PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — PREPARED IN ANTICIPATION OF LITIGATION
WITNESS PREPARATION SESSION NOTES — JANET KIRKWOOD
Matter: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
Calderwood & Harkness Matter No.: 1012-00005
Date of Session: July 11, 2023
Date of Notes: July 11, 2023
Prepared By: Helen Tsao, Senior Paralegal, Calderwood & Harkness LLP
Location of Session: Calderwood & Harkness LLP, 200 Park Avenue, 38th Floor, New York, NY 10166 (Conference Room 38-C)
Duration: Approximately 3.5 hours (10:00 a.m. – 1:30 p.m., with one 15-minute break at approximately 11:45 a.m.)
SESSION ATTENDEES
Witness: Janet Kirkwood, Vice President, Carrier Relations, Stonefield Logistics Group Inc. ("SLG" or "Stonefield")
Attorneys Present:
Patrick Gallagher, Lead Associate, Calderwood & Harkness LLP — conducted the preparation session throughout its entirety.
Samuel Eklund, Responsible Partner, Calderwood & Harkness LLP — present for approximately the first 90 minutes of the session (10:00 a.m. through approximately 11:30 a.m.); departed to attend another matter-related meeting and was not present for the remainder of the substantive preparation, although he called in briefly near the session's conclusion (see Section XI below).
Also Present:
Helen Tsao, Senior Paralegal, Calderwood & Harkness LLP — present throughout the session in the capacity of note-taker.
Client Representative (joined by phone for portion):
Tobias Wren, General Counsel, Stonefield Logistics Group Inc. — joined the session by telephone at approximately 10:15 a.m. for a background discussion regarding the status of discovery and scheduling matters. Mr. Wren dropped off the call at approximately 10:45 a.m., before substantive deposition preparation began. Mr. Wren did not participate in any of the substantive witness preparation, coaching, or practice questioning described below.
PURPOSE AND CONTEXT OF SESSION
This session was conducted for the purpose of preparing Janet Kirkwood for her deposition, which is currently scheduled for July 14, 2023, at the offices of Caldwell Royce & Shapiro LLP ("CRS"), 1 Liberty Plaza, 22nd Floor, New York, NY 10006, commencing at 9:30 a.m. Based on information received from CRS, the deposition is expected to be conducted by Jason Whitford, Partner at CRS, who serves as lead trial counsel for Vantor Holdings Corp. ("Vantor" or "VHC") and Vantor Transportation Services LLC ("VTS"). Harrison Caldwell, the firm's named partner and senior counsel on the matter, may also attend portions of the examination.
Kirkwood has been identified as a key fact witness for Stonefield in this litigation. She served as the primary SLG executive responsible for managing the day-to-day operational relationship with Vantor and VTS under the Transportation Services Agreement dated March 15, 2019 (Contract Ref. SLG-VTS-2019-0315, the "TSA"). In that capacity, Kirkwood oversaw carrier performance monitoring, capacity allocation decisions, and operational communications with her principal counterparts at Vantor — specifically, Derek Pruitt, Vice President of Business Development at Vantor/VTS, and, at times, Sandra Milescu, Chief Operating Officer of Vantor/VTS. Kirkwood reported directly to Carlos Medina, Senior Vice President, Operations at Stonefield.
The preparation session focused on three principal risk areas that had been previously identified and analyzed in the Deposition Preparation Memorandum prepared by the litigation team (Doc. 72, dated July 7, 2023, authored by Patrick Gallagher with input from Simone Laroche, Associate). Those three risk areas are:
1. The September 22, 2021 Internal Email from Kirkwood to Medina (SLG-017892): This email contains language that CRS is expected to characterize as evidence of a premeditated plan by Stonefield to terminate the TSA, including the phrase "pull the plug on the whole contract," as well as references to volume diversion to competing carriers Cascade Freight Systems Inc. and Briarwood Trucking Co.
2. Kirkwood's Awareness of the Anticipated April 2022 Rate Adjustment and Whether It Influenced the Termination Decision: CRS's theory of the case posits that Stonefield's true motivation for terminating the TSA was to avoid a significant rate increase that would have taken effect on April 1, 2022. CRS is expected to probe Kirkwood's knowledge of the magnitude of this increase and any connection between that knowledge and the timing of the Cure Notice and termination.
3. The Cure Notice Process and Kirkwood's Role in Evaluating VTS Performance Metrics: As the operational lead on the VTS relationship, Kirkwood played a central role in identifying the performance deficiencies cited in the Cure Notice dated January 18, 2022, and in evaluating whether VTS achieved cure during the 30-day cure period. CRS is expected to challenge the accuracy and completeness of the performance data, the sufficiency of the cure period, and the good faith of Stonefield's evaluation.
I. GENERAL DEPOSITION GUIDELINES AND GROUND RULES
Gallagher opened the session with a comprehensive review of standard deposition preparation instructions and ground rules for Kirkwood's testimony. These instructions were delivered verbally, with Kirkwood following along from a one-page summary handout (not produced; internal work product).
Gallagher covered the following points in detail:
• Listen carefully to each question and answer only the question asked. Gallagher emphasized that the most common mistake witnesses make is answering a question that was not asked, or expanding their answer to address what they think the questioner is getting at. Kirkwood was instructed to listen to the precise words of each question and to respond only to what was asked.
• Do not volunteer information beyond what is necessary to truthfully respond. Gallagher explained that while Kirkwood must answer every question truthfully and completely, she should not offer additional context, narrative, or explanation unless specifically asked. If the question calls for a "yes" or "no," a "yes" or "no" answer is appropriate. If the examining attorney wants more detail, he will ask a follow-up question.
• If you do not understand a question, ask for clarification; do not guess. Gallagher instructed Kirkwood that there is no obligation to answer a question she does not understand. She should feel comfortable saying, "Could you rephrase that?" or "I'm not sure I understand what you're asking." She should never guess at what a question means or attempt to answer a question she finds ambiguous or confusing.
