1012-00005 · Stonefield Logistics Group · Discovery/Propounded

responses-vantor-rfa.docx DOCUMENT Litigation

61 / 150 ← → ✕

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

DEFENDANT STONEFIELD LOGISTICS GROUP INC.'S RESPONSES TO PLAINTIFF'S FIRST SET OF REQUESTS FOR ADMISSION

PRELIMINARY STATEMENT

Defendant Stonefield Logistics Group Inc. ("Stonefield" or "Defendant"), by and through its undersigned attorneys, Calderwood & Harkness LLP, hereby responds to Plaintiff Vantor Holdings Corp.'s ("Vantor" or "Plaintiff") First Set of Requests for Admission (Nos. 1–25), served on March 20, 2023, pursuant to Rule 36 of the Federal Rules of Civil Procedure.

These responses are made as of April 14, 2023, and are based upon information reasonably available to Defendant after a reasonable inquiry conducted as of that date. Notwithstanding the diligent efforts undertaken to identify and review all responsive information, discovery in this matter remains ongoing. Accordingly, these responses are necessarily based on information presently known to Defendant, and Defendant's investigation and discovery are continuing.

These responses are made subject to, and without waiver of, the General Objections set forth below and any specific objections set forth in the individual responses to particular Requests. The assertion of any objection to a particular Request, or to any portion thereof, does not constitute an admission that any non-objectionable portion of such Request is relevant, material, or admissible at trial or for any other purpose.

By responding to any Request for Admission herein, Defendant does not concede the relevance, materiality, or admissibility of either the subject matter of the Request or of Defendant's response thereto. Nothing in these responses shall be construed as a waiver or limitation of any claim, defense, objection, or privilege available to Defendant in this action or in any other proceeding.

Defendant expressly reserves the right to amend, modify, or supplement these responses as additional information becomes available through the continuing investigation and discovery in this matter, including but not limited to depositions, document production, and expert disclosures, all in accordance with the Federal Rules of Civil Procedure and any applicable orders of this Court.

GENERAL OBJECTIONS

Defendant asserts the following General Objections, each of which is incorporated by reference into every individual response set forth below as though fully stated therein. The assertion of a General Objection does not imply that the objection is necessarily applicable to every Request, but rather preserves the objection to the extent it may apply.

1. Defendant objects to each Request to the extent it seeks information or the admission of facts that are protected by the attorney-client privilege, the work product doctrine, the joint defense or common interest privilege, or any other applicable privilege, protection, or immunity from disclosure recognized under federal or state law. No response herein is intended to, nor shall it be deemed to, waive any such privilege, protection, or immunity.

2. Defendant objects to each Request to the extent it is vague, ambiguous, overly broad, or utilizes undefined terms or phrases in a manner that renders the Request susceptible to multiple reasonable interpretations, thereby precluding Defendant from providing an unqualified admission or denial. To the extent Defendant responds to any such Request, Defendant does so based upon its own reasonable interpretation of the Request, without conceding that Plaintiff's intended interpretation is the correct one.

3. Defendant objects to each Request to the extent it calls for a legal conclusion or seeks the admission of a mixed question of law and fact, rather than a straightforward factual admission. Requests for Admission under Rule 36 are properly limited to factual matters and the application of law to fact; they are not a proper vehicle for obtaining legal conclusions or concessions on contested legal issues.

4. Defendant objects to each Request to the extent it is compound, contains multiple embedded sub-parts, or seeks admission of multiple discrete factual propositions in a single Request. To the extent Defendant responds to any such compound Request, Defendant does so by addressing each identifiable factual proposition separately, and an admission of one factual component shall not be construed as an admission of any other component.

5. Defendant objects to each Request to the extent it mischaracterizes documents, testimony, prior discovery responses, or facts, or to the extent it contains assumptions of fact not established in the record. By responding to any such Request, Defendant does not concede the accuracy of any characterization or assumption embedded therein.

6. Defendant objects to each Request to the extent it seeks admissions regarding the subjective intent, knowledge, motivation, or state of mind of any person or entity, as such matters are not properly the subject of requests for admission and are more appropriately addressed through deposition testimony, interrogatory responses, or trial testimony.

7. Defendant reserves and does not waive any and all objections, claims, affirmative defenses, and counterclaims set forth in its Answer, Affirmative Defenses, and Counterclaim filed on January 13, 2023 (ECF No. 18). Nothing in these responses shall be construed as a waiver, abandonment, or modification of any position taken therein.

8. Subject to and without waiver of these General Objections, and incorporating each such objection as if fully set forth in each individual response below, Defendant responds to the individual Requests for Admission as follows:

RESPONSES TO INDIVIDUAL REQUESTS FOR ADMISSION

REQUEST FOR ADMISSION NO. 1

Request: Admit that on March 15, 2019, Stonefield Logistics Group Inc. and Vantor Transport Services LLC executed a Transportation Services Agreement bearing reference number SLG-VTS-2019-0315 (the "TSA").

Response: Admitted. Defendant admits that Stonefield Logistics Group Inc. and Vantor Transport Services LLC executed the Transportation Services Agreement dated March 15, 2019, bearing reference number SLG-VTS-2019-0315 (the "TSA"). The TSA, along with all schedules and exhibits attached thereto, speaks for itself.

REQUEST FOR ADMISSION NO. 2

Request: Admit that the TSA was drafted by Ashford Meridian LLP on behalf of Stonefield.

Response: Admitted. Defendant admits that the law firm of Ashford Meridian LLP was retained by Stonefield in connection with the drafting and negotiation of the TSA. Defendant notes, however, that the TSA was the product of extensive arm's-length negotiations between the parties, and both parties and their respective counsel reviewed, commented upon, and revised multiple drafts of the agreement prior to execution.

REQUEST FOR ADMISSION NO. 3

Request: Admit that the TSA provides for a five-year term commencing April 1, 2019 and expiring March 31, 2024.

Response: Admitted. The TSA speaks for itself, and Defendant admits that the term of the TSA, as stated in Section 2.1 thereof, commences on April 1, 2019 and expires on March 31, 2024, constituting a five-year initial term, subject to earlier termination in accordance with the provisions of the TSA.

REQUEST FOR ADMISSION NO. 4

Request: Admit that the TSA establishes an Annual Committed Volume ("ACV") under which Stonefield committed to tender a minimum of $43,200,000 in annual transportation charges to Vantor Transport Services LLC in each contract year.

Response: Admitted, subject to the qualification that the ACV obligation is subject to all of the terms and conditions of the TSA, including but not limited to the force majeure provisions set forth in Section 12.1 of the TSA, the adjustment mechanisms set forth in Section 5.4, and the provisions governing the excusal or reduction of performance obligations under the TSA. The TSA speaks for itself, and Defendant's admission of the stated ACV amount does not constitute a concession that the ACV obligation was absolute or unconditional in all circumstances.

REQUEST FOR ADMISSION NO. 5

Request: Admit that the total minimum commitment under the TSA over the five-year term was $216,000,000.

Response: Admitted, subject to the same qualifications stated in Defendant's response to Request No. 4 regarding the applicability of Section 12.1 (Force Majeure), Section 5.4 (Volume Adjustments), and other provisions of the TSA that may adjust, modify, or excuse performance of the minimum commitment in whole or in part. Defendant admits that the arithmetic product of the $43,200,000 ACV multiplied by five contract years equals $216,000,000, but does not concede that Stonefield's actual obligation over the term was fixed and unalterable at that amount.

REQUEST FOR ADMISSION NO. 6

Request: Admit that Section 14.2 of the TSA provides for liquidated damages in the event of termination other than "for Cause" as defined in Section 13.1.

