Expert Rebuttal Report of Dr. Evelyn Rosser, Ph.D.
Vantor Holdings Corp. v. Stonefield Logistics Group Inc. Case No. 22-cv-07841 (S.D.N.Y.)
Prepared by: Dr. Evelyn Rosser, Ph.D. Managing Director Kensington Analytics Group LLC 1700 Market Street, Suite 2800 Philadelphia, Pennsylvania 19103
Assisted by: Michael Chung Senior Analyst Kensington Analytics Group LLC
Submitted to: Patrick Gallagher, Senior Associate Samuel Eklund, Partner Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166
Retention: I have been retained by Calderwood & Harkness LLP on behalf of Stonefield Logistics Group Inc. pursuant to an engagement letter dated October 28, 2022.
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I. INTRODUCTION AND ASSIGNMENT
A. Identity and Qualifications of Expert
1. My name is Dr. Evelyn Rosser. I am the Managing Director and Lead Expert at Kensington Analytics Group LLC ("Kensington Analytics" or "KAG"), an economic and financial consulting firm headquartered at 1700 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103. I submit this expert rebuttal report in connection with the above-captioned matter.
2. I hold a Ph.D. in Economics from the University of Pennsylvania, with a specialization in transportation economics and industrial organization. I also hold a Master of Arts in Economics from the University of Virginia and a Bachelor of Arts in Economics, summa cum laude, from Georgetown University. My doctoral dissertation examined pricing dynamics in deregulated freight markets and was subsequently published, in revised form, in the Journal of Transport Economics and Policy.
3. I have over twenty years of professional experience in economic analysis, damages quantification, and expert testimony in the context of commercial litigation. Throughout my career, I have developed particular expertise in the transportation and logistics industry, including freight brokerage operations, truckload and less-than-truckload markets, carrier economics, supply chain contract structures, and the financial and operational dynamics of asset-based and asset-light transportation companies. Prior to founding Kensington Analytics, I served as a Vice President at a nationally recognized economic consulting firm, where I led the transportation and infrastructure practice group.
4. My industry-specific expertise encompasses the full range of economic issues commonly arising in transportation disputes, including the analysis of rate structures, volume commitments, service level agreements, capacity allocation, fleet utilization metrics, and the economic impact of market cycles on carrier and shipper profitability. I have been engaged as a consulting or testifying expert in matters involving national and regional trucking companies, third-party logistics providers, intermodal operators, and freight technology platforms.
5. I have been retained as a testifying expert in prior matters involving, among other topics, breach of contract damages, lost profits quantification, liquidated damages disputes, business valuation, and economic analysis of commercial agreements. I have provided testimony at trial and by deposition in federal and state courts across multiple jurisdictions, as well as in arbitration proceedings. A complete list of cases in which I have testified at trial or by deposition in the preceding four years is set forth in Appendix D to this
6. My full curriculum vitae, setting forth my educational background, professional experience, publications, presentations, and prior testimony, is attached as Appendix A to this report.
B. Scope of Engagement
7. I have been retained by Calderwood & Harkness LLP on behalf of Stonefield Logistics Group Inc. ("Stonefield," "SLG," or "Defendant") to serve as a testifying expert in connection with the damages claims asserted by Vantor Holdings Corp. ("Vantor" or "VHC") and its subsidiary, Vantor Transport Services LLC ("VTS"), in this litigation. My engagement has been specifically focused on rebutting the expert report of Dr. Philip Trask, Founder and Lead Expert of Trask Greystone & Associates, which was served on May 15, 2023 on behalf of Vantor (the "Trask Report").
8. The scope of my engagement encompasses the following tasks:
(i) Evaluating the methodology and conclusions of Dr. Trask's damages analysis, including his calculation of liquidated damages, lost profits, stranded asset costs, workforce reduction costs, and mitigation costs;
(ii) Providing an independent economic assessment of any damages, if any, that Vantor may have suffered as a result of the termination of the Transportation Services Agreement dated March 15, 2019 (the "TSA," Contract Reference No. SLG-VTS-2019-0315);
(iii) Analyzing the liquidated damages clause set forth in Section 14.2 of the TSA from an economic perspective , including whether the liquidated damages formula produces results that bear a reasonable relationship to anticipated or actual harm ; and
(iv) Assessing Vantor's mitigation efforts—or lack thereof—and the availability of mitigation opportunities in the post-termination freight market environment.
9. In performing my analysis, I have been assisted by Michael Chung, Senior Analyst at Kensington Analytics Group LLC. Mr. Chung has performed data collection, financial modeling, and computational analysis under my direction and supervision. All opinions expressed in this report are my own.
C. Summary of Opinions
10. Based on my review of the record evidence, my independent economic analysis, and my professional judgment, I have formed the following opinions, each of which I hold to a reasonable degree of economic certainty:
Opinion 1: If Stonefield's termination of the TSA was valid "for Cause" under Section 13.1(a) of the TSA—an issue that is ultimately a legal determination for the Court—then Vantor Transport Services LLC is entitled to zero dollars ($0) in damages. A valid for-Cause termination does not give rise to a damages claim by the breaching party whose material breach prompted the termination.
Opinion 2: Even assuming arguendo that the termination was wrongful (i.e., that the Court were to conclude that SLG did not have valid Cause under Section 13.1(a) to terminate the TSA), Dr. Trask's damages analysis is fundamentally flawed in multiple respects and substantially overstates Vantor's damages. Dr. Trask's analysis is affected by at least five categories of fundamental error, including the assumption of liquidated damages enforceability without independent economic analysis, duplicative damages calculations, inflated operating margin assumptions, failure to account for Vantor's own contributory breaches, and failure to perform meaningful mitigation analysis.
Opinion 3: Under an alternative lost-profits methodology that corrects for Dr. Trask's errors—accounting for Vantor's own contributory breaches, proper market-based margin calculations, volume shortfall offsets, and Vantor's failure to mitigate—maximum damages would be approximately $8.2 million. This figure assumes that all categories of consequential damages asserted by Dr. Trask (stranded assets, workforce reduction costs, and mitigation costs) are recoverable, which I understand is disputed as a legal matter under the TSA's mutual consequential damages waiver in Section 15.1. If consequential damages are barred by Section 15.1, maximum damages would be approximately $1.7 million. In either event, the damages figure is a small fraction of Dr. Trask's $95.4 million calculation.
