MEMORANDUM
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. It is prepared in anticipation of litigation and for the purpose of providing legal advice to the client. Do not distribute, copy, or disclose without the express authorization of Calderwood & Harkness LLP.
TO: Samuel Eklund, Responsible Partner
FROM: Patrick Gallagher, Lead Associate
DATE: January 10, 2025
RE: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.) — Options for Case Resolution
MATTER NO.: 1012-00005
CLIENT: Stonefield Logistics Group Inc.
I. Executive Summary
The purpose of this memorandum is to analyze the available strategic options for resolving this matter in light of nearly eleven months of complete docket inactivity and Vantor Holdings Corp.'s ("Vantor" or "Plaintiff") failure to retain substitute counsel following the court-approved withdrawal of Caldwell Royce & Shapiro LLP in October 2023. As detailed in the procedural history below, Vantor has missed two consecutive court-imposed deadlines for retaining new counsel, has made no filings since February 2024, and — as a corporation — cannot prosecute its claims pro se in federal court. The case, for all practical purposes, has stalled entirely.
This memorandum analyzes three potential courses of action:
1. Option 1 — File Renewed FRCP 41(b) Motion for Involuntary Dismissal. This option involves filing a motion under Federal Rule of Civil Procedure 41(b) seeking involuntary dismissal of Vantor's claims for failure to prosecute and failure to comply with court orders, ideally with prejudice.
2. Option 2 — Continue Quarterly Docket Monitoring on Dormant Status. This option involves maintaining the current posture of periodic docket checks and client updates without any affirmative filings, waiting for Vantor or the court to act.
3. Option 3 — Contact Nikolai Vantorovich Directly to Explore Voluntary Dismissal or Nominal Settlement. This option involves reaching out to Vantor's principal to negotiate a stipulated dismissal with prejudice, potentially in exchange for a mutual release and a nominal (or zero) payment.
Recommendation. We recommend Option 1 — filing a renewed FRCP 41(b) motion — as the primary course of action. The procedural record overwhelmingly supports involuntary dismissal; the estimated cost is modest in relation to the defense investment already made; and this approach provides the most reliable path to a definitive, on-the-merits resolution. Option 3 is recommended as a complementary or alternative approach if the client and Ridgeline Capital Partners ("Ridgeline") prefer a faster, quieter resolution or wish to avoid any risk — however small — that a court motion could prompt Vantor to reengage. We recommend against Option 2 as a standalone strategy given the indefinite pendency, ongoing disclosure obligations, and lack of finality it entails.
The estimated costs to execute each option are as follows:
• Option 1: Approximately $25,000–$40,000 in legal fees.
• Option 2: Approximately $8,000–$12,000 per year (ongoing monitoring costs).
• Option 3: Approximately $10,000–$20,000 in legal fees, plus any negotiated settlement payment within the client's previously authorized range.
For context, Stonefield's total Calderwood & Harkness spend on this matter through October 2023 (when the case entered dormancy) is approximately $4.42 million, consisting of approximately $3.8 million in attorney fees and approximately $620,000 in costs and disbursements (including expert witness fees, e-discovery vendor charges, deposition costs, and related expenses). Since the case was placed on dormant status in April 2024, additional spend has been minimal, limited to the quarterly docket checks performed by Helen Tsao and associated attorney review and client reporting.
II. Procedural History and Current Status
A. Overview of the Litigation
Vantor Holdings Corp. filed its original Complaint on August 12, 2022, in the United States District Court for the Southern District of New York, initiating the above-captioned action against Stonefield Logistics Group Inc. ("Stonefield" or "Defendant"). The Complaint asserts breach of contract claims arising from Stonefield's March 4, 2022 termination of a five-year Transportation Services Agreement dated March 15, 2019 (the "TSA," Contract Ref. No. SLG-VTS-2019-0315). The TSA was executed between Stonefield Logistics Group Inc., in its capacity as "Shipper-Broker," and Vantor Transport Services LLC ("VTS"), a wholly-owned subsidiary of Vantor Holdings Corp., in its capacity as "Carrier-Provider." Vantor Holdings Corp., as the parent entity of VTS and the signatory guarantor under the TSA, filed the Complaint in its own name as the party in interest.
Vantor claims total damages of approximately $95.4 million, broken down as follows:
• $67.23 million in liquidated damages under TSA Section 14.2, calculated as 75% of the TSA's annual contract value ("ACV") of $43.2 million multiplied by the approximately 2.07 years remaining in the contract term at the time of termination;
• $18.7 million in lost profits, representing the projected earnings VTS would have generated over the remaining term absent termination;
• $5.2 million in stranded assets, including dedicated equipment, terminal leases, and technology infrastructure investments allegedly made in reliance on the TSA;
• $2.87 million in workforce reduction costs, including severance, benefits continuation, and outplacement services for personnel displaced by the loss of the Stonefield account; and
• $1.4 million in mitigation costs, representing expenses allegedly incurred in attempting to replace the revenue lost from the TSA termination.
Stonefield's defenses are substantial and, in our assessment, strong on the merits. Our principal defense is that Stonefield's termination of the TSA was valid for Cause under TSA Section 13.1(a), which permits either party to terminate the agreement upon 30 days' written notice if the other party commits a material breach that remains uncured after notice and a 45-day cure period. Stonefield's termination was based on VTS's sustained, severe, and uncured service level failures during Q4 2021 (October through December 2021), which were documented through Stonefield's Service Level Compliance Dashboard and confirmed through the discovery record. The specific failures were as follows:
Each of these failures individually constitutes a material breach under the TSA, and collectively they demonstrate a pattern of pervasive, systemic non-performance that persisted throughout the entire quarter despite Stonefield's issuance of formal cure notices on November 8, 2021 and December 14, 2021.
Stonefield's additional defenses include:
• Unenforceable Penalty. The liquidated damages clause in TSA Section 14.2 is an unenforceable penalty under New York law because the 75%-of-ACV formula bears no reasonable relationship to anticipated or actual damages and was not a reasonable estimate at the time the contract was formed.
• Failure to Mitigate. Vantor and VTS failed to take reasonable steps to mitigate their alleged damages following the TSA termination, including failing to pursue available carrier contracts with other shippers despite the availability of market opportunities in the post-pandemic freight market.
• Consequential Damages Waiver. TSA Section 15.1 contains a mutual waiver of consequential, incidental, and indirect damages, which bars Vantor's claims for lost profits, stranded assets, and workforce reduction costs — categories that constitute consequential damages under established New York commercial law.
• First-to-Breach Doctrine. VTS itself committed the first material breach of the TSA when it unilaterally reassigned approximately 85 dedicated tractors away from Stonefield's designated lanes to the Northwind Distribution Co. account in October 2021, without notice to or consent from Stonefield. This reassignment directly caused the service level failures that formed the basis for Stonefield's termination notice. Under the first-to-breach doctrine, VTS cannot recover damages for Stonefield's subsequent termination when VTS's own prior breach precipitated the termination.
• Force Majeure. To the extent Vantor argues that Stonefield's failure to meet ACV commitments during the period from approximately April through September 2020 constitutes a material breach excusing VTS's later performance failures, Stonefield invokes the force majeure provision in TSA Section 16.4, which excuses performance failures attributable to pandemics, public health emergencies, and governmental orders. The COVID-19 pandemic and related governmental shutdown orders during that period squarely fall within the clause's scope.
On January 13, 2023, Stonefield filed a counterclaim seeking a declaratory judgment that: (a) Stonefield's termination of the TSA on March 4, 2022 was valid and for Cause under TSA Section 13.1(a); (b) no liquidated damages or other damages are owed to Vantor or VTS; and (c) VTS committed the first material breach of the TSA by the unauthorized tractor reassignment.
The case is assigned to the Honorable Margaret T. Calloway, United States District Judge. Judge Calloway entered a Case Management Order on February 17, 2023, establishing the following case schedule:
• Fact discovery deadline: September 29, 2023
• Expert discovery deadline: January 12, 2024
• Dispositive motions deadline: March 1, 2024
All of these deadlines are now effectively stayed as a result of the events described in Section II.C below.
B. Discovery and Depositions Completed
The parties engaged in substantial discovery prior to the case becoming dormant. The key milestones of the discovery process are as follows:
Document Productions. Stonefield produced a total of 42,387 documents (comprising approximately 186,000 pages) on April 14, 2023. The production included the complete TSA and all amendments, internal correspondence regarding VTS service levels, cure notices and responses, termination documentation, financial records relating to ACV calculations, and fleet management data. Vantor produced 28,914 documents (comprising approximately 112,000 pages) on April 28, 2023. Following a motion to compel, which Judge Calloway granted by order dated June 9, 2023, Vantor made a supplemental production of 4,218 documents on June 22, 2023, consisting primarily of fleet redeployment records that documented VTS's reassignment of tractors from Stonefield-dedicated lanes to other accounts, including the Northwind Distribution Co. account. These records proved critical in establishing the factual basis for Stonefield's first-to-breach defense.
Written discovery. Interrogatories, requests for production, and requests for admissions were substantially completed by both parties during the spring and summer of 2023. Vantor served two sets of interrogatories (25 interrogatories total) and three sets of requests for production. Stonefield served two sets of interrogatories (25 interrogatories total), four sets of requests for production, and one set of requests for admissions (40 requests). All written discovery responses were served within the timeframes established by the Case Management Order or as agreed upon by counsel.
Depositions. The following fact witness depositions were completed:
1. Derek Pruitt (Vice President, Business Development, Vantor Holdings Corp.) — deposed July 10, 2023. Duration: approximately 6 hours. Pruitt testified regarding Vantor's business relationship with Stonefield, the negotiation and execution of the TSA, and Vantor's alleged damages. Notably, Pruitt could not identify specific mitigation steps that Vantor or VTS had taken following the TSA termination, testifying only that VTS had "explored" other carrier opportunities without providing details, timelines, or documentation.
2. Janet Kirkwood (Vice President, Carrier Relations, Stonefield Logistics Group Inc.) — deposed July 14, 2023. Duration: approximately 5.5 hours. Kirkwood testified regarding Stonefield's monitoring of VTS service levels, the escalation process, the issuance of cure notices, and the ultimate decision to terminate the TSA.
3. Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.) — deposed July 27, 2023. Duration: approximately 5 hours. Hess testified regarding the Service Level Compliance Dashboard, the methodology for measuring VTS performance against contractual SLOs, and the specific performance data underlying the termination decision.
4. Sandra Milescu (Chief Operating Officer, Vantor Holdings Corp. and Vantor Transport Services LLC) — deposed August 4, 2023. Duration: approximately 6.5 hours. This was a critical deposition from Stonefield's perspective. Milescu confirmed that approximately 85 dedicated tractors were reassigned from Stonefield-designated lanes to the Northwind Distribution Co. account in October 2021 without providing notification to Stonefield as required by the TSA. Milescu testified that the decision was made to address "urgent capacity needs" for the Northwind account but acknowledged that no contractual basis for the reassignment was identified and that Stonefield's consent was neither sought nor obtained.
5. Nikolai Vantorovich (Chief Executive Officer and approximately 58% shareholder, Vantor Holdings Corp.) — deposition commenced August 18, 2023. The deposition lasted approximately 4.5 hours before Vantorovich claimed illness and requested an adjournment. During the testimony that was completed, Vantorovich stated that he was "not involved in day-to-day fleet decisions" and deferred substantive questions to Milescu and other operational personnel. Judge Calloway subsequently ordered completion of the Vantorovich deposition by October 20, 2023. Due to the withdrawal of Vantor's counsel on October 3, 2023 (discussed below), this deposition was never completed.
Expert discovery. Expert reports were exchanged as follows:
• Dr. Philip Trask of Trask Greystone & Associates, Vantor's damages expert, served his expert report on May 15, 2023. Dr. Trask opined that Vantor's total damages amounted to $95.4 million, largely adopting the damages figures alleged in the Complaint.
• Dr. Evelyn Rosser of Kensington Analytics Group LLC, Stonefield's damages and rebuttal expert, served her rebuttal report on August 25, 2023. Dr. Rosser opined that if the TSA termination was valid for Cause (as Stonefield contends), Vantor's damages are $0. In the alternative, under a lost-profits theory assuming an unjustified termination, Dr. Rosser calculated a maximum damages figure of $8.2 million, based on a corrected ACV calculation, proper discounting, and deductions for mitigation failures and the consequential damages waiver.
Expert depositions were scheduled for the fall of 2023 but were never conducted due to the withdrawal of Vantor's counsel and the subsequent stay of all deadlines.
C. Counsel Withdrawal and Subsequent Events
The following chronology details the events that led to the current dormancy of the case:
October 3, 2023: Caldwell Royce & Shapiro LLP filed a Motion to Withdraw as counsel for Vantor Holdings Corp., citing "irreconcilable differences" between the firm and its client. The supporting papers filed with the motion indicated that the withdrawal was driven by a fee dispute. According to the withdrawal motion, Vantor owed Caldwell Royce approximately $870,000 in unpaid legal invoices at the time of withdrawal. The motion was filed under seal to the extent it disclosed the specific nature of the fee dispute, but the docket entry and the motion's public portions made the fee-related basis for withdrawal apparent.
October 18, 2023: Judge Calloway granted the Motion to Withdraw. In her order, Judge Calloway directed Vantor to retain new counsel and have that counsel file a notice of appearance within 60 days — i.e., by December 17, 2023. The order further stated that all case deadlines were stayed pending the appearance of new counsel for Vantor.
December 17, 2023: The 60-day deadline expired. No new counsel appeared on behalf of Vantor. No filings of any kind were made by Vantor or on its behalf.
January 8, 2024: Calderwood & Harkness, through Samuel Eklund, filed a letter to Judge Calloway noting Vantor's failure to retain substitute counsel within the court-ordered timeframe and requesting a conference to discuss the status of the case and potential consequences for Vantor's failure to comply.
January 22, 2024: Judge Calloway issued an Order to Show Cause why Vantor's claims should not be dismissed for failure to prosecute under FRCP 41(b). The return date was set for February 12, 2024. The Order to Show Cause was served on Vantor at its registered address and also on Nikolai Vantorovich personally.
February 12, 2024: Nikolai Vantorovich appeared in court pro se on behalf of Vantor on the return date of the Order to Show Cause. Vantorovich represented to Judge Calloway that Vantor was in discussions with potential replacement counsel and requested a 90-day extension to finalize the retention. Judge Calloway granted a 60-day extension — shorter than the 90 days requested — establishing a new deadline of April 12, 2024 for Vantor to have new counsel appear. The court did not expressly state what consequence would follow from a further failure to comply, but the context of the Order to Show Cause made the prospect of dismissal clear.
April 12, 2024: The second extension deadline expired. No new counsel appeared. No filings were made by Vantor. No communication of any kind was received from Vantor or Vantorovich.
April 15, 2024: Calderwood & Harkness placed the case on dormant/monitoring status pursuant to our internal Case Dormancy Protocol, as documented in the internal memorandum of that date. Under this protocol, the matter was placed on a quarterly docket review schedule with minimal active staffing.
Quarterly Docket Checks. Helen Tsao, a senior paralegal in the Litigation Department, has conducted quarterly docket checks as follows:
As of the date of this memorandum, the case has been inactive for nearly 11 months since the February 12, 2024 hearing. There has been no prosecution by Vantor, no appearance of counsel, and no communication from Vantor or Vantorovich to the court or to Calderwood & Harkness since that date.
D. Corporate Pro Se Limitation
An important legal backdrop to the current status of this case is the well-established federal rule that a corporation cannot appear pro se in federal court. This principle has been consistently applied by the Second Circuit and the Southern District of New York. A corporation is an artificial entity that can act only through its agents, and the litigation of legal claims requires the assistance of a licensed attorney. Accordingly, while Nikolai Vantorovich appeared personally at the February 12, 2024 hearing, he cannot represent Vantor Holdings Corp. in any capacity other than as a factual witness. He cannot file motions, argue legal positions, or otherwise prosecute Vantor's claims on the corporation's behalf.
Judge Calloway's orders have implicitly recognized this limitation by conditioning the continued prosecution of Vantor's claims on the retention of licensed counsel. Vantor's failure to retain counsel therefore renders the case effectively incapable of advancing on the plaintiff's side. Vantor cannot file discovery responses, serve expert reports, move for summary judgment, or proceed to trial without an attorney. The case is, in practical terms, at a standstill that only Vantor — through the retention of new counsel — can break.
III. Option 1: File Renewed FRCP 41(b) Motion for Involuntary Dismissal
A. Legal Standard — FRCP 41(b)
Federal Rule of Civil Procedure 41(b) provides that "[i]f the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against it." This rule codifies the inherent power of federal courts to manage their dockets and to dismiss cases where a plaintiff has abandoned or unreasonably delayed prosecution.
In the Southern District of New York and the Second Circuit, courts evaluating a motion for involuntary dismissal under FRCP 41(b) apply a well-established five-factor test derived from the Second Circuit's leading precedent on the subject. The five factors are:
(1) Duration of the plaintiff's failure to prosecute. The longer the period of inactivity or non-compliance, the more strongly this factor weighs in favor of dismissal.
(2) Whether the plaintiff received notice that further delay would result in dismissal. Courts are reluctant to dismiss a case for failure to prosecute unless the plaintiff has been put on notice — through court orders, show-cause proceedings, or other mechanisms — that its inaction may lead to dismissal.
(3) Whether the defendant would be prejudiced by further delay. Prejudice may include increased litigation costs, fading witness memories, loss of evidence, and the administrative burden of maintaining the case in an open posture.
(4) A balancing of the court's interest in managing its docket efficiently against the plaintiff's interest in receiving a fair opportunity to be heard. This factor requires the court to weigh the institutional costs of case backlog against the equitable concern that a plaintiff not be deprived of its day in court without justification.
(5) Whether lesser sanctions — such as a conditional dismissal, a fine, or other curative measures — would be effective and appropriate. Courts generally prefer to impose the least severe sanction necessary to achieve compliance. Where lesser sanctions have already been tried and have failed, this factor favors dismissal.
Critically, dismissal under FRCP 41(b) operates as an adjudication on the merits — that is, a dismissal with prejudice — unless the court's order of dismissal specifically states otherwise. This default rule provides a powerful incentive for compliance and makes FRCP 41(b) dismissal a potent tool for defendants facing an abandoning plaintiff.
B. Application to This Case
The five factors of the governing test weigh strongly — and in several instances overwhelmingly — in favor of dismissal of Vantor's claims.
Factor 1 — Duration of Failure to Prosecute. This factor weighs heavily in Stonefield's favor. As of the date of this memorandum, the case has been entirely inactive for nearly 11 months since the February 12, 2024 hearing. If measured from the date of Caldwell Royce's withdrawal (October 3, 2023), the effective period of non-prosecution extends to approximately 15 months. Vantor has not filed a single document, made a single court appearance through counsel, or taken any discoverable step to advance its claims since October 2023. Courts in this Circuit have granted FRCP 41(b) dismissal for far shorter periods of inactivity. The duration factor here is compelling.
Moreover, Vantor's failure is not merely a failure to prosecute in the general sense; it is a failure to comply with two consecutive, explicit court-imposed deadlines. Judge Calloway ordered Vantor to retain counsel by December 17, 2023. When Vantor failed to do so and Vantorovich requested additional time, the court granted a 60-day extension to April 12, 2024 — itself a lesser accommodation than the 90 days Vantorovich requested. Vantor failed to meet this second deadline as well. The pattern of non-compliance is unmistakable and sustained.
Factor 2 — Notice. This factor also weighs heavily in Stonefield's favor. Vantor received explicit notice that dismissal was being considered through the Order to Show Cause issued on January 22, 2024, which specifically directed Vantor to show cause why its claims should not be dismissed for failure to prosecute. The Order to Show Cause was served on both Vantor at its registered corporate address and on Nikolai Vantorovich personally. Vantorovich's personal appearance at the February 12, 2024 hearing demonstrates actual notice of the threat of dismissal. The 60-day extension granted at that hearing served as a final warning — an additional opportunity for Vantor to cure its non-compliance, which Vantor squandered. No party can credibly claim surprise if dismissal is now ordered.