Response: Admitted that Section 14.2 of the TSA contains a provision labeled "Liquidated Damages" that, by its terms, purports to apply in the event of a termination other than a termination "for Cause" as that term is defined in Section 13.1 of the TSA. The TSA speaks for itself. Defendant denies, however, that the liquidated damages provision in Section 14.2 is enforceable. Defendant affirmatively contends that the liquidated damages clause constitutes an unenforceable penalty under New York law because it does not bear a reasonable relationship to the probable loss anticipated at the time of contracting and is grossly disproportionate to any actual or anticipated harm. Defendant further contends that the actual damages flowing from any hypothetical termination without Cause would be readily ascertainable, rendering a liquidated damages clause unnecessary and inappropriate.

REQUEST FOR ADMISSION NO. 7

Request: Admit that the liquidated damages formula in Section 14.2 provides for payment of 75% of the ACV multiplied by the number of full and partial contract years remaining in the then-current term.

Response: Admitted that the formula set forth in Section 14.2 of the TSA is substantially as described in the Request. The TSA speaks for itself. Defendant denies, however, that the formula produces a result that constitutes a reasonable estimate of anticipated or probable damages resulting from a termination without Cause, and Defendant affirmatively contends that the clause is an unenforceable penalty under governing New York law for the reasons set forth in Defendant's response to Request No. 6 and as more fully argued in Defendant's motion practice and expert submissions in this action.

REQUEST FOR ADMISSION NO. 8

Request: Admit that on January 18, 2022, Raymond Hess, Director of Contract Compliance at Stonefield, sent a written Cure Notice to Sandra Milescu, COO of Vantor Transport Services LLC.

Response: Admitted. Defendant admits that Raymond Hess, in his capacity as Director of Contract Compliance at Stonefield, sent a written Cure Notice dated January 18, 2022, addressed to Sandra Milescu, Chief Operating Officer of Vantor Transport Services LLC ("VTS"), identifying material breaches of the TSA and providing VTS with notice and an opportunity to cure such breaches in accordance with the requirements of Section 13.2 of the TSA.

REQUEST FOR ADMISSION NO. 9

Request: Admit that the Cure Notice identified alleged deficiencies in Vantor Transport Services LLC's on-time pickup rate, on-time delivery rate, tender acceptance rate, equipment availability, and cargo claims ratio for Q4 2021.

Response: Admitted that the Cure Notice identified performance failures and material breaches of the TSA by VTS in each of the five categories referenced in the Request, specifically: (i) on-time pickup rate; (ii) on-time delivery rate; (iii) tender acceptance rate; (iv) equipment availability; and (v) cargo claims ratio, all for the fourth quarter of 2021 (October 1, 2021 through December 31, 2021). Defendant objects, however, to the characterization of the identified performance failures as merely "alleged deficiencies." The performance failures documented in the Cure Notice constituted material breaches of the Service Level Obligations ("SLOs") set forth in Schedule B to the TSA and were supported by VTS's own data as reported through VTS's Carrier Performance Portal. The word "alleged" is inappropriate given that VTS did not dispute the underlying performance data in its February 14, 2022 response to the Cure Notice.

REQUEST FOR ADMISSION NO. 10

Request: Admit that the Cure Notice provided VTS with a 30-calendar-day cure period expiring on February 17, 2022.

Response: Admitted. The Cure Notice provided VTS with a 30-calendar-day cure period, as required by Section 13.2 of the TSA, commencing on the date of receipt of the Cure Notice (January 18, 2022) and expiring on February 17, 2022. Defendant further states that VTS failed to cure the identified material breaches within the 30-day cure period, as documented in Stonefield's internal compliance review conducted on February 18, 2022, and as reflected in VTS's continued failure to meet the applicable SLOs during the cure period.

REQUEST FOR ADMISSION NO. 11

Request: Admit that on February 14, 2022, Derek Pruitt, VP of Business Development at Vantor, sent a letter to Janet Kirkwood, VP of Carrier Relations at Stonefield, responding to the Cure Notice.

Response: Admitted. Defendant admits that a letter dated February 14, 2022, was sent by Derek Pruitt, Vice President of Business Development at Vantor Holdings Corp., to Janet Kirkwood, Vice President of Carrier Relations at Stonefield, purporting to respond to the January 18, 2022 Cure Notice. Defendant notes that the February 14, 2022 letter did not dispute the accuracy of the Q4 2021 performance data underlying the Cure Notice, did not offer a concrete remediation plan with measurable milestones, and did not demonstrate that VTS had cured or was in the process of curing the identified material breaches.

REQUEST FOR ADMISSION NO. 12

Request: Admit that VTS's on-time pickup rate for Q4 2021 was 78.2%.

Response: Admitted. Defendant admits that VTS's on-time pickup rate for Q4 2021 was 78.2%, as reflected in VTS's own Carrier Performance Portal data for the period October 1, 2021 through December 31, 2021. This rate was materially below the 95% on-time pickup Service Level Obligation established in Schedule B, Section 1(a) of the TSA, representing a shortfall of 16.8 percentage points.

REQUEST FOR ADMISSION NO. 13

Request: Admit that VTS's on-time delivery rate for Q4 2021 was 81.6%.

Response: Admitted. Defendant admits that VTS's on-time delivery rate for Q4 2021 was 81.6%, as reflected in VTS's own Carrier Performance Portal data for the period October 1, 2021 through December 31, 2021. This rate was materially below the 93% on-time delivery Service Level Obligation established in Schedule B, Section 1(b) of the TSA, representing a shortfall of 11.4 percentage points.

REQUEST FOR ADMISSION NO. 14

Request: Admit that VTS's tender acceptance rate for Q4 2021 was 71.4%.

Response: Admitted, subject to the qualification that Defendant's records indicate the tender acceptance rate was 71.4%, as reflected in VTS's own Carrier Performance Portal data for the period October 1, 2021 through December 31, 2021. Defendant's internal carrier management system independently confirmed a substantially similar tender acceptance rate of approximately 71.2% for the same period. This rate was materially below the 90% tender acceptance Service Level Obligation established in Schedule B, Section 1(c) of the TSA, representing a shortfall of approximately 18.6 percentage points. Defendant notes that VTS's declining tender acceptance rate forced Stonefield to seek alternative carriers for loads that VTS refused or failed to accept, at significant additional cost and operational disruption to Stonefield's supply chain operations.

REQUEST FOR ADMISSION NO. 15

Request: Admit that VTS had approximately 248 tractors available for Stonefield freight in Q4 2021, representing approximately 62% of the 400-tractor minimum fleet commitment under the TSA.

Response: Defendant admits, upon information and belief, that VTS had approximately 248 tractors available for Stonefield dedicated lanes in Q4 2021, representing approximately 62% of the 400-tractor minimum fleet commitment set forth in Schedule D, Section 3 of the TSA. This level of equipment availability was materially below the 85% equipment availability Service Level Obligation established in Schedule B, Section 1(d) of the TSA. Defendant further states, upon information and belief, that VTS's reduction in available fleet capacity was attributable in substantial part to VTS's undisclosed unilateral decision to redeploy approximately 85 tractors from Stonefield dedicated lanes to other shipper accounts in or around October 2021, as evidenced by the November 12, 2021 internal email from Sandra Milescu to Nikolai Vantorovich (Bates No. VHC-008417), which was produced in Plaintiff's initial document production.

REQUEST FOR ADMISSION NO. 16

Request: Admit that 16 cargo claims totaling $387,400 were documented against VTS shipments in November and December 2021.

