1012-00005 · Stonefield Logistics Group · Discovery/Analysis

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

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

FROM: Kara Nystrom, Contract Associate, and Simone Laroche, Working Associate, Litigation (General), Calderwood & Harkness LLP

DATE: July 3, 2023

RE: Analysis of Vantor's Supplemental Document Production (VHC-029001 through VHC-033218)

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

MATTER NO.: 1012-00005

I. Executive Summary

The purpose of this memorandum is to summarize and analyze the supplemental document production made by Vantor Holdings Corp. ("Vantor") and its wholly owned subsidiary, Vantor Transport Services LLC ("VTS," and together with Vantor, "Plaintiffs"), on June 22, 2023, pursuant to the Honorable Margaret T. Calloway's June 9, 2023 discovery order compelling the production of fleet redeployment records. This supplemental production consists of 4,218 documents, Bates-numbered VHC-029001 through VHC-033218, and represents a significant addition to the documentary record in this case.

The documents were produced in response to Stonefield Logistics Group Inc.'s ("Stonefield" or "SLG") Second Request for Production of Documents, which was served on May 5, 2023. The Second Request for Production specifically targeted the following categories of materials through RFP Nos. 1 through 5:

• VTS fleet redeployment records for Q3 and Q4 2021;

• Communications between Sandra Milescu (COO of VTS) and Nikolai Vantorovich (CEO of Vantor) regarding SLG-dedicated capacity;

• VTS contracts with shippers to whom fleet capacity was redirected during the relevant period;

• VTS driver termination and workforce reduction records post-March 2022; and

• All internal analyses or financial assessments of the impact of the SLG contract termination.

These documents were not produced voluntarily. Vantor initially objected to the Second Request for Production on the grounds that the requests were overbroad, unduly burdensome, and not proportional to the needs of the case. Following the objections, Calderwood & Harkness sent a detailed meet-and-confer letter to Vantor's counsel, Caldwell Royce & Shapiro LLP, on May 30, 2023, outlining the specific deficiencies in Vantor's objections and demanding production. Vantor's counsel did not substantively respond to the meet-and-confer letter, and no resolution was reached through the informal discovery dispute resolution process. Accordingly, Stonefield filed a discovery dispute letter brief with the Court on June 5, 2023, requesting an order compelling production. Judge Calloway held a telephonic conference on June 9, 2023, and issued an order the same day compelling Vantor to produce all responsive, non-privileged documents within ten business days. In her order, Judge Calloway specifically noted the relevance of VTS's unilateral capacity reduction to the material breach and mitigation issues that are central to this case, and she expressed concern about Vantor's failure to produce these records during its initial production.

Key Finding: The supplemental production contains documents that significantly strengthen Stonefield's defense by confirming that VTS deliberately redirected 85 tractors from Stonefield-dedicated lanes to the account of Northwind Distribution Co. ("Northwind"), a competing shipper, beginning in October 2021 — approximately five weeks before VTS's Q4 2021 performance metrics collapsed below the contractual Service Level Obligation ("SLO") thresholds set forth in the Transportation Services Agreement ("TSA"). The documents further reveal that Vantor's senior leadership, including CEO Vantorovich and COO Milescu, were fully aware of the fleet diversion, intentionally concealed it from Stonefield, and later instructed subordinates to attribute the resulting performance failures to external causes — specifically, a nationwide driver shortage and Stonefield's own alleged volume shortfalls — rather than the true cause of VTS's own deliberate capacity reduction.

This memorandum identifies and categorizes the most significant documents in the supplemental production, summarizes their content, and assesses their impact on Stonefield's defense strategy, including the valid termination for cause defense, the first-to-breach doctrine, the failure to mitigate affirmative defense, and the enforceability of the liquidated damages clause. Specific recommendations for next steps — including transmittal of key documents to the rebuttal expert team, preparation of supplemental deposition outlines, and correspondence with opposing counsel — are set forth in Section VII below.

II. Overview of the Supplemental Production

A. Production Statistics

The supplemental production made by Vantor on June 22, 2023 consists of the following:

The documents span a critical period in the parties' contractual relationship — from approximately six months before the fleet redeployment decision through approximately two months after Stonefield's termination of the TSA on March 4, 2022. The document types represented in the production break down as follows:

The predominance of internal emails is consistent with expectations for a production of this nature. The fleet management system reports and logs — which constitute over 21% of the production — are particularly significant because they provide contemporaneous, system-generated records of tractor assignments, driver schedules, and lane-by-lane performance data that are difficult to dispute or explain away as subjective or after-the-fact characterizations.

B. Review Methodology

The document review was conducted in two passes in accordance with the firm's standard litigation review protocols.

First-Pass Review. The initial responsiveness and issue-coding review was conducted by Kara Nystrom and two additional contract reviewers (Elise Hanford and James Tomczak), under the supervision of David Moretti, Litigation Support / eDiscovery Manager. All reviewers applied responsiveness and privilege coding in accordance with the Document Review Protocol Memorandum dated March 15, 2023, which was circulated to the full review team at the outset of this matter. The first-pass review was completed on June 30, 2023, approximately eight days after receipt of the production.

Second-Pass Review. A substantive second-pass review of all documents coded "Hot" or "Significant" during the first-pass review was conducted by Simone Laroche. This review focused on analyzing the content of each flagged document in the context of the case's key legal and factual issues, cross-referencing the flagged documents against the existing document universe from Vantor's initial production, and identifying documents that warranted further analysis or that should be designated for use in depositions, expert reports, or summary judgment briefing.

The coding results are summarized below:

All 34 documents coded "Hot" have been indexed separately in the Key Document Index — Vantor Supplemental Production, which Kara Nystrom is preparing and which will be dated July 5, 2023. That index includes full Bates numbers, dates, authors, recipients, subject lines, and brief content descriptions for each Hot document, and is intended to serve as a quick-reference companion to this memorandum.

Notably, Vantor did not serve a supplemental privilege log in connection with this production. No documents were withheld on the basis of privilege, and no accompanying privilege log supplement was served. This is somewhat unusual given the volume and nature of the documents produced, and it may reflect Vantor's haste in complying with Judge Calloway's order. However, as discussed in Section V.A below, several documents in the production contain unexplained redactions that may implicate privilege or other withholding bases that Vantor has not disclosed.

III. Key Document Categories and Analysis

The following sections identify and analyze the most significant documents in the supplemental production, organized by subject matter. For each key document, we provide the Bates number, date, author, recipient(s), a summary of the document's content, and an assessment of its significance to Stonefield's defense.

A. Fleet Redeployment Records — Northwind Distribution Co. Account

The single most important category of documents in the supplemental production relates to VTS's decision to reassign 85 tractors from Stonefield-dedicated lanes to the Northwind Distribution Co. account in October 2021. These documents establish, with considerable specificity, the timeline, rationale, and execution of the fleet diversion, and they provide powerful evidence that VTS's subsequent performance failures on the SLG account were self-inflicted rather than the result of external market conditions.

1. The Northwind Redeployment Decision

Four documents in particular establish the genesis and execution of the fleet redeployment decision:

VHC-029147 — Milescu to Vantorovich Email (October 3, 2021). This is an email from Sandra Milescu, Chief Operating Officer of VTS, to Nikolai Vantorovich, Chief Executive Officer of Vantor, dated October 3, 2021, with the subject line "SLG Fleet — Reallocation Proposal." In this email, Milescu proposes reassigning 85 tractors and approximately 210 trailers from Stonefield-dedicated lanes to the Northwind Distribution Co. account. Milescu states that Northwind is offering rates "18–22% above current SLG contracted rates" on comparable lanes in the Northeast corridor, and she frames the reallocation as a necessary response to margin compression on the SLG account. Critically, Milescu explicitly acknowledges the risk to the Stonefield relationship, writing that "SLG will notice the capacity reduction eventually," but asserts that VTS "can manage short-term with owner-operators and spot capacity." This document is significant because it demonstrates that VTS's leadership was fully aware that the fleet redeployment would reduce capacity on Stonefield-dedicated lanes and that VTS intentionally chose to prioritize the higher-margin Northwind business over its contractual commitments to Stonefield. The document also contains a redacted paragraph immediately following the fleet reallocation discussion, which Vantor has not explained. We recommend demanding production of the unredacted version, as discussed in Section V.A below.

VHC-029148 — Vantorovich to Milescu Reply (October 4, 2021). This is a one-line email reply from Vantorovich to Milescu, dated October 4, 2021, in which Vantorovich states: "Go ahead. We need the margin. Make sure Derek [Pruitt] doesn't flag this to his SLG contacts." This document is extraordinarily significant for several reasons. First, it confirms that Vantorovich personally authorized the fleet redeployment decision at the highest level of the corporate hierarchy. Second, it establishes that Vantorovich was motivated by financial considerations — specifically, the desire for higher margins — rather than any legitimate operational need. Third, and most damaging to Vantor's litigation position, Vantorovich's instruction to ensure that Derek Pruitt (VP, Business Development) did not "flag this to his SLG contacts" demonstrates a deliberate intent to conceal the fleet diversion from Stonefield. This email directly contradicts Vantorovich's partial deposition testimony on August 18, 2023, in which he stated under oath that he was "not involved in day-to-day fleet decisions" and could not recall specifics about the tractor reassignment. This inconsistency may be grounds for an adverse credibility inference and should be a focal point of the continuation of Vantorovich's deposition.

VHC-029203 — Internal Fleet Operations Memorandum (October 8, 2021). This is an internal VTS fleet operations memorandum dated October 8, 2021, authored by the VTS Fleet Manager (whose name has been redacted in the production), directing the transfer of 85 tractors (with specific unit numbers listed in an attached schedule) from the "SLG Dedicated Pool" to the "Northwind Regional Pool," effective October 11, 2021. The memorandum specifies the affected lanes, which were primarily SLG Northeast and Mid-Atlantic corridor routes — the same routes where Stonefield experienced the most severe service degradation in Q4 2021. This document provides the operational "paper trail" connecting the executive decision (VHC-029147 and VHC-029148) to its actual execution in the field.

VHC-029211 — Tractor Reassignment Spreadsheet (October 11, 2021). This spreadsheet, dated October 11, 2021, documents the actual tractor reassignments by unit number, driver assignment, and origin-destination lane. The spreadsheet confirms that all 85 tractors were removed from SLG-dedicated service as of October 11, 2021, and it provides a unit-by-unit accounting that can be cross-referenced against VTS's fleet management system data and the performance dashboards discussed in Section III.B below. This document is particularly valuable because it is a contemporaneous business record that will be difficult for Vantor to challenge on authenticity or reliability grounds.

2. Corroboration of Previously Identified "Smoking Gun" Email

The four documents discussed above corroborate and provide critical additional context for the previously identified Milescu-to-Vantorovich email of November 12, 2021 (VHC-008417, from Vantor's first production), which the team had already flagged as a key document. In that email, Milescu wrote: "We've pulled 85 tractors off the SLG dedicated lanes to cover [redacted] commitments. SLG won't notice until January."

The supplemental production now reveals two important facts about VHC-008417 that were previously unknown:

First, the "[redacted]" reference in VHC-008417 referred to Northwind Distribution Co. The supplemental production provides the unredacted context through the separate communications discussed above (VHC-029147, VHC-029148, VHC-029203, and VHC-029211), which identify Northwind by name as the recipient of the diverted fleet capacity.

Second, the fleet redeployment decision was made and executed in early October 2021 — approximately five weeks earlier than the November 12, 2021 email suggested. The October 3–4 email exchange between Milescu and Vantorovich (VHC-029147 and VHC-029148) and the October 11, 2021 reassignment spreadsheet (VHC-029211) establish that the decision was authorized on October 4 and implemented on October 11. The November 12 email, which was the earliest document in the initial production addressing the fleet redeployment, was therefore a mid-stream status update rather than the point of decision — a distinction that materially extends the period of VTS's knowing breach of the TSA.

The redaction in VHC-008417 was apparently applied by Vantor during its first production without a corresponding entry on the privilege log. The supplemental production provides the substantive context that the redaction obscured, but the fact that Vantor redacted the name "Northwind" from VHC-008417 without explanation or privilege log entry raises questions about the completeness and good faith of Vantor's initial production. This issue should be raised with the Court if necessary.