Factor 3 — Prejudice to Defendant. This factor supports dismissal. Stonefield has incurred approximately $4.42 million in defense costs — a massive expenditure that reflects the substantial discovery effort, expert engagement, and legal analysis already invested in this matter. While the case remains dormant, the passage of time continues to cause prejudice in multiple ways:
• Fading witness memories. Key fact witnesses, including Janet Kirkwood, Raymond Hess, Sandra Milescu, and Nikolai Vantorovich, last testified in depositions conducted in July and August 2023 — more than 17 months ago. If the case were to be revived, witness memories of the critical Q4 2021 events (now over three years in the past) will have further degraded, potentially undermining Stonefield's ability to present its defense effectively at trial.
• Incomplete Vantorovich deposition. The deposition of Nikolai Vantorovich was never completed. Only 4.5 hours of testimony were taken before Vantorovich claimed illness and the deposition was adjourned. The court ordered completion by October 20, 2023, but this never occurred. If the case were to be revived, Stonefield would face the challenge of resuming a deposition that was interrupted over 16 months ago, under circumstances where the witness has had extensive time to prepare and shape his testimony.
• Ongoing reporting obligations. The continued pendency of this case requires Stonefield to make quarterly updates to Lakeshore National Bank ("Lakeshore"), which serves as the administrative agent under Stonefield's $425 million senior secured credit facility (Credit Agreement Section 6.03(b), Ref. LNB-SLG-2017-CA-4402). The credit agreement requires disclosure of material pending or threatened litigation as a reporting covenant. Additionally, the case must continue to be disclosed as contingent litigation in Stonefield's financial reporting, and Stonefield's independent auditor, Clarendon Partners LLP, has been advised of the matter. This ongoing disclosure obligation is burdensome and, to some extent, reputationally unfavorable for Stonefield.
Factor 4 — Court's Interest in Docket Management. This factor favors dismissal. Judge Calloway, like all federal judges in the Southern District of New York, has a strong institutional interest in clearing dormant cases from her docket. The S.D.N.Y. local rules and standing orders encourage the timely disposition of inactive matters, and the court has already invested significant judicial resources in this case — including multiple pretrial conferences, discovery-related orders (including the June 9, 2023 motion-to-compel ruling), and the January–February 2024 Order to Show Cause proceedings. Allowing the case to remain indefinitely on the docket without any prospect of advancement by the plaintiff serves no legitimate purpose and imposes an administrative burden on the court.
Factor 5 — Effectiveness of Lesser Sanctions. This factor strongly favors dismissal. The court has already employed lesser sanctions and alternative measures without success. Specifically, the court (a) granted Vantor 60 days to retain counsel following the withdrawal order; (b) issued an Order to Show Cause; (c) permitted Vantorovich to appear personally and explain the situation; and (d) granted a further 60-day extension. None of these measures produced any compliance. Vantor has not retained counsel, has not communicated with the court, and has not taken any step to advance its case. There is no reason to believe that further warnings, conditional dismissals, monetary sanctions, or other lesser measures would produce a different result. Vantor's inability or unwillingness to retain counsel appears to be a function of its financial difficulties — the approximately $870,000 in unpaid invoices owed to Caldwell Royce at the time of withdrawal strongly suggests that Vantor lacks the financial resources or inclination to fund continued litigation. This conclusion is further supported by Vantor's FY 2022 revenue decline to approximately $310 million and the loss of the Stonefield contract, which represented a significant portion of VTS's revenue base. Under these circumstances, further lesser sanctions would be futile and would merely prolong the pendency of a case that Vantor has effectively abandoned.
C. Dismissal With Prejudice vs. Without Prejudice
We should seek dismissal with prejudice, which is the default outcome under FRCP 41(b). The factors supporting a with-prejudice dismissal are substantial:
• Vantor's repeated failures to comply with court orders — not one missed deadline, but two;
• The explicit notice provided through the Order to Show Cause and the February 2024 hearing;
• The extended duration of non-prosecution (approximately 15 months since counsel withdrawal, nearly 11 months since any activity whatsoever);
• The fact that Vantor has had over two years since filing its Complaint to prosecute its claims and has ceased doing so;
• The failure of lesser sanctions to produce any compliance; and
• The prejudice to Stonefield from continued pendency.
There is a risk that the court may elect to dismiss without prejudice as a more lenient outcome, particularly if Judge Calloway views the case as potentially meritorious or is sympathetic to Vantor's apparent financial difficulties. A dismissal without prejudice would leave Vantor technically free to re-file. However, we note that even in the event of a without-prejudice dismissal, Vantor would face significant obstacles to re-filing:
• Statute of limitations. Under New York CPLR § 213(2), a six-year statute of limitations applies to breach of contract claims. The TSA was terminated on March 4, 2022. The limitations period would therefore expire on approximately March 4, 2028. While this provides a theoretical window for re-filing, Vantor would need to retain counsel and re-commence litigation — something it has shown no ability or inclination to do.
• Laches. Even within the statute of limitations, a re-filed action could be subject to a laches defense based on Vantor's unreasonable delay in prosecuting its claims and the resulting prejudice to Stonefield.