Response: Admitted. Defendant admits that 16 cargo claims totaling $387,400 were documented against VTS shipments during the months of November and December 2021. This claims activity yielded a cargo claims ratio of approximately 1.07% (measured as a percentage of the total freight value transported by VTS during the two-month period), which significantly exceeded the ≤0.5% cargo claims ratio Service Level Obligation threshold established in Schedule B, Section 1(e) of the TSA. The claims included, among other incidents, damage to temperature-sensitive pharmaceutical products on Lane 3 (Newark, NJ to Memphis, TN) and damage to consumer electronics on Lane 7 (Charlotte, NC to Atlanta, GA), both of which resulted in substantial customer complaints and chargebacks to Stonefield.

REQUEST FOR ADMISSION NO. 17

Request: Admit that on March 4, 2022, Tobias Wren, General Counsel of Stonefield, sent a formal termination letter to Vantor Holdings Corp. and Vantor Transport Services LLC purporting to terminate the TSA for Cause pursuant to Section 13.1(a).

Response: Admitted that Tobias Wren, General Counsel of Stonefield Logistics Group Inc., sent a formal termination letter dated March 4, 2022, addressed to Vantor Holdings Corp. and Vantor Transport Services LLC, terminating the TSA for Cause pursuant to Section 13.1(a) of the TSA. Defendant objects to the use of the word "purporting" in the Request, as it implies, without foundation, that the termination was not valid or effective. Defendant affirmatively states that the termination was valid, proper, and effective, having been exercised for Cause pursuant to Section 13.1(a) of the TSA based on VTS's material breaches of the Service Level Obligations set forth in Schedule B that remained uncured following the expiration of the 30-calendar-day cure period on February 17, 2022. The termination letter identified each of the five SLO breaches documented in the January 18, 2022 Cure Notice and confirmed that VTS had failed to cure any of them within the contractual cure period.

REQUEST FOR ADMISSION NO. 18

Request: Admit that Stonefield tendered only $31,800,000 in transportation charges to VTS during Contract Year 2 (April 2020 through March 2021), which was $11,400,000 less than the $43,200,000 ACV.

Response: Admitted that Stonefield tendered approximately $31,800,000 in transportation charges to VTS during the period April 2020 through March 2021 (Contract Year 2). Denied that this constituted a breach of the ACV obligation or any shortfall under the TSA.

Stonefield properly and timely invoked the force majeure provision under Section 12.1 of the TSA by written notice dated April 8, 2020, for the period beginning April 2020 and extending through September 2020, covering the material adverse impact of the COVID-19 pandemic on domestic freight demand, supply chain disruptions, government-imposed restrictions on commercial activity, and related market conditions. The force majeure notice was acknowledged by VTS in a letter from Sandra Milescu dated April 15, 2020, without objection to Stonefield's invocation of Section 12.1.

The adjusted ACV for Contract Year 2, properly accounting for the six-month force majeure period during which Stonefield's volume commitment was excused, was $21,600,000 (calculated as $43,200,000 × 6/12 for the non-excused portion of the contract year). Stonefield's actual tenders of approximately $31,800,000 during Contract Year 2 exceeded the adjusted ACV by approximately $10,200,000. Accordingly, there was no volume shortfall in Contract Year 2, and Stonefield fully satisfied — indeed, substantially exceeded — its adjusted ACV obligation for that period.

REQUEST FOR ADMISSION NO. 19

Request: Admit that Stonefield tendered only $36,500,000 in transportation charges to VTS during Contract Year 3 (April 2021 through the date of termination on March 4, 2022), which was $6,700,000 less than the $43,200,000 ACV.

Response: Defendant admits that it tendered approximately $36,500,000 in transportation charges to VTS during the period April 2021 through the termination date of March 4, 2022. Defendant denies that this constitutes a shortfall or breach of the ACV obligation under the TSA.

Contract Year 3 encompasses the twelve-month period from April 1, 2021 through March 31, 2022. However, the TSA was validly terminated for Cause on March 4, 2022, approximately 27 days before the end of Contract Year 3. The $36,500,000 in tenders over the approximately eleven months and four days of the contract year preceding termination represented an annualized rate of approximately $39,500,000 which, on a prorated basis, was substantially consistent with the ACV.

Moreover, any volume shortfall during Contract Year 3 is directly attributable to VTS's own material breaches of the TSA, including but not limited to: (i) VTS's unilateral reduction in fleet capacity, with approximately 85 tractors redeployed away from Stonefield dedicated lanes in October 2021; (ii) VTS's declining tender acceptance rates, which fell to 71.4% in Q4 2021, meaning VTS rejected or failed to accept nearly 29% of all loads tendered by Stonefield; and (iii) VTS's deteriorating on-time pickup and delivery performance, which created operational disruptions that necessitated Stonefield's use of alternative carriers.

When properly adjusted for the loads that Stonefield tendered to VTS but that VTS rejected or failed to accept, Stonefield's total tender volume (including rejected tenders) for Contract Year 3 was approximately $44,100,000, which exceeded the ACV. Defendant further states that any volume shortfall that may be calculated is attributable to VTS's own material breaches and is therefore not actionable as a basis for damages against Stonefield. A party may not recover damages caused by its own breach. See, e.g., Ashgrove & Co. v. Camberwell Industries, 500 F.3d 171, 185 (2d Cir. 2007).

REQUEST FOR ADMISSION NO. 20

Request: Admit that Stonefield utilized Cascade Freight Systems Inc. and Briarwood Trucking Co. to transport freight on lanes covered by the TSA during 2021.

Response: Admitted that Stonefield utilized Cascade Freight Systems Inc. ("Cascade") and Briarwood Trucking Co. ("Briarwood") for certain freight transportation services during 2021. Denied that such usage violated the TSA or any exclusivity obligation thereunder.

Stonefield's use of Cascade and Briarwood was limited to Lanes 8 through 14, which are classified as "Secondary Lanes" under Schedule C, Section 2(b) of the TSA. The exclusivity provisions of Schedule C, Section 1 apply only to the fourteen (14) designated "Primary Lanes" (specific origin-destination pairs set forth in Schedule C, Section 2(a)), and Stonefield did not utilize Cascade, Briarwood, or any other third-party carrier on any Primary Lane during 2021 or at any other time during the term of the TSA.

Stonefield's use of alternative carriers on Secondary Lanes was expressly permitted under the terms of Schedule C, Section 2(b), which provides that "[Stonefield] shall have the right to utilize alternative carriers on Secondary Lanes without restriction." Such use was necessitated by VTS's declining tender acceptance rates and VTS's failure to provide adequate fleet capacity to handle Stonefield's freight volume on Secondary Lanes, particularly during Q3 and Q4 of 2021.

REQUEST FOR ADMISSION NO. 21

Request: Admit that Stonefield was aware, prior to terminating the TSA, that the Rate Adjustment Mechanism in Section 5.3 would have increased per-mile rates by approximately 14.3% effective April 1, 2022.

Response: Defendant admits that it was aware, prior to the date of the termination letter (March 4, 2022), of the projected rate adjustment under the Rate Adjustment Mechanism set forth in Section 5.3 of the TSA, and that such adjustment, if implemented, would have increased per-mile rates by approximately 14.3% effective April 1, 2022.

Defendant denies that this awareness had any bearing on, or was a motivating factor in, the decision to terminate the TSA. The termination was based solely and entirely on VTS's documented material breaches of the five Service Level Obligations set forth in Schedule B of the TSA during Q4 2021, and VTS's failure to cure those breaches within the 30-calendar-day cure period provided under Section 13.2. Awareness of a contractual rate adjustment that would have taken effect on April 1, 2022 — nearly six weeks after the cure period had already expired on February 17, 2022 — does not render the termination pretextual where independent, objective Cause for termination existed and was fully documented.

