1012-00005 · Stonefield Logistics Group · Depositions

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

DEPOSITION SUMMARY — JANET KIRKWOOD

July 20, 2023

Matter: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)

Calderwood & Harkness LLP Matter No.: 1012-00005

Prepared By: Simone Laroche, Associate, Litigation (General)

Distributed To: Samuel Eklund, Responsible Partner; Patrick Gallagher, Lead Associate

Classification: PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

Re: Summary and Analysis of Deposition of Janet Kirkwood, Vice President, Carrier Relations, Stonefield Logistics Group Inc.

I. DEPOSITION OVERVIEW

Witness: Janet Kirkwood, Vice President, Carrier Relations, Stonefield Logistics Group Inc.

Date of Deposition: July 14, 2023

Location: Offices of Calderwood & Harkness LLP, 200 Park Avenue, 38th Floor, New York, NY 10166

Duration: Approximately 6.5 hours (including two scheduled breaks and one additional break requested by witness)

Examining Counsel: Harrison Caldwell, Named Partner, Caldwell Royce & Shapiro LLP ("CRS") (on behalf of Plaintiff Vantor Holdings Corp.); Meredith Shapiro, Named Partner, CRS (present at counsel table throughout but did not examine the witness); Jason Whitford, Senior Associate, CRS (assisted Mr. Caldwell with exhibit management and document review)

Defending Counsel: Patrick Gallagher, Lead Associate, Calderwood & Harkness LLP; Samuel Eklund, Responsible Partner, Calderwood & Harkness LLP (present for the morning session and a portion of the afternoon session)

Court Reporter: Katherine M. Delvecchio, CSR, RPR, Ostrander Data Systems

Videographer: The deposition was recorded by videotape in addition to stenographic transcription. Videography was provided by Ostrander Data Systems.

Exhibits Marked: Fourteen (14) exhibits were marked during the deposition (Kirkwood Deposition Exhibits 1 through 14). Key exhibits are identified and discussed in detail in the relevant sections below and summarized in Section IX of this memorandum.

Witness Preparation: Ms. Kirkwood was prepared by Patrick Gallagher and Samuel Eklund during a session held at the offices of Calderwood & Harkness LLP on July 11, 2023. Preparation covered, among other topics, the September 22, 2021 internal email from Kirkwood to Carlos Medina, the volume diversion to Cascade Freight Systems Inc. and Briarwood Trucking Co., Kirkwood's awareness of the upcoming rate adjustment under Section 5.3 of the TSA, the cure notice process and associated timeline, and her role overseeing the Vantor/VTS carrier relationship on a day-to-day basis. See Witness Preparation Session Notes — Janet Kirkwood (July 11, 2023) (filed under Matter No. 1012-00005, work product).

Overall Assessment: Kirkwood performed well throughout the deposition. She was composed, direct, and largely consistent with her preparation. CRS focused heavily on two areas — the September 22, 2021 internal email and the rate adjustment motive — devoting a combined total of approximately three hours of examination to those topics. Kirkwood held up well under sustained cross-examination on both subjects. She did not volunteer information beyond what was asked, and she effectively contextualized potentially adverse language in the September 22 email without appearing evasive. Her testimony was credible and reinforced several key defense themes, including the objective severity of VTS's performance failures, the limitation of volume diversion to Secondary Lanes, and the absence of any causal link between the rate adjustment and the termination decision. Areas of concern are identified throughout this summary and consolidated in Section XII.B below.

II. BACKGROUND AND ROLE (APPROXIMATE TRANSCRIPT PAGES 8–35)

A. Professional Background

Kirkwood testified that she has served as Vice President, Carrier Relations at Stonefield Logistics Group Inc. since 2018. Prior to joining Stonefield, she held logistics management positions at two other companies over a period of approximately twelve years, including approximately seven years as Director of Carrier Operations at Pinnacle Supply Chain Solutions and approximately five years in progressively senior freight coordination roles at Caravel Intermodal Corp. She holds a bachelor's degree in supply chain management from Pennsylvania State University. She described her current role as encompassing full managerial responsibility for Stonefield's carrier network.

Kirkwood reports directly to Carlos Medina, Senior Vice President, Operations, at Stonefield. She testified that Mr. Medina is her sole direct supervisor and that she has reported to him continuously since she joined the company. She supervises a team of approximately fifteen individuals in the Carrier Relations department, including three regional carrier managers and associated support staff.

Her core responsibilities include managing relationships with Stonefield's carrier network of approximately 12,000 approved carriers, overseeing carrier compliance programs and onboarding processes, negotiating carrier contracts (including rate agreements and master transportation services agreements), and monitoring carrier performance against contractual service level obligations. She testified that she is involved in strategic decisions regarding carrier selection, carrier consolidation, and the expansion or reduction of carrier partnerships. She also testified that she participates in quarterly business reviews with major contract carriers and that she personally attends such reviews for Stonefield's top ten carriers by revenue, a group that included Vantor Transport Services LLC ("VTS") during the relevant period.

B. The Vantor/VTS Relationship

Kirkwood testified that she was the primary Stonefield executive responsible for the day-to-day management of the relationship with Vantor Transport Services LLC under the Transportation Services Agreement dated March 15, 2019 (Contract Reference No. SLG-VTS-2019-0315) (the "TSA"). She clarified that Vantor Holdings Corp. ("Vantor") is the parent company and VTS is the operating subsidiary that provided the transportation services under the TSA, though she used the terms somewhat interchangeably in practice, a usage she stated was common within Stonefield as well.

Kirkwood's primary counterpart at Vantor/VTS was Derek Pruitt, Vice President, Business Development. She testified that she and Pruitt communicated regularly — typically by phone two to three times per week and by email on an almost daily basis during periods of active operations. She also had regular interactions with Sandra Milescu, Chief Operating Officer of VTS, regarding operational issues that arose from time to time. Kirkwood testified that Milescu would become involved in discussions when issues escalated beyond routine operational matters, and that she and Milescu spoke approximately once or twice per month during the first two years of the contract, with the frequency increasing substantially during Q3 and Q4 2021.

Kirkwood described the relationship between Stonefield and VTS as "generally productive" during the first two contract years (April 2019 through March 2021). She testified that VTS met or exceeded most of the Service Level Obligations ("SLOs") set forth in the TSA during that period, and that the quarterly business reviews during those years were "constructive" and focused primarily on opportunities for volume growth rather than remediation of service failures. She stated that there were occasional performance issues — particularly during the initial six months of the contract as VTS onboarded drivers and established lane familiarity — but that those issues were resolved through normal operational channels and did not rise to the level of material concern.

However, Kirkwood testified that VTS's performance began to deteriorate noticeably beginning in the third quarter of 2021 (Q3 2021). She stated that the decline was initially limited to tender acceptance rates on certain lanes but became broader and more severe as the quarter progressed. By the fourth quarter of 2021 (Q4 2021), Kirkwood testified, the performance deterioration had become "severely problematic," affecting all five SLO categories and causing significant disruptions to Stonefield's customer commitments.

C. Knowledge of TSA Terms

Kirkwood confirmed her familiarity with the key provisions of the TSA. She testified that she reviewed the TSA at the time of its execution in March 2019, that she referred to it regularly in the course of her duties, and that she considered herself well-versed in its terms.

Specifically, Kirkwood confirmed familiarity with the following provisions:

• The five Service Level Obligations defined in Section 6.2 and Schedule B of the TSA: (i) on-time pickup rate of not less than 95%; (ii) on-time delivery rate of not less than 93%; (iii) cargo claims ratio of not greater than 0.5% of total shipment value per reporting period; (iv) tender acceptance rate of not less than 90%; and (v) equipment availability of not less than 85% of the committed fleet capacity of 400 tractors and 1,200 trailers.

• The lane classification system set forth in Schedule C of the TSA, which designated fourteen (14) "Primary Lanes" (Lanes 1 through 7 and associated return lanes) subject to exclusivity provisions under Section 4.1(a), and seven (7) "Secondary Lanes" (Lanes 8 through 14) that were not subject to exclusivity and on which Stonefield retained the right to engage alternative carriers.

• The distinction between Primary Lanes and Secondary Lanes as defined in Schedule C, Section 2(a) and Section 2(b), respectively, and the operational and contractual implications of that distinction, including the exclusivity restriction on Primary Lanes.

• The termination-for-Cause provisions under Section 13.1 of the TSA, which permitted either party to terminate the agreement upon the occurrence of a material breach by the other party, subject to compliance with the cure notice requirements of Section 13.2.

• The cure notice requirements under Section 13.2, which required the non-breaching party to provide written notice specifying the nature of the breach in reasonable detail, and which afforded the breaching party a period of thirty (30) calendar days to cure the identified breach or breaches.

Kirkwood testified that she understood these provisions and applied them in her day-to-day management of the VTS relationship. She stated that she relied on the SLO metrics in particular as the primary means of evaluating VTS's performance, and that she regularly reviewed the performance data available through VTS's Carrier Performance Portal.

III. VTS PERFORMANCE DETERIORATION — Q3 AND Q4 2021 (APPROXIMATE TRANSCRIPT PAGES 36–82)

A. Q3 2021 Performance

Kirkwood testified that she began receiving reports from members of Stonefield's operations team in approximately August 2021 indicating that VTS's tender acceptance rates were declining on certain lanes. She stated that the initial reports came from her regional carrier managers, who flagged an increase in the frequency with which VTS was rejecting load tenders on several lanes, resulting in those loads being cascaded to backup carriers or, in some cases, going unfilled for extended periods. Kirkwood testified that the affected lanes during this initial period were primarily Secondary Lanes (Lanes 8 through 14), though she noted that she also observed early signs of declining tender acceptance on one or two Primary Lanes by late August 2021.

Kirkwood stated that she raised these performance concerns directly with Derek Pruitt at VTS in phone calls and emails during August and September 2021. She testified that her initial communications with Pruitt were collegial in tone, reflecting her expectation that the issues were temporary and could be resolved through operational coordination. She described Pruitt as "responsive" to her inquiries during this period but noted that his responses were generally non-specific.

Pruitt attributed the declining tender acceptance rates to a nationwide driver shortage that was affecting the trucking industry broadly during the summer and fall of 2021. He assured Kirkwood that VTS was "working on it" and represented that VTS was engaged in active driver recruitment and retention efforts to restore capacity. Kirkwood testified that she found these explanations plausible at the time, given the widely reported driver shortage in the industry, and that she did not yet have reason to believe VTS was making internal decisions to reallocate capacity away from the Stonefield account.

B. Q4 2021 Performance Collapse

Kirkwood testified that by October 2021, VTS's performance had deteriorated dramatically and was failing across all five SLO categories. She described the Q4 2021 performance as a "collapse" that went far beyond the localized tender acceptance issues she had observed in Q3 2021. She stated that the deterioration was evident from the real-time data available through VTS's Carrier Performance Portal and from the reports her team was generating internally.

Kirkwood confirmed the accuracy of the Q4 2021 performance data that was included in the Cure Notice issued by Raymond Hess on January 18, 2022 (Kirkwood Deposition Exhibit 3). Specifically, she confirmed the following metrics for VTS's Q4 2021 performance:

• On-time pickup rate: 78.2%, versus the contractual SLO of 95%. Kirkwood characterized this as "severely below standard" and testified that this level of missed pickups was causing cascading delays throughout Stonefield's distribution network.

• On-time delivery rate: 81.6%, versus the contractual SLO of 93%. Kirkwood testified that the late delivery rate was resulting in direct complaints from Stonefield's end customers and that several major retail accounts had escalated their concerns to Stonefield's commercial team.

• Tender acceptance rate: 71.4%, versus the contractual SLO of 90%. Kirkwood testified that this represented a precipitous decline from the historical tender acceptance rates, which had consistently exceeded 92% during the first two contract years.

• Equipment availability: Approximately 62% of the committed fleet capacity, equating to approximately 248 tractors available against the contractual commitment of 400 tractors. Kirkwood testified that the shortfall of approximately 152 tractors was "staggering" and that it was the single largest driver of the performance failures across the other SLO categories.

