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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

INTERNAL PRIVILEGED MEMORANDUM

ATTORNEY WORK PRODUCT

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

Matter No.: 1012-00005

Date: June 20, 2023

From: Simone Laroche, Associate, Litigation (General), Calderwood & Harkness LLP

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

CC: Samuel Eklund, Responsible Partner, Litigation (General), Calderwood & Harkness LLP

Re: Analysis of Vantor's Challenge to Privilege Log Entries 312–318 (Hess–Beckwith Communications During Cure Period)

I. EXECUTIVE SUMMARY

On June 14, 2023, counsel for Plaintiff Vantor Holdings Corp. ("Vantor") — Jason Whitford of Caldwell Royce & Shapiro LLP ("CRS") — sent a letter to Calderwood & Harkness LLP challenging seven entries on Stonefield Logistics Group Inc.'s ("Stonefield") Privilege Log. Specifically, CRS challenges Entries 312 through 318, asserting that the documents described therein were improperly withheld from production and demanding that Stonefield produce them forthwith.

The seven challenged entries consist of email communications between Raymond Hess, Director of Contract Compliance at Stonefield, and Lorraine Beckwith, Partner in the Commercial Contracts group at Ashford Meridian LLP ("Ashford Meridian"), Stonefield's outside commercial and transactional counsel. The communications span the period from January 18, 2022 through approximately February 28, 2022 — a timeframe that encompasses the cure period under the Transportation Services Agreement (Contract Reference No. SLG-VTS-2019-0315, dated March 15, 2019) (the "TSA") and the immediate aftermath of that period. Ashford Meridian served as Stonefield's outside commercial and transactional counsel throughout the relevant period. Notably, Ashford Meridian drafted the original TSA and provided ongoing pre-litigation guidance to Stonefield regarding the interpretation of the TSA's provisions, Stonefield's contractual rights thereunder, and its termination options following Vantor's alleged material breaches.

In its June 14 letter, CRS advances four principal arguments in support of its challenge: (1) that the communications relate to "business" or "operational" decisions regarding contract compliance rather than legal advice and therefore fall outside the scope of the attorney-client privilege; (2) that even if legal advice was one purpose of the communications, the primary purpose was business advice about contract management; (3) that the privilege was waived by disclosure to non-attorney business personnel; and (4) a perfunctory invocation of the crime-fraud exception.

After a thorough review of the challenged entries, the applicable privilege law, and the factual record, this memorandum concludes that all seven entries are properly logged under the attorney-client privilege and should be vigorously defended against production. The communications reflect legal advice sought and rendered in connection with Stonefield's contractual rights, the interpretation of specific TSA provisions — including Sections 13.1 and 13.2 — and the legal sufficiency of Stonefield's cure and termination process under New York law. No waiver of privilege has occurred. The crime-fraud exception is wholly inapplicable to the facts of this case.

As of the date of this memorandum, Vantor has not filed a formal motion to compel production of these entries. Our recommendation is to respond to CRS's letter by reaffirming the privilege designations and providing a summary of the legal bases supporting the privilege assertions. Should CRS elect to file a motion to compel, we recommend preparing a supporting declaration and offering the documents for in camera review by the Honorable Margaret T. Calloway, United States Magistrate Judge.

II. BACKGROUND

A. The Privilege Log and the Challenged Entries

Stonefield served its first privilege log on April 14, 2023, concurrently with Stonefield's first production of documents in this litigation. That initial production encompassed 42,387 documents totaling approximately 186,000 pages, bearing Bates numbers SLG-000001 through SLG-042387. The accompanying privilege log identified 1,247 documents withheld on the basis of attorney-client privilege and/or the work product doctrine.

A supplemental privilege log was served on June 30, 2023, adding 218 additional documents that were identified during the second-phase review of Stonefield's document collection. Those supplemental entries are not at issue in connection with CRS's current challenge.

The seven challenged entries — Entries 312 through 318 — were included in Stonefield's original April 14, 2023 privilege log. That privilege log was prepared by the undersigned, Simone Laroche, in conjunction with Helen Tsao, Senior Paralegal in Calderwood & Harkness's Litigation Support group, following a document-by-document review of each withheld item. Each entry on the log includes the following information: (i) the entry number; (ii) the date of the communication; (iii) the author; (iv) the recipient(s) and any individuals copied on the communication; (v) a subject-matter description sufficient to identify the general nature of the communication without disclosing privileged content; and (vi) the asserted privilege basis.

B. Description of Each Challenged Entry

The following is a detailed description of each of the seven challenged entries:

Entry 312

Entry 313

Entry 314

Content Note: In his email, Hess describes specific performance metrics for the purpose of obtaining Beckwith's legal assessment: on-time pickup rate of 78.2% (versus a 95% SLO threshold); on-time delivery rate of 81.6% (versus a 93% SLO threshold); tender acceptance rate of 71.4% (versus a 90% SLO threshold); equipment availability of approximately 62% (versus an 85% SLO threshold, reflecting approximately 248 tractors available versus 400 committed); and 16 cargo claims totaling $387,400 in November through December 2021, yielding a claims ratio of approximately 1.07% (versus a contractual maximum of ≤0.5% under the applicable SLO).

Entry 315

Entry 316

Content Note: Vantor's cure response acknowledged "operational challenges" but asserted that the performance deficiencies were attributable to: (i) a nationwide driver shortage, (ii) Stonefield's alleged failure to tender minimum committed volumes under the TSA, and (iii) Stonefield's alleged diversion of freight volume to spot market carriers. Vantor claimed to have effectuated "substantial cure" of the identified deficiencies.

Entry 317

Entry 318

Content Note: This communication preceded the formal termination letter issued by Tobias Wren, Stonefield's General Counsel, on March 4, 2022.

C. Procedural Context

The following timeline sets forth the key events relevant to the challenged communications:

• January 18, 2022: Raymond Hess, Director of Contract Compliance at Stonefield, sent the Cure Notice to Sandra Milescu, Chief Operating Officer of Vantor/VTS, specifying the alleged material breaches of the TSA with particularity across the five SLO categories described above.

• January 18 – February 17, 2022: The 30-day cure period under TSA Section 13.1(a) ran from the date of the Cure Notice (January 18, 2022) through February 17, 2022.

• February 14, 2022: Derek Pruitt, Vice President of Business Development at Vantor/VTS, sent a letter to Janet Kirkwood, Vice President of Carrier Relations at Stonefield, responding to the Cure Notice. As noted above, the cure response acknowledged "operational challenges" while asserting excuse-based defenses and claiming "substantial cure."

• February 17, 2022: The 30-day cure period expired.

• March 4, 2022: Tobias Wren, General Counsel of Stonefield, issued a formal termination letter, terminating the TSA effective immediately pursuant to Section 13.1(a) for material breach.

• September 1, 2022: Calderwood & Harkness LLP was engaged as Stonefield's litigation counsel for the defense of this action. Ashford Meridian LLP had served as Stonefield's regular outside counsel for commercial and transactional matters — including TSA interpretation and the provision of initial pre-litigation guidance regarding the termination dispute — prior to Calderwood & Harkness's engagement. Ashford Meridian provided the pre-litigation guidance that is the subject of Entries 312–318.

• October 12, 2022: Vantor filed its Complaint in this action, Case No. 22-cv-07841, before the Honorable Robert J. Fielding, United States District Judge, with discovery matters referred to the Honorable Margaret T. Calloway, United States Magistrate Judge.

III. VANTOR'S CHALLENGE TO ENTRIES 312–318

A. Summary of CRS's Arguments

CRS's June 14, 2023 letter advances four arguments in support of its contention that Entries 312–318 are improperly withheld. Each argument is summarized below:

1. Business Purpose / Not Legal Advice. CRS contends that the Hess–Beckwith communications concern "ordinary business decisions" about contract administration and compliance monitoring. Specifically, CRS argues that decisions about whether to issue a cure notice, how to assess VTS's performance data against contractual benchmarks, and how to effectuate the termination of a commercial agreement are "operational" decisions falling within the ordinary course of Stonefield's business, rather than requests for or renderings of legal advice. CRS characterizes the communications as the functional equivalent of Hess consulting with an internal business colleague about contract management, and asserts that the involvement of outside counsel does not, by itself, transform routine business communications into privileged attorney-client communications.

2. Dual-Purpose Communications. In the alternative, CRS argues that even if the obtaining of legal advice was one purpose of the communications, it was not the primary purpose. CRS contends that the primary purpose of the Hess–Beckwith exchanges was to obtain business advice about how to manage the VTS contractual relationship and administer the cure and termination process. CRS invokes the "primary purpose" test applicable in the Second Circuit, arguing that under that standard, communications are not protected unless their primary purpose — as opposed to merely one of several purposes — was to obtain or provide legal advice. CRS asserts that the business objectives of the communications predominate over any incidental legal component.

3. Waiver by Disclosure to Non-Attorney Business Personnel. CRS notes that Entry 318 includes Tobias Wren, Stonefield's General Counsel, as a CC recipient. CRS argues that sharing communications with in-house counsel does not create or preserve privilege where the underlying communication is fundamentally business-oriented in nature. CRS further argues, in general terms, that the distribution of these communications to Stonefield business personnel beyond Hess may have waived any privilege that would otherwise apply. It should be noted, however, that CRS has not identified any specific non-attorney recipients of the challenged communications beyond Raymond Hess and Tobias Wren. This argument is largely speculative as presented in CRS's letter.

4. Crime-Fraud Exception. CRS makes a passing reference to the crime-fraud exception to the attorney-client privilege, suggesting that if Stonefield's termination of the TSA was pretextual — as Vantor alleges in its Complaint — then the Hess–Beckwith communications were made "in furtherance of a plan to wrongfully terminate the TSA" and are therefore not protected by the privilege. This argument is largely undeveloped in CRS's letter. CRS does not cite any specific evidence of criminal or fraudulent conduct, nor does CRS provide any legal analysis of how the crime-fraud exception applies to the facts of this case.

B. Assessment of CRS's Arguments

Each of the four arguments identified above is addressed in detail in Sections IV through VI below. As a threshold matter and as developed more fully in the analysis that follows, our overall assessment is that all four of CRS's arguments are without merit. The privilege designations for Entries 312 through 318 should be maintained and defended.

The communications at issue are classic, paradigmatic attorney-client privileged communications in which a corporate employee sought and received legal advice from outside counsel regarding the interpretation and exercise of the corporation's contractual rights. CRS's arguments either misstate the applicable legal standards, mischaracterize the nature of the communications, or are so conclusory as to fail to present a colorable basis for overcoming the privilege.

IV. LEGAL ANALYSIS — ATTORNEY-CLIENT PRIVILEGE APPLIES

A. Governing Legal Standard

This action is a diversity action in which jurisdiction rests on 28 U.S.C. § 1332. The TSA is governed by New York law. In federal diversity cases in which state law supplies the rule of decision, federal courts in the Second Circuit apply federal common law of privilege. See In re Grand Jury Subpoena Dated January 4, 1984, 750 F.2d 223, 224–25 (2d Cir. 1984); von Bulow v. von Bulow, 811 F.2d 136, 141 (2d Cir. 1987).