• If you do not recall, say "I don't recall" — do not speculate. Gallagher emphasized that "I don't recall" is a perfectly appropriate and truthful answer when a witness genuinely does not remember something. Kirkwood was instructed not to fill gaps in her memory with speculation, assumptions, or reconstructions of what she thinks must have happened. If she has a general recollection but is uncertain about specifics, she should qualify her answer accordingly.
• Be careful with time-related questions (dates, sequences). Gallagher noted that CRS will likely probe Kirkwood extensively on the chronology of events, particularly the timeline from September 2021 through March 2022. Kirkwood should be careful about committing to specific dates unless she is confident in her recollection. Where she is uncertain, she should qualify with phrases such as "to the best of my recollection," "I believe it was approximately," or "I'm not certain of the exact date, but it was sometime in that period."
• Pause before answering to allow for objections by C&H counsel. Gallagher explained that Calderwood & Harkness counsel will be present at the deposition and may need to interpose objections to certain questions. Kirkwood should pause for a moment after each question is asked before beginning her answer, to allow counsel time to object if necessary. If counsel does object, Kirkwood should wait for instruction before answering. In most cases, she will still be instructed to answer the question (subject to the objection being preserved for the record), but she should wait for that instruction.
• Do not look at counsel for cues or guidance during testimony. Gallagher cautioned Kirkwood that looking at C&H counsel before, during, or after answering a question can create an adverse inference on the record and may prompt the examining attorney to comment on it. Kirkwood should direct her attention to the questioner and answer based on her own knowledge.
• Stay calm and professional regardless of the examiner's tone. Gallagher noted that CRS counsel, and particularly Harrison Caldwell if he participates, is known for an aggressive, confrontational examination style. CRS may attempt to provoke Kirkwood, challenge her credibility, or characterize her testimony in unfavorable ways. Kirkwood should remain composed, professional, and even-tempered throughout. She should not become argumentative, defensive, or emotional, even if the questioning becomes hostile or repetitive.
• Avoid characterizations, legal conclusions, or opinions about the contract's meaning — stick to facts. Gallagher instructed Kirkwood that she is a fact witness, not an expert or a lawyer. She should confine her testimony to what she personally did, said, heard, observed, or received. She should not offer opinions about what the TSA requires, whether any party breached the TSA, or what any contractual provision means. If asked questions calling for legal conclusions, counsel will object, but Kirkwood should also be prepared to redirect her answer to the facts within her personal knowledge.
• If asked about documents, review them carefully before answering. Gallagher noted that the examining attorney will likely show Kirkwood numerous documents during the deposition. Kirkwood should take whatever time she needs to read and review each document before answering any questions about it. She should not assume she knows what a document says based on a summary or characterization provided by the questioner. She should read the actual language of the document before agreeing to any characterization.
• Accuracy and truthfulness are paramount. Gallagher concluded his review of the ground rules by reminding Kirkwood that her deposition testimony will be given under oath and carries the same legal weight as testimony in open court. Accuracy and truthfulness are not merely advisable — they are legally required. If Kirkwood realizes during the deposition that she has given an inaccurate answer, she should correct it as soon as possible, either on her own initiative or when an opportunity arises.
Kirkwood confirmed that she understood all of the guidelines and ground rules. She indicated that she had been deposed once before, approximately eight years ago, in connection with a prior employment matter unrelated to Stonefield. Kirkwood stated that the prior deposition was relatively brief and involved different subject matter, but that the experience gave her some familiarity with the general format and procedures. Gallagher acknowledged this prior experience but noted that the current deposition is likely to be significantly more extensive and adversarial, and that the preparation guidelines should be followed carefully regardless of her prior experience.
II. BACKGROUND AND ROLE DISCUSSION
Gallagher asked Kirkwood to describe, in her own words, her role at Stonefield and her involvement with the VTS relationship. The following is a summary of her description as provided during the session.
Position and Reporting Structure. Kirkwood has served as Vice President, Carrier Relations at Stonefield Logistics Group Inc. since June 2018. She was hired approximately four months before the TSA negotiations with Vantor/VTS commenced. She reports directly to Carlos Medina, Senior Vice President of Operations. Her responsibilities include managing relationships with Stonefield's carrier network, which consists of approximately 12,000 approved carriers across the United States and Canada. Her duties encompass negotiating carrier agreements and rate structures, monitoring carrier performance against contractual service levels, managing capacity allocation across Stonefield's network, and resolving operational disputes with carriers.
Oversight of the VTS Relationship. Kirkwood oversaw the Vantor/VTS relationship as one of Stonefield's top 10 carriers by volume. VTS operated as a dedicated and semi-dedicated carrier for Stonefield across 14 designated lanes, providing both truckload and intermodal drayage services. The relationship was significant both in terms of annual volume (the TSA committed approximately $43.2 million annually) and in terms of the strategic importance of the lanes serviced by VTS, which included several high-volume corridors serving major Stonefield customers.
TSA Negotiations. Kirkwood did not negotiate the TSA directly. The primary negotiation was handled by outside counsel Ashford Meridian LLP, specifically Lorraine Beckwith, Partner, on behalf of Stonefield. Kirkwood provided input on operational terms and lane pricing during the negotiation process. Specifically, she reviewed and provided comments on Schedule B (rate structure, including per-mile and accessorial rates) and Schedule C (lane designations and exclusivity provisions). Her input on these schedules was incorporated into the final agreement based on her operational knowledge of lane characteristics, volume expectations, and competitive carrier pricing. Kirkwood did not participate in the negotiation of the general terms and conditions of the TSA, including the termination provisions, force majeure clause, or liquidated damages provisions, which were negotiated by Ashford Meridian and Vantor's counsel.
Post-Execution Role. Following the execution of the TSA on March 15, 2019, Kirkwood served as the day-to-day operational lead for Stonefield's relationship with VTS. In this capacity, she held monthly performance review calls with Derek Pruitt, Vice President of Business Development at Vantor/VTS, and, at times, with Sandra Milescu, Chief Operating Officer of Vantor/VTS. These monthly calls covered performance metrics, operational issues, capacity planning, and any emerging concerns from either side. Kirkwood's team also maintained regular informal contact with VTS operational personnel at the regional and dispatch levels.