• Cargo claims: Sixteen (16) documented cargo claims filed during November and December 2021, totaling $387,400 in claimed damages. Kirkwood testified that this yielded a claims ratio of approximately 1.07% of total shipment value for the period, against the contractual SLO of no greater than 0.5%. She stated that the increase in claims was consistent with the overall degradation in VTS's operations — rushed loadings, unfamiliar substitute drivers, and inadequate equipment maintenance all contributed to a higher incidence of cargo damage and loss.

Kirkwood testified that these metrics were derived from VTS's own Carrier Performance Portal data, a web-based platform maintained by VTS to which both parties had access under the terms of the TSA. She stated that the data in the Portal was generated from electronic tendering records, GPS tracking, proof-of-delivery confirmations, and claims filings, and that both Stonefield and VTS relied on the Portal data as the authoritative source for SLO compliance reporting.

Kirkwood described the impact of VTS's performance failures on Stonefield's customers as "significant." She testified that late deliveries and missed pickups disrupted the supply chains of several of Stonefield's largest retail and manufacturing clients, and that Stonefield's customer service team was fielding an elevated volume of complaints. She stated that Stonefield was forced to "scramble for alternative capacity on short notice" to cover loads that VTS was rejecting or failing to service, which resulted in higher spot-market freight costs and operational inefficiency. She noted that during Q4 2021, her team was spending the majority of its time on VTS-related firefighting rather than on its broader carrier management responsibilities.

C. Communications with Vantor Regarding Performance Issues

Kirkwood testified at length regarding her communications with Vantor/VTS personnel about the performance deterioration during Q4 2021. She stated that she raised her concerns with Derek Pruitt on multiple occasions, both by telephone and by email, and that the tenor of these communications shifted from collegial concern to increasing frustration as the quarter progressed without improvement.

She testified that Pruitt acknowledged what he characterized as "challenges" in VTS's operations but consistently attributed them to external market factors, including the ongoing nationwide driver shortage, elevated fuel costs, and supply chain disruptions affecting the broader transportation industry. Kirkwood stated that Pruitt did not, at any point during their Q4 2021 communications, acknowledge or disclose that VTS had made an internal decision to reallocate fleet assets away from the Stonefield account.

Kirkwood testified specifically that she was not informed by anyone at Vantor, VTS, or any other source that VTS had pulled approximately 85 tractors off the Stonefield dedicated lanes in order to cover commitments to other customers. This testimony directly referenced the substance of the internal Vantor/VTS email dated November 12, 2021, from Sandra Milescu (COO) to Nikolai Vantorovich (CEO), produced in discovery and bearing Bates number VHC-008417, in which Milescu described the redeployment of tractors from the Stonefield account to the Northwind Distribution Co. account. Kirkwood testified that she first learned of this fleet redeployment only through the document productions in this litigation and that she was "shocked" when she read the email.

She stated that had she been informed of the redeployment at the time, she would have immediately escalated the issue to Carlos Medina and Tobias Wren (General Counsel) and that Stonefield would have treated it as a material breach warranting an immediate cure notice. She testified that VTS's failure to disclose the redeployment while simultaneously blaming external market factors for its performance failures was, in her view, "fundamentally dishonest."

IV. THE SEPTEMBER 22, 2021 INTERNAL EMAIL (APPROXIMATE TRANSCRIPT PAGES 83–142)

A. CRS's Examination Approach

This was the most heavily examined area of the deposition by a significant margin. Harrison Caldwell devoted approximately ninety (90) minutes of examination to this single document and its surrounding circumstances. His examination was methodical, returning to the email's language repeatedly from different angles and attempting to establish through Kirkwood's testimony that the email reflected a pre-formed corporate intent to terminate the TSA. He read the key phrases of the email aloud on the record on at least four separate occasions. The email was marked as Kirkwood Deposition Exhibit 7 (Bates No. SLG-017842).

B. Content of the Email

The email at issue was dated September 22, 2021 and was sent by Janet Kirkwood to Carlos Medina, Senior Vice President, Operations, at Stonefield. The email was a brief, informal internal communication. It did not include any other recipients on the "To," "CC," or "BCC" lines. The full text of the body of the email, as read into the record, stated:

"Carlos — 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."

The email did not include any attachments. Kirkwood testified that she did not recall receiving a written response from Medina to this specific email, though she stated that she and Medina discussed VTS performance issues verbally on a regular basis during this period.

C. Kirkwood's Testimony Regarding the Email

Kirkwood acknowledged authoring the email and confirmed its contents without equivocation. She did not attempt to dispute authorship, question the accuracy of the document, or suggest that it had been taken out of context in any way that altered its literal meaning.

She testified that the email reflected her personal frustration with VTS's declining performance at that point in time, particularly the increasing frequency of tender rejections on Secondary Lanes that were forcing Stonefield's operations team to find alternative capacity on short notice. She described the email as the type of informal internal communication she might send to a colleague at the end of a difficult day and stated that it was not intended as a formal recommendation or policy directive.

Regarding the phrase "moving volume to Cascade and Briarwood on Lanes 8–14":

Kirkwood testified that Lanes 8 through 14, as referenced in the email, were classified as "Secondary Lanes" under Schedule C, Section 2(b) of the TSA. She stated that Secondary Lanes were expressly not subject to the exclusivity restrictions applicable to the fourteen "Primary Lanes" designated under Schedule C, Section 2(a), and that Stonefield retained full contractual authority to engage alternative carriers on Secondary Lanes at its discretion.

She testified that the volume being moved to Cascade Freight Systems Inc. and Briarwood Trucking Co. on those Secondary Lanes was being redirected specifically because VTS was rejecting tenders on those lanes at an unacceptable rate. In other words, Stonefield was backfilling capacity that VTS was failing to provide, not proactively diverting committed freight from VTS to other carriers. She characterized the volume shifts as a direct and necessary response to VTS's own service failures.

Kirkwood testified unequivocally that Stonefield did not divert any freight from VTS on any of the fourteen Primary Lanes to Cascade, Briarwood, or any other carrier during the relevant period. She stated that the Primary Lane exclusivity provisions of the TSA were respected at all times and that she would have been personally responsible for ensuring compliance with those provisions given her role.

On cross-examination, Caldwell pressed Kirkwood on whether she was "certain" that the volume diversion was limited to Secondary Lanes. Kirkwood maintained her position firmly and without hesitation. She stated that she could identify the specific lane-by-lane tender records from Stonefield's transportation management system ("TMS") that would confirm the limitation of the diversion to Lanes 8 through 14, and she expressed confidence that those records would corroborate her testimony in full.

Regarding the phrase "pull the plug on the whole contract":

Kirkwood testified that this language was colloquial shorthand expressing her personal frustration with the trajectory of the VTS relationship. She stated that it was not a statement of corporate intent, not a formal recommendation to terminate, and not reflective of any decision that had been made at Stonefield to exit the TSA.

She testified that no decision to terminate the TSA had been made as of September 22, 2021. She stated that the actual decision to issue the Cure Notice under Section 13.2 of the TSA was not made until early January 2022, approximately four months after the email, and that the decision was reached only after the Q4 2021 performance data confirmed sustained, severe service failures across all five SLO categories.

On cross-examination, Caldwell suggested that the email demonstrated Stonefield had a "predetermined plan" to exit the contract and that subsequent events — including the issuance of the Cure Notice and the termination — were merely the execution of a plan set in motion no later than September 2021. Kirkwood denied this characterization. She testified that the email was an expression of concern and frustration, not a plan, and that Stonefield's actual hope at that point was that VTS would improve its performance and avoid the need for any formal contractual remedies. She stated that Stonefield continued to tender loads to VTS on all lanes — including the Primary Lanes — throughout Q4 2021 and into January 2022, which she stated was inconsistent with the notion of a predetermined plan to exit.

Caldwell also suggested that the phrase "pull the plug" indicated Stonefield was actively looking for a pretext to terminate the contract, perhaps motivated by the upcoming rate adjustment (discussed in Section VI below). Kirkwood disagreed with this characterization. She testified that the cure notice and termination process that Stonefield ultimately pursued followed the contractual requirements of Sections 13.1 and 13.2 of the TSA and was based on objectively documented, quantifiable performance failures across all five SLO metrics — not on any pretext or manufactured justification.

D. Assessment of Testimony on the Email

Kirkwood's testimony on the September 22, 2021 email was consistent with her witness preparation and with the defense position that the volume diversion was limited to Secondary Lanes and constituted a reactive response to VTS's own tender rejections. She did not waver under sustained pressure from Caldwell, and her demeanor during this portion of the deposition was calm, direct, and credible.

The "pull the plug" language remains a meaningful risk factor in this case. Despite Kirkwood's effective contextualization of the phrase as frustrated venting rather than a corporate decision, the language is undeniably vivid and can be characterized by Vantor as evidence of premeditated termination planning that predated the formal cure process by approximately four months. Vantor will almost certainly cite this email prominently in its opposition to summary judgment and, if the case proceeds to trial, will likely display it for the jury.

However, several factors mitigate the risk of the email:

1. The four-month gap between the email (September 22, 2021) and the issuance of the Cure Notice (January 18, 2022) supports the argument that no termination decision was made as of the date of the email and that the Cure Notice was issued only after the accumulation of additional, more severe performance data in Q4 2021.

2. Kirkwood's testimony that Stonefield continued to tender loads to VTS on all lanes — including Primary Lanes — throughout Q4 2021 is inconsistent with the notion of a predetermined exit plan.

3. The email expressly references Lanes 8 through 14, which are Secondary Lanes not subject to exclusivity, reinforcing the defense position that the volume shifts described in the email did not constitute a breach of the TSA.

4. The email is addressed to a single recipient (Carlos Medina) and reads as an informal, personal expression of frustration rather than a formal business recommendation or directive.

Recommendation: In summary judgment briefing, address this email head-on rather than attempting to minimize it. Argue that: (i) the email reflects Kirkwood's awareness of deteriorating VTS performance, not a termination plan; (ii) Stonefield gave VTS four additional months to improve its performance before issuing the Cure Notice; (iii) the volume shifts described in the email were limited to Secondary Lanes and were contractually permissible; and (iv) under New York law, subjective frustration on the part of the non-breaching party does not negate objective Cause for termination where the contractual grounds for termination are independently satisfied. See Research Memorandum — Pretext and Good Faith in Termination for Cause (October 7, 2022).

V. VOLUME DIVERSION TO CASCADE FREIGHT SYSTEMS AND BRIARWOOD TRUCKING (APPROXIMATE TRANSCRIPT PAGES 143–178)

A. Factual Testimony

Kirkwood testified in detail regarding Stonefield's engagement of Cascade Freight Systems Inc. ("Cascade"), headquartered in Columbus, Ohio, and Briarwood Trucking Co. ("Briarwood"), headquartered in Arlington, Virginia, to handle freight on Lanes 8 through 14 during the period beginning in approximately August or September 2021.

She confirmed that Lanes 8 through 14 were classified as "Secondary Lanes" under Schedule C, Section 2(b) of the TSA and were expressly not subject to the exclusivity restrictions that governed the fourteen Primary Lanes under Section 4.1(a). She stated that both Cascade and Briarwood were existing approved carriers within Stonefield's 12,000-carrier network, and that engaging them on these Secondary Lanes did not require any new contractual arrangements or special authorization — it was within the ordinary course of Stonefield's operations.

Kirkwood testified that the decision to utilize alternative carriers on Lanes 8 through 14 was made because VTS's tender acceptance rate on those specific lanes had dropped below 65% during the August–September 2021 period, leaving Stonefield with unfilled loads and resulting in customer service failures. She stated that Stonefield's operations team was experiencing repeated instances in which VTS would reject tenders on these lanes, forcing Stonefield to scramble for alternative capacity on the spot market at premium rates or, in some cases, to notify customers of delays.

Kirkwood characterized the decision to use Cascade and Briarwood on these lanes as "reactive, not strategic." She testified: "We were filling gaps that VTS was leaving. We weren't redirecting committed freight. We were picking up loads that VTS was refusing to carry." She stated that Stonefield would have preferred to continue using VTS on all lanes, including the Secondary Lanes, if VTS had been accepting tenders and performing at contractual levels.

B. Cross-Examination on Exclusivity

Caldwell devoted significant attention to the exclusivity issue during this portion of the deposition. His primary objective appeared to be establishing that at least some of the freight moved to Cascade and Briarwood may have originated on, or geographically overlapped with, origin-destination pairs associated with Primary Lanes, thereby constituting a breach of the exclusivity provisions under Section 4.1(a) of the TSA.