3. Northwind Contract Documents

Three documents in the supplemental production relate to the VTS-Northwind contractual relationship and confirm the financial terms that motivated the fleet diversion:

VHC-029387 — VTS-Northwind Master Transportation Services Agreement (September 28, 2021). This is the executed Master Transportation Services Agreement between Vantor Transport Services LLC and Northwind Distribution Co., dated September 28, 2021. The contract has a term of one year with automatic renewal, and it contains a minimum volume commitment by Northwind of $12.5 million annually. The execution date of September 28, 2021, is significant because it predates Milescu's October 3, 2021 reallocation proposal by only five days, suggesting that VTS was negotiating the Northwind contract simultaneously with planning the fleet diversion from Stonefield-dedicated lanes. The contract also imposes minimum equipment commitments on VTS, which further confirms that VTS could not have serviced both the Stonefield and Northwind accounts at contractual levels with its existing fleet.

VHC-029388 — Northwind Rate Schedule. This is the rate schedule appended to the Northwind contract, showing per-mile rates averaging $3.42 across designated lanes. By comparison, the weighted average SLG rate under the TSA was $2.87 per mile. This differential of $0.55 per mile, or approximately 19.2%, is consistent with Milescu's characterization in VHC-029147 that Northwind rates were "18–22% above current SLG contracted rates." This rate differential provides a clear financial motive for VTS's decision to prioritize Northwind over Stonefield and will be important in establishing that the fleet diversion was economically motivated rather than operationally necessitated.

VHC-029401 — Pruitt to Milescu Email (September 30, 2021). This email from Derek Pruitt, Vice President of Business Development at Vantor, to Milescu, dated September 30, 2021, congratulates Milescu on the Northwind deal and states: "This makes up for the margin compression we've been eating on the SLG contract." This document is significant for two reasons. First, it confirms that Pruitt — who was the primary relationship manager with Stonefield and the individual responsible for communicating with Stonefield's logistics team — was aware of the Northwind contract and the financial motivations behind the fleet diversion. Second, Pruitt's reference to "margin compression" on the SLG contract provides additional evidence that VTS's decision was driven by financial self-interest rather than any legitimate operational constraint. The document contains a redacted footer that Vantor has not explained.

B. Impact on VTS Q4 2021 Performance Metrics

The second major category of significant documents in the supplemental production consists of VTS's internal performance tracking records for the SLG account during Q4 2021. These documents are critical because they establish a clear and immediate causal link between the October 2021 tractor reassignment and the performance failures that prompted Stonefield's January 18, 2022 Cure Notice.

1. Internal Performance Tracking

VHC-030012 — VTS Internal Weekly Performance Dashboard (Week Ending October 22, 2021). This document is a VTS internal weekly performance dashboard for the week ending October 22, 2021 — approximately eleven days after the 85 tractors were reassigned to the Northwind account. The dashboard shows an immediate and substantial decline in SLG-dedicated performance metrics. Specifically, the on-time pickup rate dropped from 93.1% for the week ending October 8 to 86.4% for the week ending October 22, and the tender acceptance rate dropped from 88.7% to 79.2% over the same period. Both of these metrics had been consistently above the contractual SLO thresholds prior to the tractor reassignment.

VHC-030045 through VHC-030089 — Weekly Performance Dashboards (October 2021 through January 2022). This series of approximately 45 weekly performance dashboards covers the period from October 2021 through January 2022 and documents the progressive deterioration of all five Service Level Obligation metrics on the SLG account. The trajectory across all five metrics is summarized as follows:

The Q4 2021 average figures are consistent with the metrics cited in Stonefield's January 18, 2022 Cure Notice, which identified failures across all five SLO categories. The dashboards establish that the performance degradation was not gradual or attributable to seasonal fluctuations; rather, the decline began abruptly in the week following the October 11, 2021 tractor reassignment and continued to worsen through the end of the quarter as VTS failed to backfill the diverted capacity.

The equipment availability metric is particularly telling. VTS was operating at approximately 62% of its committed fleet on the SLG account — approximately 248 tractors versus the 400 required under the TSA — a shortfall that corresponds almost exactly to the 85 tractors that were reassigned to Northwind (400 minus 85 equals 315, but the actual utilization figure of 248 suggests additional attrition beyond the initial 85-tractor diversion, likely driven by cascading effects such as driver reassignments and route disruptions).

The cargo claims ratio spike in November and December 2021 — 16 claims totaling $387,400, resulting in a ratio of 1.07% against the 0.5% SLO threshold — is also notable. This spike is consistent with the operational disruption caused by the fleet diversion, as reduced equipment availability likely resulted in the use of less experienced owner-operators and spot carriers who were more prone to cargo damage incidents.

2. Internal Acknowledgment of Causation

Two documents in the supplemental production contain explicit internal acknowledgments that the fleet diversion caused the performance failures on the SLG account:

VHC-030112 — VTS Fleet Manager to Milescu Email (November 19, 2021). In this email, the VTS Fleet Manager writes to Milescu: "The SLG metrics are tanking because we don't have the equipment. We're running 62% of committed capacity. Drivers are being forced to decline tenders. If SLG audits the fleet logs we're going to have a problem." This email is a contemporaneous, candid internal admission that directly links the performance failures to the equipment shortfall created by the Northwind redeployment. The Fleet Manager's concern about a potential SLG audit of fleet logs further demonstrates VTS's awareness that the redeployment was concealed from Stonefield and that discovery of the true cause would create significant liability exposure.

VHC-030118 — Milescu to Vantorovich Email (November 22, 2021). Three days after receiving the Fleet Manager's warning, Milescu forwarded the concern to Vantorovich, writing: "Fleet manager is raising flags about SLG numbers. I told him we'll manage it. Worst case we backfill with owner-operators in January." This email is significant because it demonstrates that VTS's senior leadership was aware of the deteriorating SLG metrics and their cause, yet chose to defer any corrective action until January 2022 — by which time the Q4 2021 SLO failures had already occurred and Stonefield's Cure Notice was imminent. Milescu's casual dismissal of the Fleet Manager's concerns ("I told him we'll manage it") further undermines Vantor's litigation position that the performance deficiencies were caused by factors beyond VTS's control, such as Stonefield's own volume shortfalls or the nationwide driver shortage.

Together, these documents create a powerful narrative: VTS's own personnel recognized in real time that the fleet diversion was causing the SLG account to fail, raised the alarm internally, and were told to stand down by the same executive who had authorized the diversion in the first place.

C. Failure to Notify Stonefield of Capacity Reduction

The supplemental production also contains evidence that VTS deliberately chose not to notify Stonefield of the capacity reduction, in violation of the TSA's contractual provisions regarding equipment commitments and substitute capacity.

VHC-029156 — Pruitt/Milescu Email Chain (October 6–7, 2021). This is an email chain between Derek Pruitt (VP, Business Development) and Sandra Milescu (COO), dated October 6–7, 2021. In the chain, Pruitt asks Milescu: "Should we give Janet [Kirkwood] a heads-up about the capacity shift?" Janet Kirkwood is Stonefield's Director of Transportation Procurement and was the primary day-to-day contact on the SLG account. Milescu responds: "No. Let's keep this internal for now. We don't want SLG renegotiating rates or invoking the equipment clause [Section 7.4 of the TSA]."

This exchange is critical for two reasons. First, it establishes that VTS actively and deliberately chose to conceal the fleet diversion from Stonefield, even when one of its own senior officers suggested disclosure. This was not an oversight or an administrative failure — it was a conscious decision made at the executive level. Second, Milescu's specific reference to Section 7.4 of the TSA demonstrates that VTS's leadership was aware of the contractual provision requiring VTS to provide substitute equipment or surge capacity in the event of a shortfall in committed fleet resources, and that VTS deliberately chose to breach that provision rather than risk Stonefield invoking it.

Section 7.4 of the TSA, titled "Equipment Shortfall; Substitute Capacity," provides in relevant part:

In the event that Carrier is unable to provide the Committed Equipment for any reason, including equipment failure, maintenance requirements, or force majeure events, Carrier shall promptly notify Shipper of such shortfall and shall use commercially reasonable efforts to procure substitute equipment or surge capacity from qualified subcontractors at no additional cost to Shipper. Carrier shall not reduce the Committed Equipment below the levels specified in Exhibit B without Shipper's prior written consent.

VTS's deliberate decision not to notify Stonefield and not to provide substitute capacity constitutes an additional, independent breach of the TSA — separate from and in addition to the SLO failures that resulted from the fleet diversion. This evidence directly supports Stonefield's "first-to-breach" defense: VTS committed the first material breach by unilaterally reducing fleet capacity in October 2021, without notice and without providing substitute equipment, before any alleged volume shortfall by Stonefield and before the termination. Under New York's first-to-breach doctrine, as discussed further in Section IV.B below, VTS's prior material breach would excuse Stonefield's subsequent performance obligations and provide an independent basis for validating the termination.

D. Vantor's Response to Cure Notice — Internal Deliberations

Perhaps the most damaging category of documents in the supplemental production consists of Vantor's internal deliberations following receipt of Stonefield's January 18, 2022 Cure Notice. These documents reveal that Vantor's leadership knew the Cure Notice metrics were accurate, recognized that curing the defaults would require reversing the Northwind redeployment, and instead chose to craft a response that deliberately concealed the true cause of the performance failures and attributed them to external factors.

VHC-031204 — Fielding to Vantorovich Email (January 20, 2022). This email from Gregory Fielding, Chief Financial Officer of Vantor, to Vantorovich, dated January 20, 2022 — just two days after Stonefield served its Cure Notice — states: "The metrics SLG cited are accurate. We can't cure this in 30 days — we'd need to pull the tractors back from Northwind, and that kills our margins." This is an admission from Vantor's CFO that (a) the performance failures identified in the Cure Notice were real and not disputed internally; (b) the only way to cure the defaults within the 30-day cure period was to reverse the Northwind redeployment; and (c) Vantor chose not to do so because it would negatively impact the company's profit margins. This document goes to the heart of the termination-for-cause defense: Vantor was given a contractual opportunity to cure its defaults and made a deliberate business decision not to cure because curing would have required sacrificing the financial benefits of the Northwind arrangement.

VHC-031218 — Milescu to Pruitt Email (January 22, 2022). This email from Milescu to Pruitt, dated January 22, 2022, instructs Pruitt to: "Draft the response to SLG. Push back on the volume shortfall angle. Don't mention Northwind." This document is evidence of a deliberate strategy to conceal the true cause of VTS's performance failures during the cure period. Milescu's instruction to "push back on the volume shortfall angle" indicates a conscious decision to blame Stonefield for the service degradation rather than acknowledge VTS's own fleet diversion. Her instruction to "don't mention Northwind" is an explicit directive to withhold material information from the Cure Notice response. This document may also be relevant to any future arguments regarding discovery misconduct or litigation bad faith, as it demonstrates a pattern of concealment that began before the litigation was even contemplated and continued into the formal dispute resolution process.

VHC-031245 — Draft Cure Notice Response (Internal Version with Tracked Changes). This is an internal draft of Vantor's February 14, 2022 Cure Notice response letter, complete with tracked changes showing the editorial process. The tracked changes reveal that Pruitt's edits removed a reference to "fleet redeployment" as a contributing factor and replaced it with "nationwide driver shortage" as the primary explanation for the performance shortfalls. This is direct evidence that Vantor's February 14, 2022 response — which was the formal response that Vantor submitted to Stonefield during the cure period — was knowingly misleading.

Vantor's February 14, 2022 Cure Notice response, as sent to Stonefield, attributed the operational challenges to three purported causes: (i) a nationwide driver shortage affecting all carriers in the industry; (ii) Stonefield's alleged failure to tender minimum committed volumes under the TSA; and (iii) Stonefield's alleged instructions to divert certain shipments to spot market carriers. The supplemental production documents — particularly VHC-031204, VHC-031218, and VHC-031245 — conclusively demonstrate that these explanations were pretextual. The real cause of the performance failures was the Northwind fleet diversion, which Vantor's own CFO acknowledged internally and which Vantor deliberately concealed from Stonefield.