Under federal common law, the attorney-client privilege protects confidential communications between an attorney and a client, or between their respective agents, made for the purpose of obtaining or providing legal advice. See Upjohn Co. v. United States, 449 U.S. 383, 389 (1981); In re Cty. of Erie, 473 F.3d 413, 418 (2d Cir. 2007). The essential elements of the privilege are: (i) a communication; (ii) made between privileged persons (i.e., the client and the attorney, including their agents); (iii) in confidence; (iv) for the purpose of seeking, obtaining, or providing legal assistance to the client. In re Cty. of Erie, 473 F.3d at 419.

In the corporate context, the privilege extends to communications between corporate employees and the corporation's counsel — whether in-house or outside counsel — where the employee communicates with counsel at the direction of, or with the authorization of, corporate management for the purpose of obtaining legal advice for the corporation. Upjohn, 449 U.S. at 394–95. The Supreme Court in Upjohn rejected the restrictive "control group" test and held that the privilege can protect communications from employees at all levels of the corporate hierarchy, provided the communications concern matters within the scope of the employee's duties and are made for the purpose of enabling the corporation to obtain legal advice. Id. at 394–95.

The Second Circuit applies a "primary purpose" test to evaluate whether communications that serve both legal and business purposes are entitled to the protection of the attorney-client privilege. Under this standard, a communication is privileged if its primary purpose — though not necessarily its sole purpose — was to obtain or provide legal advice. In re Cty. of Erie, 473 F.3d at 420–21. The Second Circuit has recognized that "[i]n the modern corporate context, it may be difficult to distinguish between legal and business advice, because legal considerations permeate virtually all business decisions," but has emphasized that the privilege must be "strictly confined within the narrowest possible limits consistent with the logic of its principle." Id. at 418–19 (internal quotation marks omitted). At the same time, the Circuit has cautioned that "the need for the privilege is greater in the corporate context where the attorney's role is complex." Id. at 419.

Importantly, the fact that a communication contains factual information does not defeat the privilege. A client's communication of facts to counsel for the purpose of obtaining legal advice is privileged, even though the facts themselves are not privileged if obtained from other sources. Upjohn, 449 U.S. at 395–96. What is protected is the communication — the fact that the client communicated the information to counsel in confidence for the purpose of obtaining legal assistance.

B. Application to Entries 312–318

The challenged entries fall squarely within the scope of the attorney-client privilege under the standards set forth above. Each element of the privilege is satisfied:

Privileged Persons. Ashford Meridian LLP was Stonefield's retained outside legal counsel for commercial contracts, including the TSA. This engagement was a formal attorney-client relationship in which Ashford Meridian was engaged to provide legal services to Stonefield. Lorraine Beckwith, a partner in Ashford Meridian's Commercial Contracts group, acted in her capacity as Stonefield's legal advisor throughout the challenged communications. Troy Nakamura, a senior associate at Ashford Meridian, participated as a member of the legal team servicing Stonefield's account. Raymond Hess, as Stonefield's Director of Contract Compliance, was the Stonefield employee authorized to communicate with outside counsel regarding TSA compliance matters. His communications with Beckwith were made in the course of his corporate duties and for the purpose of enabling Stonefield, as the corporate client, to obtain legal advice.

For the Purpose of Seeking or Providing Legal Advice. The subject matter of each communication unambiguously involves the seeking or provision of legal advice:

• Entries 312 and 313 concern the legal sufficiency of the draft Cure Notice — specifically, whether the notice language complied with the "reasonable particularity" requirement of TSA Section 13.2 and applicable New York law governing cure notices. Hess submitted a draft legal notice to counsel for legal review (Entry 312), and Beckwith provided legal comments and recommended specific revisions to ensure legal compliance (Entry 313). These are quintessential requests for and renderings of legal advice.

• Entries 314 and 315 concern the legal meaning of "material breach" under TSA Section 13.1(a) as interpreted under New York law. Hess transmitted factual data (the Q4 2021 performance metrics) to Beckwith for the specific purpose of enabling Beckwith to render a legal opinion on whether the identified SLO failures constituted "material breach" under the contract and applicable law (Entry 314). Beckwith responded with a legal analysis applying New York's multi-factor materiality test to the facts (Entry 315). The communication of facts to counsel for the purpose of obtaining a legal opinion is a paradigmatic privileged communication.

• Entries 316 and 317 concern the legal sufficiency of Vantor's cure response. Hess forwarded Vantor's cure letter to Beckwith and sought a legal assessment of whether the response constituted "substantial cure" within the meaning of the TSA's cure provisions (Entry 316). Beckwith provided a legal opinion analyzing the cure response under the contractual standard and New York law, concluding that it constituted an acknowledgment of shortfalls accompanied by excuse-based arguments rather than evidence of actual remediation, and recommending a legally sound course of action (Entry 317). Again, this is the seeking and provision of legal advice.

• Entry 318 concerns the legal requirements for an effective termination letter, the legal consequences of termination under the TSA, and the enforceability of the liquidated damages clause in Section 14.2. Beckwith's advice addressed legal form requirements, legal consequences, and litigation exposure risks — matters that are exclusively within the province of legal counsel. This entry also reflects an awareness of the prospect of disputes and potential litigation arising from the termination, further reinforcing the legal nature of the advice.

Confidentiality. Each communication was transmitted between Hess and Beckwith (with Nakamura and, in the case of Entry 318, Tobias Wren, Stonefield's General Counsel) in confidence. The communications were not shared with any third parties outside the attorney-client relationship. There is no evidence that the communications were disseminated to any non-privileged person. The expectation of confidentiality is apparent from the nature of the communications and the relationship between the parties.

In sum, Entries 312 through 318 are paradigmatic attorney-client privileged communications. They reflect a corporate employee consulting with retained outside counsel about the legal interpretation of a commercial contract, the legal requirements for exercising a contractual right (termination for cause), the legal sufficiency of the opposing party's response during a cure period, and the legal consequences and litigation risks associated with various courses of action. These are precisely the types of communications that the attorney-client privilege exists to protect.

C. Rebuttal of the "Business Purpose" Argument

CRS's primary argument — that the Hess–Beckwith communications concern "ordinary business decisions" about contract administration rather than legal advice — fundamentally misapprehends the nature of the privilege and the character of the communications at issue.

The fact that legal advice relates to a business decision does not strip the communication of its privileged character. It is well settled that "[i]n the modern corporate context, legal considerations permeate virtually all business decisions." In re Cty. of Erie, 473 F.3d at 419. Virtually every piece of legal advice a corporate attorney provides — whether regarding a potential acquisition, a regulatory filing, a contract dispute, or an employment decision — informs and relates to a business decision. Were it otherwise, the privilege would be effectively nullified in the corporate context. See Paul R. Rice, Attorney-Client Privilege in the United States § 7:10 (2023) ("The mere fact that legal advice also has business implications does not destroy the privilege.").

The relevant inquiry is not whether the ultimate decision informed by the legal advice was a "business" decision, but rather whether the communication itself was made for the purpose of obtaining or providing legal advice. See In re Cty. of Erie, 473 F.3d at 420. Here, the specific content of the challenged communications leaves no doubt that their purpose was legal:

• Analysis of whether a draft cure notice satisfies the "reasonable particularity" requirement of a specific contract provision (Section 13.2) is an exercise in legal interpretation and drafting — not contract administration in any "business" sense.

• Determination of whether a set of performance failures constitutes "material breach" under a specific contract provision (Section 13.1(a)) as interpreted under New York law requires application of a legal standard — the multi-factor test for materiality — to a specific set of facts. This is legal analysis, not operational assessment.

• Assessment of whether a cure response constitutes legally sufficient cure under the terms of a contract and applicable law is a legal determination, not a business one.

• Advising on the legal form and content of a termination letter, the legal requirements for effective termination, and the enforceability of a liquidated damages provision are exclusively legal functions.

CRS's argument attempts to recharacterize unmistakably legal communications as "business" communications by stripping away the legal framework that is their central subject matter. The Second Circuit has repeatedly rejected such attempts. See, e.g., In re Grand Jury Subpoena Dated January 4, 1984, 750 F.2d at 225–26 (communications with counsel regarding interpretation of contractual obligations are privileged); Brennan Ctr. for Justice v. U.S. Dep't of Justice, 697 F.3d 184, 207 (2d Cir. 2012) (privilege protects communications that "reflect legal analysis or legal judgment").

CRS's argument also ignores the significance of who was providing the advice. Lorraine Beckwith is a partner in the Commercial Contracts group of a major law firm retained specifically to advise Stonefield on its legal rights under the TSA. She was not acting as a business consultant or contract manager; she was acting as a lawyer providing legal advice. The Second Circuit has recognized that communications with retained outside counsel enjoy a strong presumption of being for the purpose of legal advice, because "a person ordinarily does not seek out a lawyer merely for business advice." In re Cty. of Erie, 473 F.3d at 420 n.5.

D. Rebuttal of the "Dual-Purpose" / "Primary Purpose" Argument

CRS's alternative argument — that even if legal advice was one purpose of the communications, it was not the primary purpose — fares no better.

Even under the "primary purpose" test applied in the Second Circuit, the communications at issue plainly qualify for protection. Their primary purpose was to seek and provide legal advice regarding Stonefield's contractual rights and the legal sufficiency of its actions under the TSA and New York law. This is evident from the face of the privilege log descriptions and from a review of the communications themselves.

The factual information transmitted by Hess to Beckwith — including the Q4 2021 performance metrics (Entry 314) and Vantor's cure response (Entry 316) — was provided specifically to enable Beckwith to render informed legal advice. The transmission of factual information to counsel for the purpose of obtaining legal advice is itself a privileged communication, and the presence of factual content does not convert a privileged communication into a non-privileged one. See Upjohn, 449 U.S. at 395–96 (privilege protects communications from corporate employees to counsel, even though facts contained therein are not independently privileged). As the Supreme Court recognized in Upjohn, "[t]he client cannot be compelled to answer the question, 'What did you say or write to the attorney?' but may not refuse to disclose any relevant fact within his knowledge merely because he incorporated a statement of such fact into his communication to his attorney." Id. at 395.

The legal analysis and recommendations provided by Beckwith — interpreting the "reasonable particularity" requirement, analyzing the "material breach" standard under New York's multi-factor test, evaluating the legal sufficiency of Vantor's cure response, and advising on termination procedures and liquidated damages exposure — are indisputably legal in nature. These are not matters on which a business consultant would be engaged; they are matters requiring the exercise of legal judgment and the application of legal standards to specific facts. The primary purpose of each such communication was to provide legal advice, not business guidance.

CRS cites no authority for the proposition that advice regarding the interpretation and exercise of contractual rights under a commercial agreement is "business advice" rather than "legal advice." Nor could it. The interpretation of contract provisions, the assessment of legal rights and obligations arising under a contract, and the evaluation of litigation exposure are quintessential legal services. See, e.g., Schaeffler v. United States, 806 F.3d 34, 40 (2d Cir. 2015) (recognizing that communications regarding the "legal ramifications" of proposed transactions are privileged even where the communications also contain business-related content).

V. LEGAL ANALYSIS — NO WAIVER

A. Distribution Limited to the Privileged Circle

CRS's waiver argument fails because the challenged communications were distributed only among privileged persons — that is, persons within the scope of the attorney-client relationship.

The communications in Entries 312 through 317 were exchanged solely between Raymond Hess (an authorized corporate employee communicating with counsel on contract compliance matters within the scope of his employment duties) and Lorraine Beckwith and Troy Nakamura (outside counsel at Ashford Meridian). No third parties — whether within or outside Stonefield — were included on these communications.

Entry 318 includes one additional recipient: Tobias Wren, Stonefield's General Counsel. Mr. Wren is himself an attorney and the senior legal officer of the client corporation. The inclusion of in-house counsel on communications with outside counsel does not waive the attorney-client privilege — to the contrary, it reinforces the privileged nature of the communication by confirming that the communication was part of the corporation's legal decision-making process. See United States v. Mejia, 655 F.3d 126, 133–34 (2d Cir. 2011) (privilege extends to communications among attorneys and agents of the client in the course of legal representation); In re Grand Jury Proceedings, 219 F.3d 175, 182 (2d Cir. 2000) (communications between in-house and outside counsel on behalf of common client are privileged). Including the General Counsel — the corporate officer ultimately responsible for overseeing the legal aspects of the TSA dispute — on a communication from outside counsel advising on termination procedures and litigation exposure is not merely appropriate; it would have been derelict for outside counsel not to do so.

CRS has not identified any disclosure of the challenged communications to any non-privileged third party. Its waiver argument rests on the bare assertion that communications may have been distributed to "Stonefield business personnel beyond Hess," but CRS identifies no specific individual, no specific disclosure, and no specific basis for its speculation. This is insufficient to establish waiver. The party asserting waiver bears the burden of demonstrating that a privileged communication was disclosed to a third party outside the privilege. See In re Grand Jury Proceedings, 219 F.3d at 182. CRS has not met — and cannot meet — that burden here.

B. No Broad Dissemination

Calderwood & Harkness's review of Stonefield's email metadata for the challenged communications confirms that no broader dissemination occurred. Specifically:

• Entries 312, 314, and 316 (communications from Hess to Beckwith) were sent solely by Hess to Beckwith, with no CC or BCC recipients.

• Entries 313, 315, and 317 (communications from Beckwith to Hess) were sent by Beckwith to Hess, with Troy Nakamura (Ashford Meridian senior associate) on CC. No other recipients were identified.

• Entry 318 (communication from Beckwith to Hess) was sent by Beckwith to Hess, with Tobias Wren (Stonefield General Counsel) and Troy Nakamura (Ashford Meridian senior associate) on CC. No other recipients were identified.

No evidence of any forwarding of the challenged communications to non-privileged persons has been identified in the document review or in the email metadata analysis. There is no basis for CRS's speculation that broader distribution may have occurred.

Under the "need to know" standard applicable to the attorney-client privilege in the corporate context, distribution of legal advice to corporate employees who need the advice to perform their duties does not waive the privilege, provided the communication remains within the "privileged circle" of persons involved in the matter on behalf of the corporation. See Upjohn, 449 U.S. at 394–95; In re Cty. of Erie, 473 F.3d at 419. Even if the challenged communications had been shared with other Stonefield personnel involved in the cure and termination process — which they were not — such distribution would not necessarily constitute waiver if the recipients were within the circle of persons who needed access to the legal advice to make informed decisions. But the point is moot: the communications were not shared beyond Hess, Beckwith, Nakamura, and (in one instance) Wren.

VI. LEGAL ANALYSIS — CRIME-FRAUD EXCEPTION DOES NOT APPLY

A. Standard for the Crime-Fraud Exception

The crime-fraud exception to the attorney-client privilege provides that the privilege does not protect communications made for the purpose of furthering a crime or fraud. See Clark v. United States, 289 U.S. 1, 15 (1933); In re Grand Jury Subpoena Duces Tecum Dated September 15, 1983, 731 F.2d 1032, 1038 (2d Cir. 1984). The exception requires a threshold showing that: (a) the client was engaged in, or was planning, criminal or fraudulent conduct at the time the communication was made; and (b) the attorney's assistance was obtained in furtherance of that criminal or fraudulent conduct. In re Grand Jury Subpoena, 731 F.2d at 1038.

The party seeking to invoke the crime-fraud exception bears the burden of establishing a factual basis for its application. See In re Richard Roe, Inc., 68 F.3d 38, 40 (2d Cir. 1995). This burden requires more than mere allegation; the invoking party must make a prima facie showing — i.e., present evidence that, if believed, would establish the elements of the exception. Id. Bare allegations of wrongdoing, without supporting evidence, are insufficient to overcome the privilege. See In re Grand Jury Subpoena, 731 F.2d at 1039.

Moreover, the exception is narrowly construed. It applies only where the client's purpose in consulting the attorney was to further a crime or fraud — not where the attorney was unwittingly used, and not where the client sought legal advice in good faith about the legality of a proposed course of action. See In re Grand Jury Proceedings, 87 F.3d 377, 381 (9th Cir. 1996) ("A client who consults an attorney for advice that will serve him in the commission of a fraud will have no help from the privilege.") (emphasis added); Restatement (Third) of the Law Governing Lawyers § 82 cmt. c (2000) (exception does not apply "merely because the advice relates to activity that is later determined to be unlawful").

B. Application

CRS's invocation of the crime-fraud exception is perfunctory, undeveloped, and legally unfounded. It should be summarily rejected.

First, CRS has not made — and cannot make — a prima facie showing that Stonefield engaged in criminal or fraudulent conduct. The gravamen of Vantor's claims in this action is that Stonefield's termination of the TSA constituted a breach of contract. A breach of contract — even one that is ultimately found to be wrongful — is not a crime or fraud. The crime-fraud exception applies to communications made in furtherance of criminal conduct or actual fraud, not to communications made in connection with a civil contract dispute in which one party contends that the other party exercised its contractual rights improperly. See Adriatic Specialty Insurance v. Certain Underwriters at Lloyd's London, 176 Misc. 2d 605, 612 (N.Y. Sup. Ct. 1998) (crime-fraud exception requires showing of actual crime or fraud, not merely wrongful conduct).

Second, CRS's argument conflates a disputed legal position with fraud or illegality. Vantor alleges that Stonefield's termination was pretextual and did not comply with the TSA's termination provisions. Even if that allegation were ultimately sustained, it would establish, at most, a breach of contract — not a crime or fraud. The question whether Stonefield properly exercised its contractual right to terminate for cause is precisely the kind of contested legal issue that the attorney-client privilege is designed to protect. Parties must be free to consult with counsel about their legal rights under a contract — including whether they have grounds to terminate — without fear that those consultations will be stripped of their privileged character if the opposing party later contends that the termination was improper.

Third, there is no allegation, much less evidence, that Lorraine Beckwith's legal advice was sought or used to facilitate any criminal or fraudulent scheme. The challenged communications reflect Hess seeking, and Beckwith providing, legal advice about the interpretation of the TSA, the legal sufficiency of the cure process, and the legal requirements for termination. These are legitimate legal consultations, not the tools of a criminal or fraudulent enterprise.

Fourth, CRS's crime-fraud argument is so undeveloped as to be effectively waived. CRS's June 14 letter makes only a passing reference to the exception without identifying any specific evidence of criminal or fraudulent conduct, without citing any legal authority, and without providing any analysis of how the exception applies to the specific communications at issue. This falls far short of the prima facie showing required to invoke the exception.

VII. ADDITIONAL CONSIDERATIONS

A. Relationship to the FRE 502(d) Stipulation and Order

The parties in this action entered into a stipulated clawback agreement pursuant to Federal Rule of Evidence 502(d), which was incorporated into the Case Management Order entered by Judge Calloway on February 17, 2023 (Dkt. No. 34). The Rule 502(d) stipulation provides that the inadvertent production of privileged documents in this litigation does not constitute a waiver of the attorney-client privilege or the work product doctrine, either in this action or in any other federal or state proceeding.

The 502(d) order provides a valuable backstop against inadvertent waiver. However, it does not directly address the present dispute, which concerns a challenge to the correctness of the privilege designations on Stonefield's privilege log, rather than a claim that privilege was inadvertently waived through an unintentional production. The 502(d) order is a procedural safeguard, not a substitute for the substantive privilege analysis set forth in this memorandum.

B. Relationship to Our Own Prior Privilege Analysis

On March 22, 2023, the undersigned prepared an internal memorandum analyzing the privilege status of Stonefield's pre-litigation communications with Ashford Meridian LLP regarding TSA interpretation and potential termination (the "March 22 Memorandum"). That memorandum reviewed the full corpus of Hess–Beckwith and related Ashford Meridian correspondence and concluded that the attorney-client privilege applies to the communications in which Stonefield employees sought and received legal advice from Ashford Meridian regarding the TSA's provisions, the cure process, and the termination decision.

The March 22 Memorandum identified 84 documents from the Hess–Beckwith/Ashford Meridian correspondence for inclusion on the privilege log. Entries 312 through 318 are among those 84 documents. The analysis in this memorandum is consistent with and reinforces the conclusions reached in the March 22 Memorandum.

C. Confirmation from Hess Deposition Testimony

Raymond Hess was deposed in this action on July 27, 2023. During his deposition, Hess testified regarding his role in the cure and termination process. Several aspects of his testimony are relevant to the current privilege dispute:

• Hess testified that he independently verified all Q4 2021 performance metrics using data from VTS's own Carrier Performance Portal, which Stonefield accessed pursuant to reporting obligations under the TSA. This testimony confirms that the underlying performance data was independently available to Stonefield through business channels — but the fact that the data was independently available does not undermine the privilege, because what is protected is not the data itself but the communications in which Hess transmitted the data to counsel for the purpose of obtaining legal advice.

• Hess testified that he consulted with Ashford Meridian LLP regarding the legal requirements for the cure notice and the termination process. This testimony is consistent with the privilege log descriptions and supports the characterization of the challenged communications as privileged legal consultations.

• Critically, Hess did not disclose the substance of the legal advice he received from Beckwith or any other Ashford Meridian attorney. His testimony confirmed the fact of consultation, but did not reveal the content of the communications. Accordingly, no subject-matter waiver has occurred. Under the applicable standard, disclosure of the fact that a client consulted with counsel does not waive the privilege as to the content of those consultations. See In re von Bulow, 828 F.2d 94, 102–03 (2d Cir. 1987) (distinction between disclosure of fact of consultation and disclosure of content of communications).

D. VTS Did Not Dispute the Metrics

A further point warrants mention because it bears on CRS's characterization of the challenged communications as "operational" in nature. As confirmed both in Hess's deposition testimony and in our analysis of Vantor's February 14, 2022 cure response, VTS did not dispute the specific performance metrics cited in the Cure Notice during the cure period. Vantor's cure response acknowledged "operational challenges" while offering excuses (nationwide driver shortage, Stonefield's alleged failure to tender minimum committed volumes, diversion to spot market carriers) rather than contesting the underlying data.

This fact is significant because it undercuts CRS's suggestion that the Hess–Beckwith communications were merely about "operational" compliance monitoring — i.e., about whether the performance data showed a problem. The performance data itself was not in dispute. The questions Hess posed to Beckwith — and the advice Beckwith rendered — concerned legal questions: whether the undisputed performance shortfalls constituted "material breach" under the contract and New York law; whether the cure notice was legally sufficient; whether Vantor's excuse-based response constituted legally effective cure; and what the legal requirements and consequences of termination would be. These are inherently legal questions, not operational ones. The fact that the underlying metrics were undisputed only reinforces the conclusion that the purpose of the communications was to obtain legal guidance on how to interpret and apply those metrics within the legal framework of the TSA and New York law.

VIII. RECOMMENDATION

A. Defend All Seven Entries

All seven entries (Entries 312 through 318) on Stonefield's Privilege Log are properly designated as protected by the attorney-client privilege. The privilege designations should be vigorously defended against CRS's challenge.

As set forth in detail in Sections IV through VI above, CRS's arguments are without merit. The communications are primarily — and indeed almost exclusively — legal in nature, involving the seeking and provision of legal advice from retained outside counsel regarding the interpretation and exercise of contractual rights under the TSA and applicable New York law. No waiver of privilege has occurred, as the communications were distributed only among privileged persons within the attorney-client relationship. The crime-fraud exception is wholly inapplicable, as this is a civil contract dispute involving no criminal or fraudulent conduct.

B. Proposed Response to CRS

We recommend that Patrick Gallagher prepare and send a letter to Jason Whitford at Caldwell Royce & Shapiro LLP responding to CRS's June 14, 2023 challenge. The response letter should:

1. Reaffirm the privilege designations for all seven challenged entries (Entries 312–318);

2. Provide a summary of the legal bases supporting the privilege assertions, including: (a) the existence of a formal attorney-client relationship between Stonefield and Ashford Meridian LLP; (b) the legal nature of the communications, which involve the seeking and provision of legal advice regarding the interpretation of the TSA and the legal sufficiency of the cure and termination process; (c) the absence of any waiver; and (d) the inapplicability of the crime-fraud exception;

3. Invite CRS to file a motion to compel if it disagrees with Stonefield's privilege designations, rather than prolonging the parties' letter-writing exchange; and

4. Reserve all rights and arguments in connection with any such motion.

The tone of the response should be firm but measured. Given the strength of our position on the merits, we should welcome — rather than seek to avoid — judicial resolution of the dispute. A confident invitation to CRS to present its arguments to the Court, if it wishes to pursue the challenge, is the most effective way to signal the strength of our position and may discourage CRS from incurring the cost and effort of a formal motion that is unlikely to succeed.

C. Preparation for Potential In Camera Review

In the event that CRS files a motion to compel production of Entries 312 through 318, we recommend the following preparatory steps:

1. Supporting Declaration. Prepare a declaration from Samuel Eklund (Responsible Partner) or Patrick Gallagher (Lead Associate) describing: (a) the nature of the attorney-client relationship between Stonefield and Ashford Meridian LLP; (b) the circumstances under which the challenged communications were made; (c) the legal advice sought and provided (described at a level of generality sufficient to support the privilege assertion without disclosing privileged content); and (d) the limited distribution of the communications.

2. In Camera Review. Offer the seven challenged documents for in camera review by Judge Calloway, to allow the Court to independently verify that the communications are privileged. This approach demonstrates confidence in our position and is likely to be well received by the Court.

3. Briefing. Prepare a memorandum of law in opposition to any motion to compel, incorporating and expanding upon the analysis in this memorandum.

Preparation of these materials should be completed promptly so that we are in a position to respond expeditiously if CRS does file a motion. That said, the likelihood that CRS will actually file a formal motion to compel is uncertain. The weakness of CRS's arguments, as set forth in this memorandum, may dissuade CRS from pursuing the challenge further once it receives our response letter. As of the date of this memorandum, no motion has been filed.

D. Preservation of Arguments

If CRS's challenge proceeds to a motion, we should also preserve the argument that the challenged communications — particularly Entry 318 — are independently protected by the work product doctrine under Federal Rule of Civil Procedure 26(b)(3). Entry 318, which discusses the consequences of termination including potential exposure under the liquidated damages clause in Section 14.2 and the enforceability risks of that provision, reflects Beckwith's mental impressions and legal analysis prepared in anticipation of litigation. By late February 2022, with the cure period having expired and Stonefield preparing to issue a termination letter, the prospect of a dispute — and ultimately litigation — arising from the termination was clearly foreseeable. Beckwith's analysis of liquidated damages exposure and enforceability risks in Entry 318 was plainly prepared with an eye toward the litigation consequences of termination and therefore qualifies as work product.

To the extent the earlier communications (Entries 312–317) also reflect Beckwith's analysis of Stonefield's legal position with an awareness of the prospect of disputes and potential litigation, those communications may also qualify for work product protection. However, the attorney-client privilege provides a stronger and more straightforward basis for withholding these documents, and the work product argument should be preserved as an alternative ground rather than a primary basis for the privilege assertion.

IX. CONCLUSION

Entries 312 through 318 on Stonefield's Privilege Log are properly designated as protected by the attorney-client privilege. They represent a series of confidential communications between Raymond Hess, a Stonefield employee authorized to communicate with counsel on contract compliance matters, and Lorraine Beckwith and Troy Nakamura, attorneys at Ashford Meridian LLP serving as Stonefield's outside legal counsel. The communications were made for the purpose of seeking and obtaining legal advice regarding the interpretation and exercise of Stonefield's contractual rights under the TSA during the cure and termination process spanning January through February 2022.

The communications address paradigmatic legal questions: the legal sufficiency of a cure notice under the contract's "reasonable particularity" requirement, the meaning of "material breach" under the contract and New York law, the legal effect of a counterparty's cure response, and the legal requirements and consequences of contract termination. These are not "business" or "operational" communications; they are consultations with legal counsel on matters of legal interpretation and legal rights.

No waiver of the privilege has occurred. The communications were distributed only among privileged persons — Hess, Beckwith, Nakamura, and (in one instance) Stonefield's General Counsel, Tobias Wren. No disclosure to any non-privileged third party has been identified or alleged with any specificity.

The crime-fraud exception is inapplicable. A civil contract dispute about whether a termination was proper does not implicate criminal or fraudulent conduct. CRS has made no prima facie showing — indeed, no showing of any kind — that Stonefield engaged in criminal or fraudulent activity or that Beckwith's legal advice was sought in furtherance of any such conduct.

CRS's challenges to Entries 312 through 318 are without merit and should be rejected in their entirety. The privilege designations should be maintained and vigorously defended.

Prepared by:

Simone Laroche Associate, Litigation (General) Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 555-4800

Email: slaroche@calderwoodharkness.com

Date: June 20, 2023

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the attorneys and staff of Calderwood & Harkness LLP involved in the above-referenced matter. Any disclosure, copying, or distribution of this memorandum or its contents without the express written consent of the author is strictly prohibited.

Field	Detail
Date	January 18, 2022
Author	Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
Recipient	Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
CC	None
Subject Description	Email from Hess to Beckwith forwarding a draft Cure Notice and requesting legal review of the notice language for compliance with TSA Section 13.2 (which requires that alleged breaches be described with "reasonable particularity") and applicable New York law governing cure notices.
Attachment(s)	Draft Cure Notice (enclosed with email)
Privilege Basis	Attorney-Client Privilege
Field	Detail
Date	January 19, 2022
Author	Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
Recipient	Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
CC	Troy Nakamura (Senior Associate, Ashford Meridian LLP)
Subject Description	Email from Beckwith to Hess providing legal comments on the draft Cure Notice, advising on the specificity of breach descriptions required under TSA Section 13.2, and recommending specific revisions to ensure that each alleged breach is identified with "reasonable particularity," including the incorporation of specific metrics, service level obligation ("SLO") thresholds, and actual performance figures.
Attachment(s)	None
Privilege Basis	Attorney-Client Privilege
Field	Detail
Date	January 20, 2022
Author	Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
Recipient	Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
CC	None
Subject Description	Email from Hess to Beckwith seeking guidance on whether the five identified categories of SLO failures — (i) on-time pickup, (ii) on-time delivery, (iii) tender acceptance, (iv) equipment availability, and (v) cargo claims ratio — individually or collectively constitute "material breach" under TSA Section 13.1(a). The email includes an attachment of VTS Q4 2021 performance data.
Attachment(s)	VTS Q4 2021 Performance Data Summary
Privilege Basis	Attorney-Client Privilege
Field	Detail

Date	January 23, 2022
Author	Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
Recipient	Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
CC	Troy Nakamura (Senior Associate, Ashford Meridian LLP)
Subject Description	Email from Beckwith to Hess providing legal analysis on the meaning of "material breach" under TSA Section 13.1(a) in light of New York law; advises that the cumulative failures across all five SLO categories likely satisfy the material breach standard; discusses the relevant factors New York courts consider in determining materiality, including the severity of the breach, the duration of non-compliance, the likelihood that the breaching party will cure, and whether the breach goes to the essence of the contract.
Attachment(s)	None
Privilege Basis	Attorney-Client Privilege
Field	Detail
Date	February 15, 2022
Author	Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
Recipient	Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
CC	None
Subject Description	Email from Hess forwarding Vantor's February 14, 2022 response to the Cure Notice (a letter from Derek Pruitt, Vice President of Business Development, Vantor/VTS, to Janet Kirkwood, Vice President of Carrier Relations, Stonefield) and requesting Beckwith's legal assessment of whether Vantor's response constitutes "substantial cure" or otherwise satisfies VTS's obligations under the 30-day cure period, which was set to expire on February 17, 2022.
Attachment(s)	Vantor/VTS Cure Response dated February 14, 2022
Privilege Basis	Attorney-Client Privilege
Field	Detail
Date	February 16, 2022
Author	Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
Recipient	Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
CC	Troy Nakamura (Senior Associate, Ashford Meridian LLP)
Subject Description	Email from Beckwith providing a legal opinion on whether Vantor's February 14, 2022 response constituted effective cure under TSA Section 13.1(a) and New York law; advises that the response constitutes an acknowledgment of performance shortfalls accompanied by excuse-based arguments rather than evidence of actual remediation; recommends that Stonefield document continued failure to meet SLOs and proceed with termination if metrics remain below contractual thresholds after the cure period expires on February 17, 2022.
Attachment(s)	None
Privilege Basis	Attorney-Client Privilege
Field	Detail
Date	February 28, 2022

Author	Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
Recipient	Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
CC	Tobias Wren (General Counsel, Stonefield Logistics Group Inc.); Troy Nakamura (Senior Associate, Ashford Meridian LLP)
Subject Description	Email from Beckwith providing legal recommendations on the form and content of a termination letter, advising on the legal requirements for effective termination under TSA Section 13.1(a) following expiration of the cure period, and discussing the consequences of termination — including potential exposure under the liquidated damages clause in TSA Section 14.2 — and the enforceability risks associated with the liquidated damages provision under New York law.
Attachment(s)	None
Privilege Basis	Attorney-Client Privilege

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
INTERNAL PRIVILEGED MEMORANDUM
ATTORNEY WORK PRODUCT
Matter: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
Matter No.: 1012-00005
Date: June 20, 2023
From: Simone Laroche, Associate, Litigation (General), Calderwood & Harkness LLP
To: Patrick Gallagher, Lead Associate, Litigation (General), Calderwood & Harkness LLP
CC: Samuel Eklund, Responsible Partner, Litigation (General), Calderwood & Harkness LLP
Re: Analysis of Vantor's Challenge to Privilege Log Entries 312–318 (Hess–Beckwith Communications During Cure Period)
I. EXECUTIVE SUMMARY
On June 14, 2023, counsel for Plaintiff Vantor Holdings Corp. ("Vantor") — Jason Whitford of Caldwell Royce & Shapiro LLP ("CRS") — sent a letter to Calderwood & Harkness LLP challenging seven entries on Stonefield Logistics Group Inc.'s ("Stonefield") Privilege Log. Specifically, CRS challenges Entries 312 through 318, asserting that the documents described therein were improperly withheld from production and demanding that Stonefield produce them forthwith.
The seven challenged entries consist of email communications between Raymond Hess, Director of Contract Compliance at Stonefield, and Lorraine Beckwith, Partner in the Commercial Contracts group at Ashford Meridian LLP ("Ashford Meridian"), Stonefield's outside commercial and transactional counsel. The communications span the period from January 18, 2022 through approximately February 28, 2022 — a timeframe that encompasses the cure period under the Transportation Services Agreement (Contract Reference No. SLG-VTS-2019-0315, dated March 15, 2019) (the "TSA") and the immediate aftermath of that period. Ashford Meridian served as Stonefield's outside commercial and transactional counsel throughout the relevant period. Notably, Ashford Meridian drafted the original TSA and provided ongoing pre-litigation guidance to Stonefield regarding the interpretation of the TSA's provisions, Stonefield's contractual rights thereunder, and its termination options following Vantor's alleged material breaches.
In its June 14 letter, CRS advances four principal arguments in support of its challenge: (1) that the communications relate to "business" or "operational" decisions regarding contract compliance rather than legal advice and therefore fall outside the scope of the attorney-client privilege; (2) that even if legal advice was one purpose of the communications, the primary purpose was business advice about contract management; (3) that the privilege was waived by disclosure to non-attorney business personnel; and (4) a perfunctory invocation of the crime-fraud exception.
After a thorough review of the challenged entries, the applicable privilege law, and the factual record, this memorandum concludes that all seven entries are properly logged under the attorney-client privilege and should be vigorously defended against production. The communications reflect legal advice sought and rendered in connection with Stonefield's contractual rights, the interpretation of specific TSA provisions — including Sections 13.1 and 13.2 — and the legal sufficiency of Stonefield's cure and termination process under New York law. No waiver of privilege has occurred. The crime-fraud exception is wholly inapplicable to the facts of this case.
As of the date of this memorandum, Vantor has not filed a formal motion to compel production of these entries. Our recommendation is to respond to CRS's letter by reaffirming the privilege designations and providing a summary of the legal bases supporting the privilege assertions. Should CRS elect to file a motion to compel, we recommend preparing a supporting declaration and offering the documents for in camera review by the Honorable Margaret T. Calloway, United States Magistrate Judge.
II. BACKGROUND
A. The Privilege Log and the Challenged Entries
Stonefield served its first privilege log on April 14, 2023, concurrently with Stonefield's first production of documents in this litigation. That initial production encompassed 42,387 documents totaling approximately 186,000 pages, bearing Bates numbers SLG-000001 through SLG-042387. The accompanying privilege log identified 1,247 documents withheld on the basis of attorney-client privilege and/or the work product doctrine.
A supplemental privilege log was served on June 30, 2023, adding 218 additional documents that were identified during the second-phase review of Stonefield's document collection. Those supplemental entries are not at issue in connection with CRS's current challenge.
The seven challenged entries — Entries 312 through 318 — were included in Stonefield's original April 14, 2023 privilege log. That privilege log was prepared by the undersigned, Simone Laroche, in conjunction with Helen Tsao, Senior Paralegal in Calderwood & Harkness's Litigation Support group, following a document-by-document review of each withheld item. Each entry on the log includes the following information: (i) the entry number; (ii) the date of the communication; (iii) the author; (iv) the recipient(s) and any individuals copied on the communication; (v) a subject-matter description sufficient to identify the general nature of the communication without disclosing privileged content; and (vi) the asserted privilege basis.
B. Description of Each Challenged Entry
The following is a detailed description of each of the seven challenged entries:
Entry 312
Entry 313
Entry 314
Content Note: In his email, Hess describes specific performance metrics for the purpose of obtaining Beckwith's legal assessment: on-time pickup rate of 78.2% (versus a 95% SLO threshold); on-time delivery rate of 81.6% (versus a 93% SLO threshold); tender acceptance rate of 71.4% (versus a 90% SLO threshold); equipment availability of approximately 62% (versus an 85% SLO threshold, reflecting approximately 248 tractors available versus 400 committed); and 16 cargo claims totaling $387,400 in November through December 2021, yielding a claims ratio of approximately 1.07% (versus a contractual maximum of ≤0.5% under the applicable SLO).
Entry 315
Entry 316
Content Note: Vantor's cure response acknowledged "operational challenges" but asserted that the performance deficiencies were attributable to: (i) a nationwide driver shortage, (ii) Stonefield's alleged failure to tender minimum committed volumes under the TSA, and (iii) Stonefield's alleged diversion of freight volume to spot market carriers. Vantor claimed to have effectuated "substantial cure" of the identified deficiencies.
Entry 317
Entry 318
Content Note: This communication preceded the formal termination letter issued by Tobias Wren, Stonefield's General Counsel, on March 4, 2022.
C. Procedural Context
The following timeline sets forth the key events relevant to the challenged communications:
•  January 18, 2022: Raymond Hess, Director of Contract Compliance at Stonefield, sent the Cure Notice to Sandra Milescu, Chief Operating Officer of Vantor/VTS, specifying the alleged material breaches of the TSA with particularity across the five SLO categories described above.
•  January 18 – February 17, 2022: The 30-day cure period under TSA Section 13.1(a) ran from the date of the Cure Notice (January 18, 2022) through February 17, 2022.
•  February 14, 2022: Derek Pruitt, Vice President of Business Development at Vantor/VTS, sent a letter to Janet Kirkwood, Vice President of Carrier Relations at Stonefield, responding to the Cure Notice. As noted above, the cure response acknowledged "operational challenges" while asserting excuse-based defenses and claiming "substantial cure."
•  February 17, 2022: The 30-day cure period expired.
•  March 4, 2022: Tobias Wren, General Counsel of Stonefield, issued a formal termination letter, terminating the TSA effective immediately pursuant to Section 13.1(a) for material breach.
•  September 1, 2022: Calderwood & Harkness LLP was engaged as Stonefield's litigation counsel for the defense of this action. Ashford Meridian LLP had served as Stonefield's regular outside counsel for commercial and transactional matters — including TSA interpretation and the provision of initial pre-litigation guidance regarding the termination dispute — prior to Calderwood & Harkness's engagement. Ashford Meridian provided the pre-litigation guidance that is the subject of Entries 312–318.
•  October 12, 2022: Vantor filed its Complaint in this action, Case No. 22-cv-07841, before the Honorable Robert J. Fielding, United States District Judge, with discovery matters referred to the Honorable Margaret T. Calloway, United States Magistrate Judge.
III. VANTOR'S CHALLENGE TO ENTRIES 312–318
A. Summary of CRS's Arguments
CRS's June 14, 2023 letter advances four arguments in support of its contention that Entries 312–318 are improperly withheld. Each argument is summarized below:
1. Business Purpose / Not Legal Advice. CRS contends that the Hess–Beckwith communications concern "ordinary business decisions" about contract administration and compliance monitoring. Specifically, CRS argues that decisions about whether to issue a cure notice, how to assess VTS's performance data against contractual benchmarks, and how to effectuate the termination of a commercial agreement are "operational" decisions falling within the ordinary course of Stonefield's business, rather than requests for or renderings of legal advice. CRS characterizes the communications as the functional equivalent of Hess consulting with an internal business colleague about contract management, and asserts that the involvement of outside counsel does not, by itself, transform routine business communications into privileged attorney-client communications.
2. Dual-Purpose Communications. In the alternative, CRS argues that even if the obtaining of legal advice was one purpose of the communications, it was not the primary purpose. CRS contends that the primary purpose of the Hess–Beckwith exchanges was to obtain business advice about how to manage the VTS contractual relationship and administer the cure and termination process. CRS invokes the "primary purpose" test applicable in the Second Circuit, arguing that under that standard, communications are not protected unless their primary purpose — as opposed to merely one of several purposes — was to obtain or provide legal advice. CRS asserts that the business objectives of the communications predominate over any incidental legal component.
3. Waiver by Disclosure to Non-Attorney Business Personnel. CRS notes that Entry 318 includes Tobias Wren, Stonefield's General Counsel, as a CC recipient. CRS argues that sharing communications with in-house counsel does not create or preserve privilege where the underlying communication is fundamentally business-oriented in nature. CRS further argues, in general terms, that the distribution of these communications to Stonefield business personnel beyond Hess may have waived any privilege that would otherwise apply. It should be noted, however, that CRS has not identified any specific non-attorney recipients of the challenged communications beyond Raymond Hess and Tobias Wren. This argument is largely speculative as presented in CRS's letter.
4. Crime-Fraud Exception. CRS makes a passing reference to the crime-fraud exception to the attorney-client privilege, suggesting that if Stonefield's termination of the TSA was pretextual — as Vantor alleges in its Complaint — then the Hess–Beckwith communications were made "in furtherance of a plan to wrongfully terminate the TSA" and are therefore not protected by the privilege. This argument is largely undeveloped in CRS's letter. CRS does not cite any specific evidence of criminal or fraudulent conduct, nor does CRS provide any legal analysis of how the crime-fraud exception applies to the facts of this case.
B. Assessment of CRS's Arguments
Each of the four arguments identified above is addressed in detail in Sections IV through VI below. As a threshold matter and as developed more fully in the analysis that follows, our overall assessment is that all four of CRS's arguments are without merit. The privilege designations for Entries 312 through 318 should be maintained and defended.
The communications at issue are classic, paradigmatic attorney-client privileged communications in which a corporate employee sought and received legal advice from outside counsel regarding the interpretation and exercise of the corporation's contractual rights. CRS's arguments either misstate the applicable legal standards, mischaracterize the nature of the communications, or are so conclusory as to fail to present a colorable basis for overcoming the privilege.
IV. LEGAL ANALYSIS — ATTORNEY-CLIENT PRIVILEGE APPLIES
A. Governing Legal Standard
This action is a diversity action in which jurisdiction rests on 28 U.S.C. § 1332. The TSA is governed by New York law. In federal diversity cases in which state law supplies the rule of decision, federal courts in the Second Circuit apply federal common law of privilege. See In re Grand Jury Subpoena Dated January 4, 1984, 750 F.2d 223, 224–25 (2d Cir. 1984); von Bulow v. von Bulow, 811 F.2d 136, 141 (2d Cir. 1987).
Under federal common law, the attorney-client privilege protects confidential communications between an attorney and a client, or between their respective agents, made for the purpose of obtaining or providing legal advice. See Upjohn Co. v. United States, 449 U.S. 383, 389 (1981); In re Cty. of Erie, 473 F.3d 413, 418 (2d Cir. 2007). The essential elements of the privilege are: (i) a communication; (ii) made between privileged persons (i.e., the client and the attorney, including their agents); (iii) in confidence; (iv) for the purpose of seeking, obtaining, or providing legal assistance to the client. In re Cty. of Erie, 473 F.3d at 419.
In the corporate context, the privilege extends to communications between corporate employees and the corporation's counsel — whether in-house or outside counsel — where the employee communicates with counsel at the direction of, or with the authorization of, corporate management for the purpose of obtaining legal advice for the corporation. Upjohn, 449 U.S. at 394–95. The Supreme Court in Upjohn rejected the restrictive "control group" test and held that the privilege can protect communications from employees at all levels of the corporate hierarchy, provided the communications concern matters within the scope of the employee's duties and are made for the purpose of enabling the corporation to obtain legal advice. Id. at 394–95.
The Second Circuit applies a "primary purpose" test to evaluate whether communications that serve both legal and business purposes are entitled to the protection of the attorney-client privilege. Under this standard, a communication is privileged if its primary purpose — though not necessarily its sole purpose — was to obtain or provide legal advice. In re Cty. of Erie, 473 F.3d at 420–21. The Second Circuit has recognized that "[i]n the modern corporate context, it may be difficult to distinguish between legal and business advice, because legal considerations permeate virtually all business decisions," but has emphasized that the privilege must be "strictly confined within the narrowest possible limits consistent with the logic of its principle." Id. at 418–19 (internal quotation marks omitted). At the same time, the Circuit has cautioned that "the need for the privilege is greater in the corporate context where the attorney's role is complex." Id. at 419.
Importantly, the fact that a communication contains factual information does not defeat the privilege. A client's communication of facts to counsel for the purpose of obtaining legal advice is privileged, even though the facts themselves are not privileged if obtained from other sources. Upjohn, 449 U.S. at 395–96. What is protected is the communication — the fact that the client communicated the information to counsel in confidence for the purpose of obtaining legal assistance.
B. Application to Entries 312–318
The challenged entries fall squarely within the scope of the attorney-client privilege under the standards set forth above. Each element of the privilege is satisfied:
Privileged Persons. Ashford Meridian LLP was Stonefield's retained outside legal counsel for commercial contracts, including the TSA. This engagement was a formal attorney-client relationship in which Ashford Meridian was engaged to provide legal services to Stonefield. Lorraine Beckwith, a partner in Ashford Meridian's Commercial Contracts group, acted in her capacity as Stonefield's legal advisor throughout the challenged communications. Troy Nakamura, a senior associate at Ashford Meridian, participated as a member of the legal team servicing Stonefield's account. Raymond Hess, as Stonefield's Director of Contract Compliance, was the Stonefield employee authorized to communicate with outside counsel regarding TSA compliance matters. His communications with Beckwith were made in the course of his corporate duties and for the purpose of enabling Stonefield, as the corporate client, to obtain legal advice.
For the Purpose of Seeking or Providing Legal Advice. The subject matter of each communication unambiguously involves the seeking or provision of legal advice:
•  Entries 312 and 313 concern the legal sufficiency of the draft Cure Notice — specifically, whether the notice language complied with the "reasonable particularity" requirement of TSA Section 13.2 and applicable New York law governing cure notices. Hess submitted a draft legal notice to counsel for legal review (Entry 312), and Beckwith provided legal comments and recommended specific revisions to ensure legal compliance (Entry 313). These are quintessential requests for and renderings of legal advice.
•  Entries 314 and 315 concern the legal meaning of "material breach" under TSA Section 13.1(a) as interpreted under New York law. Hess transmitted factual data (the Q4 2021 performance metrics) to Beckwith for the specific purpose of enabling Beckwith to render a legal opinion on whether the identified SLO failures constituted "material breach" under the contract and applicable law (Entry 314). Beckwith responded with a legal analysis applying New York's multi-factor materiality test to the facts (Entry 315). The communication of facts to counsel for the purpose of obtaining a legal opinion is a paradigmatic privileged communication.
•  Entries 316 and 317 concern the legal sufficiency of Vantor's cure response. Hess forwarded Vantor's cure letter to Beckwith and sought a legal assessment of whether the response constituted "substantial cure" within the meaning of the TSA's cure provisions (Entry 316). Beckwith provided a legal opinion analyzing the cure response under the contractual standard and New York law, concluding that it constituted an acknowledgment of shortfalls accompanied by excuse-based arguments rather than evidence of actual remediation, and recommending a legally sound course of action (Entry 317). Again, this is the seeking and provision of legal advice.
•  Entry 318 concerns the legal requirements for an effective termination letter, the legal consequences of termination under the TSA, and the enforceability of the liquidated damages clause in Section 14.2. Beckwith's advice addressed legal form requirements, legal consequences, and litigation exposure risks — matters that are exclusively within the province of legal counsel. This entry also reflects an awareness of the prospect of disputes and potential litigation arising from the termination, further reinforcing the legal nature of the advice.
Confidentiality. Each communication was transmitted between Hess and Beckwith (with Nakamura and, in the case of Entry 318, Tobias Wren, Stonefield's General Counsel) in confidence. The communications were not shared with any third parties outside the attorney-client relationship. There is no evidence that the communications were disseminated to any non-privileged person. The expectation of confidentiality is apparent from the nature of the communications and the relationship between the parties.
In sum, Entries 312 through 318 are paradigmatic attorney-client privileged communications. They reflect a corporate employee consulting with retained outside counsel about the legal interpretation of a commercial contract, the legal requirements for exercising a contractual right (termination for cause), the legal sufficiency of the opposing party's response during a cure period, and the legal consequences and litigation risks associated with various courses of action. These are precisely the types of communications that the attorney-client privilege exists to protect.
C. Rebuttal of the "Business Purpose" Argument
CRS's primary argument — that the Hess–Beckwith communications concern "ordinary business decisions" about contract administration rather than legal advice — fundamentally misapprehends the nature of the privilege and the character of the communications at issue.
The fact that legal advice relates to a business decision does not strip the communication of its privileged character. It is well settled that "[i]n the modern corporate context, legal considerations permeate virtually all business decisions." In re Cty. of Erie, 473 F.3d at 419. Virtually every piece of legal advice a corporate attorney provides — whether regarding a potential acquisition, a regulatory filing, a contract dispute, or an employment decision — informs and relates to a business decision. Were it otherwise, the privilege would be effectively nullified in the corporate context. See Paul R. Rice, Attorney-Client Privilege in the United States § 7:10 (2023) ("The mere fact that legal advice also has business implications does not destroy the privilege.").
The relevant inquiry is not whether the ultimate decision informed by the legal advice was a "business" decision, but rather whether the communication itself was made for the purpose of obtaining or providing legal advice. See In re Cty. of Erie, 473 F.3d at 420. Here, the specific content of the challenged communications leaves no doubt that their purpose was legal:
•  Analysis of whether a draft cure notice satisfies the "reasonable particularity" requirement of a specific contract provision (Section 13.2) is an exercise in legal interpretation and drafting — not contract administration in any "business" sense.
•  Determination of whether a set of performance failures constitutes "material breach" under a specific contract provision (Section 13.1(a)) as interpreted under New York law requires application of a legal standard — the multi-factor test for materiality — to a specific set of facts. This is legal analysis, not operational assessment.
•  Assessment of whether a cure response constitutes legally sufficient cure under the terms of a contract and applicable law is a legal determination, not a business one.
•  Advising on the legal form and content of a termination letter, the legal requirements for effective termination, and the enforceability of a liquidated damages provision are exclusively legal functions.
CRS's argument attempts to recharacterize unmistakably legal communications as "business" communications by stripping away the legal framework that is their central subject matter. The Second Circuit has repeatedly rejected such attempts. See, e.g., In re Grand Jury Subpoena Dated January 4, 1984, 750 F.2d at 225–26 (communications with counsel regarding interpretation of contractual obligations are privileged); Brennan Ctr. for Justice v. U.S. Dep't of Justice, 697 F.3d 184, 207 (2d Cir. 2012) (privilege protects communications that "reflect legal analysis or legal judgment").
CRS's argument also ignores the significance of who was providing the advice. Lorraine Beckwith is a partner in the Commercial Contracts group of a major law firm retained specifically to advise Stonefield on its legal rights under the TSA. She was not acting as a business consultant or contract manager; she was acting as a lawyer providing legal advice. The Second Circuit has recognized that communications with retained outside counsel enjoy a strong presumption of being for the purpose of legal advice, because "a person ordinarily does not seek out a lawyer merely for business advice." In re Cty. of Erie, 473 F.3d at 420 n.5.
D. Rebuttal of the "Dual-Purpose" / "Primary Purpose" Argument
CRS's alternative argument — that even if legal advice was one purpose of the communications, it was not the primary purpose — fares no better.
Even under the "primary purpose" test applied in the Second Circuit, the communications at issue plainly qualify for protection. Their primary purpose was to seek and provide legal advice regarding Stonefield's contractual rights and the legal sufficiency of its actions under the TSA and New York law. This is evident from the face of the privilege log descriptions and from a review of the communications themselves.
The factual information transmitted by Hess to Beckwith — including the Q4 2021 performance metrics (Entry 314) and Vantor's cure response (Entry 316) — was provided specifically to enable Beckwith to render informed legal advice. The transmission of factual information to counsel for the purpose of obtaining legal advice is itself a privileged communication, and the presence of factual content does not convert a privileged communication into a non-privileged one. See Upjohn, 449 U.S. at 395–96 (privilege protects communications from corporate employees to counsel, even though facts contained therein are not independently privileged). As the Supreme Court recognized in Upjohn, "[t]he client cannot be compelled to answer the question, 'What did you say or write to the attorney?' but may not refuse to disclose any relevant fact within his knowledge merely because he incorporated a statement of such fact into his communication to his attorney." Id. at 395.
The legal analysis and recommendations provided by Beckwith — interpreting the "reasonable particularity" requirement, analyzing the "material breach" standard under New York's multi-factor test, evaluating the legal sufficiency of Vantor's cure response, and advising on termination procedures and liquidated damages exposure — are indisputably legal in nature. These are not matters on which a business consultant would be engaged; they are matters requiring the exercise of legal judgment and the application of legal standards to specific facts. The primary purpose of each such communication was to provide legal advice, not business guidance.
CRS cites no authority for the proposition that advice regarding the interpretation and exercise of contractual rights under a commercial agreement is "business advice" rather than "legal advice." Nor could it. The interpretation of contract provisions, the assessment of legal rights and obligations arising under a contract, and the evaluation of litigation exposure are quintessential legal services. See, e.g., Schaeffler v. United States, 806 F.3d 34, 40 (2d Cir. 2015) (recognizing that communications regarding the "legal ramifications" of proposed transactions are privileged even where the communications also contain business-related content).
V. LEGAL ANALYSIS — NO WAIVER
A. Distribution Limited to the Privileged Circle
CRS's waiver argument fails because the challenged communications were distributed only among privileged persons — that is, persons within the scope of the attorney-client relationship.
The communications in Entries 312 through 317 were exchanged solely between Raymond Hess (an authorized corporate employee communicating with counsel on contract compliance matters within the scope of his employment duties) and Lorraine Beckwith and Troy Nakamura (outside counsel at Ashford Meridian). No third parties — whether within or outside Stonefield — were included on these communications.
Entry 318 includes one additional recipient: Tobias Wren, Stonefield's General Counsel. Mr. Wren is himself an attorney and the senior legal officer of the client corporation. The inclusion of in-house counsel on communications with outside counsel does not waive the attorney-client privilege — to the contrary, it reinforces the privileged nature of the communication by confirming that the communication was part of the corporation's legal decision-making process. See United States v. Mejia, 655 F.3d 126, 133–34 (2d Cir. 2011) (privilege extends to communications among attorneys and agents of the client in the course of legal representation); In re Grand Jury Proceedings, 219 F.3d 175, 182 (2d Cir. 2000) (communications between in-house and outside counsel on behalf of common client are privileged). Including the General Counsel — the corporate officer ultimately responsible for overseeing the legal aspects of the TSA dispute — on a communication from outside counsel advising on termination procedures and litigation exposure is not merely appropriate; it would have been derelict for outside counsel not to do so.
CRS has not identified any disclosure of the challenged communications to any non-privileged third party. Its waiver argument rests on the bare assertion that communications may have been distributed to "Stonefield business personnel beyond Hess," but CRS identifies no specific individual, no specific disclosure, and no specific basis for its speculation. This is insufficient to establish waiver. The party asserting waiver bears the burden of demonstrating that a privileged communication was disclosed to a third party outside the privilege. See In re Grand Jury Proceedings, 219 F.3d at 182. CRS has not met — and cannot meet — that burden here.
B. No Broad Dissemination
Calderwood & Harkness's review of Stonefield's email metadata for the challenged communications confirms that no broader dissemination occurred. Specifically:
•  Entries 312, 314, and 316 (communications from Hess to Beckwith) were sent solely by Hess to Beckwith, with no CC or BCC recipients.
•  Entries 313, 315, and 317 (communications from Beckwith to Hess) were sent by Beckwith to Hess, with Troy Nakamura (Ashford Meridian senior associate) on CC. No other recipients were identified.
•  Entry 318 (communication from Beckwith to Hess) was sent by Beckwith to Hess, with Tobias Wren (Stonefield General Counsel) and Troy Nakamura (Ashford Meridian senior associate) on CC. No other recipients were identified.
No evidence of any forwarding of the challenged communications to non-privileged persons has been identified in the document review or in the email metadata analysis. There is no basis for CRS's speculation that broader distribution may have occurred.
Under the "need to know" standard applicable to the attorney-client privilege in the corporate context, distribution of legal advice to corporate employees who need the advice to perform their duties does not waive the privilege, provided the communication remains within the "privileged circle" of persons involved in the matter on behalf of the corporation. See Upjohn, 449 U.S. at 394–95; In re Cty. of Erie, 473 F.3d at 419. Even if the challenged communications had been shared with other Stonefield personnel involved in the cure and termination process — which they were not — such distribution would not necessarily constitute waiver if the recipients were within the circle of persons who needed access to the legal advice to make informed decisions. But the point is moot: the communications were not shared beyond Hess, Beckwith, Nakamura, and (in one instance) Wren.
VI. LEGAL ANALYSIS — CRIME-FRAUD EXCEPTION DOES NOT APPLY
A. Standard for the Crime-Fraud Exception
The crime-fraud exception to the attorney-client privilege provides that the privilege does not protect communications made for the purpose of furthering a crime or fraud. See Clark v. United States, 289 U.S. 1, 15 (1933); In re Grand Jury Subpoena Duces Tecum Dated September 15, 1983, 731 F.2d 1032, 1038 (2d Cir. 1984). The exception requires a threshold showing that: (a) the client was engaged in, or was planning, criminal or fraudulent conduct at the time the communication was made; and (b) the attorney's assistance was obtained in furtherance of that criminal or fraudulent conduct. In re Grand Jury Subpoena, 731 F.2d at 1038.
The party seeking to invoke the crime-fraud exception bears the burden of establishing a factual basis for its application. See In re Richard Roe, Inc., 68 F.3d 38, 40 (2d Cir. 1995). This burden requires more than mere allegation; the invoking party must make a prima facie showing — i.e., present evidence that, if believed, would establish the elements of the exception. Id. Bare allegations of wrongdoing, without supporting evidence, are insufficient to overcome the privilege. See In re Grand Jury Subpoena, 731 F.2d at 1039.
Moreover, the exception is narrowly construed. It applies only where the client's purpose in consulting the attorney was to further a crime or fraud — not where the attorney was unwittingly used, and not where the client sought legal advice in good faith about the legality of a proposed course of action. See In re Grand Jury Proceedings, 87 F.3d 377, 381 (9th Cir. 1996) ("A client who consults an attorney for advice that will serve him in the commission of a fraud will have no help from the privilege.") (emphasis added); Restatement (Third) of the Law Governing Lawyers § 82 cmt. c (2000) (exception does not apply "merely because the advice relates to activity that is later determined to be unlawful").
B. Application
CRS's invocation of the crime-fraud exception is perfunctory, undeveloped, and legally unfounded. It should be summarily rejected.
First, CRS has not made — and cannot make — a prima facie showing that Stonefield engaged in criminal or fraudulent conduct. The gravamen of Vantor's claims in this action is that Stonefield's termination of the TSA constituted a breach of contract. A breach of contract — even one that is ultimately found to be wrongful — is not a crime or fraud. The crime-fraud exception applies to communications made in furtherance of criminal conduct or actual fraud, not to communications made in connection with a civil contract dispute in which one party contends that the other party exercised its contractual rights improperly. See Adriatic Specialty Insurance v. Certain Underwriters at Lloyd's London, 176 Misc. 2d 605, 612 (N.Y. Sup. Ct. 1998) (crime-fraud exception requires showing of actual crime or fraud, not merely wrongful conduct).
Second, CRS's argument conflates a disputed legal position with fraud or illegality. Vantor alleges that Stonefield's termination was pretextual and did not comply with the TSA's termination provisions. Even if that allegation were ultimately sustained, it would establish, at most, a breach of contract — not a crime or fraud. The question whether Stonefield properly exercised its contractual right to terminate for cause is precisely the kind of contested legal issue that the attorney-client privilege is designed to protect. Parties must be free to consult with counsel about their legal rights under a contract — including whether they have grounds to terminate — without fear that those consultations will be stripped of their privileged character if the opposing party later contends that the termination was improper.
Third, there is no allegation, much less evidence, that Lorraine Beckwith's legal advice was sought or used to facilitate any criminal or fraudulent scheme. The challenged communications reflect Hess seeking, and Beckwith providing, legal advice about the interpretation of the TSA, the legal sufficiency of the cure process, and the legal requirements for termination. These are legitimate legal consultations, not the tools of a criminal or fraudulent enterprise.
Fourth, CRS's crime-fraud argument is so undeveloped as to be effectively waived. CRS's June 14 letter makes only a passing reference to the exception without identifying any specific evidence of criminal or fraudulent conduct, without citing any legal authority, and without providing any analysis of how the exception applies to the specific communications at issue. This falls far short of the prima facie showing required to invoke the exception.
VII. ADDITIONAL CONSIDERATIONS
A. Relationship to the FRE 502(d) Stipulation and Order
The parties in this action entered into a stipulated clawback agreement pursuant to Federal Rule of Evidence 502(d), which was incorporated into the Case Management Order entered by Judge Calloway on February 17, 2023 (Dkt. No. 34). The Rule 502(d) stipulation provides that the inadvertent production of privileged documents in this litigation does not constitute a waiver of the attorney-client privilege or the work product doctrine, either in this action or in any other federal or state proceeding.
The 502(d) order provides a valuable backstop against inadvertent waiver. However, it does not directly address the present dispute, which concerns a challenge to the correctness of the privilege designations on Stonefield's privilege log, rather than a claim that privilege was inadvertently waived through an unintentional production. The 502(d) order is a procedural safeguard, not a substitute for the substantive privilege analysis set forth in this memorandum.
B. Relationship to Our Own Prior Privilege Analysis
On March 22, 2023, the undersigned prepared an internal memorandum analyzing the privilege status of Stonefield's pre-litigation communications with Ashford Meridian LLP regarding TSA interpretation and potential termination (the "March 22 Memorandum"). That memorandum reviewed the full corpus of Hess–Beckwith and related Ashford Meridian correspondence and concluded that the attorney-client privilege applies to the communications in which Stonefield employees sought and received legal advice from Ashford Meridian regarding the TSA's provisions, the cure process, and the termination decision.
The March 22 Memorandum identified 84 documents from the Hess–Beckwith/Ashford Meridian correspondence for inclusion on the privilege log. Entries 312 through 318 are among those 84 documents. The analysis in this memorandum is consistent with and reinforces the conclusions reached in the March 22 Memorandum.
C. Confirmation from Hess Deposition Testimony
Raymond Hess was deposed in this action on July 27, 2023. During his deposition, Hess testified regarding his role in the cure and termination process. Several aspects of his testimony are relevant to the current privilege dispute:
•  Hess testified that he independently verified all Q4 2021 performance metrics using data from VTS's own Carrier Performance Portal, which Stonefield accessed pursuant to reporting obligations under the TSA. This testimony confirms that the underlying performance data was independently available to Stonefield through business channels — but the fact that the data was independently available does not undermine the privilege, because what is protected is not the data itself but the communications in which Hess transmitted the data to counsel for the purpose of obtaining legal advice.
•  Hess testified that he consulted with Ashford Meridian LLP regarding the legal requirements for the cure notice and the termination process. This testimony is consistent with the privilege log descriptions and supports the characterization of the challenged communications as privileged legal consultations.
•  Critically, Hess did not disclose the substance of the legal advice he received from Beckwith or any other Ashford Meridian attorney. His testimony confirmed the fact of consultation, but did not reveal the content of the communications. Accordingly, no subject-matter waiver has occurred. Under the applicable standard, disclosure of the fact that a client consulted with counsel does not waive the privilege as to the content of those consultations. See In re von Bulow, 828 F.2d 94, 102–03 (2d Cir. 1987) (distinction between disclosure of fact of consultation and disclosure of content of communications).
D. VTS Did Not Dispute the Metrics
A further point warrants mention because it bears on CRS's characterization of the challenged communications as "operational" in nature. As confirmed both in Hess's deposition testimony and in our analysis of Vantor's February 14, 2022 cure response, VTS did not dispute the specific performance metrics cited in the Cure Notice during the cure period. Vantor's cure response acknowledged "operational challenges" while offering excuses (nationwide driver shortage, Stonefield's alleged failure to tender minimum committed volumes, diversion to spot market carriers) rather than contesting the underlying data.
This fact is significant because it undercuts CRS's suggestion that the Hess–Beckwith communications were merely about "operational" compliance monitoring — i.e., about whether the performance data showed a problem. The performance data itself was not in dispute. The questions Hess posed to Beckwith — and the advice Beckwith rendered — concerned legal questions: whether the undisputed performance shortfalls constituted "material breach" under the contract and New York law; whether the cure notice was legally sufficient; whether Vantor's excuse-based response constituted legally effective cure; and what the legal requirements and consequences of termination would be. These are inherently legal questions, not operational ones. The fact that the underlying metrics were undisputed only reinforces the conclusion that the purpose of the communications was to obtain legal guidance on how to interpret and apply those metrics within the legal framework of the TSA and New York law.
VIII. RECOMMENDATION
A. Defend All Seven Entries
All seven entries (Entries 312 through 318) on Stonefield's Privilege Log are properly designated as protected by the attorney-client privilege. The privilege designations should be vigorously defended against CRS's challenge.
As set forth in detail in Sections IV through VI above, CRS's arguments are without merit. The communications are primarily — and indeed almost exclusively — legal in nature, involving the seeking and provision of legal advice from retained outside counsel regarding the interpretation and exercise of contractual rights under the TSA and applicable New York law. No waiver of privilege has occurred, as the communications were distributed only among privileged persons within the attorney-client relationship. The crime-fraud exception is wholly inapplicable, as this is a civil contract dispute involving no criminal or fraudulent conduct.
B. Proposed Response to CRS
We recommend that Patrick Gallagher prepare and send a letter to Jason Whitford at Caldwell Royce & Shapiro LLP responding to CRS's June 14, 2023 challenge. The response letter should:
1.  Reaffirm the privilege designations for all seven challenged entries (Entries 312–318);
2.  Provide a summary of the legal bases supporting the privilege assertions, including: (a) the existence of a formal attorney-client relationship between Stonefield and Ashford Meridian LLP; (b) the legal nature of the communications, which involve the seeking and provision of legal advice regarding the interpretation of the TSA and the legal sufficiency of the cure and termination process; (c) the absence of any waiver; and (d) the inapplicability of the crime-fraud exception;
3.  Invite CRS to file a motion to compel if it disagrees with Stonefield's privilege designations, rather than prolonging the parties' letter-writing exchange; and
4.  Reserve all rights and arguments in connection with any such motion.
The tone of the response should be firm but measured. Given the strength of our position on the merits, we should welcome — rather than seek to avoid — judicial resolution of the dispute. A confident invitation to CRS to present its arguments to the Court, if it wishes to pursue the challenge, is the most effective way to signal the strength of our position and may discourage CRS from incurring the cost and effort of a formal motion that is unlikely to succeed.
C. Preparation for Potential In Camera Review
In the event that CRS files a motion to compel production of Entries 312 through 318, we recommend the following preparatory steps:
1.  Supporting Declaration. Prepare a declaration from Samuel Eklund (Responsible Partner) or Patrick Gallagher (Lead Associate) describing: (a) the nature of the attorney-client relationship between Stonefield and Ashford Meridian LLP; (b) the circumstances under which the challenged communications were made; (c) the legal advice sought and provided (described at a level of generality sufficient to support the privilege assertion without disclosing privileged content); and (d) the limited distribution of the communications.
2.  In Camera Review. Offer the seven challenged documents for in camera review by Judge Calloway, to allow the Court to independently verify that the communications are privileged. This approach demonstrates confidence in our position and is likely to be well received by the Court.
3.  Briefing. Prepare a memorandum of law in opposition to any motion to compel, incorporating and expanding upon the analysis in this memorandum.
Preparation of these materials should be completed promptly so that we are in a position to respond expeditiously if CRS does file a motion. That said, the likelihood that CRS will actually file a formal motion to compel is uncertain. The weakness of CRS's arguments, as set forth in this memorandum, may dissuade CRS from pursuing the challenge further once it receives our response letter. As of the date of this memorandum, no motion has been filed.
D. Preservation of Arguments
If CRS's challenge proceeds to a motion, we should also preserve the argument that the challenged communications — particularly Entry 318 — are independently protected by the work product doctrine under Federal Rule of Civil Procedure 26(b)(3). Entry 318, which discusses the consequences of termination including potential exposure under the liquidated damages clause in Section 14.2 and the enforceability risks of that provision, reflects Beckwith's mental impressions and legal analysis prepared in anticipation of litigation. By late February 2022, with the cure period having expired and Stonefield preparing to issue a termination letter, the prospect of a dispute — and ultimately litigation — arising from the termination was clearly foreseeable. Beckwith's analysis of liquidated damages exposure and enforceability risks in Entry 318 was plainly prepared with an eye toward the litigation consequences of termination and therefore qualifies as work product.
To the extent the earlier communications (Entries 312–317) also reflect Beckwith's analysis of Stonefield's legal position with an awareness of the prospect of disputes and potential litigation, those communications may also qualify for work product protection. However, the attorney-client privilege provides a stronger and more straightforward basis for withholding these documents, and the work product argument should be preserved as an alternative ground rather than a primary basis for the privilege assertion.
IX. CONCLUSION
Entries 312 through 318 on Stonefield's Privilege Log are properly designated as protected by the attorney-client privilege. They represent a series of confidential communications between Raymond Hess, a Stonefield employee authorized to communicate with counsel on contract compliance matters, and Lorraine Beckwith and Troy Nakamura, attorneys at Ashford Meridian LLP serving as Stonefield's outside legal counsel. The communications were made for the purpose of seeking and obtaining legal advice regarding the interpretation and exercise of Stonefield's contractual rights under the TSA during the cure and termination process spanning January through February 2022.
The communications address paradigmatic legal questions: the legal sufficiency of a cure notice under the contract's "reasonable particularity" requirement, the meaning of "material breach" under the contract and New York law, the legal effect of a counterparty's cure response, and the legal requirements and consequences of contract termination. These are not "business" or "operational" communications; they are consultations with legal counsel on matters of legal interpretation and legal rights.
No waiver of the privilege has occurred. The communications were distributed only among privileged persons — Hess, Beckwith, Nakamura, and (in one instance) Stonefield's General Counsel, Tobias Wren. No disclosure to any non-privileged third party has been identified or alleged with any specificity.
The crime-fraud exception is inapplicable. A civil contract dispute about whether a termination was proper does not implicate criminal or fraudulent conduct. CRS has made no prima facie showing — indeed, no showing of any kind — that Stonefield engaged in criminal or fraudulent activity or that Beckwith's legal advice was sought in furtherance of any such conduct.
CRS's challenges to Entries 312 through 318 are without merit and should be rejected in their entirety. The privilege designations should be maintained and vigorously defended.
Prepared by:
Simone Laroche Associate, Litigation (General) Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 555-4800
Email: slaroche@calderwoodharkness.com
Date: June 20, 2023
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the attorneys and staff of Calderwood & Harkness LLP involved in the above-referenced matter. Any disclosure, copying, or distribution of this memorandum or its contents without the express written consent of the author is strictly prohibited.
Field | Detail
Date | January 18, 2022
Author | Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
Recipient | Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
CC | None
Subject Description | Email from Hess to Beckwith forwarding a draft Cure Notice and requesting legal review of the notice language for compliance with TSA Section 13.2 (which requires that alleged breaches be described with "reasonable particularity") and applicable New York law governing cure notices.
Attachment(s) | Draft Cure Notice (enclosed with email)
Privilege Basis | Attorney-Client Privilege
Field | Detail
Date | January 19, 2022
Author | Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
Recipient | Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
CC | Troy Nakamura (Senior Associate, Ashford Meridian LLP)
Subject Description | Email from Beckwith to Hess providing legal comments on the draft Cure Notice, advising on the specificity of breach descriptions required under TSA Section 13.2, and recommending specific revisions to ensure that each alleged breach is identified with "reasonable particularity," including the incorporation of specific metrics, service level obligation ("SLO") thresholds, and actual performance figures.
Attachment(s) | None
Privilege Basis | Attorney-Client Privilege
Field | Detail
Date | January 20, 2022
Author | Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
Recipient | Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
CC | None
Subject Description | Email from Hess to Beckwith seeking guidance on whether the five identified categories of SLO failures — (i) on-time pickup, (ii) on-time delivery, (iii) tender acceptance, (iv) equipment availability, and (v) cargo claims ratio — individually or collectively constitute "material breach" under TSA Section 13.1(a). The email includes an attachment of VTS Q4 2021 performance data.
Attachment(s) | VTS Q4 2021 Performance Data Summary
Privilege Basis | Attorney-Client Privilege
Field | Detail
Date | January 23, 2022
Author | Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
Recipient | Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
CC | Troy Nakamura (Senior Associate, Ashford Meridian LLP)
Subject Description | Email from Beckwith to Hess providing legal analysis on the meaning of "material breach" under TSA Section 13.1(a) in light of New York law; advises that the cumulative failures across all five SLO categories likely satisfy the material breach standard; discusses the relevant factors New York courts consider in determining materiality, including the severity of the breach, the duration of non-compliance, the likelihood that the breaching party will cure, and whether the breach goes to the essence of the contract.
Attachment(s) | None
Privilege Basis | Attorney-Client Privilege
Field | Detail
Date | February 15, 2022
Author | Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
Recipient | Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
CC | None
Subject Description | Email from Hess forwarding Vantor's February 14, 2022 response to the Cure Notice (a letter from Derek Pruitt, Vice President of Business Development, Vantor/VTS, to Janet Kirkwood, Vice President of Carrier Relations, Stonefield) and requesting Beckwith's legal assessment of whether Vantor's response constitutes "substantial cure" or otherwise satisfies VTS's obligations under the 30-day cure period, which was set to expire on February 17, 2022.
Attachment(s) | Vantor/VTS Cure Response dated February 14, 2022
Privilege Basis | Attorney-Client Privilege
Field | Detail
Date | February 16, 2022
Author | Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
Recipient | Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
CC | Troy Nakamura (Senior Associate, Ashford Meridian LLP)
Subject Description | Email from Beckwith providing a legal opinion on whether Vantor's February 14, 2022 response constituted effective cure under TSA Section 13.1(a) and New York law; advises that the response constitutes an acknowledgment of performance shortfalls accompanied by excuse-based arguments rather than evidence of actual remediation; recommends that Stonefield document continued failure to meet SLOs and proceed with termination if metrics remain below contractual thresholds after the cure period expires on February 17, 2022.
Attachment(s) | None
Privilege Basis | Attorney-Client Privilege
Field | Detail
Date | February 28, 2022
Author | Lorraine Beckwith (Partner, Commercial Contracts, Ashford Meridian LLP)
Recipient | Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.)
CC | Tobias Wren (General Counsel, Stonefield Logistics Group Inc.); Troy Nakamura (Senior Associate, Ashford Meridian LLP)
Subject Description | Email from Beckwith providing legal recommendations on the form and content of a termination letter, advising on the legal requirements for effective termination under TSA Section 13.1(a) following expiration of the cure period, and discussing the consequences of termination — including potential exposure under the liquidated damages clause in TSA Section 14.2 — and the enforceability risks associated with the liquidated damages provision under New York law.
Attachment(s) | None
Privilege Basis | Attorney-Client Privilege

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

INTERNAL PRIVILEGED MEMORANDUM

ATTORNEY WORK PRODUCT

I. EXECUTIVE SUMMARY

II. BACKGROUND

VII. ADDITIONAL CONSIDERATIONS

VIII. RECOMMENDATION

IX. CONCLUSION

Record

Parties

Dates

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