Opinion 4: The liquidated damages formula set forth in TSA Section 14.2 produces results that are grossly disproportionate to any actual or reasonably anticipated harm arising from early termination of the TSA. The formula implies that VTS would retain 75% of gross revenue as pure economic benefit—an assumption that is economically implausible for an asset-based trucking operation with actual operating margins in the range of 3% to 5%. The resulting liquidated damages figure ($67.23 million) exceeds my estimate of maximum actual damages by a ratio of approximately 8.2 to 1. This economic disproportion supports a determination that the liquidated damages clause operates as an unenforceable penalty under New York law.
D. Compensation
11. My hourly rate for this engagement is $625 per hour. Mr. Chung's hourly rate is $375 per hour. These rates are consistent with the standard rates charged by Kensington Analytics for comparable engagements and are not contingent on the opinions I render, the content of my testimony, or the outcome of this litigation. Total fees invoiced to date in connection with this engagement are approximately $214,300.
E. Materials Reviewed
12. In forming my opinions, I have reviewed and considered a substantial body of materials, including contractual documents, correspondence, financial data, deposition transcripts, discovery productions, public market data, and the Trask Report itself. A list of materials considered in forming my opinions is as Appendix B to this key materials I have relied upon include, but are not limited to, the following:
• Transportation Services Agreement dated March 15, 2019 (Contract Reference No. SLG-VTS-2019-0315), including all Schedules (A through D), amendments, and ancillary documents;
• Cure Notice dated January 18, 2022, from Raymond Hess, Director of Contract Compliance at SLG, to Sandra Milescu, Chief Operating Officer of Vantor/VTS;
• VTS response to Cure Notice dated February 14, 2022, from Derek Pruitt, Vice President of Business Development at Vantor, to Janet Kirkwood, Vice President of Carrier Relations at SLG;
• Termination letter dated March 4, 2022, from Tobias Wren, General Counsel of SLG;
• Expert Report of Dr. Philip Trask dated May 15, 2023, including all exhibits and appendices thereto;
• VTS Q4 2021 Performance Report (internal VTS document produced in discovery);
• VTS internal email dated November 12, 2021, from Sandra Milescu to Nikolai Vantorovich, Bates-stamped VHC-008417;
• Fleet redeployment records produced by Vantor in supplemental production, Bates-stamped VHC-029001 through VHC-033218;
• Stonefield internal email dated September 22, 2021, from Janet Kirkwood to Carlos Medina;
• Ashford Meridian LLP rate adjustment analysis memorandum dated February
• SLG financial data, including FY 2021 revenue (approximately $1.42 billion), FY 2022 revenue (approximately $1.28 billion), and FY 2022 EBITDA (approximately $118 million);
• Vantor/VTS financial data, including FY 2021 revenue (approximately $385 million) and FY 2022 revenue (approximately $310 million);
• Deposition transcript of Derek Pruitt, taken July 10, 2023;
• Deposition transcript of Sandra Milescu, taken August 4, 2023;
• Deposition transcript of Nikolai Vantorovich (partial), taken August 18, 2023;
• Public data on freight market conditions, including spot rate indices (Brightmoor Software, Penrose Services Inc., Dunmore Data Systems), diesel fuel pricing (U.S. Energy Information Administration), and CPI-U adjustments for the period 2019 through 2023;
• VTS driver termination and severance records; and
• Records from Vantor supplemental production reflecting VTS contracts with
13. I reserve the right to supplement the materials list set forth in Appendix B as additional materials become available through the completion of outstanding discovery in this matter.
II. BACKGROUND AND FACTUAL FRAMEWORK
14. Before addressing the specific errors in Dr. Trask's damages analysis, it is necessary to set forth the relevant factual and contractual background. The following summary is drawn from the documentary record and deposition testimony I have reviewed in connection with this engagement.
A. Overview of the TSA
15. The Transportation Services Agreement at issue in this litigation was executed on March 15, 2019, between Stonefield Logistics Group Inc., acting in its capacity as "Shipper-Broker," and Vantor Transport Services LLC, a wholly-owned subsidiary of Vantor Holdings Corp., acting in its capacity as "Carrier-Provider." The TSA established a five-year contractual relationship with an initial term running from April 1, 2019 through March 31, 2024.
16. The TSA included an automatic two-year renewal provision, pursuant to which the agreement would renew for an additional two-year term (through March 31, 2026) unless either party provided written notice of non-renewal at least 180 days prior to the expiration of the initial term. No non-renewal notice was issued by either party prior to the events giving rise to this litigation.
17. The scope of the TSA required VTS to provide dedicated and on-demand truckload transportation services across specified freight lanes in the Northeast, Mid-Atlantic, and Southeast corridors of the United States. The geographic scope and lane designations were set forth in Schedule A to the TSA. VTS was to serve as a primary carrier for SLG's freight tendering operations in these corridors, subject to the volume commitments and service level obligations discussed below.
18. Under the TSA, VTS committed to maintaining a minimum fleet capacity of 400 tractors and 1,200 trailers available for SLG freight operations at all times during the term of the agreement. This minimum fleet commitment was a material term of the contract, reflecting the dedicated capacity model upon which SLG's supply chain operations depended.
19. The TSA included an Annual Committed Volume ("ACV") provision pursuant to which SLG committed to tender a minimum of $43.2 million per contract year in transportation charges to VTS. Over the full five-year initial term, this represented a total minimum commitment of $216 million in freight volume. The ACV represented a mutual commitment: SLG committed to tender the minimum volume, and VTS committed to maintain the capacity, equipment, and service quality necessary to handle that volume.
20. The rate structure governing the TSA was set forth in Schedule B, which specified per-mile rates by lane category. These rates were subject to annual adjustment pursuant to the Rate Adjustment Mechanism in Section 5.3 of the TSA. Under Section 5.3, per-mile rates were adjusted each April 1, based on a blended index composed of 70% diesel fuel index (U.S. Energy Information Administration weekly retail on-highway diesel prices, national average) and 30% CPI-U (Consumer Price Index for All Urban Consumers, Bureau of Labor Statistics, seasonally adjusted). This mechanism was designed to ensure that the TSA's rate structure reflected changes in the two largest cost components for asset-based trucking operations: fuel costs and general inflation affecting labor, maintenance, and other operating expenses.
21. The TSA imposed specific Service Level Obligations ("SLOs") on VTS, which were set forth in Section 8 and quantified as measurable performance thresholds. These SLOs represented the minimum operational standards VTS was required to maintain throughout the contract term:
(a) On-Time Pickup Rate: Greater than or equal to 95% of all tendered loads picked up within the contractually specified pickup window;
(b) On-Time Delivery Rate: Greater than or equal to 93% of all tendered loads delivered within the contractually specified delivery window;
(c) Cargo Claims Ratio: Less than or equal to 0.5% of total shipments resulting in cargo damage or loss claims;
(d) Tender Acceptance Rate: Greater than or equal to 90% of all freight tenders accepted by VTS; and
(e) Equipment Availability Compliance: Greater than or equal to 85% of committed fleet capacity (i.e., at least 340 of 400 tractors) available and operational for SLG freight at any given time.
22. These SLOs were not aspirational targets; they were contractual obligations, the sustained failure of which could constitute a material breach giving rise to SLG's right to issue a Cure Notice and, ultimately, to terminate the TSA for Cause under Section 13.1(a).
B. Overview of TSA Termination
23. On January 18, 2022, Stonefield issued a formal Cure Notice to VTS, delivered from Raymond Hess, Director of Contract Compliance at SLG, to Sandra Milescu, Chief Operating Officer of Vantor and VTS. The Cure Notice identified material breaches by VTS across all five SLO categories during the fourth quarter of 2021 (October 1 through December 31, 2021). The specific performance failures identified in the Cure Notice were as follows:
(a) On-Time Pickup Rate: 78.2%, falling substantially below the 95% contractual threshold;
(b) On-Time Delivery Rate: 81.6%, falling substantially below the 93% contractual threshold;
(c) Tender Acceptance Rate: 71.4%, falling substantially below the 90% contractual threshold;
(d) Equipment Availability: Approximately 248 tractors of the 400 committed, representing only 62% availability against the 85% (340-tractor) contractual minimum; and
(e) Cargo Claims Ratio: 1.07%, based on 16 claims totaling $387,400 in cargo damage and loss during November and December 2021 alone, more than double the 0.5% contractual ceiling.
24. The Cure Notice triggered a 30-day cure period pursuant to the TSA's cure provisions. That cure period expired on February 17, 2022. During the cure period, VTS submitted a written response dated February 14, 2022, from Derek Pruitt, Vice President of Business Development at Vantor, to Janet Kirkwood, Vice President of Carrier Relations at SLG.
25. The VTS response of February 14, 2022, acknowledged what it characterized as "operational challenges" but asserted that those challenges were caused by factors beyond VTS's control, including a nationwide driver shortage affecting the entire trucking industry, SLG's alleged volume shortfalls relative to the ACV commitment, and SLG's alleged diversion of freight to other carriers. VTS also disputed certain aspects of SLG's cargo claims data, suggesting that two of the sixteen claims had been incorrectly attributed to VTS operations. Critically, however, the VTS response did not demonstrate that actual cure of the identified breaches had been achieved or was imminent. It did not provide a remediation plan with specific milestones, and it did not address the fleet capacity shortfall in any detail.
26. On March 4, 2022, following the expiration of the cure period without cure, SLG terminated the TSA effective immediately for Cause under Section 13.1(a). The termination letter was issued by Tobias Wren, General Counsel of SLG, and cited VTS's sustained failure to meet SLO thresholds across all five categories, VTS's failure to cure those breaches within the contractual cure period, and VTS's failure to maintain the minimum committed fleet capacity. At the time of termination, the remaining contract term was approximately two years and twenty-seven days (March 2022 through March 31,
C. VTS's Unilateral Fleet Redeployment
27. One of the most significant facts in the record is VTS's undisclosed, unilateral redeployment of a substantial portion of its committed fleet capacity away from SLG freight operations and toward a different customer account. This fact is central both to the question of whether Stonefield had valid Cause for termination and to the assessment of damages.
28. An internal email dated November 12, 2021, from Sandra Milescu (COO of Vantor and VTS) to Nikolai Vantorovich (CEO of Vantor Holdings Corp.), Bates-stamped VHC-008417, states in relevant part:
"We've pulled 85 tractors off the SLG dedicated lanes to cover [redacted] commitments. SLG won't notice until January."
29. The import of this communication is substantial. First, it confirms that VTS made a deliberate decision to remove 85 tractors—representing more than 21% of its 400-tractor commitment under the TSA—from SLG-dedicated freight operations. Second, the redeployment was concealed from SLG, as reflected in the statement that "SLG won't notice until January." Third, the timing of the redeployment (by November 2021 at the latest) corresponds precisely with the period during which VTS's performance metrics deteriorated to the levels cited in the January 18, 2022 Cure Notice.
30. Documents produced in Vantor's supplemental production (VHC-029001 through VHC-033218) confirm that the 85 tractors removed from the SLG account were redirected to VTS's account with Northwind Distribution Co. beginning in October 2021. These fleet redeployment records show a systematic transfer of equipment and driver assignments from SLG-designated lanes to Northwind lanes over the course of approximately three weeks in October 2021.
31. At her deposition on August 4, 2023, Ms. Milescu confirmed the 85-tractor reassignment. She characterized the decision as "temporary" and driven by what she described as "commercial necessity," testifying that Northwind Distribution had threatened to terminate its own contract with VTS if VTS could not provide additional capacity to address seasonal demand. However, Ms. Milescu could not explain why SLG was not notified of the reassignment, could not identify any TSA provision authorizing unilateral fleet reductions, and acknowledged that VTS did not seek SLG's consent or approval before redirecting the tractors.
32. The economic significance of this unilateral redeployment is straightforward. VTS's committed fleet capacity under the TSA was 400 tractors. The removal of 85 tractors reduced VTS's available fleet to approximately 315 tractors, which is 78.75% of the committed capacity—already below the 85% equipment availability threshold. By Q4 2021, when the Cure Notice performance data was measured, the effective fleet had deteriorated further to approximately 248 tractors (62% of committed capacity). The initial fleet redeployment to Northwind was the precipitating cause of this cascade of performance failures. With fewer tractors available, VTS was unable to accept freight tenders at the contractually required rate, was unable to meet pickup and delivery windows, and experienced an increase in operational strain that contributed to elevated cargo claims.
33. In short, VTS's own deliberate, undisclosed decision to redirect equipment away from the SLG account was the primary driver of the very SLO failures that gave rise to the Cure Notice and subsequent termination. This fact is critical to any honest damages analysis and is entirely absent from Dr. Trask's report.
D. Stonefield's Volume Tendering
34. Because Dr. Trask's report and Vantor's litigation position both rely heavily on the allegation that SLG failed to meet its ACV commitment—and that this failure was a root cause of VTS's performance problems—it is necessary to examine the actual volume tendering history under the TSA.
35. Contract Year 1 (April 2019 – March 2020): SLG tendered the full committed volume during the first contract year. There is no dispute regarding CY1 performance, and no shortfall claim has been asserted by either party for this period.
36. Contract Year 2 (April 2020 – March 2021): Actual freight tenders from SLG to VTS during CY2 totaled approximately $31.8 million. Standing alone, this figure would represent a shortfall of approximately $11.4 million against the unadjusted ACV of $43.2 million. However, Stonefield invoked the force majeure provision of the TSA (Section 12.1) for the period of April 2020 through September 2020, a six-month interval during which the COVID-19 pandemic caused severe disruptions to freight demand across all sectors of the economy. Under the force majeure provision, SLG's volume commitment was proportionally adjusted for the affected period, reducing the applicable ACV for CY2 to $21.6 million (calculated as $43.2 million × 6/12, reflecting the six-month non-force-majeure portion of the contract year). Against this adjusted ACV, SLG's actual tenders of $31.8 million exceeded the commitment by $10.2 million. Accordingly, there was no volume shortfall in CY2 when the contractual force majeure adjustment is properly applied.
37. **Contract Year 3 (April 2021 – 2022, partial):** CY3 was interrupted by the March 4, 2022 termination, covering only approximately ten months of the twelve-month contract year. During this ten-month period, SLG tendered approximately $36.5 million in freight charges to VTS. Vantor has alleged that this represents a shortfall of $6.7 million against the full-year ACV of $43.2 million. However, this comparison is misleading because it measures actual tenders over a partial year (ten months) against a full-year commitment (twelve months). On an annualized basis, SLG's CY3 tendering pace was approximately $43.8 million ($36.5 million which would have slightly exceeded the full-year ACV had the contract continued through the remainder of CY3. Moreover, any true volume shortfall analysis for CY3 must account for the fact that the termination itself cut short the year, and any prorated obligations should be calculated accordingly.
38. In sum, the volume tendering record does not support Vantor's narrative that SLG systematically underperformed its volume commitment under the TSA. CY1 was fully performed. CY2 exceeded the adjusted ACV by a substantial margin. CY3, when properly annualized, was on pace to meet or exceed the ACV. These facts are relevant both to the validity of VTS's asserted defenses and to the proper calculation of damages.
III. CRITIQUE OF DR. TRASK'S DAMAGES ANALYSIS
39. Having established the relevant factual and contractual framework, I turn to a detailed critique of Dr. Trask's damages analysis. As set forth below, the Trask Report contains at least five fundamental errors, each of which independently inflates the damages figure and, collectively, result in an overstatement of damages by a factor of approximately eleven to one.
A. Overview of Dr. Trask's Conclusions
40. Dr. Trask's report, served on May 15, 2023, concludes that Vantor has suffered total damages of $95.4 million as a result of the TSA termination. This figure is comprised of the following components:
• Liquidated damages (2 full remaining contract years): $64,800,000, calculated as 75% × $43.2 million × 2 years;
• Liquidated damages (partial year, 27 days): $2,430,000, calculated as 75% × $43.2 million ×
• Total liquidated damages: $67,230,000;
• Lost profits: $18,700,000, calculated using a 12% operating margin applied to the remaining committed volume;
• Stranded assets and costs: $5,200,000, representing equipment lease obligations, depreciation, and idle asset costs;
• Workforce reduction costs: $2,870,000, representing severance and related costs for approximately 180 terminated employees; and
• Mitigation costs: $1,400,000, representing costs allegedly incurred by Vantor in attempting to find replacement freight volume.
41. For the reasons set forth below, each of these components is affected by one or more fundamental analytical errors, and the aggregate figure of $95.4 million bears no reasonable relationship to any actual or reasonably anticipated harm suffered by Vantor as a result of the TSA termination.
B. Fundamental Error 1: Assumption of Liquidated Damages Enforceability Without Economic Analysis
42. The single largest component of Dr. Trask's damages calculation is his claim for liquidated damages in the amount of $67.23 million, representing over 70% of his total damages figure. Dr. Trask arrives at this number by mechanically applying the liquidated damages formula set forth in Section 14.2 of the TSA. However, Dr. Trask's report simply assumes as a given that the liquidated damages clause is enforceable. He performs no independent economic analysis of whether the formula produces results that bear a reasonable relationship to the anticipated or actual harm arising from early termination. This is a critical omission.
43. Under well-established New York law, which governs the TSA pursuant to its choice-of-law provision, a liquidated damages clause is enforceable only if two conditions are satisfied: (i) the amount liquidated bears a reasonable proportion to the probable loss at the time of contracting, and (ii) actual damages flowing from the breach would be difficult to ascertain. Where the amount fixed is "plainly or grossly disproportionate to the probable loss," the clause will be struck down as an unenforceable penalty. See, e.g., Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354 (1977); JMD Holding Corp. v. Congress Financial Corp., 4 N.Y.3d 373 (2005).