The implications of these documents extend beyond the termination-for-cause defense. They may also support an argument that Vantor's Cure Notice response constituted a bad-faith repudiation of the cure process, which could affect the Court's analysis of whether VTS meaningfully attempted to cure its defaults within the contractual cure period. If VTS never intended to reverse the fleet diversion — and the documents strongly suggest it did not — then Vantor cannot credibly argue that it was denied a fair opportunity to cure.

E. Post-Termination Mitigation (or Lack Thereof)

The supplemental production includes a substantial body of documents — approximately 187 documents numbered VHC-032001 through VHC-032187 — relating to Vantor's actions in the period following Stonefield's March 4, 2022 termination of the TSA. These documents are highly relevant to Stonefield's affirmative defense that Vantor failed to mitigate its damages.

VHC-032015 — Milescu to Vantorovich Email (March 8, 2022). This email, sent just four days after the termination became effective, shows Milescu informing Vantorovich: "SLG termination is effective. We still have 85 units on Northwind plus the rest of the fleet. No immediate need to find replacement volume — Northwind is covering the gap." This document demonstrates that Vantor viewed the Northwind account as a partial substitute for the lost SLG volume and did not perceive an urgent need to seek additional replacement business. While this is not itself an admission of failure to mitigate, it establishes a baseline mindset that is inconsistent with the vigorous mitigation efforts that New York law requires of a non-breaching party.

VHC-032089 — Internal VTS Business Development Report, Q2 2022. This document is a quarterly business development report for VTS covering Q2 2022 (April through June). The report shows that VTS submitted only two Requests for Proposal ("RFPs") to potential new shipper clients during this period, neither of which resulted in a new contract. No new transportation services contracts were executed through June 2022 to replace the lost SLG volume. This is striking given the market conditions at the time: the domestic freight market in Q1 and Q2 2022 was characterized by historically elevated demand, with spot rates running approximately 35% above historical averages according to publicly available freight market indices. In this environment, a carrier of VTS's size and capability should have been able to secure replacement business with relatively modest effort. The business development report suggests that VTS made only minimal efforts to do so.

VHC-032143 — Pruitt to Milescu Email (April 15, 2022). This email is potentially the single most damaging document in the supplemental production with respect to the mitigation defense. Pruitt writes to Milescu: "We're focused on the litigation now. Harrison [Caldwell, of Caldwell Royce & Shapiro LLP] says our best recovery is the liquidated damages clause. No need to scramble for replacement freight — it could hurt our damages case." This is a direct admission that Vantor deliberately chose not to mitigate its damages — not because replacement business was unavailable, but because Vantor's litigation counsel advised that vigorous mitigation could undermine Vantor's damages claim. Under New York law, a non-breaching party has an affirmative duty to take reasonable steps to minimize its damages, and the failure to do so may reduce or eliminate the damages that the non-breaching party can recover. See, e.g., Wilmot v. State, 32 N.Y.2d 164, 168–69 (1973); Vireo Trust Bank v. Marlowe Commerce Bank Asset Capital Corp., 424 F.3d 195, 208 (2d Cir. 2005). Vantor's deliberate strategy of foregoing mitigation in order to maximize its litigation recovery is precisely the type of conduct that New York courts have found to constitute an unreasonable failure to mitigate.

It is worth noting that VHC-032143 contains a reference to advice from Vantor's litigation counsel, Harrison Caldwell. While Vantor might argue that this document is protected by the attorney-client privilege, the document was produced without any privilege designation, no privilege log entry was made, and Vantor did not claw back the document within the time periods specified in the parties' Rule 502(d) order. We should nevertheless be prepared for a potential clawback demand and should promptly assess the implications under the Federal Rules of Evidence and the parties' stipulated order regarding inadvertent production.

VHC-032178 — Internal Financial Analysis (May 2022). This document is an internal financial analysis prepared by CFO Fielding in May 2022, assessing the actual revenue impact to Vantor from the loss of the SLG contract. According to Fielding's analysis, the annualized revenue impact was approximately $36.5 million, based on the Calendar Year 3 run rate under the TSA. However, this gross figure was offset by approximately $12.5 million in retained Northwind revenue, plus continued fleet utilization on other existing accounts. The net annualized revenue impact was estimated at approximately $18 to $20 million. This figure is significantly less than the $43.2 million Annual Contract Value ("ACV") that Vantor used as the basis for its liquidated damages calculation, which yields a claim of approximately $67.23 million under the TSA's liquidated damages formula (1.5 times the ACV for the then-current contract year, plus the ACV for the remaining contract years). The gap between the actual impact ($18–$20 million) and the liquidated damages claim ($67.23 million) is central to Stonefield's argument that the liquidated damages clause is an unenforceable penalty, as discussed further in Section IV.D below.

F. Driver Termination and Workforce Records

The supplemental production includes approximately 187 documents (VHC-032501 through VHC-032687) consisting of VTS human resources records related to driver and support staff reductions following the termination of the TSA. These records bear directly on Vantor's claim for workforce reduction costs, which is pleaded in Paragraph 78 of the Amended Complaint and which Vantor quantifies at $2.87 million in alleged severance and related costs for approximately 180 affected employees.

VHC-032512 — Driver Termination Summary Spreadsheet. This spreadsheet provides a comprehensive summary of all driver and support staff terminations or non-renewals between March and June 2022. Contrary to the figures alleged in Vantor's Amended Complaint, the spreadsheet shows that only 127 drivers and staff were terminated or not renewed during this period — not 180. The total associated severance costs were approximately $1.82 million — not $2.87 million. The discrepancy of 53 employees and approximately $1.05 million in claimed costs is substantial and warrants scrutiny during depositions and in summary judgment briefing.

VHC-032540 — Internal HR Memorandum (April 2022). This internal human resources memorandum, dated April 2022, provides additional detail that further undermines the workforce reduction claim. According to the memorandum, 38 of the 127 terminated drivers were already on formal performance improvement plans before the SLG termination and were slated for termination regardless of whether the SLG contract continued. An additional 15 drivers voluntarily resigned to accept positions at other carriers, and their departures are therefore not properly attributable to the TSA termination. Together, these 53 employees (38 on PIPs plus 15 voluntary departures) account for a significant portion of the total workforce reduction claimed by Vantor, and their associated costs — which would need to be calculated from the spreadsheet data in VHC-032512 — should be excluded from any damages analysis.

In summary, the workforce reduction records suggest that: (a) the total number of affected employees is 127, not 180; (b) the total severance cost is approximately $1.82 million, not $2.87 million; and (c) a substantial portion of the workforce reduction (at least 53 of 127 employees, or approximately 42%) was not causally connected to the TSA termination and should be excluded from Vantor's damages claim. These findings should be incorporated into the rebuttal expert analysis and raised during the remaining depositions.

G. Documents Relating to Rate Adjustment Awareness

The final significant category of documents in the supplemental production consists of approximately 44 internal VTS communications (VHC-033001 through VHC-033044) from January and February 2022, discussing the upcoming April 2022 rate adjustment under the TSA's Rate Adjustment Mechanism (Section 5.3).

VHC-033012 — Fielding to Vantorovich Email (February 1, 2022). In this email, Fielding writes to Vantorovich: "The April rate adjustment works in our favor — rates go up 14.3% under the formula. SLG knows this. Frankly, I think that's why they're trying to terminate now." This document is a double-edged sword that requires careful handling. On one hand, it supports Vantor's narrative that Stonefield's termination was motivated by a desire to avoid an impending rate increase — which Vantor has characterized as evidence of Stonefield's lack of good faith and its alleged pretext for termination. On the other hand, the document also confirms Vantor's awareness that the rate adjustment was a significant financial event, and it may help explain VTS's willingness to risk SLO failures by diverting fleet to Northwind. If VTS believed that the TSA would survive the cure period (or that Stonefield would not terminate), VTS would have expected to benefit from 14.3% higher rates on whatever SLG volume it continued to carry — a calculation that could have made the short-term risk of SLO failures seem acceptable from a financial standpoint.

This document should be flagged for use in depositions and for summary judgment briefing, but the team should be prepared to address Vantor's likely argument that it supports a finding of pretext. In our assessment, the document actually strengthens the inference that VTS made a calculated economic decision to prioritize short-term margins (through the Northwind diversion) over contractual compliance (with the SLG SLOs), gambling that the rate adjustment would compensate for any capacity shortfall. That gamble failed when Stonefield terminated the TSA before the rate adjustment took effect.

IV. Assessment of Impact on Key Defense Arguments

This section assesses the impact of the supplemental production on each of Stonefield's principal defense arguments.

A. Valid Termination for Cause (Section 13.1(a))

The supplemental production significantly strengthens Stonefield's defense that its March 4, 2022 termination of the TSA was a valid termination for cause under Section 13.1(a) of the agreement, which permits termination upon the occurrence of a material breach that is not cured within 30 days after written notice.

The fleet redeployment records establish, with specificity and through contemporaneous documents, that VTS's Q4 2021 SLO failures were not caused by external market factors (such as the nationwide driver shortage) or by Stonefield's own conduct (such as alleged volume shortfalls or diversion to spot carriers). Rather, the SLO failures were caused by VTS's own deliberate decision to reassign 85 tractors — representing approximately 21% of the SLG committed fleet — to a more profitable competing account (Northwind). This was an intentional, undisclosed breach of the TSA that VTS's leadership authorized, executed, and actively concealed from Stonefield.

The weekly performance dashboards (VHC-030012 and VHC-030045 through VHC-030089) create an unmistakable timeline: all five SLO metrics were within or near contractual thresholds before the October 11, 2021 tractor reassignment and declined sharply and progressively in the weeks following the reassignment. The internal emails from VTS's own Fleet Manager (VHC-030112) and COO (VHC-030118) confirm that VTS personnel recognized in real time that the equipment shortfall was the direct cause of the metric deterioration.

VTS's failure to cure during the 30-day cure period (January 18 through February 17, 2022) is now explained by the internal admission from CFO Fielding (VHC-031204) that curing the defaults would require pulling the tractors back from Northwind — which VTS was unwilling to do because "that kills our margins." Combined with the evidence that Vantor's Cure Notice response was drafted with the deliberate intent to conceal the Northwind redeployment (VHC-031218, VHC-031245), these documents demonstrate that VTS never made a good-faith effort to cure its defaults within the contractual cure period.

B. First-to-Breach Doctrine

The October 2021 fleet diversion constitutes VTS's material breach of the TSA, predating any alleged breach by Stonefield. Specifically, VTS breached (i) the equipment commitment provisions of the TSA by unilaterally reducing the SLG Committed Equipment below the levels specified in Exhibit B without Stonefield's prior written consent, and (ii) Section 7.4 of the TSA by failing to notify Stonefield of the equipment shortfall and failing to procure substitute equipment or surge capacity.

Under New York's first-to-breach doctrine, a party who has committed a material breach of a contract cannot recover damages for the other party's subsequent breach. See Ashgrove & Co. v. Camberwell Industries, 500 F.3d 171, 186 (2d Cir. 2007) ("It is the general rule that a party's obligations under a bilateral contract will be discharged if the other party is in material breach."). VTS's prior material breach in October 2021 — which preceded Stonefield's alleged volume shortfalls by several months and preceded the termination by approximately five months — would excuse Stonefield's subsequent performance obligations and provide an independent legal basis for validating Stonefield's termination.

The supplemental production is particularly powerful on this point because it establishes not merely that VTS breached first, but that VTS knew it was breaching and actively concealed the breach from Stonefield. The deliberate concealment — evidenced by Vantorovich's instruction not to "flag this to his SLG contacts" (VHC-029148) and Milescu's directive to "keep this internal" and avoid triggering the Section 7.4 equipment clause (VHC-029156) — negates any argument that the breach was inadvertent, immaterial, or excusable.

C. Failure to Mitigate

Pruitt's April 15, 2022 email (VHC-032143) — in which he states that Vantor's litigation counsel, Harrison Caldwell, advised against seeking replacement freight because it "could hurt our damages case" — is a direct admission that Vantor deliberately failed to mitigate its damages. Under New York law, a party claiming damages for breach of contract has an affirmative duty to take reasonable steps to minimize those damages, and the failure to do so will reduce the recoverable damages to the amount that could not have been avoided through reasonable mitigation efforts. See Kenford Co. v. County of Erie, 73 N.Y.2d 312, 326 (1989); U.S. Bank Nat'l Ass'n v. DLJ Mortgage Capital, Inc., 33 N.Y.3d 72, 84 (2019).

