf of Stonefield. The ultimate decision to terminate a significant commercial contract like the TSA involved senior management, and Hess's role was limited to confirming, from a contract compliance standpoint, that the identified breaches remained uncured as of the cure deadline. Hess can describe his role without characterizing the internal deliberation process or identifying who had final decision-making authority — those are matters for other witnesses (Wren, Medina, or Denton) to address.
On the two-week gap between the cure period expiration (February 17, 2022) and the issuance of the Termination Letter (March 4, 2022), Hess should explain that the period was used for legitimate procedural purposes: compiling final performance data, verifying that the deficiencies persisted through the end of the cure period, reviewing VTS's February 14 response, and coordinating with counsel. The termination of a significant carrier agreement with a multi-year term and substantial financial implications is a consequential corporate action that warrants careful verification before execution. This is standard practice for a significant contract termination, not evidence of delay, tactical maneuvering, or uncertainty about the merits of the termination.
Hess should avoid characterizing the two-week gap as a "deliberation period" or a period during which Stonefield was "deciding" whether to terminate. Such characterizations could suggest uncertainty about whether Cause existed, which would undermine Stonefield's position. The more accurate characterization is that the gap was a procedural and verification interval — a period during which Hess confirmed the continued deficiency, compiled the supporting documentation, and coordinated with counsel on the formal termination process.
Finally, Hess should be prepared to note — if the question arises — that the TSA's cure provision (Section 13.2) specifies a 30-day cure period but does not impose any deadline on the terminating party to exercise its right to terminate after the cure period has lapsed without cure. The right to terminate for an uncured material breach does not expire immediately upon the cure deadline. Stonefield was entitled to take a reasonable period to verify the deficiency and complete its internal process before issuing the formal Termination Letter.
V. General Deposition Preparation Instructions
A. Ground Rules for the Witness
The following ground rules should be reviewed with Hess at the preparation session and reinforced immediately before the deposition begins: