PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166
March 22, 2023
MEMORANDUM
Matter: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
Matter No.: 1012-00005
To: Patrick Gallagher, Lead Associate, Litigation (General)
From: Simone Laroche, Working Associate, Litigation (General)
Re: Privilege Analysis — Pre-Litigation Communications Between Stonefield Logistics Group Inc. and Ashford Meridian LLP Regarding TSA Interpretation and Potential Termination
CONFIDENTIALITY NOTICE: This memorandum constitutes attorney work product prepared in anticipation of litigation and is protected from disclosure by the attorney-client privilege and the work product doctrine. It is prepared for internal use by Calderwood & Harkness LLP in connection with its representation of Stonefield Logistics Group Inc. and should not be disclosed to any third party without prior approval. This memorandum contains the mental impressions, conclusions, opinions, and legal theories of counsel and constitutes opinion work product entitled to the highest level of protection under the work product doctrine.
I. EXECUTIVE SUMMARY
This memorandum analyzes the privilege status of eighty-four (84) documents comprising pre-litigation communications between Stonefield Logistics Group Inc. ("Stonefield" or "SLG") and its regular outside commercial counsel, Ashford Meridian LLP ("Ashford Meridian"), concerning the interpretation and potential termination of the Transportation Services Agreement dated March 15, 2019 (the "TSA," Contract Reference No. SLG-VTS-2019-0315) with Vantor Transport Services LLC ("VTS"). The purpose of this memorandum is to provide a comprehensive privilege analysis supporting the withholding of these documents from production in connection with the pending litigation captioned Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.).
The 84 documents span the period from approximately September 2021 through August 2022. This period encompasses the timeline from Stonefield's initial awareness of VTS's performance failures through the issuance of the Cure Notice on January 18, 2022, Vantor's response on February 14, 2022, the expiration of the cure period on February 17, 2022, the formal termination letter on March 4, 2022, and the subsequent pre-suit demand and negotiation period leading up to the filing of the Complaint on August 12, 2022.
Based on the analysis set forth below, it is my conclusion that all 84 documents are properly protected by the attorney-client privilege. Each of these communications was made between Stonefield personnel and Ashford Meridian attorneys for the purpose of seeking or rendering legal advice concerning the interpretation of the TSA and the exercise of Stonefield's contractual rights. The communications were made in confidence and shared only among individuals with a need to know. The privilege has not been waived.
In addition, a subset of 36 documents qualifies for independent protection under the work product doctrine. Specifically, 31 documents from the January through March 2022 period were prepared in anticipation of litigation, which became reasonably foreseeable following the issuance of the Cure Notice on January 18, 2022 and was virtually certain by the time of the termination letter on March 4, 2022. An additional 5 documents from the March through August 2022 post-termination period also qualify for work product protection, as litigation was reasonably anticipated following Vantor's April 8, 2022 demand letter (demanding $95.4 million in damages) and was ultimately initiated with the filing of the Complaint on August 12, 2022. The 31-document figure referenced in this summary reflects those documents from the January–March 2022 period for which work product protection is independently established under a stricter "litigation reasonably anticipated" threshold. Including the 5 post-termination documents, the total number of documents subject to dual protection (attorney-client privilege and work product) is 36.
These documents should be withheld from production and logged on Stonefield's privilege log in accordance with Federal Rule of Civil Procedure 26(b)(5)(A) and the Case Management Order entered February 17, 2023 by the Honorable Margaret T. Calloway, United States District Judge.
It should be noted that these 84 documents form part of the larger set of 1,247 documents withheld on privilege grounds in Stonefield's first production, which was served on April 14, 2023 (Bates range SLG-000001 through SLG-042387). The privilege log prepared by Simone Laroche and Helen Tsao (Senior Paralegal) accompanying that production includes entries for all 84 documents analyzed herein. A supplemental privilege log served on June 30, 2023 added 218 additional documents identified during second-phase review; the 84 Ashford Meridian communications are part of the original April 14 privilege log, not the supplemental log.
II. BACKGROUND
A. The Parties and Their Counsel Relationships
1. Stonefield Logistics Group Inc.
Stonefield Logistics Group Inc. is a Delaware corporation headquartered at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102. Stonefield is a mid-market freight brokerage and managed transportation company that provides comprehensive logistics services to shippers across the continental United States. In fiscal year 2021, Stonefield reported approximately $1.42 billion in revenue. Since October 2017, Stonefield has been majority-owned (approximately 72%) by Ridgeline Capital Partners, LP, acting through its investment vehicle Ridgeline Fund III, LP. Ridgeline acquired its controlling interest through a leveraged buyout transaction at an enterprise value of approximately $680 million. Stonefield's senior management team relevant to this memorandum includes Tobias Wren, General Counsel; Raymond Hess, Director of Contract Compliance; Janet Kirkwood, Vice President of Carrier Relations; Carlos Medina, Senior Vice President of Operations; and Priya Ramachandran, Chief Financial Officer.
2. Ashford Meridian LLP
Ashford Meridian LLP is a law firm based at 2200 Ross Avenue, Suite 3600, Dallas, Texas 75201. Ashford Meridian has served as Stonefield's regular outside commercial and transactional counsel since at least 2018. The key personnel at Ashford Meridian involved in the communications at issue are Lorraine Beckwith, a partner in the firm's Commercial Contracts practice group, and Troy Nakamura, a senior associate. Ms. Beckwith served as the lead attorney responsible for drafting the original TSA on behalf of Stonefield in early 2019 and continued to advise Stonefield on matters related to the interpretation and administration of the TSA throughout the life of the agreement. Mr. Nakamura supported Ms. Beckwith in legal research, memorandum preparation, and drafting.
It is important to note that Ashford Meridian's engagement was exclusively as legal counsel. The firm provided legal advice on contract drafting, interpretation, compliance, and the exercise of contractual remedies. Ashford Meridian did not serve as a business consultant, financial advisor, or operational consultant to Stonefield at any time relevant to this memorandum.
3. Calderwood & Harkness LLP
Our firm, Calderwood & Harkness LLP, was retained as lead defense counsel on September 1, 2022, following the filing of Vantor's original Complaint on August 12, 2022. The engagement was initiated through communications between Tobias Wren and Samuel Eklund, partner in our Litigation (General) practice group. Prior to Calderwood & Harkness's engagement, Ashford Meridian provided the initial pre-litigation guidance that is the subject of this memorandum. Upon retention, Ashford Meridian transitioned its advisory role to Calderwood & Harkness and has not provided substantive legal advice to Stonefield regarding the TSA dispute since approximately September 2022, though the firm has cooperated with Calderwood & Harkness in providing background factual information concerning the TSA and its negotiation history.
4. Vantor Holdings Corp. and Vantor Transport Services LLC
Vantor Holdings Corp. is a New York corporation headquartered at 580 Eighth Avenue, 14th Floor, New York, New York 10018. Vantor Holdings Corp. is the plaintiff in this action. Vantor Transport Services LLC ("VTS") is a wholly owned operating subsidiary of Vantor Holdings Corp. VTS was the signatory counterparty to the TSA, identified in the agreement as the "Carrier-Provider," alongside Stonefield in its capacity as "Shipper-Broker." The key Vantor/VTS personnel relevant to the events underlying this memorandum include Nikolai Vantorovich, Chief Executive Officer of Vantor Holdings Corp.; Sandra Milescu, Chief Operating Officer of VTS; and Derek Pruitt, Vice President of Business Development of Vantor Holdings Corp.
B. The TSA and Relevant Provisions
The Transportation Services Agreement was executed on March 15, 2019, between Stonefield and VTS. The TSA established a five-year term commencing April 1, 2019 and extending through March 31, 2024. The agreement is governed by New York law, as specified in Section 18.3 (Choice of Law). The TSA governs VTS's provision of dedicated truckload transportation services to Stonefield across designated freight lanes in the southeastern and midwestern United States.
The following provisions of the TSA are directly relevant to the privilege review, as they constituted the primary subjects of Ashford Meridian's legal advice to Stonefield during the September 2021 through August 2022 period:
Section 13.1 — Termination for Cause. This provision permits either party to terminate the TSA upon material breach by the other party that remains uncured for thirty (30) calendar days after the delivery of written notice specifying the breach. Section 13.1 distinguishes termination "for Cause" from termination for convenience, with significantly different financial consequences depending on the basis for termination.
Section 13.2 — Cure Notice Requirement. This provision sets forth the procedural requirements for a valid termination for Cause. The terminating party must deliver a written Cure Notice that specifies "with reasonable particularity" the alleged breach and provides the applicable cure period. The "reasonable particularity" standard was the subject of extensive analysis by Ashford Meridian during the January 2022 Cure Notice drafting process.
Section 14.2 — Liquidated Damages. This provision provides that if Stonefield terminates the TSA other than "for Cause," Stonefield is obligated to pay VTS liquidated damages equal to seventy-five percent (75%) of the Annual Contract Value ("ACV," defined as $43.2 million per year) multiplied by the number of remaining contract years. This clause was the subject of detailed enforceability analysis by Ashford Meridian, as it created substantial potential exposure for Stonefield — approximately $67.23 million (75% × $43.2M × approximately 2.07 remaining years) — if Stonefield's termination were later determined not to constitute a valid termination "for Cause."
Section 12.1 — Force Majeure. This provision excuses performance obligations to the extent performance is prevented by events beyond a party's reasonable control, including pandemics, government orders, and similar force majeure events. This provision was relevant because Stonefield had invoked the force majeure clause during the COVID-19 pandemic (approximately April through September 2020) in connection with volume shortfalls, and VTS later asserted that Stonefield's own performance during that period contributed to VTS's subsequent operational challenges.
Section 7.4 — Substitute Equipment. This provision imposes obligations on VTS regarding the provision of substitute equipment in the event of equipment failures, breakdowns, or shortages. VTS's failure to maintain adequate equipment availability was one of the principal performance failures identified in the Cure Notice.
Schedule C — Lane Exclusivity. Schedule C to the TSA designates certain freight lanes as "Primary Lanes" (for which VTS has exclusivity, subject to SLO compliance) and "Secondary Lanes" (for which VTS has a right of first refusal). Stonefield's diversion of freight volume from Primary Lanes to alternative carriers (specifically Cascade Freight Systems Inc. and Briarwood Trucking Co.) was a central issue in VTS's defense, with VTS claiming that Stonefield's diversion of volume itself contributed to VTS's inability to meet SLO thresholds.
Service Level Obligations ("SLOs"). The TSA establishes five categories of SLOs to which VTS's performance is measured: (i) on-time pickup, with a minimum threshold of 95%; (ii) on-time delivery, with a minimum threshold of 93%; (iii) cargo claims ratio, not to exceed 0.5% of shipment value; (iv) tender acceptance, with a minimum rate of 90%; and (v) equipment availability, with a minimum threshold of 85% of committed fleet. The SLOs form the quantitative basis for the breach allegations underlying the Cure Notice and termination.
Section 5.3 — Rate Adjustment Mechanism. This provision establishes an annual rate adjustment mechanism effective each April 1, based on a formula incorporating the Producer Price Index for Long-Distance General Freight Trucking (PPI-LDGFT), diesel fuel cost indices, and driver wage benchmarks. Ashford Meridian's February 2022 analysis projected that the April 2022 adjustment would increase per-mile rates from a weighted average of $2.87 to $3.28 — a 14.3% increase — adding approximately $6.2 million in annual transportation costs for Stonefield.
C. Chronology of Relevant Events Giving Rise to the Communications
The following chronology sets forth the key events that generated the 84 communications at issue. This timeline is relevant to the privilege analysis because the nature of the communications — and particularly the applicability of the work product doctrine — depends on the stage of the dispute at the time each communication was created.
Q4 2021: Deterioration of VTS Performance Metrics. Beginning in the fourth quarter of 2021, VTS's performance metrics fell materially below the SLO thresholds established in the TSA across all five categories. Specifically, on-time pickup dropped to 78.2% (against a 95% threshold), on-time delivery fell to 81.6% (against a 93% threshold), tender acceptance declined to 71.4% (against a 90% threshold), equipment availability dropped to approximately 62% — reflecting approximately 248 tractors deployed against a committed fleet of 400 — (against an 85% threshold), and the cargo claims ratio rose to 1.07% (against a 0.5% threshold), driven by 16 claims totaling $387,400 in the November through December 2021 period alone.
September 22, 2021: Internal Stonefield Communications Regarding Performance. On September 22, 2021, Janet Kirkwood (VP, Carrier Relations) sent an internal email to Carlos Medina (SVP, Operations) referencing the diversion of freight volume to alternative carriers — specifically Cascade Freight Systems Inc. and Briarwood Trucking Co. — on Lanes 8 through 14, and raising the possibility of terminating the TSA in light of VTS's performance shortfalls. This internal email represents one of the earliest documented instances of Stonefield personnel contemplating the potential termination of the TSA.
November 12, 2021: VTS Internal Admission of Equipment Redeployment. On November 12, 2021, Sandra Milescu, Chief Operating Officer of VTS, sent an internal email to Nikolai Vantorovich, CEO of Vantor Holdings Corp., stating that VTS had "pulled 85 tractors off the SLG dedicated lanes" to cover other commitments. This email, which was produced by Vantor in discovery and is now part of the record, constitutes significant evidence of VTS's deliberate decision to divert committed equipment away from the Stonefield lanes, directly contributing to the equipment availability shortfall and other SLO failures.
Late 2021 / Early 2022: Engagement with Ashford Meridian. During this period, Stonefield's in-house legal team, led by Tobias Wren (General Counsel), in coordination with Raymond Hess (Director, Contract Compliance), consulted extensively with Ashford Meridian regarding: the scope of VTS's contractual obligations under the TSA; the interpretation of "material breach" under Section 13.1; the procedural requirements of Section 13.2 for issuing a valid Cure Notice; and Stonefield's potential financial exposure under the liquidated damages clause in Section 14.2 if a termination were later challenged as not being "for Cause." These consultations generated the majority of the 84 documents at issue.
January 18, 2022: Issuance of Cure Notice. On January 18, 2022, Raymond Hess, on behalf of Stonefield, sent the formal written Cure Notice to Sandra Milescu at VTS. The Cure Notice identified specific material breaches across all five SLO categories, documented the performance metrics for Q4 2021, and provided VTS with a thirty (30) calendar day cure period in accordance with Section 13.2 of the TSA. The Cure Notice was the product of extensive drafting collaboration between Stonefield and Ashford Meridian, as detailed in Category 2 of the document-by-document analysis below.
February 14, 2022: Vantor's Response. On February 14, 2022, Derek Pruitt (VP, Business Development, Vantor Holdings Corp.) sent a letter to Janet Kirkwood acknowledging "operational challenges" experienced by VTS but disputing that the breaches identified in the Cure Notice remained uncured. Significantly, Vantor's response asserted that Stonefield's own conduct — specifically, alleged volume shortfalls and freight diversion to alternative carriers — had caused or substantially contributed to VTS's inability to meet SLO thresholds. This response marked a significant escalation in the adversarial nature of the dispute and rendered litigation reasonably foreseeable, if it was not already.
February 17, 2022: Expiration of Cure Period. The thirty-calendar-day cure period established by the January 18 Cure Notice expired on February 17, 2022. As of that date, VTS had not demonstrated that it had cured the material breaches identified in the Cure Notice, nor had VTS provided objective evidence of remediation.
February 2022: Rate Adjustment Analysis. During February 2022, Ashford Meridian prepared a rate adjustment analysis memorandum at the request of Stonefield's CFO (Priya Ramachandran) and General Counsel (Tobias Wren). This memorandum analyzed the projected impact of the April 2022 Rate Adjustment Mechanism under Section 5.3, demonstrating that the adjustment would increase per-mile rates from a weighted average of $2.87 to $3.28 (a 14.3% increase), adding approximately $6.2 million in annual transportation costs. This analysis was prepared for the purpose of informing Stonefield's legal decision-making regarding whether to proceed with termination.
March 4, 2022: Termination Letter. On March 4, 2022, Tobias Wren sent a formal termination letter to Vantor Holdings Corp. and VTS, terminating the TSA effective immediately for failure to cure material breaches in accordance with Section 13.1(a). Ashford Meridian provided legal review and drafting assistance for this letter, as detailed in Category 4 below.
April 8, 2022: Vantor's Demand Letter. On April 8, 2022, Vantor Holdings Corp. sent a demand letter to Stonefield asserting that the termination was wrongful and demanding $95.4 million in damages. This demand significantly exceeded the liquidated damages amount calculated under Section 14.2, suggesting that Vantor intended to pursue claims beyond the contractual formula.
May 16 and June 3, 2022: Executive Negotiation Meetings. Pursuant to Section 16 of the TSA, the parties engaged in executive-level negotiation meetings on May 16 and June 3, 2022. These meetings did not result in a resolution of the dispute.
August 12, 2022: Filing of Complaint. On August 12, 2022, Vantor Holdings Corp. filed its original Complaint in this action, initiating litigation in the United States District Court for the Southern District of New York.
September 1, 2022: Retention of Calderwood & Harkness. On September 1, 2022, Stonefield retained Calderwood & Harkness LLP as lead defense counsel.
D. Nature of Ashford Meridian's Pre-Litigation Role
Understanding the precise nature of Ashford Meridian's role is essential to the privilege analysis, as the characterization of the firm's function bears directly on whether the communications were made for the purpose of seeking or rendering legal advice.
Ashford Meridian served as Stonefield's legal advisor with respect to the TSA from the agreement's inception. The firm was retained to draft the TSA in early 2019 and continued in its role as outside counsel for purposes of post-execution administration, including the interpretation of contractual provisions, advice on compliance issues, and guidance on the exercise of contractual remedies. Ms. Beckwith, who led the drafting of the TSA, maintained a continuous advisory relationship with Stonefield's legal and compliance personnel throughout the life of the agreement.
During the September 2021 through March 2022 period — the period that generated the bulk of the 84 communications at issue — Ashford Meridian provided legal advice to Stonefield on the following subjects:
(i) Whether VTS's performance failures constituted "material breach" under Section 13.1 of the TSA, including analysis of whether simultaneous failures across multiple SLO categories, and whether a pattern of declining performance as opposed to isolated incidents, satisfied the materiality threshold;
(ii) How to draft a Cure Notice satisfying Section 13.2's "reasonable particularity" standard, including the level of specificity required to identify the alleged breaches, the appropriate metric benchmarks to reference, and the procedural prerequisites for effective delivery;
(iii) Whether Stonefield's invocation of the force majeure clause (Section 12.1) during the COVID-19 pandemic (approximately April through September 2020) was valid and whether it could be used by VTS as a defense or counterclaim basis;
(iv) Stonefield's financial exposure under the liquidated damages clause (Section 14.2) if a termination were later determined not to be "for Cause," including a detailed calculation of potential liability and analysis of the enforceability of the formula;
(v) The enforceability of the liquidated damages clause itself under New York law, including application of the two-part test for distinguishing enforceable liquidated damages provisions from unenforceable penalty clauses; and
(vi) The financial implications of the upcoming April 2022 rate adjustment under Section 5.3 and its bearing on the termination decision.
Each of these subjects is inherently legal in nature. Ashford Meridian was not providing operational logistics advice, financial consulting services, or business strategy recommendations. The firm was retained for its legal expertise in commercial contract law and was rendering legal advice within the scope of that expertise.
The key Ashford Meridian personnel involved in the communications were Lorraine Beckwith (Partner), who served as the lead advisor and primary point of contact for Stonefield, and Troy Nakamura (Senior Associate), who provided supporting legal research and memorandum preparation. On the Stonefield side, the primary participants in the communications were Tobias Wren (General Counsel), Raymond Hess (Director, Contract Compliance), Janet Kirkwood (VP, Carrier Relations), and Priya Ramachandran (CFO). All four Stonefield individuals had functional responsibilities directly relevant to the subject matter of the communications and participated in the communications at the direction of or in coordination with the General Counsel for the purpose of securing legal advice.
III. LEGAL STANDARDS FOR ATTORNEY-CLIENT PRIVILEGE
A. General Framework
Under federal common law, which governs privilege issues in this diversity action, the attorney-client privilege protects from compelled disclosure confidential communications between a client and its attorney made for the purpose of seeking or providing legal advice. See In re Grand Jury Subpoena Duces Tecum, 731 F.2d 1032, 1036 (2d Cir. 1984); see also In re County of Erie, 473 F.3d 413, 418 (2d Cir. 2007). Although the underlying claims in Vantor Holdings Corp. v. Stonefield Logistics Group Inc. are governed by New York substantive law, the law of privilege applicable to discovery disputes in federal court is federal common law. See Fed. R. Evid. 501.
The attorney-client privilege requires the satisfaction of four elements:
(1) The communication was made between privileged persons — that is, between a client (or the client's agents and representatives) and an attorney (or the attorney's agents and representatives acting in a professional capacity);
(2) The communication was made for the purpose of seeking or rendering legal advice, as distinguished from business advice or general communications unrelated to legal matters;
(3) The communication was made in confidence — that is, with the expectation that it would not be disclosed to third parties outside the scope of the attorney-client relationship; and
(4) The privilege has not been waived, either expressly or by conduct inconsistent with the maintenance of confidentiality.
See In re Grand Jury Investigation, 399 F.3d 527, 532 (2d Cir. 2005); see also United States v. International Brotherhood of Teamsters, 119 F.3d 210, 214 (2d Cir. 1997).
The party asserting the privilege bears the burden of establishing that each element is satisfied. See In re Grand Jury Subpoena, 731 F.2d at 1036. However, this burden is not onerous where, as here, the communications involve a recognized attorney-client relationship, are clearly directed at obtaining or providing legal advice, and have been maintained in confidence.
In the corporate context, the attorney-client privilege extends beyond communications between the corporation's senior management and counsel to encompass communications from corporate employees at all levels, provided that the conditions set forth by the Supreme Court in Upjohn Co. v. United States, 449 U.S. 383 (1981), are satisfied. Under Upjohn, communications from corporate employees to counsel are privileged when:
(a) the communications were made at the direction of corporate superiors;
(b) the communications were made for the purpose of securing legal advice for the corporation;
(c) the subject matter of the communications concerned matters within the scope of the employees' corporate duties; and
(d) the employees were aware that the communications were being made for the purpose of obtaining legal advice.
Upjohn, 449 U.S. at 394–95. The Upjohn framework is directly relevant to several of the communications at issue, particularly those involving Raymond Hess (Director, Contract Compliance), who communicated directly with Ashford Meridian attorneys at the direction of the General Counsel regarding matters squarely within his corporate responsibilities.
B. Application to Outside Counsel
The attorney-client privilege applies with equal force to communications with outside counsel as to communications with in-house counsel. See, e.g., In re Teleglobe Communications Corp., 493 F.3d 345, 359 (3d Cir. 2007); see also Spectrum Sys. Int'l Corp. v. Granite Harbor Securities, 78 N.Y.2d 371, 377 (1991). The relevant inquiry is not whether the attorney is an employee of the client or an external advisor, but rather whether the communication was made for the purpose of obtaining or providing legal advice within the scope of an attorney-client relationship.
Ashford Meridian's role as Stonefield's outside commercial counsel is well-established. The firm was retained specifically for its legal expertise in commercial contract matters. The relationship between Stonefield and Ashford Meridian was at all relevant times an attorney-client relationship, not a consulting or advisory engagement of a non-legal character. Ms. Beckwith and Mr. Nakamura are attorneys licensed to practice law in the State of Texas (and, in Ms. Beckwith's case, also in the State of New York). Their communications with Stonefield personnel were made in their capacity as legal advisors.
Ashford Meridian's dual role as the drafter of the original TSA and as advisor on the interpretation of that agreement during the dispute period serves to reinforce, rather than undermine, the legal nature of the communications. The firm was interpreting a contract that it had itself drafted, applying its specialized knowledge of the contractual provisions, the intent of the parties at the time of drafting, and the legal significance of the operative language. This is quintessentially legal work, not business consulting.
C. Distinction Between Legal and Business Advice
Communications between corporate personnel and attorneys frequently address matters that implicate both legal and business considerations. In such circumstances, the prevailing standard in this Circuit is that the communication is privileged if the "primary purpose" of the communication was to seek or provide legal advice. See In re County of Erie, 473 F.3d at 420–22 (adopting the "primary purpose" test). Under this standard, the privilege is not defeated merely because the communication also touches on business matters; what matters is whether the dominant purpose of the communication was legal in character.
In the present case, the subject matter of the 84 documents is overwhelmingly legal in nature. The communications address contractual interpretation ("material breach," "reasonable particularity," "uncured"), the exercise of contractual remedies (cure procedures, termination rights), damages exposure analysis (liquidated damages calculations, enforceability analysis), and the procedural requirements of contractual provisions (Section 13.2 Cure Notice requirements). These are subjects on which a corporate client naturally and properly seeks the advice of counsel.
To the extent any of the communications contain ancillary business content — for example, references to operational performance data that informed the legal analysis, or financial projections related to the rate adjustment mechanism — such content is incidental to the legal advice being sought and provided. The primary purpose of each communication was to obtain or render legal advice, and the inclusion of background factual information necessary to inform that advice does not strip the communication of its privileged character. See, e.g., In re Vioxx Prods. Liab. Litig., 501 F. Supp. 2d 789, 797 (E.D. La. 2007) (holding that the "communication is privileged as long as the primary purpose for the communication is legal advice, even if the communication also includes some factual information").
Ashford Meridian was retained specifically for its legal expertise in commercial contract interpretation. The firm was not providing operational, logistics, or financial consulting services. There is no basis for characterizing any of the 84 communications as "business advice" rather than legal advice.
D. Confidentiality Requirement
The privilege protects only communications made in confidence. A communication loses its confidential character if it is shared with third parties outside the scope of the attorney-client relationship, absent an applicable exception (such as the common interest doctrine or the agent exception).
The communications at issue were shared only among Stonefield personnel with a need to know — specifically, Tobias Wren (General Counsel), Raymond Hess (Director, Contract Compliance), Janet Kirkwood (VP, Carrier Relations), and Priya Ramachandran (CFO) — and Ashford Meridian attorneys (Lorraine Beckwith and Troy Nakamura). No third parties were included in or received copies of these communications. In particular, the communications were not shared with Ridgeline Capital Partners, Vantor, VTS, or any other entity or individual outside the Stonefield/Ashford Meridian attorney-client relationship.
The inclusion of non-lawyer corporate personnel (Hess, Kirkwood, and Ramachandran) in the communications does not defeat the confidentiality requirement. These individuals participated in the communications in their corporate capacities as agents of the client, Stonefield, and their involvement was necessary to enable Ashford Meridian to render effective legal advice. Corporate employees who participate in privileged communications at the direction of the corporation's management for the purpose of facilitating the corporation's receipt of legal advice are within the scope of the attorney-client privilege. See Upjohn, 449 U.S. at 394–95.
The confidentiality requirement is satisfied for all 84 documents.
IV. LEGAL STANDARDS FOR WORK PRODUCT DOCTRINE
A. General Framework
The work product doctrine, codified in Federal Rule of Civil Procedure 26(b)(3) and rooted in the Supreme Court's decision in Hickman v. Taylor, 329 U.S. 495 (1947), protects from discovery documents and tangible things prepared in anticipation of litigation or for trial by or for a party, or by or for that party's representative (including the party's attorney, consultant, surety, indemnitor, insurer, or agent). The doctrine reflects the policy judgment that attorneys must be free to prepare for litigation without fear that their work will be appropriated by opposing counsel.
The work product doctrine provides two tiers of protection. "Ordinary" or "fact" work product — which includes facts gathered and compiled in anticipation of litigation — may be discovered only upon a showing that the party seeking discovery has substantial need for the materials and cannot, without undue hardship, obtain the substantial equivalent by other means. See Fed. R. Civ. P. 26(b)(3)(A)(ii). "Opinion" work product — which encompasses the mental impressions, conclusions, opinions, and legal theories of an attorney or other representative of a party — receives near-absolute protection and is discoverable, if at all, only in extraordinary circumstances. See Hickman, 329 U.S. at 510–12; see also In re Grand Jury Subpoena, 220 F.3d 406, 409 (5th Cir. 2000).
The critical inquiry in applying the work product doctrine is whether the document was prepared "because of" the prospect of litigation. The Second Circuit has adopted the "because of" test, under which a document is entitled to work product protection if it was prepared or obtained because of the prospect of litigation, as opposed to having been prepared in the ordinary course of business or for some other non-litigation purpose. See United States v. Adlman, 134 F.3d 1194, 1202 (2d Cir. 1998). Under this standard, a document need not have been created primarily or exclusively for litigation purposes; it is sufficient that the document would not have been created in substantially similar form but for the prospect of litigation.
B. Application to the Pre-Litigation Period
The work product doctrine is not limited to documents created after litigation has been formally commenced. The doctrine applies to documents created in anticipation of litigation — that is, when litigation is reasonably foreseeable. See, e.g., In re Grand Jury Subpoena, 220 F.3d at 408; see also Nat'l Union Fire Ins. Co. v. Murray Sheet Metal Co., 967 F.2d 980, 984 (4th Cir. 1992). The question is whether, at the time the document was created, the prospect of litigation was identifiable because of specific claims that had already arisen or were likely to arise.
In applying this standard to the 84 communications at issue, I have distinguished between those communications created before and after the issuance of the Cure Notice on January 18, 2022, which I have identified as the approximate inflection point at which litigation became reasonably foreseeable.
Communications from September through December 2021 (Category 1: 34 documents). During this period, Stonefield was consulting with Ashford Meridian about the interpretation of its contractual rights and VTS's obligations under the TSA. While the dispute with VTS was developing, Stonefield had not yet determined to issue a Cure Notice, and the prospect of litigation had not yet crystallized. The communications during this period were generated primarily for the purpose of obtaining legal advice on contractual compliance and the evaluation of options — a process that is distinct from preparation for litigation. Accordingly, while these 34 documents are protected by the attorney-client privilege, they do not independently qualify for work product protection.
Communications from January through March 2022 (Categories 2, 3, and 4: 45 documents total, of which 31 qualify for work product protection). The issuance of the Cure Notice on January 18, 2022 marked a significant escalation of the dispute. The Cure Notice formally accused VTS of material breach and initiated a cure period that, if it expired without remedy, would entitle Stonefield to terminate the TSA — an action that Stonefield and Ashford Meridian recognized would likely precipitate litigation given the magnitude of the financial interests involved (the ACV of $43.2 million per year and potential liquidated damages of approximately $67.23 million). Within this period, however, a further distinction can be drawn. The seven documents from early to mid-January 2022 (before the Cure Notice was actually sent on January 18) were created during a transitional phase in which Stonefield was preparing to assert its contractual rights but had not yet taken the affirmative step that would likely trigger an adversarial response and potential litigation. For these seven documents, the prospect of litigation had not yet reached the threshold of being "reasonably anticipated" under the stricter standard applied in this Circuit. Accordingly, of the 45 documents in Categories 2, 3, and 4, I have identified 31 as qualifying for work product protection — specifically, those created on or after January 18, 2022. The remaining 7 documents from Category 2 (those pre-dating January 18) are protected solely by the attorney-client privilege.
Communications from March through August 2022 (Category 5: 5 documents). By this period, litigation was not merely reasonably foreseeable — it was virtually certain. Vantor had sent a $95.4 million demand letter on April 8, 2022, the parties had engaged in executive negotiations that failed to resolve the dispute, and the Complaint was filed on August 12, 2022. All 5 documents from this period qualify for work product protection.
In total, 36 documents are entitled to dual protection under both the attorney-client privilege and the work product doctrine: 31 from the January–March 2022 period and 5 from the March–August 2022 period.
V. DOCUMENT-BY-DOCUMENT ANALYSIS
A. Category 1: TSA Interpretation and Material Breach Analysis (September – December 2021) — 34 Documents
1. Nature of Documents
Category 1 comprises 34 documents consisting of emails, memoranda, and draft analyses exchanged between Ashford Meridian (primarily Lorraine Beckwith and Troy Nakamura) and Stonefield personnel (primarily Tobias Wren and Raymond Hess) during the period from September through December 2021. These communications addressed the interpretation of "material breach" under Section 13.1 of the TSA, the scope of VTS's SLO obligations, and Stonefield's contractual rights in light of the Q4 2021 performance failures described above.
2. Specific Topics Addressed
The 34 documents in this category address the following legal questions, among others:
(a) Whether simultaneous failure across multiple SLO categories constitutes "material breach" under Section 13.1, or whether each SLO category must be assessed independently — i.e., whether the materiality of the breach is measured by the aggregate impact of failures across all performance categories or by reference to each individual SLO threshold in isolation;
(b) Whether a pattern of declining performance over multiple months (as opposed to a single incident or isolated failure) triggers the termination right under Section 13.1, and how to characterize the Q4 2021 metrics as reflective of a sustained pattern rather than a temporary anomaly;
(c) The interpretation of the term "uncured" in the context of ongoing or recurring breaches — specifically, whether breaches that are corrected in one reporting period but recur in a subsequent period are properly characterized as "uncured" for purposes of Section 13.1; and
(d) The implications of VTS's unilateral redeployment of dedicated tractors (as reflected in the November 12, 2021 Milescu email) for the breach analysis — specifically, whether the intentional nature of the equipment withdrawal strengthens the case for "material breach" as opposed to breach resulting from operational difficulties beyond VTS's reasonable control.
3. Privilege Basis
Attorney-Client Privilege: Applicable. Each of the 34 documents constitutes a communication between Stonefield personnel and Ashford Meridian attorneys made for the purpose of seeking or providing legal advice on the interpretation of the TSA and the assessment of VTS's contractual compliance. The communications were initiated by Stonefield personnel seeking legal guidance from Ashford Meridian, and the responses were rendered by Ashford Meridian attorneys providing such guidance in their professional capacity. All communications were maintained in confidence and shared only among Stonefield personnel with a need to know (Wren, Hess, and, in certain instances, Kirkwood and Ramachandran) and Ashford Meridian attorneys (Beckwith and Nakamura). The four elements of the attorney-client privilege — communication between privileged persons, for the purpose of legal advice, in confidence, with no waiver — are satisfied.
Work Product Doctrine: Not independently applicable. As discussed in Section IV.B above, the work product doctrine does not apply to these 34 documents because litigation was not reasonably anticipated during the September through December 2021 period. At this stage, Stonefield was evaluating its contractual position and had not yet determined to issue a Cure Notice, commence termination proceedings, or take other action that would foreseeably lead to litigation. The communications were generated for the purpose of obtaining legal advice on contractual interpretation and compliance — a legitimate and important legal function, but one distinct from preparation for anticipated litigation.
4. Privilege Log Treatment
These 34 documents should be logged on the privilege log with entries identifying the date, author/sender, recipient(s) (including cc recipients), a general subject matter description sufficient to allow assessment of the privilege claim without revealing privileged content (e.g., "Legal advice regarding interpretation of TSA performance obligations and material breach standard under Section 13.1"), and the privilege basis (attorney-client privilege). The entries should not reveal the substance of the legal advice provided or the mental impressions of counsel.
B. Category 2: Cure Notice Drafting and Procedural Compliance (January 2022) — 19 Documents
1. Nature of Documents
Category 2 comprises 19 documents consisting of drafts, redlined revisions, legal research memoranda, and email exchanges between Ashford Meridian (Beckwith and Nakamura) and Stonefield (Hess and Wren) created during January 2022 in connection with the preparation and issuance of the January 18, 2022 Cure Notice. These documents reflect the legal advice sought by Stonefield and provided by Ashford Meridian regarding the procedural requirements of Section 13.2's "reasonable particularity" standard, as well as strategic discussions about the content, tone, and specificity of the Cure Notice.