Vantor's strategic decision to forego mitigation in pursuit of a larger litigation recovery is precisely the kind of conduct that courts have found to constitute an unreasonable failure to mitigate. The Q2 2022 business development report (VHC-032089) corroborates this finding by showing that VTS submitted only two RFPs and executed no new contracts during a period of historically elevated freight demand. Combined with Milescu's March 8, 2022 email noting "no immediate need to find replacement volume" (VHC-032015), the documents paint a clear picture of a company that made a deliberate, litigation-driven decision to leave its capacity underutilized rather than seek replacement business.

If the Court credits this evidence, Vantor's recoverable damages could be substantially reduced or eliminated entirely, depending on the Court's assessment of what replacement revenue Vantor could have earned through reasonable mitigation efforts. Given the robust freight market conditions in Q1 and Q2 2022, Stonefield's damages expert should be able to demonstrate that substantial replacement revenue was available to Vantor.

D. Liquidated Damages Enforceability

Fielding's internal financial analysis (VHC-032178) showing an actual net revenue impact of approximately $18 to $20 million annually — versus the liquidated damages formula yield of approximately $67.23 million — provides powerful ammunition for Stonefield's argument that the liquidated damages clause is an unenforceable penalty.

Under New York law, a liquidated damages clause is enforceable only if (i) the amount fixed is a reasonable forecast of the probable loss at the time of contracting, and (ii) actual damages would be difficult to ascertain at the time of contracting. See Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 357–58 (1977); Kestrel Corporation, 4 N.Y.3d 373, 379–80 (2005). Where the stipulated amount is "grossly disproportionate" to the probable loss, the clause will be deemed an unenforceable penalty. Id.

Fielding's analysis — prepared by Vantor's own CFO for internal purposes, not for litigation — establishes that Vantor's actual damages are approximately 27% to 30% of the liquidated damages amount ($18–$20M versus $67.23M). This 3.4-to-1 disparity between the liquidated amount and the actual harm is substantial and supports a finding of gross disproportionality. Moreover, because the analysis was prepared by Vantor's own financial officer for internal decision-making purposes, it carries considerable evidentiary weight and will be difficult for Vantor to dismiss or discredit.

This document should be provided to Dr. Evelyn Rosser and the team at Kensington Analytics Group LLC promptly for incorporation into the rebuttal expert analysis. Dr. Rosser should be able to use Fielding's own methodology and inputs to construct a persuasive demonstration that the liquidated damages clause yields a result that is grossly disproportionate to Vantor's actual economic harm.

E. Workforce Reduction Damages

The human resources records in the supplemental production undermine the workforce reduction component of Vantor's damages claim in several respects. The actual number of affected employees was 127, not the 180 alleged in the Amended Complaint. The actual severance costs were approximately $1.82 million, not the $2.87 million claimed. And a significant portion of the workforce reduction — 38 employees on pre-existing performance improvement plans and 15 voluntary departures — was not causally connected to the TSA termination and should be excluded from any damages calculation.

If these 53 employees and their associated costs are excluded from the workforce reduction claim, the remaining damages attributable to the termination would be substantially lower than the amount alleged, and the causal connection between the termination and the residual costs would need to be established on an employee-by-employee basis. This analysis should be incorporated into the rebuttal expert report.

V. Documents Requiring Further Analysis or Follow-Up

A. Redactions and Gaps

Several documents in the VHC-029xxx range contain redactions that Vantor has not explained or logged on a privilege log. The most notable examples include:

• VHC-029147 (Milescu to Vantorovich email, October 3, 2021): Contains a redacted paragraph immediately following the fleet reallocation discussion. The content of this paragraph could be significant, as it appears in the portion of the email where Milescu was discussing the operational implications of the redeployment decision.

• VHC-029401 (Pruitt to Milescu email, September 30, 2021): Contains a redacted footer. While footer redactions are sometimes applied to remove privileged content such as legal department review stamps, the absence of any privilege log entry for this document raises concerns about the basis for the redaction.

We recommend sending a letter to Vantor's counsel of record, Jason Whitford at Caldwell Royce & Shapiro LLP, demanding an explanation of the basis for these redactions and, in the absence of a valid privilege or other recognized basis, demanding production of the unredacted versions. The letter should reference Judge Calloway's June 9, 2023 order, which required production of all responsive, non-privileged documents. If Vantor contends that the redacted material is privileged, it must supplement its privilege log accordingly. Note that Caldwell Royce & Shapiro LLP remains counsel of record for Vantor as of the date of this memorandum, July 3, 2023. We understand that a motion to withdraw was not filed until October 3, 2023, and that Caldwell Royce continued to represent Vantor throughout the period relevant to the follow-up actions recommended here.

B. Documents for Expert Witness

The following documents from the supplemental production should be transmitted to Dr. Evelyn Rosser and Michael Chung at Kensington Analytics Group LLC for incorporation into the rebuttal expert report, which is due August 25, 2023 per the Case Management Order deadlines:

Given the August 25 deadline for the rebuttal expert report, these documents should be transmitted no later than the week of July 10, 2023, to allow Dr. Rosser and her team adequate time to review and incorporate the materials. We recommend scheduling a call with the Kensington team in the coming week to discuss the supplemental production findings and their implications for the expert analysis.

C. Documents for Deposition Use

Several documents from the supplemental production should be designated for use in the remaining depositions in this matter. The most important deposition opportunity is the continuation of Nikolai Vantorovich's deposition, which was originally conducted on August 18, 2023 but was cut short due to Vantorovich's claimed illness. A motion to compel completion of the deposition is either pending or anticipated. The following documents should be used in the Vantorovich deposition and in other remaining depositions:

For the Vantorovich Deposition:

• VHC-029148 (Vantorovich's October 4, 2021 email: "Go ahead. We need the margin. Make sure Derek [Pruitt] doesn't flag this to his SLG contacts.") — This email directly contradicts Vantorovich's deposition testimony that he was "not involved in day-to-day fleet decisions" and could not recall specifics about the tractor reassignment. This document should be used to impeach Vantorovich's prior testimony and to establish his direct involvement in and authorization of the fleet diversion.

For any further examination of Sandra Milescu:

• VHC-031218 (Milescu's January 22, 2022 instruction to Pruitt: "Draft the response to SLG. Push back on the volume shortfall angle. Don't mention Northwind.") — This document should be used to establish Milescu's role in crafting the misleading Cure Notice response and her deliberate decision to conceal the Northwind redeployment from Stonefield.

For potential cross-examination or supplemental deposition of Derek Pruitt:

• VHC-032143 (Pruitt's April 15, 2022 email regarding mitigation strategy: "No need to scramble for replacement freight — it could hurt our damages case.") — This document should be used to establish Vantor's deliberate failure to mitigate and to explore the basis for and substance of the advice purportedly provided by Vantor's litigation counsel.

Supplemental deposition outlines incorporating these documents should be prepared promptly to ensure readiness when the remaining depositions are scheduled.

VI. Summary of 34 "Hot" Documents

A separate Key Document Index — Vantor Supplemental Production has been prepared by Kara Nystrom, dated July 5, 2023, which indexes all 34 documents coded "Hot" during the document review. The index includes full Bates numbers, dates, authors, recipients, subject lines, and brief content descriptions for each document. A summary of the 34 Hot documents by category is provided below:

The full Key Document Index, with complete document-level detail, accompanies this memorandum as a separate document and should be circulated to the case team and maintained in the case file alongside this analysis.

VII. Recommendations

Based on the analysis set forth in this memorandum, we recommend the following next steps:

1. Transmit Key Documents to Kensington Analytics Immediately. The documents identified in Section V.B above — VHC-032178, VHC-032089, VHC-032512, and VHC-029388 — should be transmitted to Dr. Evelyn Rosser and Michael Chung at Kensington Analytics Group LLC no later than the week of July 10, 2023, for incorporation into the rebuttal expert report. The draft rebuttal report is due on approximately August 25, 2023, per the Case Management Order deadlines, and the Kensington team will need adequate lead time to review and integrate the new materials. We recommend scheduling an introductory call with the Kensington team to walk through the key findings of this memorandum and discuss the implications for the damages and mitigation analyses.

2. Prepare Supplemental Deposition Outline for Vantorovich. A supplemental deposition outline should be prepared for the continuation of Nikolai Vantorovich's deposition, incorporating VHC-029148 and other documents from the supplemental production that directly contradict his August 18, 2023 testimony. The outline should be designed to systematically impeach Vantorovich's prior statements regarding his level of involvement in fleet management decisions and his knowledge of the Northwind redeployment. Simone Laroche will prepare an initial draft of the supplemental outline for review by Patrick Gallagher.

3. Send Letter to Caldwell Royce & Shapiro LLP. A letter should be sent to Jason Whitford at Caldwell Royce & Shapiro LLP demanding an explanation of the unexplained redactions in the supplemental production, specifically in VHC-029147 and VHC-029401. The letter should demand either a valid privilege basis (with accompanying privilege log supplement) or production of the unredacted versions within ten business days. The letter should reference Judge Calloway's June 9, 2023 order and reserve Stonefield's right to seek further relief from the Court if the redactions are not adequately justified.

4. Update the Summary Judgment Roadmap. The Summary Judgment Roadmap should be updated to incorporate the supplemental production findings, with particular attention to the following arguments: (a) valid termination for cause based on VTS's intentional SLO failures caused by the Northwind fleet diversion; (b) first-to-breach doctrine based on VTS's October 2021 breach of the equipment commitment and Section 7.4 substitute capacity provisions; (c) failure to mitigate based on Vantor's deliberate decision to forego replacement business on the advice of litigation counsel; and (d) liquidated damages disproportionality based on the gap between Fielding's internal estimate of $18–$20 million in actual damages and the $67.23 million liquidated damages claim. The supplemental production documents should be mapped to the corresponding elements of each argument in the roadmap.

5. Advise Client. We recommend that Patrick Gallagher provide a prompt update to Tobias Wren, General Counsel of Stonefield, and Samuel Eklund, Responsible Partner, on the significance of these findings. The supplemental production materially strengthens Stonefield's defense posture across multiple fronts, and the client should be informed of the improved litigation position. A client update memorandum or call summary should be prepared for this purpose, bearing in mind that communications with the client should be kept at an appropriate level of generality to preserve flexibility on litigation strategy.

6. Preserve Chain of Custody and Coding. All documents in the supplemental production should remain on the Pinnacle Forensics LLC platform with current coding intact. David Moretti should confirm that the production has been backed up and archived in accordance with firm protocols for litigation document retention. The coding applied during the first-pass and second-pass reviews should be locked to prevent inadvertent modification, and any subsequent re-coding or re-categorization should be tracked and documented.

VIII. Appendix — Document Reference Table

The following table lists all 34 documents coded "Hot" during the review of Vantor's supplemental production. This table is a summary reference; the full Key Document Index — Vantor Supplemental Production (separate document dated July 5, 2023, prepared by Kara Nystrom) contains additional detail, including extended content descriptions and cross-references to case issues.

This table should be cross-referenced with the Key Document Index — Vantor Supplemental Production (separate document dated July 5, 2023, prepared by Kara Nystrom), which provides extended content descriptions, full recipient lists, and cross-references to the specific case issues and defense arguments that each document supports.

This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It was prepared in anticipation of litigation and for the purpose of providing legal analysis to the Calderwood & Harkness LLP litigation team. This memorandum should not be disclosed to any person outside the firm without the prior authorization of the Responsible Partner.