REQUEST FOR ADMISSION NO. 22

Request: Admit that the projected April 2022 rate adjustment would have increased Stonefield's annual transportation costs under the TSA by approximately $6,200,000.

Response: Defendant admits that an internal analysis performed by Ashford Meridian LLP in February 2022, at Stonefield's request, estimated that the projected rate adjustment under Section 5.3 of the TSA would increase the weighted average per-mile rate from approximately $2.87 to approximately $3.28, representing an increase of approximately 14.3%, and adding approximately $6,200,000 in annual transportation costs assuming full utilization of the ACV. Defendant notes that this analysis was prepared in the ordinary course of Stonefield's contract management and budgeting processes and was not undertaken in connection with, or as a precursor to, the termination decision.

Defendant denies that this projected cost increase motivated or influenced the termination decision in any way. The decision to terminate the TSA was made solely on the basis of VTS's material breaches of the SLOs and VTS's failure to cure those breaches, as documented in the January 18, 2022 Cure Notice and the March 4, 2022 termination letter.

REQUEST FOR ADMISSION NO. 23

Request: Admit that Stonefield's termination of the TSA was pretextual and was motivated by a desire to avoid the April 2022 rate adjustment and to divert freight volume to lower-cost carriers.

Response: Denied. Defendant categorically and unequivocally denies that the termination of the TSA was pretextual, and denies that the termination was motivated in whole or in part by a desire to avoid the April 2022 rate adjustment under Section 5.3, to divert freight volume to lower-cost carriers, or for any reason other than VTS's documented material breaches of the TSA.

The termination was based on VTS's sustained, material, and uncured breaches of the TSA across all five Service Level Obligations during Q4 2021, including but not limited to:

(a) an on-time pickup rate of 78.2%, which was 16.8 percentage points below the 95% SLO;

(b) an on-time delivery rate of 81.6%, which was 11.4 percentage points below the 93% SLO;

(d) equipment availability of approximately 62% (248 of 400 tractors), which was 23 percentage points below the 85% SLO; and

(e) a cargo claims ratio of approximately 1.07%, which was more than double the ≤0.5% SLO threshold.

In addition, VTS failed to cure any of these material breaches within the 30-calendar-day cure period that expired on February 17, 2022. VTS's February 14, 2022 response letter from Derek Pruitt did not dispute the underlying performance data, did not provide a concrete remediation plan, and did not demonstrate that any cure had been or was being implemented.

Defendant further states that VTS's undisclosed unilateral redeployment of approximately 85 tractors away from Stonefield dedicated lanes in or around October 2021 — as reflected in the November 12, 2021 internal email from Sandra Milescu to Nikolai Vantorovich (Bates No. VHC-008417) — was a deliberate and material breach of VTS's fleet commitment obligations under the TSA that independently constituted Cause for termination.

The termination was valid and was exercised in good faith for Cause pursuant to Section 13.1(a) of the TSA. This Request calls for a legal conclusion and contains unsupported assumptions of fact, and Defendant's General Objections Nos. 3, 5, and 6 are specifically incorporated herein.

REQUEST FOR ADMISSION NO. 24

Request: Admit that as of the date of termination, there were approximately 2 years and 27 days remaining in the TSA term (March 4, 2022 through March 31, 2024).

Response: Admitted that the remaining period from the date of termination, March 4, 2022, through the scheduled expiration date of the TSA, March 31, 2024, is approximately 2 years and 27 days.

Defendant denies, however, that this calculation is relevant to any damages analysis in this action because the termination was valid and effective for Cause under Section 13.1(a) of the TSA. A valid termination for Cause does not trigger the liquidated damages provision of Section 14.2 or any other termination-based damages remedy. Accordingly, the remaining term is immaterial to the damages inquiry, and no liquidated damages or other termination-based damages are owed to Plaintiff.

REQUEST FOR ADMISSION NO. 25

Request: Admit that Vantor Holdings Corp. has suffered damages in excess of $95,000,000 as a result of Stonefield's wrongful termination of the TSA.

Response: Denied. Defendant denies each and every element of this Request.

First, Defendant denies that it wrongfully terminated the TSA. As set forth in the preceding responses and in Defendant's Answer, Affirmative Defenses, and Counterclaim, the termination was a valid and proper exercise of Stonefield's contractual right to terminate for Cause under Section 13.1(a) of the TSA, based on VTS's documented material breaches of the TSA that remained uncured after the expiration of the 30-day cure period.

Second, Defendant denies that Vantor Holdings Corp. or any Vantor affiliate has suffered any compensable damages as a result of the termination. Because the termination was for Cause, no liquidated damages, lost profits, or other termination-based damages are owed under the terms of the TSA.

Third, Defendant denies the claimed quantum of damages in its entirety. Even assuming arguendo that the termination were deemed not to be for Cause — which Defendant does not concede — Plaintiff's claimed damages of approximately $95,400,000 are grossly inflated and unsupported, for the following reasons, among others:

(a) The liquidated damages clause in Section 14.2 of the TSA constitutes an unenforceable penalty under New York law, as the formula produces a result that is grossly disproportionate to any reasonably anticipated harm and bears no reasonable relationship to the probable loss that was contemplated by the parties at the time of contracting;

(b) Plaintiff's claimed damages are duplicative, seeking both liquidated damages under Section 14.2 and lost profits under general breach of contract theories, which constitute impermissible double recovery;

(c) Plaintiff's claimed damages include consequential, incidental, and speculative damages that are expressly barred by the mutual consequential damages waiver set forth in Section 15.1 of the TSA;

(d) Plaintiff has failed to demonstrate reasonable efforts to mitigate its damages, as required under New York law, including by seeking alternative shipper customers for the fleet capacity that was allegedly dedicated to Stonefield; and

(e) Plaintiff's damages model fails to account for VTS's own material breaches of the TSA, which independently caused or contributed to any harm allegedly suffered by Plaintiff.

Defendant's rebuttal damages expert, Dr. Evelyn Rosser of Kensington Analytics Group LLC, has opined, based on her independent analysis of the record evidence, that the maximum defensible damages under an alternative lost-profits theory — assuming the termination were not for Cause, which Defendant does not concede — are $8,200,000, and that if the termination was valid for Cause, Plaintiff's recoverable damages are zero ($0). Dr. Rosser's opinions are set forth in her expert report dated March 10, 2023, and will be further addressed in her rebuttal report and trial testimony.

•

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Samuel Eklund Partner

Patrick Gallagher Senior Associate

200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 841-7200 Facsimile: (212) 841-7201

Email: seklund@calderwoodharkness.com

Email: pgallagher@calderwoodharkness.com

Attorneys for Defendant Stonefield Logistics Group Inc.

Dated: April 14, 2023

CERTIFICATE OF SERVICE

I, Patrick Gallagher, hereby certify that on April 14, 2023, a true and correct copy of the foregoing Defendant Stonefield Logistics Group Inc.'s Responses to Plaintiff's First Set of Requests for Admission was served upon all counsel of record via the Court's CM/ECF electronic filing system, which will send a Notice of Electronic Filing to all registered participants, and via electronic mail to:

Jason Whitford, Esq. Caldwell Royce & Shapiro LLP 1 Liberty Plaza, 22nd Floor New York, New York 10006 Telephone: (212) 603-4500

Email: jwhitford@caldwellroyce.com

Counsel for Plaintiff Vantor Holdings Corp.

________________________________________

Patrick Gallagher

VANTOR HOLDINGS CORP.,

Plaintiff,

v.	Case No. 22-cv-07841
STONEFIELD LOGISTICS GROUP INC.,	Hon. Margaret T. Calloway, U.S.D.J.

Defendant.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
DEFENDANT STONEFIELD LOGISTICS GROUP INC.'S RESPONSES TO PLAINTIFF'S FIRST SET OF REQUESTS FOR ADMISSION
PRELIMINARY STATEMENT
Defendant Stonefield Logistics Group Inc. ("Stonefield" or "Defendant"), by and through its undersigned attorneys, Calderwood & Harkness LLP, hereby responds to Plaintiff Vantor Holdings Corp.'s ("Vantor" or "Plaintiff") First Set of Requests for Admission (Nos. 1–25), served on March 20, 2023, pursuant to Rule 36 of the Federal Rules of Civil Procedure.
These responses are made as of April 14, 2023, and are based upon information reasonably available to Defendant after a reasonable inquiry conducted as of that date. Notwithstanding the diligent efforts undertaken to identify and review all responsive information, discovery in this matter remains ongoing. Accordingly, these responses are necessarily based on information presently known to Defendant, and Defendant's investigation and discovery are continuing.
These responses are made subject to, and without waiver of, the General Objections set forth below and any specific objections set forth in the individual responses to particular Requests. The assertion of any objection to a particular Request, or to any portion thereof, does not constitute an admission that any non-objectionable portion of such Request is relevant, material, or admissible at trial or for any other purpose.
By responding to any Request for Admission herein, Defendant does not concede the relevance, materiality, or admissibility of either the subject matter of the Request or of Defendant's response thereto. Nothing in these responses shall be construed as a waiver or limitation of any claim, defense, objection, or privilege available to Defendant in this action or in any other proceeding.
Defendant expressly reserves the right to amend, modify, or supplement these responses as additional information becomes available through the continuing investigation and discovery in this matter, including but not limited to depositions, document production, and expert disclosures, all in accordance with the Federal Rules of Civil Procedure and any applicable orders of this Court.
GENERAL OBJECTIONS
Defendant asserts the following General Objections, each of which is incorporated by reference into every individual response set forth below as though fully stated therein. The assertion of a General Objection does not imply that the objection is necessarily applicable to every Request, but rather preserves the objection to the extent it may apply.
1. Defendant objects to each Request to the extent it seeks information or the admission of facts that are protected by the attorney-client privilege, the work product doctrine, the joint defense or common interest privilege, or any other applicable privilege, protection, or immunity from disclosure recognized under federal or state law. No response herein is intended to, nor shall it be deemed to, waive any such privilege, protection, or immunity.
2. Defendant objects to each Request to the extent it is vague, ambiguous, overly broad, or utilizes undefined terms or phrases in a manner that renders the Request susceptible to multiple reasonable interpretations, thereby precluding Defendant from providing an unqualified admission or denial. To the extent Defendant responds to any such Request, Defendant does so based upon its own reasonable interpretation of the Request, without conceding that Plaintiff's intended interpretation is the correct one.
3. Defendant objects to each Request to the extent it calls for a legal conclusion or seeks the admission of a mixed question of law and fact, rather than a straightforward factual admission. Requests for Admission under Rule 36 are properly limited to factual matters and the application of law to fact; they are not a proper vehicle for obtaining legal conclusions or concessions on contested legal issues.
4. Defendant objects to each Request to the extent it is compound, contains multiple embedded sub-parts, or seeks admission of multiple discrete factual propositions in a single Request. To the extent Defendant responds to any such compound Request, Defendant does so by addressing each identifiable factual proposition separately, and an admission of one factual component shall not be construed as an admission of any other component.
5. Defendant objects to each Request to the extent it mischaracterizes documents, testimony, prior discovery responses, or facts, or to the extent it contains assumptions of fact not established in the record. By responding to any such Request, Defendant does not concede the accuracy of any characterization or assumption embedded therein.
6. Defendant objects to each Request to the extent it seeks admissions regarding the subjective intent, knowledge, motivation, or state of mind of any person or entity, as such matters are not properly the subject of requests for admission and are more appropriately addressed through deposition testimony, interrogatory responses, or trial testimony.
7. Defendant reserves and does not waive any and all objections, claims, affirmative defenses, and counterclaims set forth in its Answer, Affirmative Defenses, and Counterclaim filed on January 13, 2023 (ECF No. 18). Nothing in these responses shall be construed as a waiver, abandonment, or modification of any position taken therein.
8. Subject to and without waiver of these General Objections, and incorporating each such objection as if fully set forth in each individual response below, Defendant responds to the individual Requests for Admission as follows:
RESPONSES TO INDIVIDUAL REQUESTS FOR ADMISSION
REQUEST FOR ADMISSION NO. 1
Request: Admit that on March 15, 2019, Stonefield Logistics Group Inc. and Vantor Transport Services LLC executed a Transportation Services Agreement bearing reference number SLG-VTS-2019-0315 (the "TSA").
Response: Admitted. Defendant admits that Stonefield Logistics Group Inc. and Vantor Transport Services LLC executed the Transportation Services Agreement dated March 15, 2019, bearing reference number SLG-VTS-2019-0315 (the "TSA"). The TSA, along with all schedules and exhibits attached thereto, speaks for itself.
REQUEST FOR ADMISSION NO. 2
Request: Admit that the TSA was drafted by Ashford Meridian LLP on behalf of Stonefield.
Response: Admitted. Defendant admits that the law firm of Ashford Meridian LLP was retained by Stonefield in connection with the drafting and negotiation of the TSA. Defendant notes, however, that the TSA was the product of extensive arm's-length negotiations between the parties, and both parties and their respective counsel reviewed, commented upon, and revised multiple drafts of the agreement prior to execution.
REQUEST FOR ADMISSION NO. 3
Request: Admit that the TSA provides for a five-year term commencing April 1, 2019 and expiring March 31, 2024.
Response: Admitted. The TSA speaks for itself, and Defendant admits that the term of the TSA, as stated in Section 2.1 thereof, commences on April 1, 2019 and expires on March 31, 2024, constituting a five-year initial term, subject to earlier termination in accordance with the provisions of the TSA.
REQUEST FOR ADMISSION NO. 4
Request: Admit that the TSA establishes an Annual Committed Volume ("ACV") under which Stonefield committed to tender a minimum of $43,200,000 in annual transportation charges to Vantor Transport Services LLC in each contract year.
Response: Admitted, subject to the qualification that the ACV obligation is subject to all of the terms and conditions of the TSA, including but not limited to the force majeure provisions set forth in Section 12.1 of the TSA, the adjustment mechanisms set forth in Section 5.4, and the provisions governing the excusal or reduction of performance obligations under the TSA. The TSA speaks for itself, and Defendant's admission of the stated ACV amount does not constitute a concession that the ACV obligation was absolute or unconditional in all circumstances.
REQUEST FOR ADMISSION NO. 5
Request: Admit that the total minimum commitment under the TSA over the five-year term was $216,000,000.
Response: Admitted, subject to the same qualifications stated in Defendant's response to Request No. 4 regarding the applicability of Section 12.1 (Force Majeure), Section 5.4 (Volume Adjustments), and other provisions of the TSA that may adjust, modify, or excuse performance of the minimum commitment in whole or in part. Defendant admits that the arithmetic product of the $43,200,000 ACV multiplied by five contract years equals $216,000,000, but does not concede that Stonefield's actual obligation over the term was fixed and unalterable at that amount.
REQUEST FOR ADMISSION NO. 6
Request: Admit that Section 14.2 of the TSA provides for liquidated damages in the event of termination other than "for Cause" as defined in Section 13.1.
Response: Admitted that Section 14.2 of the TSA contains a provision labeled "Liquidated Damages" that, by its terms, purports to apply in the event of a termination other than a termination "for Cause" as that term is defined in Section 13.1 of the TSA. The TSA speaks for itself. Defendant denies, however, that the liquidated damages provision in Section 14.2 is enforceable. Defendant affirmatively contends that the liquidated damages clause constitutes an unenforceable penalty under New York law because it does not bear a reasonable relationship to the probable loss anticipated at the time of contracting and is grossly disproportionate to any actual or anticipated harm. Defendant further contends that the actual damages flowing from any hypothetical termination without Cause would be readily ascertainable, rendering a liquidated damages clause unnecessary and inappropriate.
REQUEST FOR ADMISSION NO. 7
Request: Admit that the liquidated damages formula in Section 14.2 provides for payment of 75% of the ACV multiplied by the number of full and partial contract years remaining in the then-current term.
Response: Admitted that the formula set forth in Section 14.2 of the TSA is substantially as described in the Request. The TSA speaks for itself. Defendant denies, however, that the formula produces a result that constitutes a reasonable estimate of anticipated or probable damages resulting from a termination without Cause, and Defendant affirmatively contends that the clause is an unenforceable penalty under governing New York law for the reasons set forth in Defendant's response to Request No. 6 and as more fully argued in Defendant's motion practice and expert submissions in this action.
REQUEST FOR ADMISSION NO. 8
Request: Admit that on January 18, 2022, Raymond Hess, Director of Contract Compliance at Stonefield, sent a written Cure Notice to Sandra Milescu, COO of Vantor Transport Services LLC.
Response: Admitted. Defendant admits that Raymond Hess, in his capacity as Director of Contract Compliance at Stonefield, sent a written Cure Notice dated January 18, 2022, addressed to Sandra Milescu, Chief Operating Officer of Vantor Transport Services LLC ("VTS"), identifying material breaches of the TSA and providing VTS with notice and an opportunity to cure such breaches in accordance with the requirements of Section 13.2 of the TSA.
REQUEST FOR ADMISSION NO. 9
Request: Admit that the Cure Notice identified alleged deficiencies in Vantor Transport Services LLC's on-time pickup rate, on-time delivery rate, tender acceptance rate, equipment availability, and cargo claims ratio for Q4 2021.
Response: Admitted that the Cure Notice identified performance failures and material breaches of the TSA by VTS in each of the five categories referenced in the Request, specifically: (i) on-time pickup rate; (ii) on-time delivery rate; (iii) tender acceptance rate; (iv) equipment availability; and (v) cargo claims ratio, all for the fourth quarter of 2021 (October 1, 2021 through December 31, 2021). Defendant objects, however, to the characterization of the identified performance failures as merely "alleged deficiencies." The performance failures documented in the Cure Notice constituted material breaches of the Service Level Obligations ("SLOs") set forth in Schedule B to the TSA and were supported by VTS's own data as reported through VTS's Carrier Performance Portal. The word "alleged" is inappropriate given that VTS did not dispute the underlying performance data in its February 14, 2022 response to the Cure Notice.
REQUEST FOR ADMISSION NO. 10
Request: Admit that the Cure Notice provided VTS with a 30-calendar-day cure period expiring on February 17, 2022.
Response: Admitted. The Cure Notice provided VTS with a 30-calendar-day cure period, as required by Section 13.2 of the TSA, commencing on the date of receipt of the Cure Notice (January 18, 2022) and expiring on February 17, 2022. Defendant further states that VTS failed to cure the identified material breaches within the 30-day cure period, as documented in Stonefield's internal compliance review conducted on February 18, 2022, and as reflected in VTS's continued failure to meet the applicable SLOs during the cure period.
REQUEST FOR ADMISSION NO. 11
Request: Admit that on February 14, 2022, Derek Pruitt, VP of Business Development at Vantor, sent a letter to Janet Kirkwood, VP of Carrier Relations at Stonefield, responding to the Cure Notice.
Response: Admitted. Defendant admits that a letter dated February 14, 2022, was sent by Derek Pruitt, Vice President of Business Development at Vantor Holdings Corp., to Janet Kirkwood, Vice President of Carrier Relations at Stonefield, purporting to respond to the January 18, 2022 Cure Notice. Defendant notes that the February 14, 2022 letter did not dispute the accuracy of the Q4 2021 performance data underlying the Cure Notice, did not offer a concrete remediation plan with measurable milestones, and did not demonstrate that VTS had cured or was in the process of curing the identified material breaches.
REQUEST FOR ADMISSION NO. 12
Request: Admit that VTS's on-time pickup rate for Q4 2021 was 78.2%.
Response: Admitted. Defendant admits that VTS's on-time pickup rate for Q4 2021 was 78.2%, as reflected in VTS's own Carrier Performance Portal data for the period October 1, 2021 through December 31, 2021. This rate was materially below the 95% on-time pickup Service Level Obligation established in Schedule B, Section 1(a) of the TSA, representing a shortfall of 16.8 percentage points.
REQUEST FOR ADMISSION NO. 13
Request: Admit that VTS's on-time delivery rate for Q4 2021 was 81.6%.
Response: Admitted. Defendant admits that VTS's on-time delivery rate for Q4 2021 was 81.6%, as reflected in VTS's own Carrier Performance Portal data for the period October 1, 2021 through December 31, 2021. This rate was materially below the 93% on-time delivery Service Level Obligation established in Schedule B, Section 1(b) of the TSA, representing a shortfall of 11.4 percentage points.
REQUEST FOR ADMISSION NO. 14
Request: Admit that VTS's tender acceptance rate for Q4 2021 was 71.4%.
Response: Admitted, subject to the qualification that Defendant's records indicate the tender acceptance rate was 71.4%, as reflected in VTS's own Carrier Performance Portal data for the period October 1, 2021 through December 31, 2021. Defendant's internal carrier management system independently confirmed a substantially similar tender acceptance rate of approximately 71.2% for the same period. This rate was materially below the 90% tender acceptance Service Level Obligation established in Schedule B, Section 1(c) of the TSA, representing a shortfall of approximately 18.6 percentage points. Defendant notes that VTS's declining tender acceptance rate forced Stonefield to seek alternative carriers for loads that VTS refused or failed to accept, at significant additional cost and operational disruption to Stonefield's supply chain operations.
REQUEST FOR ADMISSION NO. 15
Request: Admit that VTS had approximately 248 tractors available for Stonefield freight in Q4 2021, representing approximately 62% of the 400-tractor minimum fleet commitment under the TSA.
Response: Defendant admits, upon information and belief, that VTS had approximately 248 tractors available for Stonefield dedicated lanes in Q4 2021, representing approximately 62% of the 400-tractor minimum fleet commitment set forth in Schedule D, Section 3 of the TSA. This level of equipment availability was materially below the 85% equipment availability Service Level Obligation established in Schedule B, Section 1(d) of the TSA. Defendant further states, upon information and belief, that VTS's reduction in available fleet capacity was attributable in substantial part to VTS's undisclosed unilateral decision to redeploy approximately 85 tractors from Stonefield dedicated lanes to other shipper accounts in or around October 2021, as evidenced by the November 12, 2021 internal email from Sandra Milescu to Nikolai Vantorovich (Bates No. VHC-008417), which was produced in Plaintiff's initial document production.
REQUEST FOR ADMISSION NO. 16
Request: Admit that 16 cargo claims totaling $387,400 were documented against VTS shipments in November and December 2021.