Key TSA Provisions. Gallagher reviewed the key TSA provisions with Kirkwood, and Kirkwood confirmed her understanding of each:
• Term: Five-year term commencing April 1, 2019 and expiring March 31, 2024, subject to earlier termination in accordance with Article 13.
• Annual Committed Volume (ACV): $43.2 million per contract year, measured on the basis of freight tendered by Stonefield to VTS across all designated lanes.
• Service Level Obligations (SLOs): The TSA established the following minimum service levels, measured on a quarterly basis:
• On-time pickup rate: ≥ 95%
• On-time delivery rate: ≥ 93%
• Cargo claims ratio: ≤ 0.5% (measured as total claim value as a percentage of total freight revenue for the applicable quarter)
• Tender acceptance rate: ≥ 90%
• Equipment availability: ≥ 85% of committed fleet (400 tractors and 1,200 trailers)
• Termination for Cause (Section 13.1(a)): Either party could terminate the TSA for cause upon the occurrence of a material breach by the other party that remained uncured for 30 calendar days after written notice of such breach was delivered in accordance with Section 13.2.
• Liquidated Damages (Section 14.2): Liquidated damages were applicable only in the event of a termination that was not "for Cause" as defined in Section 13.1(a). This provision is central to Vantor's damages theory — if Stonefield's termination was not validly "for Cause," Vantor contends it is entitled to liquidated damages calculated under Section 14.2, which would include the remaining ACV for the unexpired term plus consequential costs.
Kirkwood confirmed she was comfortable with her understanding of these provisions and that the descriptions accurately reflected her working knowledge of the TSA during the relevant period.
III. THE SEPTEMBER 22, 2021 INTERNAL EMAIL (KEY RISK AREA #1)
A. Document Review
Gallagher displayed the email on the conference room screen for Kirkwood to review. The email bears Bates stamp SLG-017892 and was produced by Stonefield during the document production phase of discovery.
The email is from Janet Kirkwood to Carlos Medina, dated September 22, 2021, with the subject line: "VTS — Ongoing Performance Issues."
The full relevant text of the email body reads as follows:
"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."
Kirkwood confirmed that she authored this email. She confirmed that she sent the email from her Stonefield corporate email account (j.kirkwood@stonefieldlogistics.com) to Carlos Medina's Stonefield corporate email account. She confirmed that there were no other recipients on the email — no CC or BCC recipients. Kirkwood stated that she did not forward the email to anyone else and was not aware of Medina forwarding it to anyone else at the time.
B. Kirkwood's Explanation of Context
Gallagher asked Kirkwood to explain the circumstances that prompted the email. Kirkwood provided the following account:
The email was written in frustration after a particularly difficult week of operational failures by VTS. In the days immediately preceding September 22, 2021, VTS had missed multiple pickups on Lanes 9, 11, and 13, and had rejected an unusually high number of tenders submitted by Stonefield's dispatch team. Kirkwood recalled that one of Stonefield's largest retail customers, which she declined to name during the session but which Gallagher confirmed was identified in previous filings, had escalated a complaint directly to Carlos Medina about late deliveries during this period.
Kirkwood explained that VTS had been declining tenders at an increasing rate starting in approximately August 2021. By mid-September 2021, VTS was rejecting approximately 25 to 30 percent of tenders on certain lanes, particularly the Secondary Lanes (Lanes 8–14). This rejection rate was already below the 90% tender acceptance SLO threshold specified in the TSA. The pattern of declining tenders was not limited to a single lane or a single region — it was occurring across multiple Secondary Lanes and was becoming increasingly disruptive to Stonefield's operations and customer commitments.
When asked about the phrase "pull the plug on the whole contract," Kirkwood stated unequivocally that this was an informal expression of frustration, not a formal recommendation or plan to terminate the TSA. She characterized the phrase as "blowing off steam in an email to my boss" and stated that she did not intend the phrase as a directive, recommendation, or statement of corporate policy. Kirkwood stated that she did not present any formal termination recommendation to management until after the Q4 2021 performance data was compiled in January 2022, approximately four months after the September 22 email was sent.
Kirkwood further stated that, as of September 22, 2021, she had not discussed termination of the TSA with anyone in Stonefield's legal department, including Tobias Wren (General Counsel), nor had she consulted with outside counsel at Ashford Meridian LLP. The idea of termination was, at that point, an expression of her personal frustration with the deteriorating operational situation — not a formal legal or business strategy.
Kirkwood confirmed that "Cascade" in the email refers to Cascade Freight Systems Inc. and that "Briarwood" refers to Briarwood Trucking Co., both of which are approved carriers in Stonefield's carrier network.
C. Volume Diversion to Cascade and Briarwood — Lane Specifics
Gallagher focused extensively on the portion of the email referencing the movement of volume to Cascade and Briarwood "on Lanes 8–14." This portion of the preparation session lasted approximately 25 minutes and involved detailed questioning about the TSA's lane designation and exclusivity provisions.
Kirkwood confirmed that under Schedule C of the TSA, there were 14 designated origin-destination pairs organized into two categories:
• Primary Lanes (Lanes 1–7): These were the highest-volume, highest-priority corridors. They included major distribution center-to-distribution center and distribution center-to-retail hub routes. The Primary Lanes accounted for approximately 65% of the total ACV under the TSA.
• Secondary Lanes (Lanes 8–14): These were lower-volume corridors that served regional distribution points, satellite facilities, and seasonal overflow routes. The Secondary Lanes accounted for approximately 35% of the total ACV.
Kirkwood stated unequivocally that Stonefield's use of Cascade Freight Systems and Briarwood Trucking was limited to Lanes 8–14 — the Secondary Lanes. She stated this with specificity and confidence, noting that she personally approved the use of these alternative carriers and was the decision-maker responsible for lane-level carrier assignments within her authority as VP, Carrier Relations.
Kirkwood explained the contractual basis for this decision by reference to the exclusivity provisions in Schedule C:
• Section 2(a) of Schedule C provided that VTS had exclusive carrier status on the Primary Lanes (Lanes 1–7). Stonefield was not permitted to use alternative carriers on Primary Lanes without VTS's prior written consent, except in cases of emergency or force majeure.
• Section 2(b) of Schedule C expressly permitted Stonefield to use alternative carriers on the Secondary Lanes (Lanes 8–14), subject only to a right of first refusal for VTS. Under this right of first refusal, Stonefield was required to tender freight to VTS on the Secondary Lanes before offering it to alternative carriers. Only if VTS declined the tender or failed to accept within the specified acceptance window (four hours for standard shipments, two hours for expedited shipments) was Stonefield free to assign the freight to another carrier.
Kirkwood stated that VTS was failing to exercise its right of first refusal on the Secondary Lanes precisely because it was rejecting tenders at the rates described above. The volume diversion to Cascade and Briarwood was a direct operational response to VTS's tender rejections. In Kirkwood's words: "We had freight that needed to move. VTS was declining loads. We had to cover with other carriers. That's basic logistics — you can't leave freight sitting on a dock because your primary carrier won't pick it up."
Kirkwood confirmed that she personally approved the use of Cascade and Briarwood on Lanes 8–14 and that this decision was within her authority as VP, Carrier Relations. She stated that she did not seek or require approval from Carlos Medina or from legal counsel for this decision, because the use of alternative carriers on Secondary Lanes was expressly contemplated by the TSA and was a routine operational decision within the scope of her responsibilities.
When Gallagher asked directly whether any volume was diverted from VTS on the Primary Lanes (Lanes 1–7) during this period, Kirkwood stated clearly: "No. We kept all Primary Lane freight with VTS. Even when they were struggling, we tried to honor the exclusivity on Primary Lanes. We were aware of the exclusivity provision and we respected it."
Gallagher instructed Kirkwood that if asked during the deposition about "diverting volume" from VTS, she should be precise about which lanes were involved. She should explain the Primary Lane/Secondary Lane distinction clearly and should not allow the examining attorney to conflate volume shifts on Secondary Lanes (which were contractually permitted) with any alleged breach of the Primary Lane exclusivity provisions. Gallagher noted that CRS is likely to use broad, general language about "diversion" without specifying lanes, and that Kirkwood should insist on precision in her answers.
D. Anticipated Lines of Attack
Gallagher discussed with Kirkwood the anticipated lines of attack that CRS is expected to pursue in connection with the September 22 email.
Premeditation Theory. Gallagher advised that CRS will likely characterize the September 22 email as evidence of a premeditated plan by Stonefield to exit the TSA. CRS's theory is that Stonefield had already decided to terminate the TSA as early as September 2021 and that the subsequent Cure Notice process was a sham designed to create a paper trail justifying a predetermined outcome. CRS will point to the phrase "pull the plug on the whole contract" and argue that it reflects Stonefield's actual intention to terminate regardless of VTS's performance.
Exclusivity Breach Theory. CRS will also argue that the volume diversion to Cascade and Briarwood constituted a breach of the exclusivity provisions in Schedule C, even on the Secondary Lanes. CRS may argue that the right of first refusal process was not properly followed, or that the volume of freight redirected was so significant as to constitute a constructive termination of VTS's role on those lanes.
Gallagher coached Kirkwood on the following response framework:
• Kirkwood should consistently and firmly distinguish between informal frustration expressed in an internal email to her supervisor and any formal corporate decision-making process. The September 22 email was the former, not the latter.
• She should emphasize that no termination decision was made until after the formal Cure Notice process was initiated and completed in January through March 2022. The September 22 email was sent nearly four months before the Cure Notice (January 18, 2022) and nearly six months before the termination letter (March 4, 2022).
• She should note that between September 22, 2021 and January 18, 2022, Stonefield continued to tender freight to VTS, continued to hold monthly performance review calls with VTS, and continued to work with VTS to attempt to resolve the operational issues — conduct inconsistent with a premeditated decision to terminate.
• If pressed on whether the email shows that Stonefield had "already decided" to terminate, Kirkwood should state clearly: she was raising a concern with her supervisor about a deteriorating operational situation; no decision had been made; the actual decision to terminate followed a documented contractual process consisting of the Cure Notice, the 30-day cure period, the evaluation of VTS's cure efforts, and the formal termination letter.
• Regarding the volume diversion, Kirkwood should be prepared to explain the contractual basis (Schedule C, Section 2(b)) and the operational necessity (VTS was rejecting tenders; freight had to move) in clear, straightforward terms.
IV. RATE ADJUSTMENT AWARENESS AND MOTIVE (KEY RISK AREA #2)
A. Background on Rate Adjustment Mechanism
Gallagher reviewed with Kirkwood the rate adjustment mechanism set forth in Section 5.3 of the TSA. Under that provision, the per-mile rates set forth in Schedule B were subject to annual adjustment each April 1, based on a blended index consisting of 70% diesel fuel index (specifically, the U.S. Energy Information Administration's weekly national average retail diesel price) and 30% Consumer Price Index for All Urban Consumers (CPI-U), as published by the Bureau of Labor Statistics.
Gallagher explained that the anticipated April 2022 rate adjustment — the adjustment that would have taken effect approximately one month after the March 4, 2022 termination — would have increased the weighted average per-mile rate from $2.87 to $3.28. This represented an increase of approximately 14.3%, which translated to an estimated additional $6.2 million in annual transportation costs for Stonefield under the TSA. Gallagher noted that these figures were derived from a rate adjustment analysis memorandum prepared by Ashford Meridian LLP in February 2022, which modeled the projected impact of the rate adjustment based on current index values and projected volumes.
B. Kirkwood's Knowledge and Involvement
Gallagher questioned Kirkwood extensively about her knowledge of the upcoming rate adjustment and the extent to which that knowledge informed or influenced the decision to issue the Cure Notice or to terminate the TSA.
Kirkwood stated that she was generally aware of the upcoming rate adjustment mechanism. She characterized her awareness as follows: "We all knew rates were going up. The fuel index had been climbing significantly through 2021. You didn't need a memo to tell you that rates were going to increase — it was obvious to anyone in the industry."