Kirkwood denied any such overlap. She testified that each lane designation under Schedule C was defined by specific origin and destination zip code clusters, and that the Primary Lane and Secondary Lane designations were mutually exclusive — there was no geographic overlap between any Primary Lane origin-destination pair and any Secondary Lane origin-destination pair. She further testified that Stonefield's transportation management system ("TMS") tracked each individual shipment by lane designation based on the origin and destination zip codes, and that the TMS records would definitively show that no Primary Lane freight was diverted to Cascade, Briarwood, or any other alternative carrier during the relevant period.

Caldwell attempted to explore whether individual shipments could be reclassified from one lane to another within the TMS, or whether a load originating at a Primary Lane origin could be routed through a different destination to fall within a Secondary Lane classification. Kirkwood testified that the TMS assigned lane designations automatically based on the actual origin and destination of each shipment, that the designations were not subject to manual override by operations personnel, and that any attempt to manipulate lane classifications would be detectable through the system's audit logs.

Note: The subpoena responses from Cascade (received and analyzed by Calderwood & Harkness on August 1, 2023) and Briarwood (received and analyzed on August 3, 2023) corroborate Kirkwood's testimony on this point. Both third-party productions include complete shipment records for all Stonefield-tendered loads handled by each carrier during the relevant period, and both confirm that Stonefield's usage of Cascade and Briarwood was limited exclusively to Lanes 8 through 14 (Secondary Lanes). No shipment records from either carrier reflect origin-destination pairs corresponding to any Primary Lane designation under Schedule C.

C. Assessment. Kirkwood's testimony on the volume diversion issue strongly supports the defense position that no exclusivity violation occurred. She was unequivocal in her denial of any Primary Lane diversion, she identified objective, verifiable records (the TMS data) that would corroborate her testimony, and her testimony is independently confirmed by the Cascade and Briarwood third-party subpoena responses.

Combined with the third-party documentary evidence, this area should be a strong candidate for summary judgment. The defense can argue that the undisputed facts demonstrate that Stonefield's use of Cascade and Briarwood was limited to Secondary Lanes, was contractually permissible, and was directly responsive to VTS's own failure to accept tenders — the very opposite of an exclusivity breach.

VI. RATE ADJUSTMENT MOTIVE (APPROXIMATE TRANSCRIPT PAGES 179–225)

A. CRS's Theory

CRS devoted a substantial portion of the afternoon session to a line of questioning designed to establish that Stonefield's true motive for terminating the TSA was to avoid the upcoming rate adjustment scheduled to take effect on April 1, 2022 under the Rate Adjustment Mechanism set forth in Section 5.3 of the TSA. This theory is central to Vantor's broader narrative that the termination was pretextual — i.e., that Stonefield seized upon VTS's performance issues as a convenient justification to exit a contract that was about to become significantly more expensive.

The projected rate increase under the Section 5.3 mechanism was approximately 14.3%, which would have moved the weighted average per-mile rate under the TSA from $2.87 to $3.28. According to the Ashford Meridian LLP rate adjustment analysis memorandum dated February 2022 (Kirkwood Deposition Exhibit 8), this increase would have added approximately $6.2 million in annual transportation costs to Stonefield's logistics spend.

B. Kirkwood's Testimony

Kirkwood acknowledged that she was aware, as of late 2021 or early 2022, that the upcoming April 2022 rate adjustment would result in a significant increase in per-mile rates under the TSA. She testified that she understood the Rate Adjustment Mechanism in Section 5.3 to be a contractual provision that automatically adjusted rates based on an agreed index and formula, and that she was generally familiar with the magnitude of the expected increase.

She testified that she had seen the Ashford Meridian LLP rate adjustment analysis memorandum dated February 2022 (Exhibit 8), which calculated the projected 14.3% rate increase and the associated $6.2 million annual cost impact. However, she could not recall the precise date on which she first reviewed the memorandum. She stated that she may have received it from Carlos Medina or from Tobias Wren (General Counsel) but was not certain of the source or the exact timing.

Kirkwood acknowledged that the projected $6.2 million annual cost increase was "significant" from a budgeting perspective and stated that any cost increase of that magnitude would be noticed within Stonefield's operations and finance teams. She did not attempt to minimize the financial significance of the rate adjustment.

On whether the rate adjustment motivated the termination decision:

Kirkwood denied that the rate adjustment influenced the decision to terminate the TSA. She testified clearly and without equivocation that the termination was based on VTS's failure to cure documented material breaches of the Service Level Obligations as set forth in the Cure Notice. She stated: "We terminated because they weren't performing. The rates had nothing to do with it."

On further questioning, Kirkwood elaborated on this point. She testified that Stonefield had honored rate adjustments under the TSA in prior contract years — specifically, the April 2020 rate adjustment and the April 2021 rate adjustment — without incident and without any discussion of terminating the contract in connection with those adjustments. She stated that Stonefield's position was that contractually mandated rate increases were "part of the deal" and that Stonefield had agreed to the Rate Adjustment Mechanism as a component of the overall commercial bargain when the TSA was negotiated and executed in 2019. She further stated that she was not aware of any discussion within Stonefield about using the rate adjustment as a reason to exit the contract.

Caldwell pressed Kirkwood on this point: "Isn't it true that Stonefield would have saved $6.2 million per year by terminating before the April adjustment took effect?" Kirkwood responded that she was not involved in financial modeling for the contract termination decision and that she did not participate in any analysis of the potential cost savings that might result from termination. She testified that cost savings from termination of the TSA were not discussed in any meeting she attended. She acknowledged the mathematical reality that termination before April 1, 2022 would have avoided the rate increase, but she denied that this financial consequence motivated or influenced the decision.

Caldwell also asked Kirkwood whether she had discussed the upcoming rate adjustment with anyone at Stonefield in the context of the termination decision. Kirkwood testified that she was aware of the rate adjustment as a general matter and that it may have come up in passing during discussions about the VTS account, but she denied that anyone at Stonefield — including Medina, Wren, or Hess — ever stated or suggested that the rate adjustment was a reason to terminate the contract or to accelerate the termination timeline.

C. Assessment. Kirkwood's testimony on the rate adjustment issue was cautious, measured, and generally favorable to the defense. She did not make any damaging admissions linking the termination decision to cost avoidance. She acknowledged what she could not plausibly deny — that she was aware of the rate adjustment and its magnitude — but firmly and consistently denied that the rate adjustment played any role in the termination decision. Her testimony that Stonefield honored prior-year rate adjustments without issue is an important data point that tends to undermine the inference that the 2022 adjustment was a termination motive.

However, the circumstantial timeline remains a legitimate concern that Vantor will continue to exploit. The chronology is as follows: the Cure Notice was issued on January 18, 2022; the thirty-day cure period expired on February 17, 2022; the termination letter was issued on March 4, 2022 — all before the April 1, 2022 effective date of the rate adjustment. While this timeline is fully consistent with a legitimate for-Cause termination based on VTS's performance failures, Vantor will argue that the proximity of the termination to the rate adjustment effective date is more than coincidental.

The defense position remains that objective Cause for termination existed independently of any cost motive, that the contractual requirements for termination for Cause were satisfied, and that New York law does not inquire into the subjective motive of the terminating party when valid contractual grounds for termination are present. See Research Memorandum — Pretext and Good Faith in Termination for Cause (October 7, 2022), which analyzes the relevant New York authorities and concludes that the implied covenant of good faith and fair dealing does not create a freestanding obligation to disregard financial considerations in exercising an express contractual right to terminate for Cause.

Recommendation: In summary judgment briefing, argue that: (i) the rate adjustment is legally irrelevant to the Cause analysis, because the TSA's termination-for-Cause provision turns on whether a material breach occurred and remained uncured, not on the terminating party's subjective motivations; (ii) Kirkwood's unrebutted testimony confirms that no one at Stonefield identified the rate adjustment as a reason for termination; (iii) even if Stonefield was aware of the financial benefit of termination — which any rational commercial actor would be — this does not render an otherwise valid for-Cause termination pretextual under New York law; and (iv) Stonefield's documented history of honoring prior-year rate adjustments is inconsistent with Vantor's theory that rate avoidance was the actual motive.

VII. THE CURE NOTICE AND TERMINATION PROCESS (APPROXIMATE TRANSCRIPT PAGES 226–270)

A. Kirkwood's Role in the Cure Notice Process

Kirkwood testified regarding her role in the discussions and decision-making process that led to the issuance of the Cure Notice on January 18, 2022. She stated that she was involved in discussions with Carlos Medina (SVP, Operations), Tobias Wren (General Counsel), and Raymond Hess (Director, Contract Compliance) regarding whether to issue a formal cure notice to VTS under Section 13.2 of the TSA.

She testified that the decision to issue the Cure Notice was made in early January 2022, after the group reviewed the finalized Q4 2021 performance data and concluded that VTS's failures were sustained, severe, and covered all five SLO categories. She described the decision as deliberate and data-driven, stating that the group discussed whether the performance issues were likely to be temporary or structural and concluded that the magnitude and breadth of the failures — affecting on-time pickup, on-time delivery, tender acceptance, equipment availability, and cargo claims simultaneously — indicated a systemic problem that was unlikely to self-correct.

Kirkwood testified that Raymond Hess prepared the Cure Notice with substantive input from Ashford Meridian LLP, and specifically from Lorraine Beckwith, Partner in the Commercial Contracts practice group at Ashford Meridian. She stated that the decision was made to have Hess, as Director of Contract Compliance, send the notice rather than having it issued from the legal department, because the Cure Notice was framed as an operational and contractual compliance communication rather than a legal demand.

She confirmed that the Cure Notice, dated January 18, 2022, was sent by Raymond Hess to Sandra Milescu (COO, Vantor/VTS) by both email and Sundial Data Systems overnight delivery. The Cure Notice identified the five SLO categories in which VTS had failed to meet its contractual obligations during Q4 2021, set forth the specific performance data for each category, and stated that VTS had thirty (30) calendar days from receipt to cure the identified material breaches in accordance with Section 13.2 of the TSA.

B. Cure Period and Vantor's Response

Kirkwood testified that she was aware of Vantor's written response to the Cure Notice, which was dated February 14, 2022 and was sent by Derek Pruitt on behalf of Vantor/VTS. The response was approximately four pages in length and acknowledged what Pruitt characterized as "operational challenges" during Q4 2021. However, the response also asserted that VTS's performance failures were caused, in significant part, by Stonefield's own conduct — specifically, by what Vantor characterized as volume shortfalls and the diversion of freight to alternative carriers in violation of the exclusivity provisions of the TSA.

Kirkwood testified that she disagreed with Vantor's characterization of the causes of VTS's performance failures. She stated that VTS's performance deterioration predated any volume shifts by Stonefield to Cascade or Briarwood, and that the performance failures were attributable to VTS's own internal decision to redeploy fleet assets to other customers — a decision that, as noted above, VTS did not disclose to Stonefield at the time. She testified that Vantor's response was, in her view, an attempt to deflect responsibility for its own service failures and to shift blame to Stonefield.

Kirkwood testified that during the thirty-day cure period (January 18 through February 17, 2022), she did not observe any meaningful improvement in VTS's service metrics. She stated that her team continued to monitor VTS's performance through the Carrier Performance Portal and through Stonefield's internal TMS data, and that the metrics remained substantially below the contractual SLO thresholds throughout the cure period. She testified that VTS did not communicate any specific remediation plan to Stonefield during the cure period, nor did VTS request an extension of the cure period.

On cross-examination, Caldwell asked Kirkwood whether Stonefield gave VTS any additional time beyond the contractual thirty-day cure period to bring its performance into compliance. Kirkwood testified that the TSA required thirty (30) calendar days and that Stonefield was not contractually obligated to extend the cure period beyond that timeframe. She confirmed that Stonefield did not voluntarily extend the cure period. She stated that, in her view, the severity of the performance failures — particularly the equipment availability shortfall representing approximately 152 missing tractors — was such that a thirty-day cure period was, if anything, generous, and that VTS's failure to make any demonstrable progress during that period confirmed the structural nature of the problem.