44. As an economist, I am not offering legal conclusions regarding the enforceability of the liquidated damages clause. However, I am qualified to, and do, offer an economic opinion on the question of whether the formula produces results that are reasonably proportionate to any actual or anticipated harm. As I demonstrate in Section III.G below, the answer is definitively no. The liquidated damages formula assumes that VTS's net economic benefit from the TSA is 75% of gross revenue—an assumption that is economically absurd for an asset-based trucking operation. VTS's actual operating margins were in the range of 3% to 5%, meaning that the formula overstates the economic benefit to VTS by a factor of more than ten.
45. An expert damages report that claims $67.23 million in liquidated damages without performing any analysis of whether the formula produces economically reasonable results is fundamentally deficient. Dr. Trask essentially invites the Court to enforce the clause without any economic evidence supporting its reasonableness—a position that cannot withstand scrutiny.
C. Fundamental Error 2: Duplicative Damages
46. Dr. Trask's report claims both liquidated damages of $67.23 million and lost profits of $18.7 million, for a combined total of $85.93 million on these two categories alone. This approach results in impermissible double recovery and is economically indefensible.
47. Under New York law, a plaintiff cannot recover both liquidated damages and actual damages (including lost profits) arising from the same breach. The purpose of a liquidated damages clause is to serve as a substitute for actual damages—to provide a predetermined measure of recovery in lieu of proof of actual loss. Where a liquidated damages clause is enforceable, it fixes the measure of damages and precludes additional recovery. Where it is unenforceable, the plaintiff is remitted to proving actual damages through traditional methodologies. In no circumstance is the plaintiff entitled to both.
48. The liquidated damages clause in Section 14.2 of the TSA was plainly intended to be VTS's exclusive remedy for a non-Cause termination by SLG. The clause provides a formula for calculating the "Termination Payment" due upon early termination without Cause, and the structure of the clause indicates that this payment was intended to make VTS whole for the loss of the remaining contract term. Dr. Trask's decision to add $18.7 million in lost profits on top of $67.23 million in liquidated damages results in overcompensation—and in a total figure ($85.93 million) that exceeds any economically defensible measure of VTS's loss by an enormous margin.
49. The logic is straightforward: if the liquidated damages clause is enforceable, the lost profits claim is subsumed within it, and Dr. Trask's separate lost profits calculation should be zeroed out. If the liquidated damages clause is unenforceable (as I believe the economic evidence supports), then only actual damages—properly calculated using a lost-profits methodology—are recoverable, and the $67.23 million figure should be zeroed out. Under no scenario should both figures stand.
D. Fundamental Error 3: Inflated Operating Margin Assumptions
50. Dr. Trask's lost profits calculation of $18.7 million is predicated on the assumption that VTS would have earned a 12% operating margin on SLG freight over the remaining contract term. This margin assumption is central to his analysis and, in my opinion, is significantly overstated and unsupported by the evidence.
51. The 12% figure appears to be derived from VTS's self-reported margins on the SLG account, as presented in internal VTS documents. However, Dr. Trask does not independently verify this figure against VTS's audited financial statements, industry benchmark data, or any analysis of the costs VTS would have actually incurred in performing the remaining contract years.
52. My analysis of VTS's audited financials reveals company-wide operating margins that are far lower than 12%:
• FY 2021: VTS reported total revenue of approximately $385 million and operating income implying an operating margin of approximately 4.8%.
• FY 2022: VTS reported total revenue of approximately $310 million (reflecting the loss of the SLG account and broader freight market softening) and operating income implying an operating margin of approximately 3.1%.
53. The company-wide operating margin is the most reliable indicator of VTS's expected profitability on a major contract. While Dr. Trask may argue that the SLG account carried above-average margins due to volume density or lane efficiency, a margin of 12%—nearly three times the company-wide average—is extraordinary and requires far more rigorous support than self-reported internal data.
54. Industry benchmarks further undermine Dr. Trask's 12% assumption. Published data from the American Trucking Associations, American Transportation Research Institute, publicly traded comparables in the regional asset-based trucking sector consistently show operating margins in the range of 3% to 7% for well-managed carriers operating in the size and segment profile comparable to A 12% operating margin would place VTS in the upper echelon of trucking industry profitability—a characterization inconsistent with its actual financial performance and the SLO failures that precipitated this dispute.
55. Moreover, Dr. Trask's margin figure fails to adequately account for the variable costs that VTS would have incurred in performing the remaining contract years. These costs include, but are not limited to: fuel costs (which were escalating sharply in 2022 due to energy price volatility); driver compensation (which was rising industry-wide due to the same driver shortage that VTS itself cited as a cause of its performance failures); equipment maintenance and repair; insurance premiums; equipment depreciation or lease payments; and tolls, permits, and regulatory compliance costs. A proper contribution margin analysis—one that isolates the incremental margin VTS would have earned on SLG freight, net of all variable and semi-variable costs—yields a figure of approximately 5.2%. This figure, which I employ in my alternative damages analysis in Section IV below, is itself generous to Vantor, as it gives VTS credit for above-average lane efficiency on the SLG account.
56. The difference between 12% and 5.2% is not a rounding error—it is the difference between $18.7 million in lost profits and approximately $3.37 million. Dr. Trask's inflated margin assumption accounts for more than $15 million of his lost profits figure.
E. Fundamental Error 4: Failure to Account for Vantor's Own Breaches
57. Perhaps the most striking deficiency in Dr. Trask's analysis is his assumption that VTS would have fully performed the remaining contract term at 100% of SLO standards, earning the full committed volume revenue of $43.2 million per year for the remaining approximately 2.07 years. This assumption is flatly contradicted by the undisputed evidence in the record.
58. As detailed in Section II.C above, by Q4 2021 VTS was failing all five SLOs, in many cases by substantial margins. Its on-time pickup rate was 78.2% (versus a 95% requirement); its on-time delivery rate was 81.6% (versus 93%); its tender acceptance rate was 71.4% (versus 90%); its equipment availability was 62% (versus 85%); and its cargo claims ratio was 1.07% (versus 0.5%). These were not minor or transient deficiencies—they represented a pattern of systemic underperformance across every measurable dimension of the contract.