Kirkwood confirmed that she had seen or been briefed on the Ashford Meridian February 2022 rate adjustment memorandum. However, she could not recall the exact date on which she first saw or was briefed on the memo. She believed it was sometime in mid-to-late February 2022. Gallagher noted, and Kirkwood confirmed, that this timing was significant: the Ashford Meridian rate adjustment memo was prepared in February 2022, which was after the Cure Notice had already been issued on January 18, 2022, and after the 30-day cure period had expired on February 17, 2022. In other words, the detailed analysis quantifying the rate increase post-dated the initiation and substantial completion of the cure process.
Kirkwood stated that she did not recall the specific projected percentage increase (14.3%) being discussed at any point before the Cure Notice was sent on January 18, 2022. Her understanding of the precise magnitude of the anticipated rate increase crystallized only after Ashford Meridian completed its analysis. Prior to that, she had a general awareness that rates were increasing across the industry, but not a specific understanding of the dollar-for-dollar impact on the TSA.
Kirkwood firmly and repeatedly denied that the rate adjustment influenced Stonefield's decision to issue the Cure Notice or to terminate the TSA. She stated: "The performance problems were real. We were losing customers because VTS couldn't deliver on time. The rate increase was a separate issue entirely."
Gallagher then asked a more targeted question: whether Kirkwood had ever discussed the rate adjustment in connection with the potential termination of the TSA — that is, whether the two topics had ever come up in the same conversation or communication. Kirkwood paused noticeably before answering. She then stated: "I may have mentioned to Carlos [Medina] at some point that the rate increase was going to be significant and that it made the VTS relationship even more frustrating from a cost perspective, but the driver for the cure notice was the service failures, not the rates."
Gallagher noted Kirkwood's pause and the content of her response, and the session moved to preparation guidance on this topic.
C. Preparation Guidance
Gallagher identified this as a significant risk area for the deposition. CRS's core damages theory depends in part on establishing that Stonefield's termination of the TSA was not genuinely "for Cause" under Section 13.1(a), but was instead motivated by a desire to avoid the April 2022 rate increase. If CRS can persuade the factfinder that the rate adjustment was the real reason for the termination, with the performance failures serving as a pretext, Stonefield's termination would not qualify as "for Cause" and Vantor would be entitled to liquidated damages under Section 14.2.
Gallagher provided the following guidance to Kirkwood:
• Be truthful about awareness of the rate adjustment. Kirkwood should not deny that she was aware rates were going up under the TSA's indexing mechanism. Such a denial would lack credibility given her role, her industry experience, and the broader market conditions during 2021. Denying awareness of the rate adjustment would invite CRS to impeach her with documents or testimony from other Stonefield witnesses, which would undermine her overall credibility.
• Clearly separate awareness from causation. Kirkwood should draw a firm line between (a) awareness of a contractual mechanism that was going to result in a rate increase, and (b) any causal connection between that awareness and the decision to issue the Cure Notice or to terminate the TSA. Awareness of a rate adjustment is not the same as being motivated by it.
• Contextualize the rate adjustment as one of many commercial considerations. If pressed, Kirkwood may acknowledge that the rate adjustment was part of the broader commercial landscape in which Stonefield operated, but she should make clear that it was not the driving factor — or any factor — in the decision to issue the Cure Notice. The driving factor was VTS's documented and persistent failure to meet its service level obligations.
• Emphasize the chronology. The chronological facts strongly support Stonefield's position on this issue. The Cure Notice was issued on January 18, 2022. The Ashford Meridian rate adjustment memorandum, which contained the detailed projection of a 14.3% increase and a $6.2 million annual cost impact, was not prepared until February 2022. The detailed rate increase projection therefore post-dated the initiation of the cure process. While Kirkwood was generally aware that rates were going up, the specific magnitude of the increase was not quantified until after the cure process was already underway.
• If asked directly: "Did the rate adjustment play any role in the decision to terminate?" Kirkwood should answer honestly and directly: the decision to terminate was driven by VTS's uncured performance failures, as documented in the Cure Notice and the performance data compiled during the cure period. While Kirkwood was aware that rates were going up under the TSA's indexing mechanism, that was not why the Cure Notice was issued, and that was not why the TSA was terminated.
Gallagher also flagged the specific exchange described above — Kirkwood's acknowledgment that she "may have mentioned" the rate increase to Medina in connection with the VTS relationship — as a point that CRS may probe. Gallagher advised Kirkwood that this answer, while truthful, should be delivered in a way that clearly conveys the context: the rate increase made the relationship "more frustrating from a cost perspective," but the cure notice was driven by the service failures, not the rates. Gallagher instructed Kirkwood not to embellish or speculate about what she may have said to Medina beyond what she actually recalls. If she does not recall the specific conversation, she should say so.
V. THE CURE NOTICE PROCESS (KEY RISK AREA #3)
A. Kirkwood's Role in Identifying Performance Deficiencies
Kirkwood described the process by which VTS's performance deficiencies were identified, documented, and escalated within Stonefield.
VTS performance was tracked through two principal systems: (1) Stonefield's internal carrier management system, which recorded tender submissions, acceptances, rejections, pickup and delivery times, and claims data for all carriers in Stonefield's network; and (2) VTS's own Carrier Performance Portal, a web-based platform maintained by VTS that both Stonefield and VTS had access to. The Carrier Performance Portal provided real-time and historical performance metrics for VTS's operations, including on-time rates, fleet utilization, and equipment availability. Kirkwood's team referenced both systems in evaluating VTS's performance.
By late Q3 2021 (approximately August to September 2021), Kirkwood's team began flagging increasing service failures by VTS. Tender rejections were climbing across multiple lanes, on-time pickup and delivery rates were declining, and equipment availability was falling below committed levels. These trends were consistent with what Kirkwood had described in the September 22, 2021 email to Medina.
In approximately November 2021, the situation became what Kirkwood described as "critical." Multiple Stonefield customers began escalating complaints about missed deliveries on VTS-serviced lanes. These were not isolated incidents but a pattern of systemic failure affecting Stonefield's ability to meet its own service commitments to its customers. Kirkwood stated that the customer escalations were a significant factor in her decision to recommend formal contractual action.
During November and December 2021, 16 cargo claims were filed in connection with VTS-handled shipments, totaling $387,400 in claim value. Based on VTS's freight revenue for the period, this yielded a cargo claims ratio of approximately 1.07% — more than double the ≤ 0.5% SLO threshold specified in the TSA.
Kirkwood escalated the issue to Carlos Medina in late November or early December 2021 (she could not recall the exact date) and recommended that Stonefield initiate formal contractual action, meaning the issuance of a Cure Notice under Section 13.2 of the TSA. Medina agreed with the recommendation and directed Raymond Hess, Director of Contract Compliance at Stonefield, to compile the Q4 2021 performance data and prepare the formal Cure Notice for review by legal counsel.
B. Compilation of Performance Data
Kirkwood confirmed that the Q4 2021 performance metrics cited in the Cure Notice were as follows:
Kirkwood stated that she reviewed and confirmed these metrics before the Cure Notice was sent. The data was derived primarily from VTS's own Carrier Performance Portal, supplemented and cross-referenced with Stonefield's internal tracking systems. Kirkwood stated that there were no material discrepancies between the two data sources, and that in the few instances where minor discrepancies existed, the VTS Portal figures were used as the basis for the Cure Notice to avoid any argument that Stonefield was relying on its own unilateral data.
Kirkwood stated that the metrics were consistent with what she and her team were observing operationally on a daily basis. She noted: "The numbers confirmed what we were living every day. The data wasn't a surprise to anyone who was managing the VTS relationship."
C. The Cure Notice and Cure Period
The Cure Notice was sent by Raymond Hess, Director of Contract Compliance, to Sandra Milescu, COO of Vantor/VTS, on January 18, 2022, pursuant to Section 13.2 of the TSA. The notice was sent via overnight courier (FedEx, tracking records maintained in the file) and simultaneously by email to Milescu's Vantor email address. The notice identified the specific SLO failures described above, cited the applicable TSA provisions, and stated that VTS had 30 calendar days from receipt to cure the identified material breaches, failing which Stonefield would exercise its right to terminate the TSA for Cause under Section 13.1(a).
Kirkwood confirmed that she reviewed a draft of the Cure Notice before it was sent and provided input on the operational descriptions contained in the notice. Specifically, she reviewed the sections describing the nature and impact of the service level failures and provided additional detail on specific incidents and customer impacts. She also confirmed that Ashford Meridian LLP — specifically Lorraine Beckwith — reviewed the Cure Notice for legal sufficiency before it was finalized and sent. The final version of the Cure Notice incorporated revisions from both Kirkwood and Beckwith.
Kirkwood described the cure period (30 calendar days, commencing January 18, 2022 and expiring February 17, 2022) as follows:
• After the Cure Notice was sent, Kirkwood's team began monitoring VTS performance on a daily basis, as opposed to the weekly and monthly reporting cadence that had previously been in place. The purpose of the daily monitoring was to assess whether VTS was taking corrective action and whether the identified performance deficiencies were being cured.
• Approximately two days after the Cure Notice was sent, on or about January 20, 2022, Derek Pruitt called Kirkwood. Kirkwood recalled that Pruitt expressed "surprise" at the formal notice. Pruitt asked for a meeting to discuss the issues informally and suggested that the formal cure process was unnecessary and could be resolved through direct negotiation. Kirkwood told Pruitt that the issues were serious and needed to be addressed through the contractual process. She did not agree to suspend or extend the cure period, nor did she have the authority to do so. Kirkwood characterized the call as professional but tense, and stated that Pruitt seemed caught off guard by the formality of the notice.
• Kirkwood and Pruitt spoke again on approximately January 30, 2022. During this second call, Pruitt indicated that VTS was "working on it" and had initiated efforts to improve tender acceptance rates and equipment availability. However, Pruitt did not provide specific remediation plans, timelines, or data showing measurable improvement. Kirkwood stated that she asked Pruitt for specific data and metrics demonstrating improvement and that Pruitt said he would "get back to her," but that she did not receive any written documentation from Pruitt or VTS during the cure period showing that the performance deficiencies had been corrected.
D. Vantor's February 14, 2022 Response
On February 14, 2022 — three days before the expiration of the 30-day cure period — Derek Pruitt sent a letter to Kirkwood on behalf of Vantor Holdings Corp. and VTS, responding to the Cure Notice.
Kirkwood recalled the key points of Vantor's response:
• Vantor acknowledged "operational challenges" during the Q4 2021 period but did not accept that the challenges constituted material breaches of the TSA.
• Vantor attributed the performance deficiencies to three factors: (i) a nationwide driver shortage affecting the entire transportation industry during 2021, which Vantor characterized as an industry-wide force majeure event; (ii) Stonefield's alleged failure to tender minimum committed volumes, which Vantor claimed impaired VTS's ability to maintain fleet utilization and driver retention on the dedicated lanes; and (iii) Stonefield's alleged instructions to divert volume to other carriers, which Vantor claimed constituted a breach of the exclusivity provisions and contributed to the decline in VTS's performance metrics.
• The letter requested an extension of the cure period and proposed a meeting between senior executives of both companies to discuss a resolution.
Kirkwood described her reaction to the February 14 letter candidly: "It felt like they were blaming us for their problems. They didn't address the fundamental issue — they had pulled equipment off our dedicated lanes. They didn't show us any data indicating they had actually improved. They just pointed fingers at external factors and at us."
Kirkwood confirmed a critical factual point: the February 14 letter did not dispute the specific Q4 2021 performance metrics cited in the Cure Notice. Vantor disputed the cause of the performance failures — attributing them to external factors and to Stonefield's alleged conduct — but the letter did not challenge the accuracy of the numerical metrics themselves (i.e., the 78.2% on-time pickup rate, the 71.4% tender acceptance rate, etc.).