C. Termination Decision

Kirkwood testified that the decision to terminate the TSA was made by Tobias Wren (General Counsel) and Marcus Denton (Chief Executive Officer), with input from the operations team including Kirkwood herself and Carlos Medina. She described the decision as a "last resort" and testified that the group discussed whether there were any alternatives to termination, including the possibility of a revised service agreement or a phased wind-down, before concluding that VTS's performance failures were too severe and too deeply embedded to justify continuing the relationship.

She confirmed that the termination letter was sent on March 4, 2022 by Tobias Wren to Vantor Holdings Corp. and Vantor Transport Services LLC. The letter stated that VTS had failed to cure the material breaches identified in the January 18, 2022 Cure Notice within the thirty-day cure period, and that the TSA was terminated effective immediately for failure to cure material breaches under Section 13.1(a). Kirkwood testified that the termination letter was sent by both email and Sundial Data Systems overnight delivery, consistent with the notice provisions of the TSA.

Kirkwood testified that she believed the termination was justified based on the severity and persistence of VTS's performance failures. She stated that, in her professional judgment, VTS had demonstrated an inability — or, in light of the fleet redeployment she later learned about through discovery, an unwillingness — to meet its contractual obligations, and that continuing the relationship would have caused further harm to Stonefield's customers and commercial reputation.

VIII. STONEFIELD'S VOLUME TENDERING (APPROXIMATE TRANSCRIPT PAGES 271–298)

A. Annual Committed Volume — Contract Year 2

Kirkwood testified regarding Stonefield's volume tendering obligations under the TSA and the extent to which Stonefield met those obligations during the relevant contract years.

She confirmed that the Annual Committed Volume ("ACV") under the TSA was $43.2 million per contract year, representing the aggregate dollar value of transportation services that Stonefield committed to tender to VTS annually. She testified that the ACV was a revenue commitment from Stonefield to VTS, intended to provide VTS with a predictable base of business in exchange for VTS's commitment to maintain dedicated fleet capacity and meet the Service Level Obligations.

Regarding Contract Year 2 (April 2020 through March 2021), Kirkwood confirmed that Stonefield tendered approximately $31.8 million in transportation charges to VTS. She acknowledged that this figure was below the unadjusted ACV of $43.2 million, but testified that the shortfall was attributable to the extraordinary impact of the COVID-19 pandemic on freight demand during the first half of the contract year.

Kirkwood testified that Stonefield invoked the force majeure clause set forth in Section 12.1 of the TSA for the period from April 2020 through September 2020 (six months) due to the effects of the COVID-19 pandemic on Stonefield's freight volumes. She stated that the force majeure invocation was documented in writing and communicated to VTS in accordance with the notice provisions of the TSA. She testified that the adjusted ACV for Contract Year 2, reflecting the six-month force majeure period, was $21.6 million (calculated as $43.2 million multiplied by 6/12, representing the non-force-majeure portion of the contract year). She confirmed that Stonefield's actual tenders of approximately $31.8 million exceeded the adjusted ACV minimum by approximately $10.2 million, which she characterized as strong performance given the economic environment.

B. Contract Year 3 Volume Tenders

Regarding Contract Year 3 (April 2021 through January 2022, when the TSA was terminated), Kirkwood testified that Stonefield tendered approximately $36.5 million in transportation charges to VTS over the approximately ten-month period before the contract was terminated.

On cross-examination, Caldwell highlighted the fact that $36.5 million in charges over ten months of a $43.2 million annual commitment suggested a potential shortfall. Caldwell attempted to annualize the figure, suggesting that at the ten-month rate, Stonefield was on pace for approximately $43.8 million for the full year — but he also questioned whether Stonefield's monthly tender volumes had been declining in the months immediately preceding termination, which could suggest a lower annualized figure if the trend continued.

Kirkwood responded that the contract year had not been completed when the TSA was terminated and that any annualization of the figure would be speculative. She testified that Stonefield's tender rate had actually been increasing in the months prior to termination as freight markets recovered from pandemic-era disruptions, and that she believed Stonefield would have met or exceeded the $43.2 million ACV had the contract year been completed. She denied that any volume shortfall during CY3 was intentional or designed to undermine VTS's business or provide a pretext for termination.

Kirkwood also noted that a significant portion of the loads that Stonefield attempted to tender to VTS during Q3 and Q4 2021 were rejected by VTS — loads that Stonefield would have counted toward the ACV had VTS accepted and transported them. She testified that tender rejections by VTS should not be counted against Stonefield's volume commitment, as Stonefield could not force VTS to accept loads that VTS was refusing to carry.

IX. KEY EXHIBITS REVIEWED DURING DEPOSITION

The following fourteen exhibits were marked during the Kirkwood deposition. Key exhibits are discussed in the relevant substantive sections of this memorandum as indicated below.

X. OBJECTIONS AND INSTRUCTIONS NOT TO ANSWER

Patrick Gallagher raised objections to form on approximately twelve (12) occasions during the deposition. These objections were made in the ordinary course and addressed issues such as compound questions, questions assuming facts not in evidence, and questions calling for legal conclusions. None of the objections resulted in sustained disputes or colloquy that materially interrupted the examination, and the witness answered the underlying questions in each instance subject to the objection being preserved on the record.

Gallagher instructed Kirkwood not to answer on two (2) occasions. Both instructions related to questions posed by Caldwell that sought the substance of communications between Stonefield personnel and counsel at Ashford Meridian LLP during the cure period (January through February 2022). Specifically, Caldwell asked Kirkwood to describe the content of a conversation she had with Lorraine Beckwith of Ashford Meridian regarding the sufficiency of VTS's cure-period response, and subsequently asked whether Ashford Meridian had provided Stonefield with legal advice regarding the termination decision. Gallagher objected on the basis of attorney-client privilege and instructed the witness not to answer. These communications are the subject of an ongoing privilege dispute. See Privilege Dispute Memorandum — Vantor Challenge to Privilege Log Entries 312–318 (June 20, 2023).

Caldwell reserved the right to move to compel Kirkwood's testimony on those questions but did not, as of the conclusion of the deposition, indicate a specific timeline for filing such a motion. As of the date of this memorandum, no motion to compel has been filed on these questions.

XI. COMPARISON TO DEPOSITION PREPARATION AND EXPECTED TESTIMONY

Kirkwood's testimony was consistent with the positions and themes developed during the witness preparation session held on July 11, 2023 with Patrick Gallagher and Samuel Eklund. There were no material deviations from her prepared positions and no unexpected admissions or surprises.

Specifically:

• September 22, 2021 email: Kirkwood followed the preparation guidance to acknowledge authorship of the email without hesitation, contextualize the language as an expression of personal frustration with VTS's declining performance, emphasize that the volume diversion referenced in the email was limited to Secondary Lanes (8–14), and deny that any corporate decision to terminate the TSA had been made as of that date. Her testimony on this topic was disciplined and consistent.

• Rate adjustment awareness: Kirkwood followed the preparation guidance to acknowledge her general awareness of the upcoming rate adjustment and its magnitude, while firmly denying any causal link between the rate adjustment and the termination decision. She appropriately limited her testimony to what she personally knew and observed, declining to speculate about the motivations of other Stonefield decision-makers.

• Volume diversion to Cascade and Briarwood: Kirkwood testified consistently with the prepared position that the diversion was limited to Secondary Lanes, was reactive to VTS's tender rejections, and did not violate the exclusivity provisions of the TSA.

• Cure notice and termination process: Kirkwood accurately described her role in the process, identified the key participants, and confirmed the timeline — all consistent with the documented record and her preparation.

No material deviations from prepared positions were observed. No unexpected admissions or surprises occurred during the deposition.

XII. SUMMARY OF KEY ADMISSIONS AND FAVORABLE TESTIMONY

A. Testimony Favorable to Stonefield

The following are the principal favorable points established through Kirkwood's testimony:

1. Performance failures were real and documented. Kirkwood confirmed that VTS's performance failures across all five SLO categories in Q4 2021 were real, sustained, severe, and documented through VTS's own Carrier Performance Portal data. The failures were not minor or marginal — on-time pickup was 78.2% against a 95% threshold, tender acceptance was 71.4% against a 90% threshold, and equipment availability was approximately 62% against an 85% threshold. This testimony supports the defense position that objective Cause for termination existed.

2. Volume diversion was limited to Secondary Lanes. Kirkwood testified unequivocally that the volume moved to Cascade Freight Systems Inc. and Briarwood Trucking Co. was limited to Lanes 8 through 14 (Secondary Lanes) and was responsive to VTS's own tender rejections on those lanes. She denied any diversion of Primary Lane freight. This testimony, corroborated by the Cascade and Briarwood third-party subpoena responses, strongly supports the defense against Vantor's exclusivity breach claim.

3. VTS concealed the fleet redeployment. Kirkwood testified that she was not informed by anyone at Vantor or VTS that VTS had pulled approximately 85 tractors off the Stonefield dedicated lanes and redeployed them to the Northwind Distribution Co. account. She learned of this redeployment only through discovery. This testimony supports the defense's first-to-breach argument and tends to undermine VTS's credibility.

4. The September 22 email reflected frustration, not a decision. Kirkwood effectively contextualized the "pull the plug" language as a colloquial expression of personal frustration, not a statement of corporate intent. She testified that no decision to terminate the TSA was made until early January 2022, approximately four months later, and only after Q4 2021 performance data confirmed sustained, severe SLO failures.

5. The termination was performance-based, not rate-driven. Kirkwood denied that the upcoming rate adjustment played any role in the termination decision. She testified that cost savings from termination were not discussed in any meeting she attended and that Stonefield had honored prior-year rate adjustments without incident.

6. Force majeure reduced the CY2 ACV obligation. Kirkwood testified that Stonefield's invocation of the force majeure clause for the April–September 2020 period was properly documented, reducing the adjusted ACV for Contract Year 2 to $21.6 million. Stonefield's actual tenders of $31.8 million exceeded this adjusted threshold by $10.2 million, negating any claim of a volume shortfall in CY2.

B. Areas of Concern / Potentially Adverse Testimony

The following areas of Kirkwood's testimony present potential risks or may be exploited by Vantor:

1. "Pull the plug" language. The September 22, 2021 email remains a risk factor notwithstanding Kirkwood's effective contextualization. The phrase "pull the plug on the whole contract" is vivid, unambiguous in its ordinary meaning, and was authored by the Stonefield executive with primary responsibility for the VTS relationship. Vantor will characterize this as evidence of premeditated exit intent that predated the formal cure process by approximately four months. While Kirkwood's explanation was credible, the email will require proactive treatment in summary judgment briefing and, if the case proceeds to trial, in Kirkwood's direct examination.

2. Awareness of rate adjustment magnitude. Kirkwood acknowledged awareness of the upcoming 14.3% rate increase and its $6.2 million annual cost impact. While she firmly denied that the rate adjustment influenced the termination decision, Vantor may argue that the combination of Kirkwood's awareness, the circumstantial timing of the termination relative to the April 1, 2022 effective date, and the financial magnitude of the avoided cost creates an inference of pretext that should survive summary judgment. The defense will need to counter this inference with both legal argument (irrelevance of subjective motive under NY law) and factual argument (prior-year adjustments honored; no evidence of cost-avoidance discussions).

3. CY3 volume shortfall. Kirkwood acknowledged that Contract Year 3 tenders totaled approximately $36.5 million against a $43.2 million ACV, which Vantor may characterize as a significant volume shortfall that itself constituted a breach of Stonefield's obligations under the TSA. While Kirkwood persuasively explained that the contract year was not completed at the time of termination and that Stonefield's tender volumes were increasing, the force majeure argument that mitigated the CY2 shortfall does not apply to CY3, and Vantor may argue that the CY3 shortfall is evidence that Stonefield was already pulling back from its volume commitments before issuing the Cure Notice. Detailed lane-level tender data from the TMS should be prepared to rebut this characterization.