Response: Admitted. Defendant admits that 16 cargo claims totaling $387,400 were documented against VTS shipments during the months of November and December 2021. This claims activity yielded a cargo claims ratio of approximately 1.07% (measured as a percentage of the total freight value transported by VTS during the two-month period), which significantly exceeded the ≤0.5% cargo claims ratio Service Level Obligation threshold established in Schedule B, Section 1(e) of the TSA. The claims included, among other incidents, damage to temperature-sensitive pharmaceutical products on Lane 3 (Newark, NJ to Memphis, TN) and damage to consumer electronics on Lane 7 (Charlotte, NC to Atlanta, GA), both of which resulted in substantial customer complaints and chargebacks to Stonefield.
REQUEST FOR ADMISSION NO. 17
Request: Admit that on March 4, 2022, Tobias Wren, General Counsel of Stonefield, sent a formal termination letter to Vantor Holdings Corp. and Vantor Transport Services LLC purporting to terminate the TSA for Cause pursuant to Section 13.1(a).
Response: Admitted that Tobias Wren, General Counsel of Stonefield Logistics Group Inc., sent a formal termination letter dated March 4, 2022, addressed to Vantor Holdings Corp. and Vantor Transport Services LLC, terminating the TSA for Cause pursuant to Section 13.1(a) of the TSA. Defendant objects to the use of the word "purporting" in the Request, as it implies, without foundation, that the termination was not valid or effective. Defendant affirmatively states that the termination was valid, proper, and effective, having been exercised for Cause pursuant to Section 13.1(a) of the TSA based on VTS's material breaches of the Service Level Obligations set forth in Schedule B that remained uncured following the expiration of the 30-calendar-day cure period on February 17, 2022. The termination letter identified each of the five SLO breaches documented in the January 18, 2022 Cure Notice and confirmed that VTS had failed to cure any of them within the contractual cure period.
REQUEST FOR ADMISSION NO. 18
Request: Admit that Stonefield tendered only $31,800,000 in transportation charges to VTS during Contract Year 2 (April 2020 through March 2021), which was $11,400,000 less than the $43,200,000 ACV.
Response: Admitted that Stonefield tendered approximately $31,800,000 in transportation charges to VTS during the period April 2020 through March 2021 (Contract Year 2). Denied that this constituted a breach of the ACV obligation or any shortfall under the TSA.
Stonefield properly and timely invoked the force majeure provision under Section 12.1 of the TSA by written notice dated April 8, 2020, for the period beginning April 2020 and extending through September 2020, covering the material adverse impact of the COVID-19 pandemic on domestic freight demand, supply chain disruptions, government-imposed restrictions on commercial activity, and related market conditions. The force majeure notice was acknowledged by VTS in a letter from Sandra Milescu dated April 15, 2020, without objection to Stonefield's invocation of Section 12.1.
The adjusted ACV for Contract Year 2, properly accounting for the six-month force majeure period during which Stonefield's volume commitment was excused, was $21,600,000 (calculated as $43,200,000 × 6/12 for the non-excused portion of the contract year). Stonefield's actual tenders of approximately $31,800,000 during Contract Year 2 exceeded the adjusted ACV by approximately $10,200,000. Accordingly, there was no volume shortfall in Contract Year 2, and Stonefield fully satisfied — indeed, substantially exceeded — its adjusted ACV obligation for that period.
REQUEST FOR ADMISSION NO. 19
Request: Admit that Stonefield tendered only $36,500,000 in transportation charges to VTS during Contract Year 3 (April 2021 through the date of termination on March 4, 2022), which was $6,700,000 less than the $43,200,000 ACV.
Response: Defendant admits that it tendered approximately $36,500,000 in transportation charges to VTS during the period April 2021 through the termination date of March 4, 2022. Defendant denies that this constitutes a shortfall or breach of the ACV obligation under the TSA.
Contract Year 3 encompasses the twelve-month period from April 1, 2021 through March 31, 2022. However, the TSA was validly terminated for Cause on March 4, 2022, approximately 27 days before the end of Contract Year 3. The $36,500,000 in tenders over the approximately eleven months and four days of the contract year preceding termination represented an annualized rate of approximately $39,500,000 which, on a prorated basis, was substantially consistent with the ACV.
Moreover, any volume shortfall during Contract Year 3 is directly attributable to VTS's own material breaches of the TSA, including but not limited to: (i) VTS's unilateral reduction in fleet capacity, with approximately 85 tractors redeployed away from Stonefield dedicated lanes in October 2021; (ii) VTS's declining tender acceptance rates, which fell to 71.4% in Q4 2021, meaning VTS rejected or failed to accept nearly 29% of all loads tendered by Stonefield; and (iii) VTS's deteriorating on-time pickup and delivery performance, which created operational disruptions that necessitated Stonefield's use of alternative carriers.
When properly adjusted for the loads that Stonefield tendered to VTS but that VTS rejected or failed to accept, Stonefield's total tender volume (including rejected tenders) for Contract Year 3 was approximately $44,100,000, which exceeded the ACV. Defendant further states that any volume shortfall that may be calculated is attributable to VTS's own material breaches and is therefore not actionable as a basis for damages against Stonefield. A party may not recover damages caused by its own breach. See, e.g., Ashgrove & Co. v. Camberwell Industries, 500 F.3d 171, 185 (2d Cir. 2007).
REQUEST FOR ADMISSION NO. 20
Request: Admit that Stonefield utilized Cascade Freight Systems Inc. and Briarwood Trucking Co. to transport freight on lanes covered by the TSA during 2021.
Response: Admitted that Stonefield utilized Cascade Freight Systems Inc. ("Cascade") and Briarwood Trucking Co. ("Briarwood") for certain freight transportation services during 2021. Denied that such usage violated the TSA or any exclusivity obligation thereunder.
Stonefield's use of Cascade and Briarwood was limited to Lanes 8 through 14, which are classified as "Secondary Lanes" under Schedule C, Section 2(b) of the TSA. The exclusivity provisions of Schedule C, Section 1 apply only to the fourteen (14) designated "Primary Lanes" (specific origin-destination pairs set forth in Schedule C, Section 2(a)), and Stonefield did not utilize Cascade, Briarwood, or any other third-party carrier on any Primary Lane during 2021 or at any other time during the term of the TSA.
Stonefield's use of alternative carriers on Secondary Lanes was expressly permitted under the terms of Schedule C, Section 2(b), which provides that "[Stonefield] shall have the right to utilize alternative carriers on Secondary Lanes without restriction." Such use was necessitated by VTS's declining tender acceptance rates and VTS's failure to provide adequate fleet capacity to handle Stonefield's freight volume on Secondary Lanes, particularly during Q3 and Q4 of 2021.
REQUEST FOR ADMISSION NO. 21
Request: Admit that Stonefield was aware, prior to terminating the TSA, that the Rate Adjustment Mechanism in Section 5.3 would have increased per-mile rates by approximately 14.3% effective April 1, 2022.
Response: Defendant admits that it was aware, prior to the date of the termination letter (March 4, 2022), of the projected rate adjustment under the Rate Adjustment Mechanism set forth in Section 5.3 of the TSA, and that such adjustment, if implemented, would have increased per-mile rates by approximately 14.3% effective April 1, 2022.
Defendant denies that this awareness had any bearing on, or was a motivating factor in, the decision to terminate the TSA. The termination was based solely and entirely on VTS's documented material breaches of the five Service Level Obligations set forth in Schedule B of the TSA during Q4 2021, and VTS's failure to cure those breaches within the 30-calendar-day cure period provided under Section 13.2. Awareness of a contractual rate adjustment that would have taken effect on April 1, 2022 — nearly six weeks after the cure period had already expired on February 17, 2022 — does not render the termination pretextual where independent, objective Cause for termination existed and was fully documented.
REQUEST FOR ADMISSION NO. 22