2. Specific Documents
The 19 documents in this category include the following:
(i) An initial draft of the Cure Notice prepared by Raymond Hess with input from Janet Kirkwood, transmitted to Ashford Meridian for legal review and comment;
(ii) Lorraine Beckwith's redlined revisions to the initial draft, adding specific metric references, SLO threshold data, and contractual cross-references to strengthen the "reasonable particularity" of the notice;
(iii) Email exchanges between Hess and Beckwith discussing whether the Cure Notice should include reference to cargo claims data and fleet availability numbers (equipment counts), and the legal implications of including or omitting such references;
(iv) A legal research memorandum prepared by Troy Nakamura analyzing the "reasonable particularity" standard under New York commercial contract law, including a survey of relevant case law addressing the sufficiency of cure notices in comparable contractual contexts;
(v) A final sign-off email chain between Tobias Wren and Lorraine Beckwith in which Wren confirmed Stonefield's authorization to issue the Cure Notice in its final form and Beckwith confirmed the legal sufficiency of the notice;
(vi) Additional email exchanges addressing the timing and method of delivery of the Cure Notice, the computation of the thirty-day cure period, and the identification of the appropriate recipient at VTS (Sandra Milescu as COO, rather than the general notice address specified in Section 17 of the TSA); and
(vii) Preliminary communications in early January 2022 (before the Cure Notice was finalized and sent) in which Wren and Beckwith discussed whether to issue the Cure Notice at all, as opposed to pursuing other remedies or engaging VTS in informal discussions first.
3. Privilege Log Entries 312–318
Seven of the 19 documents in this category correspond to privilege log entries 312 through 318. These entries were specifically challenged by Vantor during the discovery process. The challenged documents are communications between Raymond Hess and Lorraine Beckwith during the January through February 2022 cure period. A separate Privilege Dispute Memorandum dated June 20, 2023 (prepared by Simone Laroche) addresses the specific challenge in detail. It is noted here that Vantor did not ultimately file a motion to compel production of these documents, so no formal challenge is currently pending before the Court.
The privilege basis for entries 312 through 318 is sound. Hess communicated with Beckwith in her capacity as Stonefield's outside counsel for the specific purpose of obtaining legal advice on the sufficiency of the Cure Notice and the procedural requirements for a valid termination for Cause. The fact that Hess is a non-lawyer corporate officer does not vitiate the privilege. Under the Upjohn framework, Hess's communications to Ashford Meridian were made at the direction of Stonefield's General Counsel (Wren) for the purpose of securing legal advice for the corporation, and the subject matter of the communications — contractual compliance and cure notice procedures — fell squarely within the scope of Hess's corporate duties as Director of Contract Compliance. Hess was not independently seeking personal legal advice; he was acting as an agent of the corporate client in facilitating Stonefield's receipt of legal counsel from Ashford Meridian. The privilege protects these communications in full.
4. Privilege Basis
Attorney-Client Privilege: Applicable to all 19 documents. The communications in this category are quintessential attorney-client communications: a corporate client consulting with its outside counsel regarding the drafting and legal sufficiency of a formal contractual notice. Each document was created for the purpose of seeking or providing legal advice on the interpretation of the TSA and the procedural requirements of Section 13.2. The communications were made in confidence and shared only among need-to-know personnel.
Work Product Doctrine: Applicable to 12 of 19 documents. Of the 19 documents in this category, 12 were created on or after January 18, 2022 — the date the Cure Notice was issued. By that date, the issuance of the Cure Notice and Vantor's likely adversarial response made litigation reasonably foreseeable. The Cure Notice itself formally accused VTS of material breach and initiated a process that, if it did not result in cure, would lead to termination of a contract with an ACV of $43.2 million per year and potential liquidated damages exposure exceeding $67 million. Under these circumstances, the communications created on or after January 18, 2022 were prepared "because of" the prospect of litigation and qualify for work product protection.
The remaining 7 documents, created in early to mid-January 2022 before the Cure Notice was sent, were created during a period when litigation was a possibility but had not yet reached the threshold of being "reasonably anticipated." While the dispute with VTS was escalating, Stonefield had not yet taken the affirmative step (issuing the Cure Notice) that would foreseeably provoke an adversarial response and potential litigation. These 7 documents are protected by the attorney-client privilege but do not independently qualify for work product protection.
5. Privilege Log Treatment
The 19 documents in this category should be logged with subject matter descriptions such as "Draft cure notice and legal advice regarding procedural compliance with TSA Section 13.2," "Legal advice regarding sufficiency of cure notice specifications," and "Legal research memorandum regarding 'reasonable particularity' standard for contractual cure notices under New York law." The privilege basis should indicate "Attorney-Client Privilege" for all 19 documents and additionally "Work Product" for the 12 documents post-dating January 18, 2022.
C. Category 3: Analysis of Vantor's Response and Cure Sufficiency (February 2022) — 14 Documents
1. Nature of Documents
Category 3 comprises 14 documents consisting of emails and memoranda exchanged between Ashford Meridian and Stonefield during February 2022, following Vantor's February 14, 2022 response letter. The communications addressed the legal significance of Vantor's response, whether the response constituted adequate cure, and Stonefield's options upon expiration of the cure period.
2. Specific Topics Addressed
Vantor's February 14, 2022 response letter, sent by Derek Pruitt (VP, Business Development, Vantor) to Janet Kirkwood, presented a two-part position: first, an acknowledgment of "operational challenges" experienced by VTS; and second, an assertion that the performance deficiencies identified in the Cure Notice were caused by Stonefield's own conduct, specifically alleged volume shortfalls and freight diversion to alternative carriers (Cascade Freight Systems and Briarwood Trucking) on Primary Lanes. This response raised a number of legal questions on which Stonefield sought Ashford Meridian's advice, including:
(a) Whether Vantor's response constituted "substantial cure" under New York law — that is, whether an acknowledgment of operational challenges, coupled with a narrative explanation attributing the failures to the other party's conduct, satisfies the obligation to cure material breaches identified in a Cure Notice, or whether actual remediation of the identified performance failures is required;
(b) Whether Vantor's counter-accusation — that Stonefield's volume shortfalls and freight diversion caused VTS's SLO failures — had legal merit under the TSA, including analysis of the Lane Exclusivity provisions in Schedule C, Stonefield's right to divert freight from Primary Lanes to alternative carriers in the event of VTS performance failures, and the allocation of risk for volume fluctuations under the ACV structure;
(c) The relevance of the force majeure clause (Section 12.1) to Vantor's assertions regarding Stonefield's conduct during the COVID-19 pandemic, including whether VTS could assert Stonefield's pandemic-era volume reductions as a contributing cause of VTS's subsequent inability to maintain fleet levels and meet SLO thresholds; and
(d) Whether Stonefield should proceed with termination upon expiration of the 30-day cure period on February 17, 2022, or whether it was advisable (from a legal risk perspective) to grant an extension of the cure period in order to strengthen Stonefield's position in any subsequent litigation.