XIII. RECOMMENDATIONS FOR SUMMARY JUDGMENT AND TRIAL PREPARATION

Based on the testimony elicited during the Kirkwood deposition, the following recommendations are made for summary j

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
DEPOSITION SUMMARY — JANET KIRKWOOD
July 20, 2023
Matter: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
Calderwood & Harkness LLP Matter No.: 1012-00005
Prepared By: Simone Laroche, Associate, Litigation (General)
Distributed To: Samuel Eklund, Responsible Partner; Patrick Gallagher, Lead Associate
Classification: PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
Re: Summary and Analysis of Deposition of Janet Kirkwood, Vice President, Carrier Relations, Stonefield Logistics Group Inc.
I. DEPOSITION OVERVIEW
Witness: Janet Kirkwood, Vice President, Carrier Relations, Stonefield Logistics Group Inc.
Date of Deposition: July 14, 2023
Location: Offices of Calderwood & Harkness LLP, 200 Park Avenue, 38th Floor, New York, NY 10166
Duration: Approximately 6.5 hours (including two scheduled breaks and one additional break requested by witness)
Examining Counsel: Harrison Caldwell, Named Partner, Caldwell Royce & Shapiro LLP ("CRS") (on behalf of Plaintiff Vantor Holdings Corp.); Meredith Shapiro, Named Partner, CRS (present at counsel table throughout but did not examine the witness); Jason Whitford, Senior Associate, CRS (assisted Mr. Caldwell with exhibit management and document review)
Defending Counsel: Patrick Gallagher, Lead Associate, Calderwood & Harkness LLP; Samuel Eklund, Responsible Partner, Calderwood & Harkness LLP (present for the morning session and a portion of the afternoon session)
Court Reporter: Katherine M. Delvecchio, CSR, RPR, Ostrander Data Systems
Videographer: The deposition was recorded by videotape in addition to stenographic transcription. Videography was provided by Ostrander Data Systems.
Exhibits Marked: Fourteen (14) exhibits were marked during the deposition (Kirkwood Deposition Exhibits 1 through 14). Key exhibits are identified and discussed in detail in the relevant sections below and summarized in Section IX of this memorandum.
Witness Preparation: Ms. Kirkwood was prepared by Patrick Gallagher and Samuel Eklund during a session held at the offices of Calderwood & Harkness LLP on July 11, 2023. Preparation covered, among other topics, the September 22, 2021 internal email from Kirkwood to Carlos Medina, the volume diversion to Cascade Freight Systems Inc. and Briarwood Trucking Co., Kirkwood's awareness of the upcoming rate adjustment under Section 5.3 of the TSA, the cure notice process and associated timeline, and her role overseeing the Vantor/VTS carrier relationship on a day-to-day basis. See Witness Preparation Session Notes — Janet Kirkwood (July 11, 2023) (filed under Matter No. 1012-00005, work product).
Overall Assessment: Kirkwood performed well throughout the deposition. She was composed, direct, and largely consistent with her preparation. CRS focused heavily on two areas — the September 22, 2021 internal email and the rate adjustment motive — devoting a combined total of approximately three hours of examination to those topics. Kirkwood held up well under sustained cross-examination on both subjects. She did not volunteer information beyond what was asked, and she effectively contextualized potentially adverse language in the September 22 email without appearing evasive. Her testimony was credible and reinforced several key defense themes, including the objective severity of VTS's performance failures, the limitation of volume diversion to Secondary Lanes, and the absence of any causal link between the rate adjustment and the termination decision. Areas of concern are identified throughout this summary and consolidated in Section XII.B below.
II. BACKGROUND AND ROLE (APPROXIMATE TRANSCRIPT PAGES 8–35)
A. Professional Background
Kirkwood testified that she has served as Vice President, Carrier Relations at Stonefield Logistics Group Inc. since 2018. Prior to joining Stonefield, she held logistics management positions at two other companies over a period of approximately twelve years, including approximately seven years as Director of Carrier Operations at Pinnacle Supply Chain Solutions and approximately five years in progressively senior freight coordination roles at Caravel Intermodal Corp. She holds a bachelor's degree in supply chain management from Pennsylvania State University. She described her current role as encompassing full managerial responsibility for Stonefield's carrier network.
Kirkwood reports directly to Carlos Medina, Senior Vice President, Operations, at Stonefield. She testified that Mr. Medina is her sole direct supervisor and that she has reported to him continuously since she joined the company. She supervises a team of approximately fifteen individuals in the Carrier Relations department, including three regional carrier managers and associated support staff.
Her core responsibilities include managing relationships with Stonefield's carrier network of approximately 12,000 approved carriers, overseeing carrier compliance programs and onboarding processes, negotiating carrier contracts (including rate agreements and master transportation services agreements), and monitoring carrier performance against contractual service level obligations. She testified that she is involved in strategic decisions regarding carrier selection, carrier consolidation, and the expansion or reduction of carrier partnerships. She also testified that she participates in quarterly business reviews with major contract carriers and that she personally attends such reviews for Stonefield's top ten carriers by revenue, a group that included Vantor Transport Services LLC ("VTS") during the relevant period.
B. The Vantor/VTS Relationship
Kirkwood testified that she was the primary Stonefield executive responsible for the day-to-day management of the relationship with Vantor Transport Services LLC under the Transportation Services Agreement dated March 15, 2019 (Contract Reference No. SLG-VTS-2019-0315) (the "TSA"). She clarified that Vantor Holdings Corp. ("Vantor") is the parent company and VTS is the operating subsidiary that provided the transportation services under the TSA, though she used the terms somewhat interchangeably in practice, a usage she stated was common within Stonefield as well.
Kirkwood's primary counterpart at Vantor/VTS was Derek Pruitt, Vice President, Business Development. She testified that she and Pruitt communicated regularly — typically by phone two to three times per week and by email on an almost daily basis during periods of active operations. She also had regular interactions with Sandra Milescu, Chief Operating Officer of VTS, regarding operational issues that arose from time to time. Kirkwood testified that Milescu would become involved in discussions when issues escalated beyond routine operational matters, and that she and Milescu spoke approximately once or twice per month during the first two years of the contract, with the frequency increasing substantially during Q3 and Q4 2021.
Kirkwood described the relationship between Stonefield and VTS as "generally productive" during the first two contract years (April 2019 through March 2021). She testified that VTS met or exceeded most of the Service Level Obligations ("SLOs") set forth in the TSA during that period, and that the quarterly business reviews during those years were "constructive" and focused primarily on opportunities for volume growth rather than remediation of service failures. She stated that there were occasional performance issues — particularly during the initial six months of the contract as VTS onboarded drivers and established lane familiarity — but that those issues were resolved through normal operational channels and did not rise to the level of material concern.
However, Kirkwood testified that VTS's performance began to deteriorate noticeably beginning in the third quarter of 2021 (Q3 2021). She stated that the decline was initially limited to tender acceptance rates on certain lanes but became broader and more severe as the quarter progressed. By the fourth quarter of 2021 (Q4 2021), Kirkwood testified, the performance deterioration had become "severely problematic," affecting all five SLO categories and causing significant disruptions to Stonefield's customer commitments.
C. Knowledge of TSA Terms
Kirkwood confirmed her familiarity with the key provisions of the TSA. She testified that she reviewed the TSA at the time of its execution in March 2019, that she referred to it regularly in the course of her duties, and that she considered herself well-versed in its terms.
Specifically, Kirkwood confirmed familiarity with the following provisions:
• The five Service Level Obligations defined in Section 6.2 and Schedule B of the TSA: (i) on-time pickup rate of not less than 95%; (ii) on-time delivery rate of not less than 93%; (iii) cargo claims ratio of not greater than 0.5% of total shipment value per reporting period; (iv) tender acceptance rate of not less than 90%; and (v) equipment availability of not less than 85% of the committed fleet capacity of 400 tractors and 1,200 trailers.
• The lane classification system set forth in Schedule C of the TSA, which designated fourteen (14) "Primary Lanes" (Lanes 1 through 7 and associated return lanes) subject to exclusivity provisions under Section 4.1(a), and seven (7) "Secondary Lanes" (Lanes 8 through 14) that were not subject to exclusivity and on which Stonefield retained the right to engage alternative carriers.
• The distinction between Primary Lanes and Secondary Lanes as defined in Schedule C, Section 2(a) and Section 2(b), respectively, and the operational and contractual implications of that distinction, including the exclusivity restriction on Primary Lanes.
• The termination-for-Cause provisions under Section 13.1 of the TSA, which permitted either party to terminate the agreement upon the occurrence of a material breach by the other party, subject to compliance with the cure notice requirements of Section 13.2.
• The cure notice requirements under Section 13.2, which required the non-breaching party to provide written notice specifying the nature of the breach in reasonable detail, and which afforded the breaching party a period of thirty (30) calendar days to cure the identified breach or breaches.
Kirkwood testified that she understood these provisions and applied them in her day-to-day management of the VTS relationship. She stated that she relied on the SLO metrics in particular as the primary means of evaluating VTS's performance, and that she regularly reviewed the performance data available through VTS's Carrier Performance Portal.
III. VTS PERFORMANCE DETERIORATION — Q3 AND Q4 2021 (APPROXIMATE TRANSCRIPT PAGES 36–82)
A. Q3 2021 Performance
Kirkwood testified that she began receiving reports from members of Stonefield's operations team in approximately August 2021 indicating that VTS's tender acceptance rates were declining on certain lanes. She stated that the initial reports came from her regional carrier managers, who flagged an increase in the frequency with which VTS was rejecting load tenders on several lanes, resulting in those loads being cascaded to backup carriers or, in some cases, going unfilled for extended periods. Kirkwood testified that the affected lanes during this initial period were primarily Secondary Lanes (Lanes 8 through 14), though she noted that she also observed early signs of declining tender acceptance on one or two Primary Lanes by late August 2021.
Kirkwood stated that she raised these performance concerns directly with Derek Pruitt at VTS in phone calls and emails during August and September 2021. She testified that her initial communications with Pruitt were collegial in tone, reflecting her expectation that the issues were temporary and could be resolved through operational coordination. She described Pruitt as "responsive" to her inquiries during this period but noted that his responses were generally non-specific.
Pruitt attributed the declining tender acceptance rates to a nationwide driver shortage that was affecting the trucking industry broadly during the summer and fall of 2021. He assured Kirkwood that VTS was "working on it" and represented that VTS was engaged in active driver recruitment and retention efforts to restore capacity. Kirkwood testified that she found these explanations plausible at the time, given the widely reported driver shortage in the industry, and that she did not yet have reason to believe VTS was making internal decisions to reallocate capacity away from the Stonefield account.
B. Q4 2021 Performance Collapse
Kirkwood testified that by October 2021, VTS's performance had deteriorated dramatically and was failing across all five SLO categories. She described the Q4 2021 performance as a "collapse" that went far beyond the localized tender acceptance issues she had observed in Q3 2021. She stated that the deterioration was evident from the real-time data available through VTS's Carrier Performance Portal and from the reports her team was generating internally.
Kirkwood confirmed the accuracy of the Q4 2021 performance data that was included in the Cure Notice issued by Raymond Hess on January 18, 2022 (Kirkwood Deposition Exhibit 3). Specifically, she confirmed the following metrics for VTS's Q4 2021 performance:
• On-time pickup rate: 78.2%, versus the contractual SLO of 95%. Kirkwood characterized this as "severely below standard" and testified that this level of missed pickups was causing cascading delays throughout Stonefield's distribution network.
• On-time delivery rate: 81.6%, versus the contractual SLO of 93%. Kirkwood testified that the late delivery rate was resulting in direct complaints from Stonefield's end customers and that several major retail accounts had escalated their concerns to Stonefield's commercial team.
• Tender acceptance rate: 71.4%, versus the contractual SLO of 90%. Kirkwood testified that this represented a precipitous decline from the historical tender acceptance rates, which had consistently exceeded 92% during the first two contract years.
• Equipment availability: Approximately 62% of the committed fleet capacity, equating to approximately 248 tractors available against the contractual commitment of 400 tractors. Kirkwood testified that the shortfall of approximately 152 tractors was "staggering" and that it was the single largest driver of the performance failures across the other SLO categories.
• Cargo claims: Sixteen (16) documented cargo claims filed during November and December 2021, totaling $387,400 in claimed damages. Kirkwood testified that this yielded a claims ratio of approximately 1.07% of total shipment value for the period, against the contractual SLO of no greater than 0.5%. She stated that the increase in claims was consistent with the overall degradation in VTS's operations — rushed loadings, unfamiliar substitute drivers, and inadequate equipment maintenance all contributed to a higher incidence of cargo damage and loss.