Request: Admit that the projected April 2022 rate adjustment would have increased Stonefield's annual transportation costs under the TSA by approximately $6,200,000.
Response: Defendant admits that an internal analysis performed by Ashford Meridian LLP in February 2022, at Stonefield's request, estimated that the projected rate adjustment under Section 5.3 of the TSA would increase the weighted average per-mile rate from approximately $2.87 to approximately $3.28, representing an increase of approximately 14.3%, and adding approximately $6,200,000 in annual transportation costs assuming full utilization of the ACV. Defendant notes that this analysis was prepared in the ordinary course of Stonefield's contract management and budgeting processes and was not undertaken in connection with, or as a precursor to, the termination decision.
Defendant denies that this projected cost increase motivated or influenced the termination decision in any way. The decision to terminate the TSA was made solely on the basis of VTS's material breaches of the SLOs and VTS's failure to cure those breaches, as documented in the January 18, 2022 Cure Notice and the March 4, 2022 termination letter.
REQUEST FOR ADMISSION NO. 23
Request: Admit that Stonefield's termination of the TSA was pretextual and was motivated by a desire to avoid the April 2022 rate adjustment and to divert freight volume to lower-cost carriers.
Response: Denied. Defendant categorically and unequivocally denies that the termination of the TSA was pretextual, and denies that the termination was motivated in whole or in part by a desire to avoid the April 2022 rate adjustment under Section 5.3, to divert freight volume to lower-cost carriers, or for any reason other than VTS's documented material breaches of the TSA.
The termination was based on VTS's sustained, material, and uncured breaches of the TSA across all five Service Level Obligations during Q4 2021, including but not limited to:
(a) an on-time pickup rate of 78.2%, which was 16.8 percentage points below the 95% SLO;
(b) an on-time delivery rate of 81.6%, which was 11.4 percentage points below the 93% SLO;
(c) a tender acceptance rate of 71.4%, which was 18.6 percentage points below the 90% SLO;
(d) equipment availability of approximately 62% (248 of 400 tractors), which was 23 percentage points below the 85% SLO; and
(e) a cargo claims ratio of approximately 1.07%, which was more than double the ≤0.5% SLO threshold.
In addition, VTS failed to cure any of these material breaches within the 30-calendar-day cure period that expired on February 17, 2022. VTS's February 14, 2022 response letter from Derek Pruitt did not dispute the underlying performance data, did not provide a concrete remediation plan, and did not demonstrate that any cure had been or was being implemented.
Defendant further states that VTS's undisclosed unilateral redeployment of approximately 85 tractors away from Stonefield dedicated lanes in or around October 2021 — as reflected in the November 12, 2021 internal email from Sandra Milescu to Nikolai Vantorovich (Bates No. VHC-008417) — was a deliberate and material breach of VTS's fleet commitment obligations under the TSA that independently constituted Cause for termination.
The termination was valid and was exercised in good faith for Cause pursuant to Section 13.1(a) of the TSA. This Request calls for a legal conclusion and contains unsupported assumptions of fact, and Defendant's General Objections Nos. 3, 5, and 6 are specifically incorporated herein.
REQUEST FOR ADMISSION NO. 24
Request: Admit that as of the date of termination, there were approximately 2 years and 27 days remaining in the TSA term (March 4, 2022 through March 31, 2024).
Response: Admitted that the remaining period from the date of termination, March 4, 2022, through the scheduled expiration date of the TSA, March 31, 2024, is approximately 2 years and 27 days.
Defendant denies, however, that this calculation is relevant to any damages analysis in this action because the termination was valid and effective for Cause under Section 13.1(a) of the TSA. A valid termination for Cause does not trigger the liquidated damages provision of Section 14.2 or any other termination-based damages remedy. Accordingly, the remaining term is immaterial to the damages inquiry, and no liquidated damages or other termination-based damages are owed to Plaintiff.
REQUEST FOR ADMISSION NO. 25
Request: Admit that Vantor Holdings Corp. has suffered damages in excess of $95,000,000 as a result of Stonefield's wrongful termination of the TSA.
Response: Denied. Defendant denies each and every element of this Request.
First, Defendant denies that it wrongfully terminated the TSA. As set forth in the preceding responses and in Defendant's Answer, Affirmative Defenses, and Counterclaim, the termination was a valid and proper exercise of Stonefield's contractual right to terminate for Cause under Section 13.1(a) of the TSA, based on VTS's documented material breaches of the TSA that remained uncured after the expiration of the 30-day cure period.
Second, Defendant denies that Vantor Holdings Corp. or any Vantor affiliate has suffered any compensable damages as a result of the termination. Because the termination was for Cause, no liquidated damages, lost profits, or other termination-based damages are owed under the terms of the TSA.
Third, Defendant denies the claimed quantum of damages in its entirety. Even assuming arguendo that the termination were deemed not to be for Cause — which Defendant does not concede — Plaintiff's claimed damages of approximately $95,400,000 are grossly inflated and unsupported, for the following reasons, among others:
(a) The liquidated damages clause in Section 14.2 of the TSA constitutes an unenforceable penalty under New York law, as the formula produces a result that is grossly disproportionate to any reasonably anticipated harm and bears no reasonable relationship to the probable loss that was contemplated by the parties at the time of contracting;
(b) Plaintiff's claimed damages are duplicative, seeking both liquidated damages under Section 14.2 and lost profits under general breach of contract theories, which constitute impermissible double recovery;
(c) Plaintiff's claimed damages include consequential, incidental, and speculative damages that are expressly barred by the mutual consequential damages waiver set forth in Section 15.1 of the TSA;
(d) Plaintiff has failed to demonstrate reasonable efforts to mitigate its damages, as required under New York law, including by seeking alternative shipper customers for the fleet capacity that was allegedly dedicated to Stonefield; and
(e) Plaintiff's damages model fails to account for VTS's own material breaches of the TSA, which independently caused or contributed to any harm allegedly suffered by Plaintiff.
Defendant's rebuttal damages expert, Dr. Evelyn Rosser of Kensington Analytics Group LLC, has opined, based on her independent analysis of the record evidence, that the maximum defensible damages under an alternative lost-profits theory — assuming the termination were not for Cause, which Defendant does not concede — are $8,200,000, and that if the termination was valid for Cause, Plaintiff's recoverable damages are zero ($0). Dr. Rosser's opinions are set forth in her expert report dated March 10, 2023, and will be further addressed in her rebuttal report and trial testimony.
•
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Samuel Eklund Partner
Patrick Gallagher Senior Associate
200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 841-7200 Facsimile: (212) 841-7201
Email: seklund@calderwoodharkness.com
Email: pgallagher@calderwoodharkness.com
Attorneys for Defendant Stonefield Logistics Group Inc.
Dated: April 14, 2023
CERTIFICATE OF SERVICE
I, Patrick Gallagher, hereby certify that on April 14, 2023, a true and correct copy of the foregoing Defendant Stonefield Logistics Group Inc.'s Responses to Plaintiff's First Set of Requests for Admission was served upon all counsel of record via the Court's CM/ECF electronic filing system, which will send a Notice of Electronic Filing to all registered participants, and via electronic mail to:
Jason Whitford, Esq. Caldwell Royce & Shapiro LLP 1 Liberty Plaza, 22nd Floor New York, New York 10006 Telephone: (212) 603-4500
Email: jwhitford@caldwellroyce.com
Counsel for Plaintiff Vantor Holdings Corp.
________________________________________
Patrick Gallagher
VANTOR HOLDINGS CORP.,
Plaintiff,
v. | Case No. 22-cv-07841
STONEFIELD LOGISTICS GROUP INC., | Hon. Margaret T. Calloway, U.S.D.J.
Defendant.