Category	Detail
Total Documents Produced	4,218
Bates Range	VHC-029001 through VHC-033218
Date of Production	June 22, 2023
Production Format	Native files and TIFF images with accompanying load files (concordance .DAT, Opticon .OPT)
Hosting Platform	Pinnacle Forensics LLC (Project ID: PF-SLG-2022-0914)
Date Range of Documents	Approximately June 2021 through April 2022

Document Type

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Patrick Gallagher, Lead Associate, Litigation (General), Calderwood & Harkness LLP
FROM: Kara Nystrom, Contract Associate, and Simone Laroche, Working Associate, Litigation (General), Calderwood & Harkness LLP
DATE: July 3, 2023
RE: Analysis of Vantor's Supplemental Document Production (VHC-029001 through VHC-033218)
MATTER: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
MATTER NO.: 1012-00005
I. Executive Summary
The purpose of this memorandum is to summarize and analyze the supplemental document production made by Vantor Holdings Corp. ("Vantor") and its wholly owned subsidiary, Vantor Transport Services LLC ("VTS," and together with Vantor, "Plaintiffs"), on June 22, 2023, pursuant to the Honorable Margaret T. Calloway's June 9, 2023 discovery order compelling the production of fleet redeployment records. This supplemental production consists of 4,218 documents, Bates-numbered VHC-029001 through VHC-033218, and represents a significant addition to the documentary record in this case.
The documents were produced in response to Stonefield Logistics Group Inc.'s ("Stonefield" or "SLG") Second Request for Production of Documents, which was served on May 5, 2023. The Second Request for Production specifically targeted the following categories of materials through RFP Nos. 1 through 5:
• VTS fleet redeployment records for Q3 and Q4 2021;
• Communications between Sandra Milescu (COO of VTS) and Nikolai Vantorovich (CEO of Vantor) regarding SLG-dedicated capacity;
• VTS contracts with shippers to whom fleet capacity was redirected during the relevant period;
• VTS driver termination and workforce reduction records post-March 2022; and
• All internal analyses or financial assessments of the impact of the SLG contract termination.
These documents were not produced voluntarily. Vantor initially objected to the Second Request for Production on the grounds that the requests were overbroad, unduly burdensome, and not proportional to the needs of the case. Following the objections, Calderwood & Harkness sent a detailed meet-and-confer letter to Vantor's counsel, Caldwell Royce & Shapiro LLP, on May 30, 2023, outlining the specific deficiencies in Vantor's objections and demanding production. Vantor's counsel did not substantively respond to the meet-and-confer letter, and no resolution was reached through the informal discovery dispute resolution process. Accordingly, Stonefield filed a discovery dispute letter brief with the Court on June 5, 2023, requesting an order compelling production. Judge Calloway held a telephonic conference on June 9, 2023, and issued an order the same day compelling Vantor to produce all responsive, non-privileged documents within ten business days. In her order, Judge Calloway specifically noted the relevance of VTS's unilateral capacity reduction to the material breach and mitigation issues that are central to this case, and she expressed concern about Vantor's failure to produce these records during its initial production.
Key Finding: The supplemental production contains documents that significantly strengthen Stonefield's defense by confirming that VTS deliberately redirected 85 tractors from Stonefield-dedicated lanes to the account of Northwind Distribution Co. ("Northwind"), a competing shipper, beginning in October 2021 — approximately five weeks before VTS's Q4 2021 performance metrics collapsed below the contractual Service Level Obligation ("SLO") thresholds set forth in the Transportation Services Agreement ("TSA"). The documents further reveal that Vantor's senior leadership, including CEO Vantorovich and COO Milescu, were fully aware of the fleet diversion, intentionally concealed it from Stonefield, and later instructed subordinates to attribute the resulting performance failures to external causes — specifically, a nationwide driver shortage and Stonefield's own alleged volume shortfalls — rather than the true cause of VTS's own deliberate capacity reduction.
This memorandum identifies and categorizes the most significant documents in the supplemental production, summarizes their content, and assesses their impact on Stonefield's defense strategy, including the valid termination for cause defense, the first-to-breach doctrine, the failure to mitigate affirmative defense, and the enforceability of the liquidated damages clause. Specific recommendations for next steps — including transmittal of key documents to the rebuttal expert team, preparation of supplemental deposition outlines, and correspondence with opposing counsel — are set forth in Section VII below.
II. Overview of the Supplemental Production
A. Production Statistics
The supplemental production made by Vantor on June 22, 2023 consists of the following:
The documents span a critical period in the parties' contractual relationship — from approximately six months before the fleet redeployment decision through approximately two months after Stonefield's termination of the TSA on March 4, 2022. The document types represented in the production break down as follows:
The predominance of internal emails is consistent with expectations for a production of this nature. The fleet management system reports and logs — which constitute over 21% of the production — are particularly significant because they provide contemporaneous, system-generated records of tractor assignments, driver schedules, and lane-by-lane performance data that are difficult to dispute or explain away as subjective or after-the-fact characterizations.
B. Review Methodology
The document review was conducted in two passes in accordance with the firm's standard litigation review protocols.
First-Pass Review. The initial responsiveness and issue-coding review was conducted by Kara Nystrom and two additional contract reviewers (Elise Hanford and James Tomczak), under the supervision of David Moretti, Litigation Support / eDiscovery Manager. All reviewers applied responsiveness and privilege coding in accordance with the Document Review Protocol Memorandum dated March 15, 2023, which was circulated to the full review team at the outset of this matter. The first-pass review was completed on June 30, 2023, approximately eight days after receipt of the production.
Second-Pass Review. A substantive second-pass review of all documents coded "Hot" or "Significant" during the first-pass review was conducted by Simone Laroche. This review focused on analyzing the content of each flagged document in the context of the case's key legal and factual issues, cross-referencing the flagged documents against the existing document universe from Vantor's initial production, and identifying documents that warranted further analysis or that should be designated for use in depositions, expert reports, or summary judgment briefing.
The coding results are summarized below:
All 34 documents coded "Hot" have been indexed separately in the Key Document Index — Vantor Supplemental Production, which Kara Nystrom is preparing and which will be dated July 5, 2023. That index includes full Bates numbers, dates, authors, recipients, subject lines, and brief content descriptions for each Hot document, and is intended to serve as a quick-reference companion to this memorandum.
Notably, Vantor did not serve a supplemental privilege log in connection with this production. No documents were withheld on the basis of privilege, and no accompanying privilege log supplement was served. This is somewhat unusual given the volume and nature of the documents produced, and it may reflect Vantor's haste in complying with Judge Calloway's order. However, as discussed in Section V.A below, several documents in the production contain unexplained redactions that may implicate privilege or other withholding bases that Vantor has not disclosed.
III. Key Document Categories and Analysis
The following sections identify and analyze the most significant documents in the supplemental production, organized by subject matter. For each key document, we provide the Bates number, date, author, recipient(s), a summary of the document's content, and an assessment of its significance to Stonefield's defense.
A. Fleet Redeployment Records — Northwind Distribution Co. Account
The single most important category of documents in the supplemental production relates to VTS's decision to reassign 85 tractors from Stonefield-dedicated lanes to the Northwind Distribution Co. account in October 2021. These documents establish, with considerable specificity, the timeline, rationale, and execution of the fleet diversion, and they provide powerful evidence that VTS's subsequent performance failures on the SLG account were self-inflicted rather than the result of external market conditions.
1. The Northwind Redeployment Decision
Four documents in particular establish the genesis and execution of the fleet redeployment decision:
VHC-029147 — Milescu to Vantorovich Email (October 3, 2021). This is an email from Sandra Milescu, Chief Operating Officer of VTS, to Nikolai Vantorovich, Chief Executive Officer of Vantor, dated October 3, 2021, with the subject line "SLG Fleet — Reallocation Proposal." In this email, Milescu proposes reassigning 85 tractors and approximately 210 trailers from Stonefield-dedicated lanes to the Northwind Distribution Co. account. Milescu states that Northwind is offering rates "18–22% above current SLG contracted rates" on comparable lanes in the Northeast corridor, and she frames the reallocation as a necessary response to margin compression on the SLG account. Critically, Milescu explicitly acknowledges the risk to the Stonefield relationship, writing that "SLG will notice the capacity reduction eventually," but asserts that VTS "can manage short-term with owner-operators and spot capacity." This document is significant because it demonstrates that VTS's leadership was fully aware that the fleet redeployment would reduce capacity on Stonefield-dedicated lanes and that VTS intentionally chose to prioritize the higher-margin Northwind business over its contractual commitments to Stonefield. The document also contains a redacted paragraph immediately following the fleet reallocation discussion, which Vantor has not explained. We recommend demanding production of the unredacted version, as discussed in Section V.A below.
VHC-029148 — Vantorovich to Milescu Reply (October 4, 2021). This is a one-line email reply from Vantorovich to Milescu, dated October 4, 2021, in which Vantorovich states: "Go ahead. We need the margin. Make sure Derek [Pruitt] doesn't flag this to his SLG contacts." This document is extraordinarily significant for several reasons. First, it confirms that Vantorovich personally authorized the fleet redeployment decision at the highest level of the corporate hierarchy. Second, it establishes that Vantorovich was motivated by financial considerations — specifically, the desire for higher margins — rather than any legitimate operational need. Third, and most damaging to Vantor's litigation position, Vantorovich's instruction to ensure that Derek Pruitt (VP, Business Development) did not "flag this to his SLG contacts" demonstrates a deliberate intent to conceal the fleet diversion from Stonefield. This email directly contradicts Vantorovich's partial deposition testimony on August 18, 2023, in which he stated under oath that he was "not involved in day-to-day fleet decisions" and could not recall specifics about the tractor reassignment. This inconsistency may be grounds for an adverse credibility inference and should be a focal point of the continuation of Vantorovich's deposition.
VHC-029203 — Internal Fleet Operations Memorandum (October 8, 2021). This is an internal VTS fleet operations memorandum dated October 8, 2021, authored by the VTS Fleet Manager (whose name has been redacted in the production), directing the transfer of 85 tractors (with specific unit numbers listed in an attached schedule) from the "SLG Dedicated Pool" to the "Northwind Regional Pool," effective October 11, 2021. The memorandum specifies the affected lanes, which were primarily SLG Northeast and Mid-Atlantic corridor routes — the same routes where Stonefield experienced the most severe service degradation in Q4 2021. This document provides the operational "paper trail" connecting the executive decision (VHC-029147 and VHC-029148) to its actual execution in the field.
VHC-029211 — Tractor Reassignment Spreadsheet (October 11, 2021). This spreadsheet, dated October 11, 2021, documents the actual tractor reassignments by unit number, driver assignment, and origin-destination lane. The spreadsheet confirms that all 85 tractors were removed from SLG-dedicated service as of October 11, 2021, and it provides a unit-by-unit accounting that can be cross-referenced against VTS's fleet management system data and the performance dashboards discussed in Section III.B below. This document is particularly valuable because it is a contemporaneous business record that will be difficult for Vantor to challenge on authenticity or reliability grounds.
2. Corroboration of Previously Identified "Smoking Gun" Email
The four documents discussed above corroborate and provide critical additional context for the previously identified Milescu-to-Vantorovich email of November 12, 2021 (VHC-008417, from Vantor's first production), which the team had already flagged as a key document. In that email, Milescu wrote: "We've pulled 85 tractors off the SLG dedicated lanes to cover [redacted] commitments. SLG won't notice until January."
The supplemental production now reveals two important facts about VHC-008417 that were previously unknown:
First, the "[redacted]" reference in VHC-008417 referred to Northwind Distribution Co. The supplemental production provides the unredacted context through the separate communications discussed above (VHC-029147, VHC-029148, VHC-029203, and VHC-029211), which identify Northwind by name as the recipient of the diverted fleet capacity.
Second, the fleet redeployment decision was made and executed in early October 2021 — approximately five weeks earlier than the November 12, 2021 email suggested. The October 3–4 email exchange between Milescu and Vantorovich (VHC-029147 and VHC-029148) and the October 11, 2021 reassignment spreadsheet (VHC-029211) establish that the decision was authorized on October 4 and implemented on October 11. The November 12 email, which was the earliest document in the initial production addressing the fleet redeployment, was therefore a mid-stream status update rather than the point of decision — a distinction that materially extends the period of VTS's knowing breach of the TSA.
The redaction in VHC-008417 was apparently applied by Vantor during its first production without a corresponding entry on the privilege log. The supplemental production provides the substantive context that the redaction obscured, but the fact that Vantor redacted the name "Northwind" from VHC-008417 without explanation or privilege log entry raises questions about the completeness and good faith of Vantor's initial production. This issue should be raised with the Court if necessary.
3. Northwind Contract Documents
Three documents in the supplemental production relate to the VTS-Northwind contractual relationship and confirm the financial terms that motivated the fleet diversion:
VHC-029387 — VTS-Northwind Master Transportation Services Agreement (September 28, 2021). This is the executed Master Transportation Services Agreement between Vantor Transport Services LLC and Northwind Distribution Co., dated September 28, 2021. The contract has a term of one year with automatic renewal, and it contains a minimum volume commitment by Northwind of $12.5 million annually. The execution date of September 28, 2021, is significant because it predates Milescu's October 3, 2021 reallocation proposal by only five days, suggesting that VTS was negotiating the Northwind contract simultaneously with planning the fleet diversion from Stonefield-dedicated lanes. The contract also imposes minimum equipment commitments on VTS, which further confirms that VTS could not have serviced both the Stonefield and Northwind accounts at contractual levels with its existing fleet.
VHC-029388 — Northwind Rate Schedule. This is the rate schedule appended to the Northwind contract, showing per-mile rates averaging $3.42 across designated lanes. By comparison, the weighted average SLG rate under the TSA was $2.87 per mile. This differential of $0.55 per mile, or approximately 19.2%, is consistent with Milescu's characterization in VHC-029147 that Northwind rates were "18–22% above current SLG contracted rates." This rate differential provides a clear financial motive for VTS's decision to prioritize Northwind over Stonefield and will be important in establishing that the fleet diversion was economically motivated rather than operationally necessitated.
VHC-029401 — Pruitt to Milescu Email (September 30, 2021). This email from Derek Pruitt, Vice President of Business Development at Vantor, to Milescu, dated September 30, 2021, congratulates Milescu on the Northwind deal and states: "This makes up for the margin compression we've been eating on the SLG contract." This document is significant for two reasons. First, it confirms that Pruitt — who was the primary relationship manager with Stonefield and the individual responsible for communicating with Stonefield's logistics team — was aware of the Northwind contract and the financial motivations behind the fleet diversion. Second, Pruitt's reference to "margin compression" on the SLG contract provides additional evidence that VTS's decision was driven by financial self-interest rather than any legitimate operational constraint. The document contains a redacted footer that Vantor has not explained.
B. Impact on VTS Q4 2021 Performance Metrics
The second major category of significant documents in the supplemental production consists of VTS's internal performance tracking records for the SLG account during Q4 2021. These documents are critical because they establish a clear and immediate causal link between the October 2021 tractor reassignment and the performance failures that prompted Stonefield's January 18, 2022 Cure Notice.
1. Internal Performance Tracking
VHC-030012 — VTS Internal Weekly Performance Dashboard (Week Ending October 22, 2021). This document is a VTS internal weekly performance dashboard for the week ending October 22, 2021 — approximately eleven days after the 85 tractors were reassigned to the Northwind account. The dashboard shows an immediate and substantial decline in SLG-dedicated performance metrics. Specifically, the on-time pickup rate dropped from 93.1% for the week ending October 8 to 86.4% for the week ending October 22, and the tender acceptance rate dropped from 88.7% to 79.2% over the same period. Both of these metrics had been consistently above the contractual SLO thresholds prior to the tractor reassignment.
VHC-030045 through VHC-030089 — Weekly Performance Dashboards (October 2021 through January 2022). This series of approximately 45 weekly performance dashboards covers the period from October 2021 through January 2022 and documents the progressive deterioration of all five Service Level Obligation metrics on the SLG account. The trajectory across all five metrics is summarized as follows:
The Q4 2021 average figures are consistent with the metrics cited in Stonefield's January 18, 2022 Cure Notice, which identified failures across all five SLO categories. The dashboards establish that the performance degradation was not gradual or attributable to seasonal fluctuations; rather, the decline began abruptly in the week following the October 11, 2021 tractor reassignment and continued to worsen through the end of the quarter as VTS failed to backfill the diverted capacity.
The equipment availability metric is particularly telling. VTS was operating at approximately 62% of its committed fleet on the SLG account — approximately 248 tractors versus the 400 required under the TSA — a shortfall that corresponds almost exactly to the 85 tractors that were reassigned to Northwind (400 minus 85 equals 315, but the actual utilization figure of 248 suggests additional attrition beyond the initial 85-tractor diversion, likely driven by cascading effects such as driver reassignments and route disruptions).
The cargo claims ratio spike in November and December 2021 — 16 claims totaling $387,400, resulting in a ratio of 1.07% against the 0.5% SLO threshold — is also notable. This spike is consistent with the operational disruption caused by the fleet diversion, as reduced equipment availability likely resulted in the use of less experienced owner-operators and spot carriers who were more prone to cargo damage incidents.
2. Internal Acknowledgment of Causation
Two documents in the supplemental production contain explicit internal acknowledgments that the fleet diversion caused the performance failures on the SLG account:
VHC-030112 — VTS Fleet Manager to Milescu Email (November 19, 2021). In this email, the VTS Fleet Manager writes to Milescu: "The SLG metrics are tanking because we don't have the equipment. We're running 62% of committed capacity. Drivers are being forced to decline tenders. If SLG audits the fleet logs we're going to have a problem." This email is a contemporaneous, candid internal admission that directly links the performance failures to the equipment shortfall created by the Northwind redeployment. The Fleet Manager's concern about a potential SLG audit of fleet logs further demonstrates VTS's awareness that the redeployment was concealed from Stonefield and that discovery of the true cause would create significant liability exposure.
VHC-030118 — Milescu to Vantorovich Email (November 22, 2021). Three days after receiving the Fleet Manager's warning, Milescu forwarded the concern to Vantorovich, writing: "Fleet manager is raising flags about SLG numbers. I told him we'll manage it. Worst case we backfill with owner-operators in January." This email is significant because it demonstrates that VTS's senior leadership was aware of the deteriorating SLG metrics and their cause, yet chose to defer any corrective action until January 2022 — by which time the Q4 2021 SLO failures had already occurred and Stonefield's Cure Notice was imminent. Milescu's casual dismissal of the Fleet Manager's concerns ("I told him we'll manage it") further undermines Vantor's litigation position that the performance deficiencies were caused by factors beyond VTS's control, such as Stonefield's own volume shortfalls or the nationwide driver shortage.
Together, these documents create a powerful narrative: VTS's own personnel recognized in real time that the fleet diversion was causing the SLG account to fail, raised the alarm internally, and were told to stand down by the same executive who had authorized the diversion in the first place.
C. Failure to Notify Stonefield of Capacity Reduction
The supplemental production also contains evidence that VTS deliberately chose not to notify Stonefield of the capacity reduction, in violation of the TSA's contractual provisions regarding equipment commitments and substitute capacity.
VHC-029156 — Pruitt/Milescu Email Chain (October 6–7, 2021). This is an email chain between Derek Pruitt (VP, Business Development) and Sandra Milescu (COO), dated October 6–7, 2021. In the chain, Pruitt asks Milescu: "Should we give Janet [Kirkwood] a heads-up about the capacity shift?" Janet Kirkwood is Stonefield's Director of Transportation Procurement and was the primary day-to-day contact on the SLG account. Milescu responds: "No. Let's keep this internal for now. We don't want SLG renegotiating rates or invoking the equipment clause [Section 7.4 of the TSA]."
This exchange is critical for two reasons. First, it establishes that VTS actively and deliberately chose to conceal the fleet diversion from Stonefield, even when one of its own senior officers suggested disclosure. This was not an oversight or an administrative failure — it was a conscious decision made at the executive level. Second, Milescu's specific reference to Section 7.4 of the TSA demonstrates that VTS's leadership was aware of the contractual provision requiring VTS to provide substitute equipment or surge capacity in the event of a shortfall in committed fleet resources, and that VTS deliberately chose to breach that provision rather than risk Stonefield invoking it.
Section 7.4 of the TSA, titled "Equipment Shortfall; Substitute Capacity," provides in relevant part:
In the event that Carrier is unable to provide the Committed Equipment for any reason, including equipment failure, maintenance requirements, or force majeure events, Carrier shall promptly notify Shipper of such shortfall and shall use commercially reasonable efforts to procure substitute equipment or surge capacity from qualified subcontractors at no additional cost to Shipper. Carrier shall not reduce the Committed Equipment below the levels specified in Exhibit B without Shipper's prior written consent.
VTS's deliberate decision not to notify Stonefield and not to provide substitute capacity constitutes an additional, independent breach of the TSA — separate from and in addition to the SLO failures that resulted from the fleet diversion. This evidence directly supports Stonefield's "first-to-breach" defense: VTS committed the first material breach by unilaterally reducing fleet capacity in October 2021, without notice and without providing substitute equipment, before any alleged volume shortfall by Stonefield and before the termination. Under New York's first-to-breach doctrine, as discussed further in Section IV.B below, VTS's prior material breach would excuse Stonefield's subsequent performance obligations and provide an independent basis for validating the termination.
D. Vantor's Response to Cure Notice — Internal Deliberations
Perhaps the most damaging category of documents in the supplemental production consists of Vantor's internal deliberations following receipt of Stonefield's January 18, 2022 Cure Notice. These documents reveal that Vantor's leadership knew the Cure Notice metrics were accurate, recognized that curing the defaults would require reversing the Northwind redeployment, and instead chose to craft a response that deliberately concealed the true cause of the performance failures and attributed them to external factors.
VHC-031204 — Fielding to Vantorovich Email (January 20, 2022). This email from Gregory Fielding, Chief Financial Officer of Vantor, to Vantorovich, dated January 20, 2022 — just two days after Stonefield served its Cure Notice — states: "The metrics SLG cited are accurate. We can't cure this in 30 days — we'd need to pull the tractors back from Northwind, and that kills our margins." This is an admission from Vantor's CFO that (a) the performance failures identified in the Cure Notice were real and not disputed internally; (b) the only way to cure the defaults within the 30-day cure period was to reverse the Northwind redeployment; and (c) Vantor chose not to do so because it would negatively impact the company's profit margins. This document goes to the heart of the termination-for-cause defense: Vantor was given a contractual opportunity to cure its defaults and made a deliberate business decision not to cure because curing would have required sacrificing the financial benefits of the Northwind arrangement.
VHC-031218 — Milescu to Pruitt Email (January 22, 2022). This email from Milescu to Pruitt, dated January 22, 2022, instructs Pruitt to: "Draft the response to SLG. Push back on the volume shortfall angle. Don't mention Northwind." This document is evidence of a deliberate strategy to conceal the true cause of VTS's performance failures during the cure period. Milescu's instruction to "push back on the volume shortfall angle" indicates a conscious decision to blame Stonefield for the service degradation rather than acknowledge VTS's own fleet diversion. Her instruction to "don't mention Northwind" is an explicit directive to withhold material information from the Cure Notice response. This document may also be relevant to any future arguments regarding discovery misconduct or litigation bad faith, as it demonstrates a pattern of concealment that began before the litigation was even contemplated and continued into the formal dispute resolution process.
VHC-031245 — Draft Cure Notice Response (Internal Version with Tracked Changes). This is an internal draft of Vantor's February 14, 2022 Cure Notice response letter, complete with tracked changes showing the editorial process. The tracked changes reveal that Pruitt's edits removed a reference to "fleet redeployment" as a contributing factor and replaced it with "nationwide driver shortage" as the primary explanation for the performance shortfalls. This is direct evidence that Vantor's February 14, 2022 response — which was the formal response that Vantor submitted to Stonefield during the cure period — was knowingly misleading.
Vantor's February 14, 2022 Cure Notice response, as sent to Stonefield, attributed the operational challenges to three purported causes: (i) a nationwide driver shortage affecting all carriers in the industry; (ii) Stonefield's alleged failure to tender minimum committed volumes under the TSA; and (iii) Stonefield's alleged instructions to divert certain shipments to spot market carriers. The supplemental production documents — particularly VHC-031204, VHC-031218, and VHC-031245 — conclusively demonstrate that these explanations were pretextual. The real cause of the performance failures was the Northwind fleet diversion, which Vantor's own CFO acknowledged internally and which Vantor deliberately concealed from Stonefield.