59. Critically, this underperformance was substantially self-inflicted. VTS had unilaterally redeployed 85 tractors—over 21% of its committed fleet—to the Northwind Distribution Co. account without SLG's knowledge or consent. Ms. Milescu's email (VHC-008417) confirms that this redeployment was a deliberate commercial decision, not a response to external market conditions. VTS's own internal performance data shows sustained below-threshold performance dating back to at least Q3 correlating with the timing of the fleet redeployment.
60. Economically, VTS's inability or unwillingness to maintain committed capacity would have had predictable consequences for the contract relationship even if SLG had not terminated the TSA on March 4, 2022. SLG would have been entitled to exercise a range of contractual remedies, including additional Cure Notices, rate adjustments or financial penalties for SLO failures, invocation of Section 7.4's substitute equipment provisions (allowing SLG to source replacement capacity at VTS's cost), or ultimately a second termination for Cause at a later date. Any or all of these actions would have reduced VTS's actual revenue and margins below the levels Dr. Trask assumes.
61. A proper damages analysis should have incorporated a accounting for the realistic scenarios that would have unfolded in the "but-for" world—the world in which the March 4, 2022 termination did not occur. In that world, VTS's deteriorating performance trajectory strongly suggests that the contract would have been modified, partially terminated, or legitimately terminated for Cause at some point during the remaining term, significantly reducing VTS's recoverable damages. Dr. Trask performs no such analysis. He assumes a "but-for" world in which VTS magically cures all of its performance deficiencies and operates at full capacity for the next two years—an assumption that ignores both the documented trajectory of VTS's performance and the undisclosed fleet redeployment that caused it.
F. Fundamental Error 5: No Meaningful Mitigation Analysis
62. Dr. Trask includes $1.4 million in "mitigation costs"—expenses allegedly incurred by Vantor in seeking replacement freight volume—but performs no analysis whatsoever of Vantor's failure to mitigate its lost profits. This omission is a significant methodological error.
63. Under New York law, a party claiming breach of contract damages has a duty to take reasonable steps to minimize its losses. Damages that could have been avoided through reasonable mitigation efforts are not recoverable. The burden of proving failure to mitigate rests on the breaching party, but the expert damages methodology should nonetheless account for available mitigation opportunities as a matter of economic rigor.
64. The freight market environment in the first and second quarters of 2022—the period immediately following the TSA termination—was exceptionally favorable for asset-based carriers seeking replacement business. Spot truckload rates during this period were approximately 35% above three-year historical averages, driven by continued post-pandemic demand, supply chain congestion, and driver shortages. Carrier capacity was in high demand across all corridors in which VTS operated. These conditions represent the most robust carrier market in recent history, and they created significant opportunities for VTS to place its freed-up capacity with new customers at competitive or even premium rates.
65. Despite these favorable market conditions, the evidence in the record indicates that Vantor and VTS undertook little or no meaningful effort to mitigate their losses. Derek Pruitt, Vantor's Vice President of Business Development—the individual most directly responsible for securing replacement business—testified at his deposition on July 10, 2023, that he could not identify specific mitigation steps taken by Vantor or VTS after the March 4, 2022 termination. He could not name specific shippers or brokers that VTS had solicited, could not identify carrier RFPs that VTS had participated in, and could not describe any engagement with freight brokers to place VTS capacity in the market.
66. My review of the discovery record confirms the absence of documentation supporting mitigation efforts. I have not identified evidence that Vantor or VTS actively solicited replacement freight volume, participated in carrier selection processes or requests for proposals, engaged freight brokers or load boards to place available capacity, or pursued any other systematic effort to replace the lost SLG revenue. Given VTS's scale (approximately 248 tractors and significant trailer capacity freed up by the loss of the SLG contract) and the exceptionally strong carrier market in 2022, an aggressive but reasonable mitigation effort would have replaced a substantial portion of lost SLG revenue within
67. Dr. Trask's failure to reduce his damages figure by the amount Vantor could have earned through reasonable mitigation efforts is a significant methodological omission that results in a material overstatement of damages. I address the appropriate mitigation credit in my alternative damages analysis in Section IV.D below.
G. Economic Analysis of Liquidated Damages Clause (Section 14.2)
68. I turn now to a detailed economic analysis of the liquidated damages formula in Section 14.2 of the TSA. As noted above, Dr. Trask applies this formula mechanically without performing any economic analysis of its reasonableness. My analysis demonstrates that the formula produces results that are grossly disproportionate to any actual or reasonably anticipated harm.
69. The formula set forth in Section 14.2 provides that, in the event of a termination by SLG without Cause, VTS is entitled to a "Termination Payment" calculated as follows:
Termination Payment = 75% × ACV × Number of Remaining Full and Partial Contract Years
70. Applied to the facts of this case, the formula produces the following result:
Termination Payment = 75% × $43,200,000 × approximately 2.07 years = $67,230,000
71. The key parameter in this formula is the 75% multiplier applied to gross revenue (the ACV). This multiplier represents, in economic terms, the assumed net economic benefit to VTS from each year of the contract. In other words, the formula assumes that for every dollar of freight revenue VTS receives under the TSA, seventy-five cents represents pure economic benefit—profit or contribution margin—while only twenty-five cents represents cost.
72. For an asset-based trucking operation of VTS's profile, this assumption is economically implausible. Asset-based trucking is a capital-intensive, operationally complex business with high variable costs. The principal cost categories include:
• Fuel: Typically represents 25–35% of gross revenue for truckload carriers;
• Driver compensation and benefits: Typically represents 30–40% of gross revenue;
• Equipment costs (depreciation, lease payments, maintenance): Typically represents 10–15% of gross revenue;
• Insurance: Typically represents 5–8% of gross revenue;
• Other operating costs (tolls, permits, regulatory compliance, administrative overhead): Typically represents 5–10% of gross revenue.
73. When these cost categories are aggregated, total operating costs for a regional asset-based trucking carrier typically consume 93% to 97% of gross revenue, leaving operating margins of 3% to 7%. VTS's own audited financials confirm margins consistent with this range: 4.8% in FY 2021 and 3.1% in FY 2022.
74. A liquidated damages formula that assumes 75% of revenue as net economic benefit implies, in effect, an operating margin of 75%. This is more than ten times VTS's actual operating margins and more than fifteen times the upper end of the industry benchmark range. The disproportion is so extreme as to be self-evidently unreasonable.