Kirkwood testified that these metrics were derived from VTS's own Carrier Performance Portal data, a web-based platform maintained by VTS to which both parties had access under the terms of the TSA. She stated that the data in the Portal was generated from electronic tendering records, GPS tracking, proof-of-delivery confirmations, and claims filings, and that both Stonefield and VTS relied on the Portal data as the authoritative source for SLO compliance reporting.
Kirkwood described the impact of VTS's performance failures on Stonefield's customers as "significant." She testified that late deliveries and missed pickups disrupted the supply chains of several of Stonefield's largest retail and manufacturing clients, and that Stonefield's customer service team was fielding an elevated volume of complaints. She stated that Stonefield was forced to "scramble for alternative capacity on short notice" to cover loads that VTS was rejecting or failing to service, which resulted in higher spot-market freight costs and operational inefficiency. She noted that during Q4 2021, her team was spending the majority of its time on VTS-related firefighting rather than on its broader carrier management responsibilities.
C. Communications with Vantor Regarding Performance Issues
Kirkwood testified at length regarding her communications with Vantor/VTS personnel about the performance deterioration during Q4 2021. She stated that she raised her concerns with Derek Pruitt on multiple occasions, both by telephone and by email, and that the tenor of these communications shifted from collegial concern to increasing frustration as the quarter progressed without improvement.
She testified that Pruitt acknowledged what he characterized as "challenges" in VTS's operations but consistently attributed them to external market factors, including the ongoing nationwide driver shortage, elevated fuel costs, and supply chain disruptions affecting the broader transportation industry. Kirkwood stated that Pruitt did not, at any point during their Q4 2021 communications, acknowledge or disclose that VTS had made an internal decision to reallocate fleet assets away from the Stonefield account.
Kirkwood testified specifically that she was not informed by anyone at Vantor, VTS, or any other source that VTS had pulled approximately 85 tractors off the Stonefield dedicated lanes in order to cover commitments to other customers. This testimony directly referenced the substance of the internal Vantor/VTS email dated November 12, 2021, from Sandra Milescu (COO) to Nikolai Vantorovich (CEO), produced in discovery and bearing Bates number VHC-008417, in which Milescu described the redeployment of tractors from the Stonefield account to the Northwind Distribution Co. account. Kirkwood testified that she first learned of this fleet redeployment only through the document productions in this litigation and that she was "shocked" when she read the email.
She stated that had she been informed of the redeployment at the time, she would have immediately escalated the issue to Carlos Medina and Tobias Wren (General Counsel) and that Stonefield would have treated it as a material breach warranting an immediate cure notice. She testified that VTS's failure to disclose the redeployment while simultaneously blaming external market factors for its performance failures was, in her view, "fundamentally dishonest."
IV. THE SEPTEMBER 22, 2021 INTERNAL EMAIL (APPROXIMATE TRANSCRIPT PAGES 83–142)
A. CRS's Examination Approach
This was the most heavily examined area of the deposition by a significant margin. Harrison Caldwell devoted approximately ninety (90) minutes of examination to this single document and its surrounding circumstances. His examination was methodical, returning to the email's language repeatedly from different angles and attempting to establish through Kirkwood's testimony that the email reflected a pre-formed corporate intent to terminate the TSA. He read the key phrases of the email aloud on the record on at least four separate occasions. The email was marked as Kirkwood Deposition Exhibit 7 (Bates No. SLG-017842).
B. Content of the Email
The email at issue was dated September 22, 2021 and was sent by Janet Kirkwood to Carlos Medina, Senior Vice President, Operations, at Stonefield. The email was a brief, informal internal communication. It did not include any other recipients on the "To," "CC," or "BCC" lines. The full text of the body of the email, as read into the record, stated:
"Carlos — 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."
The email did not include any attachments. Kirkwood testified that she did not recall receiving a written response from Medina to this specific email, though she stated that she and Medina discussed VTS performance issues verbally on a regular basis during this period.
C. Kirkwood's Testimony Regarding the Email
Kirkwood acknowledged authoring the email and confirmed its contents without equivocation. She did not attempt to dispute authorship, question the accuracy of the document, or suggest that it had been taken out of context in any way that altered its literal meaning.
She testified that the email reflected her personal frustration with VTS's declining performance at that point in time, particularly the increasing frequency of tender rejections on Secondary Lanes that were forcing Stonefield's operations team to find alternative capacity on short notice. She described the email as the type of informal internal communication she might send to a colleague at the end of a difficult day and stated that it was not intended as a formal recommendation or policy directive.
Regarding the phrase "moving volume to Cascade and Briarwood on Lanes 8–14":
Kirkwood testified that Lanes 8 through 14, as referenced in the email, were classified as "Secondary Lanes" under Schedule C, Section 2(b) of the TSA. She stated that Secondary Lanes were expressly not subject to the exclusivity restrictions applicable to the fourteen "Primary Lanes" designated under Schedule C, Section 2(a), and that Stonefield retained full contractual authority to engage alternative carriers on Secondary Lanes at its discretion.
She testified that the volume being moved to Cascade Freight Systems Inc. and Briarwood Trucking Co. on those Secondary Lanes was being redirected specifically because VTS was rejecting tenders on those lanes at an unacceptable rate. In other words, Stonefield was backfilling capacity that VTS was failing to provide, not proactively diverting committed freight from VTS to other carriers. She characterized the volume shifts as a direct and necessary response to VTS's own service failures.
Kirkwood testified unequivocally that Stonefield did not divert any freight from VTS on any of the fourteen Primary Lanes to Cascade, Briarwood, or any other carrier during the relevant period. She stated that the Primary Lane exclusivity provisions of the TSA were respected at all times and that she would have been personally responsible for ensuring compliance with those provisions given her role.
On cross-examination, Caldwell pressed Kirkwood on whether she was "certain" that the volume diversion was limited to Secondary Lanes. Kirkwood maintained her position firmly and without hesitation. She stated that she could identify the specific lane-by-lane tender records from Stonefield's transportation management system ("TMS") that would confirm the limitation of the diversion to Lanes 8 through 14, and she expressed confidence that those records would corroborate her testimony in full.
Regarding the phrase "pull the plug on the whole contract":
Kirkwood testified that this language was colloquial shorthand expressing her personal frustration with the trajectory of the VTS relationship. She stated that it was not a statement of corporate intent, not a formal recommendation to terminate, and not reflective of any decision that had been made at Stonefield to exit the TSA.
She testified that no decision to terminate the TSA had been made as of September 22, 2021. She stated that the actual decision to issue the Cure Notice under Section 13.2 of the TSA was not made until early January 2022, approximately four months after the email, and that the decision was reached only after the Q4 2021 performance data confirmed sustained, severe service failures across all five SLO categories.
On cross-examination, Caldwell suggested that the email demonstrated Stonefield had a "predetermined plan" to exit the contract and that subsequent events — including the issuance of the Cure Notice and the termination — were merely the execution of a plan set in motion no later than September 2021. Kirkwood denied this characterization. She testified that the email was an expression of concern and frustration, not a plan, and that Stonefield's actual hope at that point was that VTS would improve its performance and avoid the need for any formal contractual remedies. She stated that Stonefield continued to tender loads to VTS on all lanes — including the Primary Lanes — throughout Q4 2021 and into January 2022, which she stated was inconsistent with the notion of a predetermined plan to exit.
Caldwell also suggested that the phrase "pull the plug" indicated Stonefield was actively looking for a pretext to terminate the contract, perhaps motivated by the upcoming rate adjustment (discussed in Section VI below). Kirkwood disagreed with this characterization. She testified that the cure notice and termination process that Stonefield ultimately pursued followed the contractual requirements of Sections 13.1 and 13.2 of the TSA and was based on objectively documented, quantifiable performance failures across all five SLO metrics — not on any pretext or manufactured justification.
D. Assessment of Testimony on the Email
Kirkwood's testimony on the September 22, 2021 email was consistent with her witness preparation and with the defense position that the volume diversion was limited to Secondary Lanes and constituted a reactive response to VTS's own tender rejections. She did not waver under sustained pressure from Caldwell, and her demeanor during this portion of the deposition was calm, direct, and credible.
The "pull the plug" language remains a meaningful risk factor in this case. Despite Kirkwood's effective contextualization of the phrase as frustrated venting rather than a corporate decision, the language is undeniably vivid and can be characterized by Vantor as evidence of premeditated termination planning that predated the formal cure process by approximately four months. Vantor will almost certainly cite this email prominently in its opposition to summary judgment and, if the case proceeds to trial, will likely display it for the jury.
However, several factors mitigate the risk of the email:
1. The four-month gap between the email (September 22, 2021) and the issuance of the Cure Notice (January 18, 2022) supports the argument that no termination decision was made as of the date of the email and that the Cure Notice was issued only after the accumulation of additional, more severe performance data in Q4 2021.
2. Kirkwood's testimony that Stonefield continued to tender loads to VTS on all lanes — including Primary Lanes — throughout Q4 2021 is inconsistent with the notion of a predetermined exit plan.
3. The email expressly references Lanes 8 through 14, which are Secondary Lanes not subject to exclusivity, reinforcing the defense position that the volume shifts described in the email did not constitute a breach of the TSA.
4. The email is addressed to a single recipient (Carlos Medina) and reads as an informal, personal expression of frustration rather than a formal business recommendation or directive.
Recommendation: In summary judgment briefing, address this email head-on rather than attempting to minimize it. Argue that: (i) the email reflects Kirkwood's awareness of deteriorating VTS performance, not a termination plan; (ii) Stonefield gave VTS four additional months to improve its performance before issuing the Cure Notice; (iii) the volume shifts described in the email were limited to Secondary Lanes and were contractually permissible; and (iv) under New York law, subjective frustration on the part of the non-breaching party does not negate objective Cause for termination where the contractual grounds for termination are independently satisfied. See Research Memorandum — Pretext and Good Faith in Termination for Cause (October 7, 2022).
V. VOLUME DIVERSION TO CASCADE FREIGHT SYSTEMS AND BRIARWOOD TRUCKING (APPROXIMATE TRANSCRIPT PAGES 143–178)
A. Factual Testimony
Kirkwood testified in detail regarding Stonefield's engagement of Cascade Freight Systems Inc. ("Cascade"), headquartered in Columbus, Ohio, and Briarwood Trucking Co. ("Briarwood"), headquartered in Arlington, Virginia, to handle freight on Lanes 8 through 14 during the period beginning in approximately August or September 2021.
She confirmed that Lanes 8 through 14 were classified as "Secondary Lanes" under Schedule C, Section 2(b) of the TSA and were expressly not subject to the exclusivity restrictions that governed the fourteen Primary Lanes under Section 4.1(a). She stated that both Cascade and Briarwood were existing approved carriers within Stonefield's 12,000-carrier network, and that engaging them on these Secondary Lanes did not require any new contractual arrangements or special authorization — it was within the ordinary course of Stonefield's operations.
Kirkwood testified that the decision to utilize alternative carriers on Lanes 8 through 14 was made because VTS's tender acceptance rate on those specific lanes had dropped below 65% during the August–September 2021 period, leaving Stonefield with unfilled loads and resulting in customer service failures. She stated that Stonefield's operations team was experiencing repeated instances in which VTS would reject tenders on these lanes, forcing Stonefield to scramble for alternative capacity on the spot market at premium rates or, in some cases, to notify customers of delays.
Kirkwood characterized the decision to use Cascade and Briarwood on these lanes as "reactive, not strategic." She testified: "We were filling gaps that VTS was leaving. We weren't redirecting committed freight. We were picking up loads that VTS was refusing to carry." She stated that Stonefield would have preferred to continue using VTS on all lanes, including the Secondary Lanes, if VTS had been accepting tenders and performing at contractual levels.
B. Cross-Examination on Exclusivity
Caldwell devoted significant attention to the exclusivity issue during this portion of the deposition. His primary objective appeared to be establishing that at least some of the freight moved to Cascade and Briarwood may have originated on, or geographically overlapped with, origin-destination pairs associated with Primary Lanes, thereby constituting a breach of the exclusivity provisions under Section 4.1(a) of the TSA.