• Practical barriers. As discussed, Vantor appears to lack the financial resources to fund litigation. The $870,000 owed to Caldwell Royce and the company's revenue decline make it highly unlikely that Vantor could attract new litigation counsel on any basis other than a substantial contingency arrangement — and given the strength of Stonefield's defenses, it is questionable whether competent counsel would accept such a case on contingency.
Accordingly, while a without-prejudice dismissal would be a less favorable outcome than a with-prejudice dismissal, it would not leave Stonefield materially exposed. Our motion should seek dismissal with prejudice as the primary relief, with an alternative request for dismissal without prejudice if the court is reluctant to impose the harsher sanction.
D. Impact on Stonefield's Counterclaim
Stonefield's counterclaim for declaratory judgment — asserting that the TSA termination was valid and for Cause, that no liquidated damages or other damages are owed to Vantor, and that any material breach was committed by VTS — remains live on the docket. The disposition of Vantor's claims will have implications for the counterclaim, which must be addressed.
If Vantor's claims are dismissed with prejudice, the counterclaim becomes largely academic. The risk of Vantor re-litigating the same claims will have been eliminated, and the practical need for declaratory relief will be substantially diminished. In that scenario, we recommend one of two courses of action:
(a) Voluntary dismissal of the counterclaim without prejudice under FRCP 41(a)(2), which would cleanly close the case without requiring further proceedings. This is the more efficient and cost-effective approach.
(b) Seeking entry of default or summary judgment on the counterclaim, which would produce an affirmative declaratory judgment on the record establishing that the TSA termination was valid and for Cause. This approach would have greater legal and practical significance — it would create a judicial determination that Stonefield can reference in future carrier disputes, investor communications, and financial reporting — but would entail additional cost and court time.
We recommend discussing with the client and with Ridgeline Capital Partners whether an affirmative declaratory judgment on the record has strategic value. Ridgeline's interests may be relevant here — for example, if Ridgeline is contemplating a portfolio exit, recapitalization, or other transaction involving Stonefield, a judicial determination that the TSA termination was valid and that no damages liability exists could have value in due diligence and representations and warranties. If such value exists, we can pursue the declaratory judgment. If not, voluntary dismissal of the counterclaim is the more economical path.
E. Estimated Cost and Timeline
The estimated costs to execute Option 1 are as follows:
• Preparation and filing of the FRCP 41(b) motion: Approximately $15,000–$25,000 in attorney fees. This estimate reflects the effort required to update and finalize the draft motion that was prepared internally on January 15, 2024, supplementing it with the additional months of inactivity, the additional missed deadline, and the additional quarterly docket checks confirming continued dormancy. The motion will be accompanied by a supporting memorandum of law, a declaration attaching the relevant docket entries and court orders, and a proposed order.
• Opposition and reply (if necessary): If Vantor opposes the motion — which is unlikely given the absence of counsel, but cannot be ruled out entirely, as Vantorovich could conceivably file a pro se opposition in his individual capacity (though not on behalf of the corporation) — the additional cost for preparing a reply brief and attending any hearing would be approximately $10,000–$15,000.
• Total estimated cost: Approximately $25,000–$40,000, depending on whether opposition is filed.
The expected timeline for resolution is as follows:
• Filing to briefing completion: approximately 30–45 days (depending on the court's briefing schedule and any opposition period).
• Briefing completion to ruling: approximately 30–75 days, depending on Judge Calloway's docket and whether she schedules oral argument.
• Total estimated timeline from filing to ruling: approximately 60–120 days.
We estimate the probability of success as follows:
• Probability of dismissal in some form (with or without prejudice): approximately 85% or higher.
• Probability of dismissal specifically with prejudice: approximately 70%.
These estimates are based on the strength of the procedural record, the governing legal standards, and the pattern of outcomes in analogous cases in the Southern District.
F. Advantages and Disadvantages
Advantages:
• Achieves definitive resolution of Vantor's claims through a court order.
• Dismissal with prejudice eliminates the risk of re-filing, providing complete finality.
• Creates a court order that can be reported to Lakeshore National Bank and Clarendon Partners LLP as case closure, eliminating ongoing litigation disclosure obligations.
• Relatively low cost ($25,000–$40,000) in the context of a matter on which $4.42 million has already been spent.
• Leverages the strong procedural record that has been built through the Order to Show Cause process, the missed deadlines, and the extended dormancy.
• Produces a public record of the disposition, which may have value for Stonefield's reputation and future commercial relationships.
Disadvantages:
• Requires court resources and involves some timeline uncertainty — the court may take several months to rule, depending on docket conditions.
• There is a small risk that the court will dismiss without prejudice only, which, while still a favorable outcome, would not provide the complete finality of a with-prejudice dismissal.
• Does not, standing alone, produce an affirmative declaratory judgment on the validity of the TSA termination (though this can be pursued separately through the counterclaim, as discussed above).
• There is a theoretical risk — which we assess as low — that the filing of the motion could prompt Vantor to retain new counsel and oppose the motion, potentially reviving the case. In our assessment, this risk is minimal given Vantor's apparent financial difficulties and the 11-month period of total inaction, but it cannot be entirely excluded.