75. I acknowledge that the TSA was drafted by Ashford Meridian LLP on behalf of Stonefield. The identity of the drafter is a factual consideration that may be relevant to the legal analysis of enforceability. However, regardless of which party drafted the clause, the economic disproportion between the formula's output and any actual or anticipated loss is an objective fact that does not depend on which party proposed the language.
76. I have also considered whether, at the time of contracting (March 15, 2019), actual damages from early termination would have been "difficult to ascertain"—the second prong of the New York enforceability analysis. In my opinion, actual damages from early termination of a transportation services agreement of this type are readily ascertainable using standard economic and financial methodologies. A lost-profits analysis—projecting revenue over the remaining contract term, subtracting projected costs, and discounting to present value, reduced by available mitigation—is a well-established and routinely applied methodology in transportation contract disputes. Nothing about the TSA or the freight industry makes such a calculation uniquely difficult or uncertain. The parties had access to detailed rate schedules, volume commitments, cost data, and market benchmarks that would have permitted a straightforward damages calculation at the time of contracting.
77. In summary, the liquidated damages figure of $67.23 million is grossly disproportionate to any actual or reasonably anticipated loss arising from the termination of the TSA. Under my alternative analysis in Section IV below, maximum actual damages are approximately $8.2 million (assuming all consequential damage categories are recoverable) or approximately $1.7 million (if consequential damages are barred). The ratio of liquidated damages to maximum actual damages is therefore approximately 8.2 to 1 (or as high as 39.5 to 1 if consequential damages are excluded). This degree of disproportion supports a determination that the liquidated damages clause operates as an unenforceable penalty under New York law.
IV. ALTERNATIVE DAMAGES ANALYSIS
78. Having identified the fundamental errors in Dr. Trask's methodology, I now present an alternative damages analysis that corrects for those errors. This analysis assumes arguendo that Stonefield's termination of the TSA was wrongful—that is, that the Court concludes SLG did not have valid Cause under Section 13.1(a) to terminate the contract—and that VTS is therefore entitled to expectation damages for breach of contract. I wish to emphasize that this assumption is made solely for purposes of this alternative analysis and does not reflect my view of the merits of Stonefield's for-Cause termination defense.
A. Methodology
79. My alternative damages analysis calculates lost profits using a contribution margin methodology, which is the standard approach in commercial breach of contract cases. The contribution margin methodology measures the profit the plaintiff would have earned on the contract but for the breach, calculated as projected revenue minus projected variable and incremental costs that the plaintiff would have incurred in performing the remaining contract term.
80. My analysis incorporates the following adjustments, each of which is necessary to produce a damages figure that reflects economic reality:
(i) Realistic volume projections accounting for VTS's actual performance trajectory and the likelihood that VTS's deteriorating SLO compliance would have resulted in reduced freight volume even in the absence of termination;
(ii) Appropriate margin assumptions based on VTS's audited financial statements and industry benchmark data, rather than unverified self-reported account-level margins;
(iii) Offsets for SLG's own volume shortfall claims that VTS would assert are owed under the ACV commitment, ensuring that damages are not inflated by volume projections that VTS itself alleges were not being met;
(iv) Mitigation credit for revenue that VTS could have reasonably earned through diligent mitigation efforts, given the favorable freight market conditions prevailing in 2022; and
(v) Present value discounting to reflect the time value of money, as future lost profits must be reduced to their present value at the time of breach.
B. Revenue Projection
81. The remaining contract period at the time of termination was approximately 24.9 months, running from March 4, 2022 through March 31, 2024 (approximately 2.07 contract years). At the full ACV of $43.2 million per year, the maximum gross revenue VTS could have earned over this period was approximately $89.4 million ($43.2 million × 2.07 years).
82. However, it is not economically reasonable to assume that VTS would have captured the full ACV over the remaining term. As of Q4 2021, VTS's operational performance was severely degraded. Its tender acceptance rate of 71.4% meant that VTS was declining nearly 30% of freight tenders from SLG—freight that SLG would have been forced to place with alternative carriers. Its equipment availability of 62% (approximately 248 tractors of 400 committed) meant that VTS lacked the physical capacity to handle the full ACV volume even if it had accepted every tender.
83. Based on the Q4 2021 performance data and the trend of VTS's capacity decline (from 400 tractors at the start of the contract to approximately 315 after the Northwind redeployment to approximately 248 by Q4 2021), I estimate that VTS's realistic volume capture rate over the remaining contract term would have been approximately 70% to 75% of the ACV. This range accounts for partial recovery of fleet capacity (assuming VTS would have eventually returned some of the Northwind-deployed tractors), continued pressure from the driver shortage, and the likelihood that SLG would have invoked contractual remedies (including Section 7.4 substitute equipment provisions) to redirect freight to other carriers.
84. Applying this capture rate to the full remaining-term revenue:
• Low estimate: $89.4 million × 70% = $62.6 million
• High estimate: $89.4 million × 75% = $67.1 million
• Midpoint estimate: $64.8 million in projected gross revenue over the remaining term
85. I use the midpoint estimate of $64.8 million as the projected gross revenue figure in the balance of my analysis. This figure is already generous to Vantor, as it assumes VTS would have stabilized its performance at a level sufficient to capture roughly 72.5% of the ACV—a level that VTS had not demonstrated the ability to achieve in the months preceding termination.
C. Margin Application
86. As discussed in Section III.D above, VTS's company-wide operating margins for the relevant fiscal years were approximately 4.8% (FY 2021) and 3.1% (FY 2022), yielding a blended average of approximately I have considered whether an account-specific margin adjustment is warranted for the SLG contract. Because the SLG account involved dense volume across relatively efficient corridor lanes, it may have carried modestly higher margins than VTS's overall book of business. To be generous to Vantor, I apply a contribution margin of 5.2%—approximately 30% above VTS's blended company-wide operating margin.
87. Applying the 5.2% contribution margin to the projected gross revenue of $64.8 million:
Gross Lost Profits (before mitigation) = $64,800,000 × 5.2% = approximately $3,370,000
88. This figure represents the maximum lost profits VTS could have earned on the SLG contract over the remaining term, before any credit for mitigation. It stands in stark contrast to Dr. Trask's lost profits figure of $18.7 million, which is inflated by both an unrealistic margin assumption (12% versus 5.2%) and an unrealistic volume assumption (100% of ACV versus 72.5%).