Kirkwood denied any such overlap. She testified that each lane designation under Schedule C was defined by specific origin and destination zip code clusters, and that the Primary Lane and Secondary Lane designations were mutually exclusive — there was no geographic overlap between any Primary Lane origin-destination pair and any Secondary Lane origin-destination pair. She further testified that Stonefield's transportation management system ("TMS") tracked each individual shipment by lane designation based on the origin and destination zip codes, and that the TMS records would definitively show that no Primary Lane freight was diverted to Cascade, Briarwood, or any other alternative carrier during the relevant period.
Caldwell attempted to explore whether individual shipments could be reclassified from one lane to another within the TMS, or whether a load originating at a Primary Lane origin could be routed through a different destination to fall within a Secondary Lane classification. Kirkwood testified that the TMS assigned lane designations automatically based on the actual origin and destination of each shipment, that the designations were not subject to manual override by operations personnel, and that any attempt to manipulate lane classifications would be detectable through the system's audit logs.
Note: The subpoena responses from Cascade (received and analyzed by Calderwood & Harkness on August 1, 2023) and Briarwood (received and analyzed on August 3, 2023) corroborate Kirkwood's testimony on this point. Both third-party productions include complete shipment records for all Stonefield-tendered loads handled by each carrier during the relevant period, and both confirm that Stonefield's usage of Cascade and Briarwood was limited exclusively to Lanes 8 through 14 (Secondary Lanes). No shipment records from either carrier reflect origin-destination pairs corresponding to any Primary Lane designation under Schedule C.
C. Assessment. Kirkwood's testimony on the volume diversion issue strongly supports the defense position that no exclusivity violation occurred. She was unequivocal in her denial of any Primary Lane diversion, she identified objective, verifiable records (the TMS data) that would corroborate her testimony, and her testimony is independently confirmed by the Cascade and Briarwood third-party subpoena responses.
Combined with the third-party documentary evidence, this area should be a strong candidate for summary judgment. The defense can argue that the undisputed facts demonstrate that Stonefield's use of Cascade and Briarwood was limited to Secondary Lanes, was contractually permissible, and was directly responsive to VTS's own failure to accept tenders — the very opposite of an exclusivity breach.
VI. RATE ADJUSTMENT MOTIVE (APPROXIMATE TRANSCRIPT PAGES 179–225)
A. CRS's Theory
CRS devoted a substantial portion of the afternoon session to a line of questioning designed to establish that Stonefield's true motive for terminating the TSA was to avoid the upcoming rate adjustment scheduled to take effect on April 1, 2022 under the Rate Adjustment Mechanism set forth in Section 5.3 of the TSA. This theory is central to Vantor's broader narrative that the termination was pretextual — i.e., that Stonefield seized upon VTS's performance issues as a convenient justification to exit a contract that was about to become significantly more expensive.
The projected rate increase under the Section 5.3 mechanism was approximately 14.3%, which would have moved the weighted average per-mile rate under the TSA from $2.87 to $3.28. According to the Ashford Meridian LLP rate adjustment analysis memorandum dated February 2022 (Kirkwood Deposition Exhibit 8), this increase would have added approximately $6.2 million in annual transportation costs to Stonefield's logistics spend.
B. Kirkwood's Testimony
Kirkwood acknowledged that she was aware, as of late 2021 or early 2022, that the upcoming April 2022 rate adjustment would result in a significant increase in per-mile rates under the TSA. She testified that she understood the Rate Adjustment Mechanism in Section 5.3 to be a contractual provision that automatically adjusted rates based on an agreed index and formula, and that she was generally familiar with the magnitude of the expected increase.
She testified that she had seen the Ashford Meridian LLP rate adjustment analysis memorandum dated February 2022 (Exhibit 8), which calculated the projected 14.3% rate increase and the associated $6.2 million annual cost impact. However, she could not recall the precise date on which she first reviewed the memorandum. She stated that she may have received it from Carlos Medina or from Tobias Wren (General Counsel) but was not certain of the source or the exact timing.
Kirkwood acknowledged that the projected $6.2 million annual cost increase was "significant" from a budgeting perspective and stated that any cost increase of that magnitude would be noticed within Stonefield's operations and finance teams. She did not attempt to minimize the financial significance of the rate adjustment.
On whether the rate adjustment motivated the termination decision:
Kirkwood denied that the rate adjustment influenced the decision to terminate the TSA. She testified clearly and without equivocation that the termination was based on VTS's failure to cure documented material breaches of the Service Level Obligations as set forth in the Cure Notice. She stated: "We terminated because they weren't performing. The rates had nothing to do with it."
On further questioning, Kirkwood elaborated on this point. She testified that Stonefield had honored rate adjustments under the TSA in prior contract years — specifically, the April 2020 rate adjustment and the April 2021 rate adjustment — without incident and without any discussion of terminating the contract in connection with those adjustments. She stated that Stonefield's position was that contractually mandated rate increases were "part of the deal" and that Stonefield had agreed to the Rate Adjustment Mechanism as a component of the overall commercial bargain when the TSA was negotiated and executed in 2019. She further stated that she was not aware of any discussion within Stonefield about using the rate adjustment as a reason to exit the contract.
Caldwell pressed Kirkwood on this point: "Isn't it true that Stonefield would have saved $6.2 million per year by terminating before the April adjustment took effect?" Kirkwood responded that she was not involved in financial modeling for the contract termination decision and that she did not participate in any analysis of the potential cost savings that might result from termination. She testified that cost savings from termination of the TSA were not discussed in any meeting she attended. She acknowledged the mathematical reality that termination before April 1, 2022 would have avoided the rate increase, but she denied that this financial consequence motivated or influenced the decision.
Caldwell also asked Kirkwood whether she had discussed the upcoming rate adjustment with anyone at Stonefield in the context of the termination decision. Kirkwood testified that she was aware of the rate adjustment as a general matter and that it may have come up in passing during discussions about the VTS account, but she denied that anyone at Stonefield — including Medina, Wren, or Hess — ever stated or suggested that the rate adjustment was a reason to terminate the contract or to accelerate the termination timeline.
C. Assessment. Kirkwood's testimony on the rate adjustment issue was cautious, measured, and generally favorable to the defense. She did not make any damaging admissions linking the termination decision to cost avoidance. She acknowledged what she could not plausibly deny — that she was aware of the rate adjustment and its magnitude — but firmly and consistently denied that the rate adjustment played any role in the termination decision. Her testimony that Stonefield honored prior-year rate adjustments without issue is an important data point that tends to undermine the inference that the 2022 adjustment was a termination motive.
However, the circumstantial timeline remains a legitimate concern that Vantor will continue to exploit. The chronology is as follows: the Cure Notice was issued on January 18, 2022; the thirty-day cure period expired on February 17, 2022; the termination letter was issued on March 4, 2022 — all before the April 1, 2022 effective date of the rate adjustment. While this timeline is fully consistent with a legitimate for-Cause termination based on VTS's performance failures, Vantor will argue that the proximity of the termination to the rate adjustment effective date is more than coincidental.
The defense position remains that objective Cause for termination existed independently of any cost motive, that the contractual requirements for termination for Cause were satisfied, and that New York law does not inquire into the subjective motive of the terminating party when valid contractual grounds for termination are present. See Research Memorandum — Pretext and Good Faith in Termination for Cause (October 7, 2022), which analyzes the relevant New York authorities and concludes that the implied covenant of good faith and fair dealing does not create a freestanding obligation to disregard financial considerations in exercising an express contractual right to terminate for Cause.
Recommendation: In summary judgment briefing, argue that: (i) the rate adjustment is legally irrelevant to the Cause analysis, because the TSA's termination-for-Cause provision turns on whether a material breach occurred and remained uncured, not on the terminating party's subjective motivations; (ii) Kirkwood's unrebutted testimony confirms that no one at Stonefield identified the rate adjustment as a reason for termination; (iii) even if Stonefield was aware of the financial benefit of termination — which any rational commercial actor would be — this does not render an otherwise valid for-Cause termination pretextual under New York law; and (iv) Stonefield's documented history of honoring prior-year rate adjustments is inconsistent with Vantor's theory that rate avoidance was the actual motive.
VII. THE CURE NOTICE AND TERMINATION PROCESS (APPROXIMATE TRANSCRIPT PAGES 226–270)
A. Kirkwood's Role in the Cure Notice Process
Kirkwood testified regarding her role in the discussions and decision-making process that led to the issuance of the Cure Notice on January 18, 2022. She stated that she was involved in discussions with Carlos Medina (SVP, Operations), Tobias Wren (General Counsel), and Raymond Hess (Director, Contract Compliance) regarding whether to issue a formal cure notice to VTS under Section 13.2 of the TSA.
She testified that the decision to issue the Cure Notice was made in early January 2022, after the group reviewed the finalized Q4 2021 performance data and concluded that VTS's failures were sustained, severe, and covered all five SLO categories. She described the decision as deliberate and data-driven, stating that the group discussed whether the performance issues were likely to be temporary or structural and concluded that the magnitude and breadth of the failures — affecting on-time pickup, on-time delivery, tender acceptance, equipment availability, and cargo claims simultaneously — indicated a systemic problem that was unlikely to self-correct.
Kirkwood testified that Raymond Hess prepared the Cure Notice with substantive input from Ashford Meridian LLP, and specifically from Lorraine Beckwith, Partner in the Commercial Contracts practice group at Ashford Meridian. She stated that the decision was made to have Hess, as Director of Contract Compliance, send the notice rather than having it issued from the legal department, because the Cure Notice was framed as an operational and contractual compliance communication rather than a legal demand.
She confirmed that the Cure Notice, dated January 18, 2022, was sent by Raymond Hess to Sandra Milescu (COO, Vantor/VTS) by both email and Sundial Data Systems overnight delivery. The Cure Notice identified the five SLO categories in which VTS had failed to meet its contractual obligations during Q4 2021, set forth the specific performance data for each category, and stated that VTS had thirty (30) calendar days from receipt to cure the identified material breaches in accordance with Section 13.2 of the TSA.
B. Cure Period and Vantor's Response
Kirkwood testified that she was aware of Vantor's written response to the Cure Notice, which was dated February 14, 2022 and was sent by Derek Pruitt on behalf of Vantor/VTS. The response was approximately four pages in length and acknowledged what Pruitt characterized as "operational challenges" during Q4 2021. However, the response also asserted that VTS's performance failures were caused, in significant part, by Stonefield's own conduct — specifically, by what Vantor characterized as volume shortfalls and the diversion of freight to alternative carriers in violation of the exclusivity provisions of the TSA.
Kirkwood testified that she disagreed with Vantor's characterization of the causes of VTS's performance failures. She stated that VTS's performance deterioration predated any volume shifts by Stonefield to Cascade or Briarwood, and that the performance failures were attributable to VTS's own internal decision to redeploy fleet assets to other customers — a decision that, as noted above, VTS did not disclose to Stonefield at the time. She testified that Vantor's response was, in her view, an attempt to deflect responsibility for its own service failures and to shift blame to Stonefield.
Kirkwood testified that during the thirty-day cure period (January 18 through February 17, 2022), she did not observe any meaningful improvement in VTS's service metrics. She stated that her team continued to monitor VTS's performance through the Carrier Performance Portal and through Stonefield's internal TMS data, and that the metrics remained substantially below the contractual SLO thresholds throughout the cure period. She testified that VTS did not communicate any specific remediation plan to Stonefield during the cure period, nor did VTS request an extension of the cure period.
On cross-examination, Caldwell asked Kirkwood whether Stonefield gave VTS any additional time beyond the contractual thirty-day cure period to bring its performance into compliance. Kirkwood testified that the TSA required thirty (30) calendar days and that Stonefield was not contractually obligated to extend the cure period beyond that timeframe. She confirmed that Stonefield did not voluntarily extend the cure period. She stated that, in her view, the severity of the performance failures — particularly the equipment availability shortfall representing approximately 152 missing tractors — was such that a thirty-day cure period was, if anything, generous, and that VTS's failure to make any demonstrable progress during that period confirmed the structural nature of the problem.