The implications of these documents extend beyond the termination-for-cause defense. They may also support an argument that Vantor's Cure Notice response constituted a bad-faith repudiation of the cure process, which could affect the Court's analysis of whether VTS meaningfully attempted to cure its defaults within the contractual cure period. If VTS never intended to reverse the fleet diversion — and the documents strongly suggest it did not — then Vantor cannot credibly argue that it was denied a fair opportunity to cure.
E. Post-Termination Mitigation (or Lack Thereof)
The supplemental production includes a substantial body of documents — approximately 187 documents numbered VHC-032001 through VHC-032187 — relating to Vantor's actions in the period following Stonefield's March 4, 2022 termination of the TSA. These documents are highly relevant to Stonefield's affirmative defense that Vantor failed to mitigate its damages.
VHC-032015 — Milescu to Vantorovich Email (March 8, 2022). This email, sent just four days after the termination became effective, shows Milescu informing Vantorovich: "SLG termination is effective. We still have 85 units on Northwind plus the rest of the fleet. No immediate need to find replacement volume — Northwind is covering the gap." This document demonstrates that Vantor viewed the Northwind account as a partial substitute for the lost SLG volume and did not perceive an urgent need to seek additional replacement business. While this is not itself an admission of failure to mitigate, it establishes a baseline mindset that is inconsistent with the vigorous mitigation efforts that New York law requires of a non-breaching party.
VHC-032089 — Internal VTS Business Development Report, Q2 2022. This document is a quarterly business development report for VTS covering Q2 2022 (April through June). The report shows that VTS submitted only two Requests for Proposal ("RFPs") to potential new shipper clients during this period, neither of which resulted in a new contract. No new transportation services contracts were executed through June 2022 to replace the lost SLG volume. This is striking given the market conditions at the time: the domestic freight market in Q1 and Q2 2022 was characterized by historically elevated demand, with spot rates running approximately 35% above historical averages according to publicly available freight market indices. In this environment, a carrier of VTS's size and capability should have been able to secure replacement business with relatively modest effort. The business development report suggests that VTS made only minimal efforts to do so.
VHC-032143 — Pruitt to Milescu Email (April 15, 2022). This email is potentially the single most damaging document in the supplemental production with respect to the mitigation defense. Pruitt writes to Milescu: "We're focused on the litigation now. Harrison [Caldwell, of Caldwell Royce & Shapiro LLP] says our best recovery is the liquidated damages clause. No need to scramble for replacement freight — it could hurt our damages case." This is a direct admission that Vantor deliberately chose not to mitigate its damages — not because replacement business was unavailable, but because Vantor's litigation counsel advised that vigorous mitigation could undermine Vantor's damages claim. Under New York law, a non-breaching party has an affirmative duty to take reasonable steps to minimize its damages, and the failure to do so may reduce or eliminate the damages that the non-breaching party can recover. See, e.g., Wilmot v. State, 32 N.Y.2d 164, 168–69 (1973); Vireo Trust Bank v. Marlowe Commerce Bank Asset Capital Corp., 424 F.3d 195, 208 (2d Cir. 2005). Vantor's deliberate strategy of foregoing mitigation in order to maximize its litigation recovery is precisely the type of conduct that New York courts have found to constitute an unreasonable failure to mitigate.
It is worth noting that VHC-032143 contains a reference to advice from Vantor's litigation counsel, Harrison Caldwell. While Vantor might argue that this document is protected by the attorney-client privilege, the document was produced without any privilege designation, no privilege log entry was made, and Vantor did not claw back the document within the time periods specified in the parties' Rule 502(d) order. We should nevertheless be prepared for a potential clawback demand and should promptly assess the implications under the Federal Rules of Evidence and the parties' stipulated order regarding inadvertent production.
VHC-032178 — Internal Financial Analysis (May 2022). This document is an internal financial analysis prepared by CFO Fielding in May 2022, assessing the actual revenue impact to Vantor from the loss of the SLG contract. According to Fielding's analysis, the annualized revenue impact was approximately $36.5 million, based on the Calendar Year 3 run rate under the TSA. However, this gross figure was offset by approximately $12.5 million in retained Northwind revenue, plus continued fleet utilization on other existing accounts. The net annualized revenue impact was estimated at approximately $18 to $20 million. This figure is significantly less than the $43.2 million Annual Contract Value ("ACV") that Vantor used as the basis for its liquidated damages calculation, which yields a claim of approximately $67.23 million under the TSA's liquidated damages formula (1.5 times the ACV for the then-current contract year, plus the ACV for the remaining contract years). The gap between the actual impact ($18–$20 million) and the liquidated damages claim ($67.23 million) is central to Stonefield's argument that the liquidated damages clause is an unenforceable penalty, as discussed further in Section IV.D below.
F. Driver Termination and Workforce Records
The supplemental production includes approximately 187 documents (VHC-032501 through VHC-032687) consisting of VTS human resources records related to driver and support staff reductions following the termination of the TSA. These records bear directly on Vantor's claim for workforce reduction costs, which is pleaded in Paragraph 78 of the Amended Complaint and which Vantor quantifies at $2.87 million in alleged severance and related costs for approximately 180 affected employees.
VHC-032512 — Driver Termination Summary Spreadsheet. This spreadsheet provides a comprehensive summary of all driver and support staff terminations or non-renewals between March and June 2022. Contrary to the figures alleged in Vantor's Amended Complaint, the spreadsheet shows that only 127 drivers and staff were terminated or not renewed during this period — not 180. The total associated severance costs were approximately $1.82 million — not $2.87 million. The discrepancy of 53 employees and approximately $1.05 million in claimed costs is substantial and warrants scrutiny during depositions and in summary judgment briefing.
VHC-032540 — Internal HR Memorandum (April 2022). This internal human resources memorandum, dated April 2022, provides additional detail that further undermines the workforce reduction claim. According to the memorandum, 38 of the 127 terminated drivers were already on formal performance improvement plans before the SLG termination and were slated for termination regardless of whether the SLG contract continued. An additional 15 drivers voluntarily resigned to accept positions at other carriers, and their departures are therefore not properly attributable to the TSA termination. Together, these 53 employees (38 on PIPs plus 15 voluntary departures) account for a significant portion of the total workforce reduction claimed by Vantor, and their associated costs — which would need to be calculated from the spreadsheet data in VHC-032512 — should be excluded from any damages analysis.
In summary, the workforce reduction records suggest that: (a) the total number of affected employees is 127, not 180; (b) the total severance cost is approximately $1.82 million, not $2.87 million; and (c) a substantial portion of the workforce reduction (at least 53 of 127 employees, or approximately 42%) was not causally connected to the TSA termination and should be excluded from Vantor's damages claim. These findings should be incorporated into the rebuttal expert analysis and raised during the remaining depositions.
G. Documents Relating to Rate Adjustment Awareness
The final significant category of documents in the supplemental production consists of approximately 44 internal VTS communications (VHC-033001 through VHC-033044) from January and February 2022, discussing the upcoming April 2022 rate adjustment under the TSA's Rate Adjustment Mechanism (Section 5.3).
VHC-033012 — Fielding to Vantorovich Email (February 1, 2022). In this email, Fielding writes to Vantorovich: "The April rate adjustment works in our favor — rates go up 14.3% under the formula. SLG knows this. Frankly, I think that's why they're trying to terminate now." This document is a double-edged sword that requires careful handling. On one hand, it supports Vantor's narrative that Stonefield's termination was motivated by a desire to avoid an impending rate increase — which Vantor has characterized as evidence of Stonefield's lack of good faith and its alleged pretext for termination. On the other hand, the document also confirms Vantor's awareness that the rate adjustment was a significant financial event, and it may help explain VTS's willingness to risk SLO failures by diverting fleet to Northwind. If VTS believed that the TSA would survive the cure period (or that Stonefield would not terminate), VTS would have expected to benefit from 14.3% higher rates on whatever SLG volume it continued to carry — a calculation that could have made the short-term risk of SLO failures seem acceptable from a financial standpoint.
This document should be flagged for use in depositions and for summary judgment briefing, but the team should be prepared to address Vantor's likely argument that it supports a finding of pretext. In our assessment, the document actually strengthens the inference that VTS made a calculated economic decision to prioritize short-term margins (through the Northwind diversion) over contractual compliance (with the SLG SLOs), gambling that the rate adjustment would compensate for any capacity shortfall. That gamble failed when Stonefield terminated the TSA before the rate adjustment took effect.
IV. Assessment of Impact on Key Defense Arguments
This section assesses the impact of the supplemental production on each of Stonefield's principal defense arguments.
A. Valid Termination for Cause (Section 13.1(a))
The supplemental production significantly strengthens Stonefield's defense that its March 4, 2022 termination of the TSA was a valid termination for cause under Section 13.1(a) of the agreement, which permits termination upon the occurrence of a material breach that is not cured within 30 days after written notice.
The fleet redeployment records establish, with specificity and through contemporaneous documents, that VTS's Q4 2021 SLO failures were not caused by external market factors (such as the nationwide driver shortage) or by Stonefield's own conduct (such as alleged volume shortfalls or diversion to spot carriers). Rather, the SLO failures were caused by VTS's own deliberate decision to reassign 85 tractors — representing approximately 21% of the SLG committed fleet — to a more profitable competing account (Northwind). This was an intentional, undisclosed breach of the TSA that VTS's leadership authorized, executed, and actively concealed from Stonefield.
The weekly performance dashboards (VHC-030012 and VHC-030045 through VHC-030089) create an unmistakable timeline: all five SLO metrics were within or near contractual thresholds before the October 11, 2021 tractor reassignment and declined sharply and progressively in the weeks following the reassignment. The internal emails from VTS's own Fleet Manager (VHC-030112) and COO (VHC-030118) confirm that VTS personnel recognized in real time that the equipment shortfall was the direct cause of the metric deterioration.
VTS's failure to cure during the 30-day cure period (January 18 through February 17, 2022) is now explained by the internal admission from CFO Fielding (VHC-031204) that curing the defaults would require pulling the tractors back from Northwind — which VTS was unwilling to do because "that kills our margins." Combined with the evidence that Vantor's Cure Notice response was drafted with the deliberate intent to conceal the Northwind redeployment (VHC-031218, VHC-031245), these documents demonstrate that VTS never made a good-faith effort to cure its defaults within the contractual cure period.
B. First-to-Breach Doctrine
The October 2021 fleet diversion constitutes VTS's material breach of the TSA, predating any alleged breach by Stonefield. Specifically, VTS breached (i) the equipment commitment provisions of the TSA by unilaterally reducing the SLG Committed Equipment below the levels specified in Exhibit B without Stonefield's prior written consent, and (ii) Section 7.4 of the TSA by failing to notify Stonefield of the equipment shortfall and failing to procure substitute equipment or surge capacity.
Under New York's first-to-breach doctrine, a party who has committed a material breach of a contract cannot recover damages for the other party's subsequent breach. See Ashgrove & Co. v. Camberwell Industries, 500 F.3d 171, 186 (2d Cir. 2007) ("It is the general rule that a party's obligations under a bilateral contract will be discharged if the other party is in material breach."). VTS's prior material breach in October 2021 — which preceded Stonefield's alleged volume shortfalls by several months and preceded the termination by approximately five months — would excuse Stonefield's subsequent performance obligations and provide an independent legal basis for validating Stonefield's termination.
The supplemental production is particularly powerful on this point because it establishes not merely that VTS breached first, but that VTS knew it was breaching and actively concealed the breach from Stonefield. The deliberate concealment — evidenced by Vantorovich's instruction not to "flag this to his SLG contacts" (VHC-029148) and Milescu's directive to "keep this internal" and avoid triggering the Section 7.4 equipment clause (VHC-029156) — negates any argument that the breach was inadvertent, immaterial, or excusable.
C. Failure to Mitigate
Pruitt's April 15, 2022 email (VHC-032143) — in which he states that Vantor's litigation counsel, Harrison Caldwell, advised against seeking replacement freight because it "could hurt our damages case" — is a direct admission that Vantor deliberately failed to mitigate its damages. Under New York law, a party claiming damages for breach of contract has an affirmative duty to take reasonable steps to minimize those damages, and the failure to do so will reduce the recoverable damages to the amount that could not have been avoided through reasonable mitigation efforts. See Kenford Co. v. County of Erie, 73 N.Y.2d 312, 326 (1989); U.S. Bank Nat'l Ass'n v. DLJ Mortgage Capital, Inc., 33 N.Y.3d 72, 84 (2019).