IV. Option 2: Continue Quarterly Docket Monitoring on Dormant Status
A. Description
Under this option, Stonefield would maintain its current posture: quarterly docket checks conducted by Helen Tsao, periodic client updates, and no affirmative filings with the court. The strategy would be to wait for one of the following developments:
(a) Vantor takes action — either by retaining new counsel and filing a notice of appearance, or by filing some other document indicating an intent to resume prosecution of its claims;
(b) The court acts sua sponte — for example, by issuing an administrative dismissal under S.D.N.Y. procedures for inactive cases, or by issuing a further Order to Show Cause; or
(c) Additional time passes, further strengthening the basis for a future FRCP 41(b) dismissal motion if Stonefield elects to file one at a later date.
B. Cost
The cost of this approach is minimal:
• Quarterly cost: Approximately $2,000–$3,000 per quarter, reflecting paralegal time for docket checks, attorney review of docket activity (or lack thereof), and client communication.
• Annual cost: Approximately $8,000–$12,000.
• Additional cost: Continued quarterly updates to Lakeshore National Bank (Catherine Devereaux, SVP, Loan Administration) regarding the status of the litigation, and annual updates for Clarendon Partners LLP (Robert Farraday, Engagement Partner) for financial statement disclosure purposes. These communications are largely template-based and add only marginal cost, but they represent an ongoing administrative obligation.
C. Advantages and Disadvantages
Advantages:
• Lowest immediate cost of any option, requiring only routine monitoring expenditures.
• Avoids any risk of triggering adverse action. There is a (small) theoretical risk that filing a dismissal motion could prompt Vantor to retain counsel in response, reviving the case. This option avoids that trigger entirely.
• Allows additional time to accumulate, which would further strengthen any future failure-to-prosecute argument. The longer Vantor fails to act, the stronger the case for involuntary dismissal becomes.
• Possible court action. It is possible that the court will dismiss the case sua sponte under S.D.N.Y. administrative procedures for inactive cases. The Southern District periodically reviews its docket for dormant cases and may take action without a motion from the defendant.
Disadvantages:
• Indefinite case pendency. There is no guarantee that the court will act on its own initiative in any particular timeframe, and Vantor may never take action. The case could remain open on the docket for years without resolution.
• Continued obligation to disclose the case as contingent litigation in Stonefield's financial reporting and to Lakeshore National Bank under the credit agreement. This ongoing disclosure requirement, while not onerous in absolute terms, imposes an administrative burden and carries a degree of reputational unfavorability.
• Continued (though de minimis) risk that Vantor retains counsel and seeks to revive the case. While we assess this risk as low, it is not zero, and the risk persists for as long as the case remains open.
• Does not achieve finality. The absence of a definitive resolution means that the matter remains an open item on Stonefield's legal docket, in its financial reporting, and in its communications with Ridgeline Capital Partners.
• Ridgeline considerations. Ridgeline Capital Partners may desire resolution of this matter for portfolio management purposes, or in connection with a potential exit, recapitalization, or other strategic transaction involving Stonefield. An open, unresolved $95.4 million litigation claim — even one that is dormant and meritless — can complicate due diligence, valuation discussions, and representations and warranties in transaction documentation.
• Witness degradation. Witness memories continue to degrade with each passing quarter, which would be prejudicial to Stonefield if the case were ever to be revived.
• No value captured. Stonefield has invested $4.42 million in developing a strong factual and legal record. Continued monitoring captures no value from that investment. A dismissal motion or negotiated resolution, by contrast, would leverage that record to achieve a definitive outcome.
Additionally, the statute of limitations bears on this analysis. Under New York CPLR § 213(2), a six-year statute of limitations applies to the breach of contract claims at issue. The TSA was terminated on March 4, 2022. The limitations period would therefore expire on or about March 4, 2028 — more than three years from now. If the case were ultimately dismissed without prejudice (whether by the court sua sponte or in response to a future motion), Vantor could theoretically re-file its claims at any time before March 2028. Continued dormancy delays the point at which a with-prejudice dismissal can be obtained, thereby prolonging the period during which re-filing risk exists. This consideration weighs against relying on passive monitoring as the sole strategy.
For these reasons, we recommend against Option 2 as a standalone strategy.
V. Option 3: Contact Nikolai Vantorovich to Explore Voluntary Dismissal or Nominal Settlement
A. Description
Under this option, Stonefield (through Calderwood & Harkness) would reach out to Nikolai Vantorovich directly — Vantor being unrepresented by counsel — to explore whether Vantor would agree to a voluntary dismissal with prejudice of all claims and counterclaims by stipulation under FRCP 41(a)(1)(A)(ii). The dismissal would be documented through a stipulated dismissal agreement and filed with the court, achieving the same finality as a court-ordered dismissal under FRCP 41(b) but through a consensual process.
The terms offered to Vantor could take one of two forms:
(a) Walk-away with mutual release and no payment. Stonefield and Vantor would exchange mutual general releases of all claims and counterclaims, and the case would be dismissed with prejudice. No money would change hands. Given Vantor's apparent inability to prosecute its claims and the strength of Stonefield's defenses, this is a defensible and rational outcome for both parties.
(b) Nominal payment in exchange for mutual release and stipulated dismissal. If Vantorovich is unwilling to agree to a walk-away, Stonefield could offer a modest "nuisance value" payment to facilitate the resolution, within the client's previously authorized settlement range.