Kirkwood also confirmed that, at the time of the February 14 response, she was not aware of the internal VTS email from Sandra Milescu to Nikolai Vantorovich dated November 12, 2021 (Bates stamped VHC-008417), in which Milescu stated that VTS had "pulled 85 tractors off the SLG dedicated lanes" to redeploy them on other, more profitable contracts. Kirkwood stated that she learned of this email only during the document review process in connection with this litigation. She noted that the existence of this email significantly undermined Vantor's claim that VTS's performance failures were attributable to external factors (the driver shortage) or to Stonefield's conduct (volume diversion), because it demonstrated that VTS had made a deliberate internal decision to reduce its committed fleet on the Stonefield lanes.
E. Post-Cure Period Evaluation and Termination Decision
After February 17, 2022 — the expiration of the 30-day cure period — Kirkwood's team reviewed performance data for the period from late January through late February 2022 to assess whether VTS had achieved cure.
Kirkwood stated that the metrics had not materially improved during the cure period:
• On-time pickup rate remained below 82%, compared to the 95% SLO.
• Tender acceptance rate hovered in the range of 74–76%, compared to the 90% SLO.
• Equipment availability showed only marginal improvement, with fleet deployment still significantly below the 85% committed level.
• While cargo claims had declined somewhat during the cure period, the overall performance profile remained well below the contractually required service levels.
Based on this assessment, Kirkwood recommended termination of the TSA to Carlos Medina. Medina agreed with the recommendation and escalated the matter to Tobias Wren, General Counsel of Stonefield, for legal review and action.
Wren, in consultation with outside counsel at Ashford Meridian LLP (Lorraine Beckwith), prepared the formal termination letter, which was dated March 4, 2022 and addressed to Vantor Holdings Corp. and VTS. The termination letter cited the uncured material breaches identified in the January 18, 2022 Cure Notice and stated that Stonefield was exercising its right to terminate the TSA for Cause under Section 13.1(a), effective immediately.
Kirkwood stated that she did not draft or review the termination letter. The preparation and issuance of the termination letter was handled entirely by the legal team — Tobias Wren and Ashford Meridian. Kirkwood's involvement in the termination process concluded with her recommendation to Medina and her provision of the post-cure period performance data.
VI. VANTOR'S CLAIM OF VOLUME SHORTFALL BY STONEFIELD
A. COVID-19 Force Majeure Period
Gallagher reviewed with Kirkwood the force majeure provision set forth in Section 12.1 of the TSA and Stonefield's invocation of that provision during the COVID-19 pandemic.
Kirkwood confirmed that she was aware of Stonefield's force majeure notice, which was issued in connection with the COVID-19 pandemic and covered the period from approximately April 2020 through September 2020. During this period, freight demand dropped significantly across the logistics industry as a result of lockdowns, supply chain disruptions, and reduced consumer activity. Stonefield's overall freight volumes declined across all carriers in its network, not just VTS.
Kirkwood noted that even during the force majeure period, Stonefield continued to tender freight to VTS. She stated that actual Contract Year 2 ("CY2") tenders — covering the period from April 2020 through March 2021 — totaled approximately $31.8 million. This figure exceeded the adjusted ACV of $21.6 million, which was calculated by reducing the standard $43.2 million annual commitment by 50% to account for the six-month force majeure period during which the volume commitment was suspended. Kirkwood stated that Stonefield's decision to continue tendering volume to VTS during the force majeure period, even when it was not contractually required to do so, was evidence of Stonefield's good faith and its desire to maintain the VTS relationship.
B. CY3 Volume Tenders
For Contract Year 3 ("CY3"), which ran from April 2021 through January 2022 (a partial year of approximately 10 months, ending at the time of the Cure Notice), Stonefield tendered approximately $36.5 million in freight to VTS.
Vantor claims a volume shortfall of $6.7 million, calculated by subtracting the $36.5 million actually tendered from the $43.2 million full-year ACV. Kirkwood addressed this claim by making two observations:
First, CY3 was only a partial year — approximately 10 months — because the TSA was terminated during the contract year. If the $36.5 million tendered over 10 months is annualized, the resulting figure is approximately $43.8 million, which actually exceeds the $43.2 million ACV. On an annualized basis, Stonefield was meeting or exceeding its volume commitment.
Second, the volume decline from the standard ACV was partly attributable to VTS's own tender rejections. When VTS rejected tenders submitted by Stonefield — as it was doing at rates of 25–30% on certain lanes — the rejected volume did not count as volume tendered by Stonefield. In Kirkwood's words: "If they reject our loads, we can't force them to carry freight. You can't claim we didn't meet our volume commitment when you're the one turning down the work."
Gallagher instructed Kirkwood to be careful with numerical claims during the deposition. He noted that precise financial calculations regarding volume commitments, shortfalls, and ACV compliance should be deferred to the appropriate witnesses — specifically, Priya Ramachandran, Chief Financial Officer of Stonefield, or Raymond Hess, Director of Contract Compliance, who compiled the detailed volume data. Kirkwood's role at the deposition is to explain the operational reality — that VTS's tender rejections directly reduced the volume of freight that could be assigned to VTS — and to leave the precise financial analysis to witnesses with primary responsibility for those calculations.
VII. RELATIONSHIP WITH VTS — GENERAL DEMEANOR AND TONE
Gallagher discussed with Kirkwood the overall demeanor and tone she should project during the deposition, both in her general testimony and in her characterization of the Vantor/VTS relationship.
Gallagher provided the following guidance:
• Kirkwood should present as professional, measured, and fact-based throughout her testimony. She should avoid emotional language, sarcasm, or expressions of frustration, even when describing events that were genuinely frustrating.
• She should not express personal animus toward Vantor personnel, particularly Derek Pruitt or Sandra Milescu. Even if Kirkwood has strong personal feelings about the conduct of these individuals, the deposition is not the appropriate forum for those feelings. CRS will be looking for evidence of bias, personal grudges, or unprofessional behavior that could be used to undermine Kirkwood's credibility.