D. Mitigation Credit
89. As discussed in Section III.F above, VTS had both the capacity and the market opportunity to replace a substantial portion of its lost SLG revenue through reasonable mitigation efforts. The freight market in Q1 and Q2 of 2022 was characterized by spot truckload rates approximately 35% above three-year historical averages, acute demand for carrier capacity, and favorable conditions for asset-based carriers seeking new shipping customers or broker relationships.
90. Following the termination, VTS had approximately 248 tractors and significant trailer capacity freed from SLG-dedicated service. This represented a substantial and marketable pool of transportation capacity that could have been redeployed to alternative freight accounts.
91. Based on my review of market data, industry conditions, and comparable carrier transitions, I estimate that a reasonable and diligent mitigation effort by VTS would have produced the following results:
• Months 1–3 (March–May 2022): replacement revenue as VTS solicited new accounts, participated in carrier RFPs, and engaged freight brokers. Estimated replacement: of lost SLG revenue.
• Months 4–6 (June–August 2022): replacement contracts secured; revenue ramp-up. Estimated replacement: of lost SLG revenue.
• Months 7–12 (September 2022–February 2023): Full ramp of replacement accounts. Estimated replacement: of lost SLG revenue.
• Months 13+ (March 2023 onward): Steady-state replacement revenue. Estimated replacement: of lost SLG revenue, subject to softening spot market conditions in H2 2022 and 2023.
92. On a blended basis over the full remaining contract term (approximately 24.9 months), I estimate that reasonable mitigation efforts would have replaced approximately of lost SLG revenue, yielding mitigation income sufficient to offset a substantial portion of VTS's lost profits. After applying the same 5.2% contribution margin to the estimated mitigation income and netting this against gross lost profits, the resulting net lost profits after mitigation are approximately $1.0 million to $1.7 million.
93. I use the upper end of this range—$1.7 million—in my summary table to be conservative (i.e., generous to Vantor). This figure assumes relatively modest mitigation performance at the lower end of the reasonable replacement range. A more aggressive mitigation scenario would reduce net lost profits further.
E. Consequential Damages Analysis
94. In addition to liquidated damages and lost profits, Dr. Trask claims three categories of consequential or incidental damages: stranded assets ($5.2 million), workforce reduction costs ($2.87 million), and mitigation costs ($1.4 million). I address each of these categories below.
95. As a threshold matter, TSA Section 15.1 contains a mutual waiver of consequential damages. Section 15.1 provides, in relevant part, that neither party shall be liable to the other for any indirect, incidental, consequential, special, or punitive damages arising out of or in connection with the TSA, regardless of whether such damages are based on contract, tort, strict liability, or any other theory. Each of the three categories of damages claimed by Dr. Trask represents indirect, incidental, or consequential losses flowing from the termination of the TSA—not direct contract damages. Direct damages in a breach of contract action are limited to the benefit of the bargain (i.e., lost profits on the contract); downstream costs such as stranded assets, severance payments, and mitigation expenses are quintessential consequential damages. Accordingly, I understand these categories to be barred by Section 15.1 as a legal matter, although I defer to the Court on the ultimate question of contractual interpretation.
96. Even if these categories are not barred by Section 15.1, they require independent scrutiny and, in several respects, are overstated.
97. Stranded Assets ($5.2 million): Dr. Trask includes $5.2 million in stranded asset costs, representing equipment lease obligations, depreciation, and idle asset costs allegedly attributable to equipment that was "stranded" by the loss of the SLG account. This figure suffers from two deficiencies. First, depreciation and lease costs are ongoing obligations that VTS would have incurred regardless of the SLG contract. These are fixed costs that existed before the TSA and would have continued after it. They are not incremental costs caused by the termination. Second, VTS had the ability to redeploy freed-up equipment to replacement accounts—indeed, VTS had previously demonstrated its ability to reassign tractors on short notice (as it did when redeploying 85 tractors to the Northwind account in October 2021). After accounting for the redeployment value of the equipment and adjusting for non-incremental costs, I estimate the supportable stranded asset claim at approximately $3.2 million. Even this reduced figure is more appropriately characterized as a consequential damage barred by Section 15.1.
98. Workforce Reduction Costs ($2.87 million): Dr. Trask claims $2.87 million in severance and related costs for approximately 180 terminated employees. This figure is overstated for two reasons. First, the 180-employee figure includes drivers who could have been reassigned to other VTS operations. Vantor's consolidated FY 2022 revenue was still approximately $310 million, indicating a substantial continuing business operation that could have absorbed a meaningful portion of the displaced workforce. Second, the severance cost of $2.87 million for 180 employees implies an average severance payment of approximately $15,944 per employee. For hourly-wage truck drivers, this figure is excessive relative to industry norms and lacks adequate documentary support. VTS's driver termination and severance records, which I have reviewed, do not consistently document individual severance amounts or the basis for their calculation. After adjusting for reassignment opportunities and applying industry-standard severance benchmarks, I estimate the supportable workforce reduction claim at approximately $2.1 million. This figure, too, is more appropriately characterized as a consequential damage.
99. Mitigation Costs ($1.4 million): Dr. Trask claims $1.4 million in costs allegedly incurred by Vantor in its efforts to find replacement freight volume. This claim is problematic in light of the evidence—or, more precisely, the absence of evidence—regarding Vantor's actual mitigation efforts. As discussed in Section III.F, Mr. Pruitt could not identify specific mitigation activities at his deposition, and the discovery record is largely devoid of documentation supporting affirmative mitigation steps. To the extent Vantor incurred some costs in exploring replacement business opportunities (such as staff time, travel, or business development expenses), a portion of these costs may be supportable. I have reduced the figure modestly to $1.2 million to exclude As with the other consequential damage categories, I note that mitigation costs are incidental or consequential in nature and may be barred by Section 15.1.
F. Summary of Maximum Alternative Damages
100. The following table summarizes my alternative damages analysis as compared to Dr. Trask's figures:
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