Ethical Considerations. Because Vantor is currently unrepresented, any direct communication with Vantorovich by Calderwood & Harkness attorneys is subject to the requirements of New York Rules of Professional Conduct ("NYRPC") Rule 4.3, which governs dealings with unrepresented persons. Rule 4.3 requires that:
• C&H attorneys must not give legal advice to Vantorovich (other than to advise him to seek independent legal counsel);
• C&H attorneys must not state or imply that they are disinterested or that they represent any interest other than Stonefield's; and
• C&H attorneys must communicate clearly and unambiguously that Calderwood & Harkness represents Stonefield Logistics Group Inc. and that Vantorovich's interests may differ from or be adverse to Stonefield's interests.
Any outreach letter or communication must be carefully drafted to comply with these obligations. We would recommend that the initial communication be in writing (letter or email) rather than by telephone, to create a clear record of compliance with Rule 4.3.
B. Potential Terms
We have on file a draft settlement term sheet that was prepared on September 1, 2023, in connection with earlier settlement discussions that were overtaken by the withdrawal of Vantor's counsel. That term sheet was never transmitted to the opposing party. It can serve as a starting point for any negotiation under this option, updated to reflect current circumstances.
The key terms of any settlement under this option would include:
• Mutual general release of all claims and counterclaims arising out of or related to the TSA, the TSA termination, and this litigation, by and between Stonefield Logistics Group Inc., Vantor Holdings Corp., Vantor Transport Services LLC, and their respective affiliates, officers, directors, shareholders, employees, agents, and successors.
• Stipulated dismissal with prejudice of all claims and counterclaims, to be filed jointly with the court under FRCP 41(a)(1)(A)(ii).
• Confidentiality provisions restricting disclosure of the terms of the settlement (other than the fact that the case has been resolved) to third parties, subject to customary exceptions for legal, regulatory, accounting, and reporting obligations.
• No admission of liability by Stonefield. The settlement agreement would contain an express provision stating that Stonefield's agreement to settle does not constitute an admission of any wrongdoing, liability, or breach of the TSA.
• Payment by Stonefield of an amount to be determined through negotiation, within the client's authorized range. Our recommended negotiation posture is as follows:
• Initial offer: $0 — a walk-away with mutual release and no payment. Given Vantor's inability to prosecute its claims and the strength of Stonefield's position, there is no legal or equitable basis for any payment. The mutual release itself has value to Vantor because it extinguishes Stonefield's counterclaim.
• Escalation range: If Vantorovich rejects the walk-away, we recommend being prepared to escalate to a nuisance-value payment in the range of $250,000–$500,000, representing a fraction of a percent of the claimed damages and a small fraction of Stonefield's defense costs.
• Maximum authority: The previously approved settlement authority is $0–$4.5 million, as approved by Marcus Denton (CEO, Stonefield), Tobias Wren (General Counsel, Stonefield), and Ridgeline Capital Partners (through Alison Trang and Douglas Whitmore) in November 2022, and confirmed in the updated settlement analysis of August 30, 2023. We strongly recommend confirming that this authority remains current before initiating any contact with Vantorovich, as nearly 16 months have elapsed since the authority was last confirmed, and the circumstances of the case have changed materially (in Stonefield's favor) since that time.
Given Vantor's apparent financial difficulties — including the approximately $870,000 in unpaid legal fees to Caldwell Royce, the FY 2022 revenue decline to approximately $310 million, and the significant revenue loss attributable to the TSA termination — even a modest payment may be attractive to Vantorovich as an immediate, certain recovery in a case he can no longer effectively prosecute.
C. Estimated Cost and Timeline
• Preparation and negotiation: Approximately $10,000–$20,000 in attorney fees, assuming a relatively straightforward negotiation process. This estimate covers the preparation of the initial outreach letter (with Rule 4.3 compliance), drafting of the settlement agreement and stipulated dismissal, and one to two rounds of negotiation. If the negotiation becomes protracted or contentious, costs could increase.
• Settlement payment: Any amount within the authorized range, as determined through negotiation.
• Timeline: If Vantorovich is responsive and cooperative, resolution could be achieved within approximately 30–60 days of initial contact. This is potentially the fastest path to closure. However, the timeline is inherently uncertain: if Vantorovich is unresponsive, hostile, or makes unreasonable demands, the process could stall indefinitely.
D. Advantages and Disadvantages
Advantages:
• Fastest path to resolution if Vantorovich is cooperative, potentially achieving closure weeks or months sooner than a contested FRCP 41(b) motion.
• Achieves dismissal with prejudice through stipulation, providing the same finality as a court-ordered with-prejudice dismissal under FRCP 41(b).
• Eliminates re-filing risk through the combination of the stipulated dismissal and the mutual general release.
• Avoids court proceedings, conserving judicial resources and avoiding any uncertainty associated with court rulings.
• Confidential resolution. While the stipulated dismissal itself would be filed on the public docket, the terms of any settlement agreement (including any payment) would be confidential, avoiding public disclosure of payment amounts.
• May be achievable at zero or nominal cost given Vantor's weakened position and apparent financial constraints.