C. Termination Decision
Kirkwood testified that the decision to terminate the TSA was made by Tobias Wren (General Counsel) and Marcus Denton (Chief Executive Officer), with input from the operations team including Kirkwood herself and Carlos Medina. She described the decision as a "last resort" and testified that the group discussed whether there were any alternatives to termination, including the possibility of a revised service agreement or a phased wind-down, before concluding that VTS's performance failures were too severe and too deeply embedded to justify continuing the relationship.
She confirmed that the termination letter was sent on March 4, 2022 by Tobias Wren to Vantor Holdings Corp. and Vantor Transport Services LLC. The letter stated that VTS had failed to cure the material breaches identified in the January 18, 2022 Cure Notice within the thirty-day cure period, and that the TSA was terminated effective immediately for failure to cure material breaches under Section 13.1(a). Kirkwood testified that the termination letter was sent by both email and Sundial Data Systems overnight delivery, consistent with the notice provisions of the TSA.
Kirkwood testified that she believed the termination was justified based on the severity and persistence of VTS's performance failures. She stated that, in her professional judgment, VTS had demonstrated an inability — or, in light of the fleet redeployment she later learned about through discovery, an unwillingness — to meet its contractual obligations, and that continuing the relationship would have caused further harm to Stonefield's customers and commercial reputation.
VIII. STONEFIELD'S VOLUME TENDERING (APPROXIMATE TRANSCRIPT PAGES 271–298)
A. Annual Committed Volume — Contract Year 2
Kirkwood testified regarding Stonefield's volume tendering obligations under the TSA and the extent to which Stonefield met those obligations during the relevant contract years.
She confirmed that the Annual Committed Volume ("ACV") under the TSA was $43.2 million per contract year, representing the aggregate dollar value of transportation services that Stonefield committed to tender to VTS annually. She testified that the ACV was a revenue commitment from Stonefield to VTS, intended to provide VTS with a predictable base of business in exchange for VTS's commitment to maintain dedicated fleet capacity and meet the Service Level Obligations.
Regarding Contract Year 2 (April 2020 through March 2021), Kirkwood confirmed that Stonefield tendered approximately $31.8 million in transportation charges to VTS. She acknowledged that this figure was below the unadjusted ACV of $43.2 million, but testified that the shortfall was attributable to the extraordinary impact of the COVID-19 pandemic on freight demand during the first half of the contract year.
Kirkwood testified that Stonefield invoked the force majeure clause set forth in Section 12.1 of the TSA for the period from April 2020 through September 2020 (six months) due to the effects of the COVID-19 pandemic on Stonefield's freight volumes. She stated that the force majeure invocation was documented in writing and communicated to VTS in accordance with the notice provisions of the TSA. She testified that the adjusted ACV for Contract Year 2, reflecting the six-month force majeure period, was $21.6 million (calculated as $43.2 million multiplied by 6/12, representing the non-force-majeure portion of the contract year). She confirmed that Stonefield's actual tenders of approximately $31.8 million exceeded the adjusted ACV minimum by approximately $10.2 million, which she characterized as strong performance given the economic environment.
B. Contract Year 3 Volume Tenders
Regarding Contract Year 3 (April 2021 through January 2022, when the TSA was terminated), Kirkwood testified that Stonefield tendered approximately $36.5 million in transportation charges to VTS over the approximately ten-month period before the contract was terminated.
On cross-examination, Caldwell highlighted the fact that $36.5 million in charges over ten months of a $43.2 million annual commitment suggested a potential shortfall. Caldwell attempted to annualize the figure, suggesting that at the ten-month rate, Stonefield was on pace for approximately $43.8 million for the full year — but he also questioned whether Stonefield's monthly tender volumes had been declining in the months immediately preceding termination, which could suggest a lower annualized figure if the trend continued.
Kirkwood responded that the contract year had not been completed when the TSA was terminated and that any annualization of the figure would be speculative. She testified that Stonefield's tender rate had actually been increasing in the months prior to termination as freight markets recovered from pandemic-era disruptions, and that she believed Stonefield would have met or exceeded the $43.2 million ACV had the contract year been completed. She denied that any volume shortfall during CY3 was intentional or designed to undermine VTS's business or provide a pretext for termination.
Kirkwood also noted that a significant portion of the loads that Stonefield attempted to tender to VTS during Q3 and Q4 2021 were rejected by VTS — loads that Stonefield would have counted toward the ACV had VTS accepted and transported them. She testified that tender rejections by VTS should not be counted against Stonefield's volume commitment, as Stonefield could not force VTS to accept loads that VTS was refusing to carry.
IX. KEY EXHIBITS REVIEWED DURING DEPOSITION
The following fourteen exhibits were marked during the Kirkwood deposition. Key exhibits are discussed in the relevant substantive sections of this memorandum as indicated below.
X. OBJECTIONS AND INSTRUCTIONS NOT TO ANSWER
Patrick Gallagher raised objections to form on approximately twelve (12) occasions during the deposition. These objections were made in the ordinary course and addressed issues such as compound questions, questions assuming facts not in evidence, and questions calling for legal conclusions. None of the objections resulted in sustained disputes or colloquy that materially interrupted the examination, and the witness answered the underlying questions in each instance subject to the objection being preserved on the record.
Gallagher instructed Kirkwood not to answer on two (2) occasions. Both instructions related to questions posed by Caldwell that sought the substance of communications between Stonefield personnel and counsel at Ashford Meridian LLP during the cure period (January through February 2022). Specifically, Caldwell asked Kirkwood to describe the content of a conversation she had with Lorraine Beckwith of Ashford Meridian regarding the sufficiency of VTS's cure-period response, and subsequently asked whether Ashford Meridian had provided Stonefield with legal advice regarding the termination decision. Gallagher objected on the basis of attorney-client privilege and instructed the witness not to answer. These communications are the subject of an ongoing privilege dispute. See Privilege Dispute Memorandum — Vantor Challenge to Privilege Log Entries 312–318 (June 20, 2023).
Caldwell reserved the right to move to compel Kirkwood's testimony on those questions but did not, as of the conclusion of the deposition, indicate a specific timeline for filing such a motion. As of the date of this memorandum, no motion to compel has been filed on these questions.
XI. COMPARISON TO DEPOSITION PREPARATION AND EXPECTED TESTIMONY
Kirkwood's testimony was consistent with the positions and themes developed during the witness preparation session held on July 11, 2023 with Patrick Gallagher and Samuel Eklund. There were no material deviations from her prepared positions and no unexpected admissions or surprises.
Specifically:
• September 22, 2021 email: Kirkwood followed the preparation guidance to acknowledge authorship of the email without hesitation, contextualize the language as an expression of personal frustration with VTS's declining performance, emphasize that the volume diversion referenced in the email was limited to Secondary Lanes (8–14), and deny that any corporate decision to terminate the TSA had been made as of that date. Her testimony on this topic was disciplined and consistent.
• Rate adjustment awareness: Kirkwood followed the preparation guidance to acknowledge her general awareness of the upcoming rate adjustment and its magnitude, while firmly denying any causal link between the rate adjustment and the termination decision. She appropriately limited her testimony to what she personally knew and observed, declining to speculate about the motivations of other Stonefield decision-makers.
• Volume diversion to Cascade and Briarwood: Kirkwood testified consistently with the prepared position that the diversion was limited to Secondary Lanes, was reactive to VTS's tender rejections, and did not violate the exclusivity provisions of the TSA.
• Cure notice and termination process: Kirkwood accurately described her role in the process, identified the key participants, and confirmed the timeline — all consistent with the documented record and her preparation.
No material deviations from prepared positions were observed. No unexpected admissions or surprises occurred during the deposition.
XII. SUMMARY OF KEY ADMISSIONS AND FAVORABLE TESTIMONY
A. Testimony Favorable to Stonefield
The following are the principal favorable points established through Kirkwood's testimony:
1. Performance failures were real and documented. Kirkwood confirmed that VTS's performance failures across all five SLO categories in Q4 2021 were real, sustained, severe, and documented through VTS's own Carrier Performance Portal data. The failures were not minor or marginal — on-time pickup was 78.2% against a 95% threshold, tender acceptance was 71.4% against a 90% threshold, and equipment availability was approximately 62% against an 85% threshold. This testimony supports the defense position that objective Cause for termination existed.
2. Volume diversion was limited to Secondary Lanes. Kirkwood testified unequivocally that the volume moved to Cascade Freight Systems Inc. and Briarwood Trucking Co. was limited to Lanes 8 through 14 (Secondary Lanes) and was responsive to VTS's own tender rejections on those lanes. She denied any diversion of Primary Lane freight. This testimony, corroborated by the Cascade and Briarwood third-party subpoena responses, strongly supports the defense against Vantor's exclusivity breach claim.
3. VTS concealed the fleet redeployment. Kirkwood testified that she was not informed by anyone at Vantor or VTS that VTS had pulled approximately 85 tractors off the Stonefield dedicated lanes and redeployed them to the Northwind Distribution Co. account. She learned of this redeployment only through discovery. This testimony supports the defense's first-to-breach argument and tends to undermine VTS's credibility.
4. The September 22 email reflected frustration, not a decision. Kirkwood effectively contextualized the "pull the plug" language as a colloquial expression of personal frustration, not a statement of corporate intent. She testified that no decision to terminate the TSA was made until early January 2022, approximately four months later, and only after Q4 2021 performance data confirmed sustained, severe SLO failures.
5. The termination was performance-based, not rate-driven. Kirkwood denied that the upcoming rate adjustment played any role in the termination decision. She testified that cost savings from termination were not discussed in any meeting she attended and that Stonefield had honored prior-year rate adjustments without incident.
6. Force majeure reduced the CY2 ACV obligation. Kirkwood testified that Stonefield's invocation of the force majeure clause for the April–September 2020 period was properly documented, reducing the adjusted ACV for Contract Year 2 to $21.6 million. Stonefield's actual tenders of $31.8 million exceeded this adjusted threshold by $10.2 million, negating any claim of a volume shortfall in CY2.
B. Areas of Concern / Potentially Adverse Testimony
The following areas of Kirkwood's testimony present potential risks or may be exploited by Vantor:
1. "Pull the plug" language. The September 22, 2021 email remains a risk factor notwithstanding Kirkwood's effective contextualization. The phrase "pull the plug on the whole contract" is vivid, unambiguous in its ordinary meaning, and was authored by the Stonefield executive with primary responsibility for the VTS relationship. Vantor will characterize this as evidence of premeditated exit intent that predated the formal cure process by approximately four months. While Kirkwood's explanation was credible, the email will require proactive treatment in summary judgment briefing and, if the case proceeds to trial, in Kirkwood's direct examination.
2. Awareness of rate adjustment magnitude. Kirkwood acknowledged awareness of the upcoming 14.3% rate increase and its $6.2 million annual cost impact. While she firmly denied that the rate adjustment influenced the termination decision, Vantor may argue that the combination of Kirkwood's awareness, the circumstantial timing of the termination relative to the April 1, 2022 effective date, and the financial magnitude of the avoided cost creates an inference of pretext that should survive summary judgment. The defense will need to counter this inference with both legal argument (irrelevance of subjective motive under NY law) and factual argument (prior-year adjustments honored; no evidence of cost-avoidance discussions).
3. CY3 volume shortfall. Kirkwood acknowledged that Contract Year 3 tenders totaled approximately $36.5 million against a $43.2 million ACV, which Vantor may characterize as a significant volume shortfall that itself constituted a breach of Stonefield's obligations under the TSA. While Kirkwood persuasively explained that the contract year was not completed at the time of termination and that Stonefield's tender volumes were increasing, the force majeure argument that mitigated the CY2 shortfall does not apply to CY3, and Vantor may argue that the CY3 shortfall is evidence that Stonefield was already pulling back from its volume commitments before issuing the Cure Notice. Detailed lane-level tender data from the TMS should be prepared to rebut this characterization.
XIII. RECOMMENDATIONS FOR SUMMARY JUDGMENT AND TRIAL PREPARATION
Based on the testimony elicited during the Kirkwood deposition, the following recommendations are made for summary j

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

I. DEPOSITION OVERVIEW

IX. KEY EXHIBITS REVIEWED DURING DEPOSITION

X. OBJECTIONS AND INSTRUCTIONS NOT TO ANSWER

XI. COMPARISON TO DEPOSITION PREPARATION AND EXPECTED TESTIMONY

XII. SUMMARY OF KEY ADMISSIONS AND FAVORABLE TESTIMONY

XIII. RECOMMENDATIONS FOR SUMMARY JUDGMENT AND TRIAL PREPARATION

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