3. Privilege Basis
Attorney-Client Privilege: Applicable to all 14 documents. Each document reflects communications between Stonefield personnel and Ashford Meridian attorneys for the purpose of seeking or providing legal advice on the legal consequences of Vantor's response and the evaluation of Stonefield's contractual options. The communications were confidential and shared only among privileged persons.
Work Product Doctrine: Applicable to all 14 documents. By February 2022, the adversarial nature of the dispute was unmistakable. Vantor had responded to the Cure Notice with a letter that not only disputed the existence of uncured breaches but affirmatively accused Stonefield of causing the performance failures — a position that, if maintained, would form the basis of affirmative claims or counterclaims in litigation. The communications during this period were prepared in the context of a dispute in which litigation was reasonably anticipated, if not virtually certain, and were created "because of" the prospect of such litigation. The 14 documents qualify for dual protection.
4. Privilege Log Treatment
These 14 documents should be logged with descriptions such as "Legal analysis of sufficiency of Vantor's cure response and advice regarding termination rights," "Legal analysis of Vantor's counter-assertions regarding Stonefield's contractual obligations," and "Legal advice regarding force majeure implications for cure sufficiency analysis."
D. Category 4: Termination Decision and Exposure Assessment (February – March 2022) — 12 Documents
1. Nature of Documents
Category 4 comprises 12 documents consisting of memoranda, draft correspondence, and email exchanges between Ashford Meridian and Stonefield during the period from late February through early March 2022, in which Ashford Meridian advised Stonefield on the legal consequences of proceeding with termination of the TSA.
2. Specific Topics Addressed
The 12 documents in this category addressed the following subjects:
(i) Liquidated Damages Exposure Analysis. Ashford Meridian prepared a detailed analysis of Stonefield's potential financial exposure under the liquidated damages clause (Section 14.2) in the event that Stonefield's termination were later found not to constitute a valid termination "for Cause." The analysis calculated potential liability at approximately $67.23 million, based on the formula: 75% × $43.2 million ACV × approximately 2.07 remaining contract years (from the projected termination date of March 4, 2022 through the end of the TSA term on March 31, 2024). This analysis was prepared for the purpose of enabling Stonefield's legal and executive team to make an informed decision regarding the termination with full awareness of the potential legal consequences.
(ii) Enforceability of the Liquidated Damages Clause. Ashford Meridian provided analysis of the enforceability of the Section 14.2 liquidated damages formula under New York law. Under New York law, a liquidated damages clause is enforceable if: (a) the amount liquidated bears a reasonable proportion to the probable loss, and (b) the actual loss is incalculable or difficult to estimate. See Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 365 (1977). Ashford Meridian assessed whether the 75%-of-ACV formula satisfies this two-part test and whether Vantor could argue that the clause constitutes an unenforceable penalty, particularly given that VTS's actual damages from early termination might be significantly lower than the formula amount.
(iii) Rate Adjustment Analysis Memorandum. As noted in the Background section, Ashford Meridian prepared a memorandum in February 2022 analyzing the projected impact of the April 2022 Rate Adjustment Mechanism under Section 5.3. The memorandum determined that the adjustment would increase per-mile rates from a weighted average of $2.87 to $3.28, a 14.3% increase, adding approximately $6.2 million in annual transportation costs for Stonefield. This memorandum was prepared at the request of Priya Ramachandran (CFO) and Tobias Wren (General Counsel) for the purpose of understanding the financial implications of continuing versus terminating the TSA.
The rate adjustment analysis memorandum warrants particular attention in the privilege analysis because it addresses a subject that has both legal and business dimensions. However, the memorandum was prepared by Ashford Meridian attorneys — not by financial advisors or business consultants — in their capacity as legal counsel analyzing a contractual mechanism. The memorandum interprets the operation of Section 5.3 and its defined terms, applies the contractual formula to current market data, and assesses the legal and financial implications of the rate adjustment in the context of Stonefield's evaluation of its termination rights. The primary purpose of the memorandum was to inform Stonefield's legal decision-making regarding whether to exercise its termination right — specifically, whether the prospect of a 14.3% rate increase made it even more important to terminate the TSA for Cause rather than continue under increasingly unfavorable financial terms. The memorandum is therefore privileged, as the primary purpose of the communication was legal advice, notwithstanding the inclusion of financial data and projections.
(iv) Termination Letter Drafting. Ashford Meridian provided legal review and drafting assistance for the March 4, 2022 termination letter sent by Tobias Wren to Vantor Holdings Corp. and VTS. The firm reviewed drafts, provided comments, and made revisions to ensure that the letter accurately characterized the termination as "for Cause" under Section 13.1(a), identified the specific material breaches that had not been cured, and preserved Stonefield's legal position for potential litigation.
3. Privilege Basis
Attorney-Client Privilege: Applicable to all 12 documents. The communications in this category are core attorney-client communications: Stonefield's counsel providing legal analysis of the client's rights, obligations, and exposure in connection with a major contractual decision with significant legal and financial consequences. The legal character of the advice is evident from its subject matter — liquidated damages enforceability analysis, contractual interpretation, and drafting of a termination notice. All communications were maintained in confidence.
Work Product Doctrine: Applicable to all 12 documents. By late February and March 2022, litigation was virtually certain. The cure period had expired without adequate cure. Stonefield was on the verge of terminating a contract with an ACV of $43.2 million per year, and the financial stakes — including potential liquidated damages liability of approximately $67.23 million — made litigation a near-certainty in the event of termination. Ashford Meridian's analysis of litigation exposure, the enforceability of the liquidated damages clause, and the drafting of the termination letter were all conducted in anticipation of the litigation that did in fact ensue. Several of the documents in this category — particularly the exposure analysis and the enforceability memorandum — contain opinion work product reflecting the mental impressions and legal conclusions of Ashford Meridian attorneys.
4. Privilege Log Treatment
These 12 documents should be logged with descriptions such as "Legal analysis of liquidated damages exposure and enforceability of TSA Section 14.