• Kirkwood should characterize the relationship with VTS as having been "generally productive" during Contract Year 1 (April 2019 through March 2020), with performance metrics that were within acceptable ranges and operational communications that were constructive and collaborative. The relationship began to deteriorate significantly in the second half of 2021, as the performance issues described above intensified.
• Kirkwood should acknowledge that she raised concerns internally about VTS's performance, but also that she and her team worked actively with VTS to try to resolve the issues before resorting to the formal cure process. This included direct communications with Pruitt and Milescu, participation in monthly performance calls, and operational-level troubleshooting by Kirkwood's carrier relations team. The formal Cure Notice was a last resort after months of unsuccessful efforts to address the problems through informal channels.
Kirkwood stated that she was comfortable with this approach and that it accurately reflected the history of the relationship. She confirmed that she did not bear personal animus toward Pruitt or Milescu and that her concerns throughout the process were operational and professional, not personal.
VIII. DOCUMENT REVIEW COMPLETED DURING SESSION
During the session, Gallagher reviewed the following key documents with Kirkwood, displaying each on the conference room screen and discussing relevance, content, and anticipated deposition questions:
1. Transportation Services Agreement dated March 15, 2019 (Contract Ref. SLG-VTS-2019-0315) — specifically Sections 5.3 (Rate Adjustment Mechanism), 7.4 (Performance Monitoring and Reporting), 12.1 (Force Majeure), 13.1 (Termination for Cause), 13.2 (Cure Notice Procedures), 14.2 (Liquidated Damages), and Schedule C (Lane Designations and Exclusivity).
2. Kirkwood-to-Medina email, September 22, 2021 (Bates No. SLG-017892) — "VTS — Ongoing Performance Issues."
3. Cure Notice, January 18, 2022 (Hess to Milescu) — formal notice of material breach under Section 13.2.
4. Vantor response to Cure Notice, February 14, 2022 (Pruitt to Kirkwood) — Vantor's written response attributing performance failures to external factors and Stonefield's alleged conduct.
5. Termination letter, March 4, 2022 (Wren to Vantor Holdings Corp. and VTS) — formal exercise of termination for Cause under Section 13.1(a).
6. VTS Q4 2021 Performance Report — internal VTS document produced in discovery, containing VTS's own compilation of Q4 2021 performance metrics.
7. Ashford Meridian Rate Adjustment Memo, February 2022 — analysis memorandum projecting the April 2022 rate adjustment impact.
8. Milescu-to-Vantorovich email, November 12, 2021 (Bates No. VHC-008417) — internal VTS communication in which Milescu stated VTS had "pulled 85 tractors off the SLG dedicated lanes."
9. Select monthly performance summary emails between Kirkwood and Pruitt (August through December 2021) — a series of email exchanges documenting the escalating performance concerns during this period.
Kirkwood confirmed familiarity with all documents reviewed during the session with the exception of document number 8 (the Milescu-to-Vantorovich email, VHC-008417). Kirkwood stated that she saw this email for the first time during the document review process conducted with counsel in preparation for this litigation. She had not been aware during the operative period that VTS had made an internal decision to pull 85 tractors off the Stonefield dedicated lanes.
IX. PRACTICE QUESTIONING
Following the document review, Gallagher conducted approximately 45 minutes of mock cross-examination. The practice questioning simulated the adversarial style and subject matter that CRS is expected to employ during the July 14, 2023 deposition.
The mock cross-examination focused on the following topics:
• The September 22, 2021 email. Gallagher adopted an aggressive questioning style and pressed Kirkwood on the tone and word choice of the email, particularly the phrase "pull the plug on the whole contract." He asked Kirkwood to agree that the phrase reflected a premeditated plan to terminate the TSA. He pressed her on whether the email constituted a recommendation to terminate, whether she discussed it with anyone else, and whether Stonefield took any steps after September 22 that were inconsistent with an intention to continue the VTS relationship.
• Whether the volume diversion to Cascade and Briarwood breached the TSA. Gallagher questioned Kirkwood about the specifics of the volume diversion, the contractual basis for using alternative carriers on Secondary Lanes, the right of first refusal process, and whether any volume was moved off Primary Lanes.
• Kirkwood's awareness of and reaction to the upcoming rate adjustment. Gallagher probed Kirkwood's knowledge of the rate increase, the timing of her awareness, any conversations she had with Medina or others about the rate adjustment in connection with the VTS relationship, and whether the rate increase provided a financial incentive to terminate the TSA.
• Whether Stonefield's termination was motivated by cost savings rather than performance. Gallagher framed several questions designed to test whether Kirkwood could maintain the separation between the performance-driven cure process and the cost implications of the rate adjustment.
• Whether Kirkwood ever communicated to Pruitt or anyone at Vantor that Stonefield was considering termination before the Cure Notice. Gallagher explored whether Kirkwood had given any formal or informal warning to VTS that the relationship was at risk of termination prior to the issuance of the January 18, 2022 Cure Notice.
Assessment of Kirkwood's Performance:
Kirkwood's performance during the mock cross-examination was assessed as strong overall. The following observations were noted:
• She remained composed under aggressive questioning, did not become flustered or defensive, and maintained a professional demeanor throughout.
• She consistently and accurately distinguished between Primary and Secondary Lanes when discussing the volume diversion, and she correctly identified the applicable provisions of Schedule C.
• She appropriately qualified her responses when she was uncertain about specific dates, using phrases such as "to the best of my recollection" and "I believe it was approximately."
• She did not speculate or volunteer unnecessary information, and she generally adhered to the guideline of answering only the question asked.
• One area for improvement was noted: When discussing the rate adjustment, Kirkwood initially provided lengthy narrative answers that went beyond what was asked and risked opening additional lines of inquiry for the examiner. For example, when asked whether she was aware of the rate increase, she provided a multi-sentence answer that included unsolicited commentary on industry-wide cost trends and Stonefield's overall transportation budget. Gallagher counseled her to keep her responses on this topic shorter and more direct, and to wait for follow-up questions before providing additional context. Kirkwood acknowledged this feedback and demonstrated improvement in subsequent practice questions.