Vantor's strategic decision to forego mitigation in pursuit of a larger litigation recovery is precisely the kind of conduct that courts have found to constitute an unreasonable failure to mitigate. The Q2 2022 business development report (VHC-032089) corroborates this finding by showing that VTS submitted only two RFPs and executed no new contracts during a period of historically elevated freight demand. Combined with Milescu's March 8, 2022 email noting "no immediate need to find replacement volume" (VHC-032015), the documents paint a clear picture of a company that made a deliberate, litigation-driven decision to leave its capacity underutilized rather than seek replacement business.
If the Court credits this evidence, Vantor's recoverable damages could be substantially reduced or eliminated entirely, depending on the Court's assessment of what replacement revenue Vantor could have earned through reasonable mitigation efforts. Given the robust freight market conditions in Q1 and Q2 2022, Stonefield's damages expert should be able to demonstrate that substantial replacement revenue was available to Vantor.
D. Liquidated Damages Enforceability
Fielding's internal financial analysis (VHC-032178) showing an actual net revenue impact of approximately $18 to $20 million annually — versus the liquidated damages formula yield of approximately $67.23 million — provides powerful ammunition for Stonefield's argument that the liquidated damages clause is an unenforceable penalty.
Under New York law, a liquidated damages clause is enforceable only if (i) the amount fixed is a reasonable forecast of the probable loss at the time of contracting, and (ii) actual damages would be difficult to ascertain at the time of contracting. See Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 357–58 (1977); Kestrel Corporation, 4 N.Y.3d 373, 379–80 (2005). Where the stipulated amount is "grossly disproportionate" to the probable loss, the clause will be deemed an unenforceable penalty. Id.
Fielding's analysis — prepared by Vantor's own CFO for internal purposes, not for litigation — establishes that Vantor's actual damages are approximately 27% to 30% of the liquidated damages amount ($18–$20M versus $67.23M). This 3.4-to-1 disparity between the liquidated amount and the actual harm is substantial and supports a finding of gross disproportionality. Moreover, because the analysis was prepared by Vantor's own financial officer for internal decision-making purposes, it carries considerable evidentiary weight and will be difficult for Vantor to dismiss or discredit.
This document should be provided to Dr. Evelyn Rosser and the team at Kensington Analytics Group LLC promptly for incorporation into the rebuttal expert analysis. Dr. Rosser should be able to use Fielding's own methodology and inputs to construct a persuasive demonstration that the liquidated damages clause yields a result that is grossly disproportionate to Vantor's actual economic harm.
E. Workforce Reduction Damages
The human resources records in the supplemental production undermine the workforce reduction component of Vantor's damages claim in several respects. The actual number of affected employees was 127, not the 180 alleged in the Amended Complaint. The actual severance costs were approximately $1.82 million, not the $2.87 million claimed. And a significant portion of the workforce reduction — 38 employees on pre-existing performance improvement plans and 15 voluntary departures — was not causally connected to the TSA termination and should be excluded from any damages calculation.
If these 53 employees and their associated costs are excluded from the workforce reduction claim, the remaining damages attributable to the termination would be substantially lower than the amount alleged, and the causal connection between the termination and the residual costs would need to be established on an employee-by-employee basis. This analysis should be incorporated into the rebuttal expert report.
V. Documents Requiring Further Analysis or Follow-Up
A. Redactions and Gaps
Several documents in the VHC-029xxx range contain redactions that Vantor has not explained or logged on a privilege log. The most notable examples include:
• VHC-029147 (Milescu to Vantorovich email, October 3, 2021): Contains a redacted paragraph immediately following the fleet reallocation discussion. The content of this paragraph could be significant, as it appears in the portion of the email where Milescu was discussing the operational implications of the redeployment decision.
• VHC-029401 (Pruitt to Milescu email, September 30, 2021): Contains a redacted footer. While footer redactions are sometimes applied to remove privileged content such as legal department review stamps, the absence of any privilege log entry for this document raises concerns about the basis for the redaction.
We recommend sending a letter to Vantor's counsel of record, Jason Whitford at Caldwell Royce & Shapiro LLP, demanding an explanation of the basis for these redactions and, in the absence of a valid privilege or other recognized basis, demanding production of the unredacted versions. The letter should reference Judge Calloway's June 9, 2023 order, which required production of all responsive, non-privileged documents. If Vantor contends that the redacted material is privileged, it must supplement its privilege log accordingly. Note that Caldwell Royce & Shapiro LLP remains counsel of record for Vantor as of the date of this memorandum, July 3, 2023. We understand that a motion to withdraw was not filed until October 3, 2023, and that Caldwell Royce continued to represent Vantor throughout the period relevant to the follow-up actions recommended here.
B. Documents for Expert Witness
The following documents from the supplemental production should be transmitted to Dr. Evelyn Rosser and Michael Chung at Kensington Analytics Group LLC for incorporation into the rebuttal expert report, which is due August 25, 2023 per the Case Management Order deadlines:
Given the August 25 deadline for the rebuttal expert report, these documents should be transmitted no later than the week of July 10, 2023, to allow Dr. Rosser and her team adequate time to review and incorporate the materials. We recommend scheduling a call with the Kensington team in the coming week to discuss the supplemental production findings and their implications for the expert analysis.
C. Documents for Deposition Use
Several documents from the supplemental production should be designated for use in the remaining depositions in this matter. The most important deposition opportunity is the continuation of Nikolai Vantorovich's deposition, which was originally conducted on August 18, 2023 but was cut short due to Vantorovich's claimed illness. A motion to compel completion of the deposition is either pending or anticipated. The following documents should be used in the Vantorovich deposition and in other remaining depositions:
For the Vantorovich Deposition:
• VHC-029148 (Vantorovich's October 4, 2021 email: "Go ahead. We need the margin. Make sure Derek [Pruitt] doesn't flag this to his SLG contacts.") — This email directly contradicts Vantorovich's deposition testimony that he was "not involved in day-to-day fleet decisions" and could not recall specifics about the tractor reassignment. This document should be used to impeach Vantorovich's prior testimony and to establish his direct involvement in and authorization of the fleet diversion.
For any further examination of Sandra Milescu:
• VHC-031218 (Milescu's January 22, 2022 instruction to Pruitt: "Draft the response to SLG. Push back on the volume shortfall angle. Don't mention Northwind.") — This document should be used to establish Milescu's role in crafting the misleading Cure Notice response and her deliberate decision to conceal the Northwind redeployment from Stonefield.
For potential cross-examination or supplemental deposition of Derek Pruitt:
• VHC-032143 (Pruitt's April 15, 2022 email regarding mitigation strategy: "No need to scramble for replacement freight — it could hurt our damages case.") — This document should be used to establish Vantor's deliberate failure to mitigate and to explore the basis for and substance of the advice purportedly provided by Vantor's litigation counsel.
Supplemental deposition outlines incorporating these documents should be prepared promptly to ensure readiness when the remaining depositions are scheduled.
VI. Summary of 34 "Hot" Documents
A separate Key Document Index — Vantor Supplemental Production has been prepared by Kara Nystrom, dated July 5, 2023, which indexes all 34 documents coded "Hot" during the document review. The index includes full Bates numbers, dates, authors, recipients, subject lines, and brief content descriptions for each document. A summary of the 34 Hot documents by category is provided below:
The full Key Document Index, with complete document-level detail, accompanies this memorandum as a separate document and should be circulated to the case team and maintained in the case file alongside this analysis.
VII. Recommendations
Based on the analysis set forth in this memorandum, we recommend the following next steps:
1. Transmit Key Documents to Kensington Analytics Immediately. The documents identified in Section V.B above — VHC-032178, VHC-032089, VHC-032512, and VHC-029388 — should be transmitted to Dr. Evelyn Rosser and Michael Chung at Kensington Analytics Group LLC no later than the week of July 10, 2023, for incorporation into the rebuttal expert report. The draft rebuttal report is due on approximately August 25, 2023, per the Case Management Order deadlines, and the Kensington team will need adequate lead time to review and integrate the new materials. We recommend scheduling an introductory call with the Kensington team to walk through the key findings of this memorandum and discuss the implications for the damages and mitigation analyses.
2. Prepare Supplemental Deposition Outline for Vantorovich. A supplemental deposition outline should be prepared for the continuation of Nikolai Vantorovich's deposition, incorporating VHC-029148 and other documents from the supplemental production that directly contradict his August 18, 2023 testimony. The outline should be designed to systematically impeach Vantorovich's prior statements regarding his level of involvement in fleet management decisions and his knowledge of the Northwind redeployment. Simone Laroche will prepare an initial draft of the supplemental outline for review by Patrick Gallagher.
3. Send Letter to Caldwell Royce & Shapiro LLP. A letter should be sent to Jason Whitford at Caldwell Royce & Shapiro LLP demanding an explanation of the unexplained redactions in the supplemental production, specifically in VHC-029147 and VHC-029401. The letter should demand either a valid privilege basis (with accompanying privilege log supplement) or production of the unredacted versions within ten business days. The letter should reference Judge Calloway's June 9, 2023 order and reserve Stonefield's right to seek further relief from the Court if the redactions are not adequately justified.
4. Update the Summary Judgment Roadmap. The Summary Judgment Roadmap should be updated to incorporate the supplemental production findings, with particular attention to the following arguments: (a) valid termination for cause based on VTS's intentional SLO failures caused by the Northwind fleet diversion; (b) first-to-breach doctrine based on VTS's October 2021 breach of the equipment commitment and Section 7.4 substitute capacity provisions; (c) failure to mitigate based on Vantor's deliberate decision to forego replacement business on the advice of litigation counsel; and (d) liquidated damages disproportionality based on the gap between Fielding's internal estimate of $18–$20 million in actual damages and the $67.23 million liquidated damages claim. The supplemental production documents should be mapped to the corresponding elements of each argument in the roadmap.
5. Advise Client. We recommend that Patrick Gallagher provide a prompt update to Tobias Wren, General Counsel of Stonefield, and Samuel Eklund, Responsible Partner, on the significance of these findings. The supplemental production materially strengthens Stonefield's defense posture across multiple fronts, and the client should be informed of the improved litigation position. A client update memorandum or call summary should be prepared for this purpose, bearing in mind that communications with the client should be kept at an appropriate level of generality to preserve flexibility on litigation strategy.
6. Preserve Chain of Custody and Coding. All documents in the supplemental production should remain on the Pinnacle Forensics LLC platform with current coding intact. David Moretti should confirm that the production has been backed up and archived in accordance with firm protocols for litigation document retention. The coding applied during the first-pass and second-pass reviews should be locked to prevent inadvertent modification, and any subsequent re-coding or re-categorization should be tracked and documented.
VIII. Appendix — Document Reference Table
The following table lists all 34 documents coded "Hot" during the review of Vantor's supplemental production. This table is a summary reference; the full Key Document Index — Vantor Supplemental Production (separate document dated July 5, 2023, prepared by Kara Nystrom) contains additional detail, including extended content descriptions and cross-references to case issues.
This table should be cross-referenced with the Key Document Index — Vantor Supplemental Production (separate document dated July 5, 2023, prepared by Kara Nystrom), which provides extended content descriptions, full recipient lists, and cross-references to the specific case issues and defense arguments that each document supports.
This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It was prepared in anticipation of litigation and for the purpose of providing legal analysis to the Calderwood & Harkness LLP litigation team. This memorandum should not be disclosed to any person outside the firm without the prior authorization of the Responsible Partner.
Category | Detail
Total Documents Produced | 4,218
Bates Range | VHC-029001 through VHC-033218
Date of Production | June 22, 2023
Production Format | Native files and TIFF images with accompanying load files (concordance .DAT, Opticon .OPT)
Hosting Platform | Pinnacle Forensics LLC (Project ID: PF-SLG-2022-0914)
Date Range of Documents | Approximately June 2021 through April 2022
Document Type

MEMORANDUM

MATTER NO.: 1012-00005

Record

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