1012-00005 · Stonefield Logistics Group · Experts

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166

MEMORANDUM

September 18, 2023

TO: Samuel Eklund, Responsible Partner, Litigation (General)

FROM: Patrick Gallagher, Lead Associate, Litigation (General)

RE: Strategic Analysis — Potential Daubert Motion Against Expert Report of Dr. Philip Trask (Trask Greystone & Associates); Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)

MATTER NO.: 1012-00005

CLIENT: Stonefield Logistics Group Inc.

I. Executive Summary and Recommendation

This memorandum evaluates whether our client, Stonefield Logistics Group Inc. ("Stonefield" or "SLG"), should file a standalone Daubert motion to exclude the expert testimony of Dr. Philip Trask, Founder and Lead Expert of Trask Greystone & Associates (400 Madison Avenue, Suite 900, New York, NY 10017), who serves as Vantor Holdings Corp.'s ("Vantor") damages expert in this matter, or instead defer the Daubert challenge and incorporate it into summary judgment briefing at the dispositive motion stage. This memorandum also identifies the specific grounds available for challenging Dr. Trask's expert report, assesses the relative strength of each argument, and recommends a strategic approach that accounts for the current procedural posture of the case.

Dr. Trask's expert report, served on May 15, 2023, opines that Vantor's total damages resulting from Stonefield's alleged wrongful termination of the Transportation Services Agreement dated March 15, 2019 (the "TSA") amount to $95,400,000, distributed across five categories:

Recommendation: Stonefield should defer the filing of a standalone Daubert motion. Instead, we recommend incorporating Daubert-based challenges to Dr. Trask's testimony into a combined summary judgment motion when the case proceeds to the dispositive motion stage, currently scheduled for March 1, 2024, pursuant to the Case Management Order entered on February 17, 2023, by the Honorable Margaret T. Calloway. We note, however, that all deadlines are currently stayed following the withdrawal of Vantor's counsel of record, Caldwell Royce & Shapiro LLP ("CRS"), effective October 18, 2023, and the case is effectively dormant pending Vantor's retention of new counsel or further order of the Court.

The rationale for deferral rests on four principal considerations:

First, combining the Daubert arguments into summary judgment briefing is more efficient and avoids alerting Vantor to specific evidentiary vulnerabilities in Dr. Trask's report that could be cured through a supplemental or corrected expert report before trial. Courts in the Second Circuit have permitted such supplemental submissions to address Daubert deficiencies, and a premature standalone motion would provide a roadmap for correction.

Second, several of the Daubert arguments overlap substantially with the merits arguments that will form the core of Stonefield's summary judgment motion — specifically, the unenforceability of the liquidated damages clause under New York law, Vantor's failure to mitigate, and the consequential damages bar under TSA Section 15.1. These arguments are more powerfully presented in a merits framework (addressing entitlement to damages) than in a gatekeeping framework (addressing admissibility of testimony).

Third, a standalone Daubert motion carries the risk of partial denial, which is a common outcome in this District, particularly before Judge Calloway, whose record does not suggest aggressive gatekeeping on Daubert issues in commercial disputes. A partial denial could create an adverse impression or unfavorable case law within the proceeding that would undermine the subsequent summary judgment motion.

Fourth, the current procedural posture — with Vantor unrepresented following CRS's withdrawal — makes the timing and utility of any motion uncertain. If the case is ultimately dismissed for failure to prosecute under Federal Rule of Civil Procedure 41(b), the motion would be entirely unnecessary.

This analysis is consistent with, and should be read in conjunction with, the September 5, 2023 Daubert Motion Research Memorandum prepared by Simone Laroche, which reached a substantially similar conclusion regarding the viability of specific grounds for exclusion (particularly with respect to the lost profits opinion) while independently recommending deferral to the summary judgment stage.

II. Background

A. The Trask Greystone Expert Report

Dr. Philip Trask's expert report was served on May 15, 2023, by CRS on behalf of Vantor. Dr. Trask is the Founder and Lead Expert of Trask Greystone & Associates, a New York-based consulting firm specializing in damages quantification in complex commercial disputes. His curriculum vitae, attached as Exhibit A to the report, lists a Ph.D. in applied economics from Columbia University, over twenty years of consulting experience, and approximately forty prior engagements as a testifying expert, primarily in transportation, logistics, and supply-chain disputes.

The report purports to quantify the damages suffered by Vantor and its wholly owned operating subsidiary, Vantor Transport Services LLC ("VTS"), as a result of Stonefield's alleged wrongful termination of the TSA (Contract Ref. No. SLG-VTS-2019-0315) on March 4, 2022. The TSA was a five-year transportation services agreement under which VTS served as a dedicated carrier for Stonefield's domestic freight operations, with VTS committing approximately 400 tractors and 1,200 trailers to SLG-dedicated lanes across the eastern and central United States.

Dr. Trask's report is organized into seven sections and spans sixty-three pages, exclusive of exhibits. The report quantifies Vantor's total claimed damages at $95,400,000, allocated across the five categories identified in Section I above. The liquidated damages claim of $67,230,000 — by far the largest component — is derived from the formula set forth in TSA Section 14.2, which Dr. Trask applied mechanically without independently analyzing the enforceability of that provision under New York law. The lost profits claim of $18,700,000 is based on a "but for" analysis comparing VTS's projected revenue from the SLG contract over the remaining term against projected costs, using a 12% operating margin assumption that is a central focus of this memorandum.

The three remaining categories — stranded assets ($5,200,000), workforce reduction costs ($2,870,000), and mitigation costs ($1,400,000) — collectively account for $9,470,000 and relate to alleged consequential harms flowing from the termination, including the asserted decline in value of VTS's dedicated fleet equipment, severance and retraining costs for displaced drivers and operational personnel, and costs incurred in seeking replacement business.

B. Stonefield's Rebuttal Expert Report

Stonefield's rebuttal expert report was served on August 25, 2023, by Dr. Evelyn Rosser, Managing Director of Kensington Analytics Group LLC ("KAG"), located at 1700 Market Street, Suite 2800, Philadelphia, PA 19103. Dr. Rosser was assisted in the preparation of the report by Senior Analyst Michael Chung. Dr. Rosser holds a Ph.D. in financial economics from the Wharton School of the University of Pennsylvania and has served as a testifying expert in over sixty commercial disputes involving damages quantification, with particular expertise in the transportation and logistics industries.

Dr. Rosser's forty-eight-page rebuttal report reaches three principal opinions. First, if Stonefield's termination of the TSA was valid "for Cause" under TSA Section 13.1(a) — as Stonefield contends — then Vantor is entitled to $0 in damages, because the Cause termination provision does not provide for any payment or damages obligation to the terminated party. Second, under an alternative lost-profits theory — assuming arguendo that the termination was wrongful — maximum damages would be approximately $8,200,000 after adjusting for: (i) VTS's own material breaches of the TSA, including the undisclosed fleet redeployment and persistent service-level failures in Q4 2021; (ii) Vantor's failure to mitigate damages by seeking replacement freight business for VTS's SLG-dedicated capacity; and (iii) recalculation of operating margins using account-specific financial data rather than the inflated company-wide blended margin employed by Dr. Trask. Third, the liquidated damages formula in Section 14.2, when applied to the facts of this case, produces a result grossly disproportionate to Vantor's actual harm, supporting unenforceability as an impermissible penalty under New York law.

Dr. Rosser's report will be the foundational evidentiary document supporting any Daubert or summary judgment challenge to Dr. Trask's opinions, and its conclusions are cross-referenced throughout this memorandum.

C. Prior Analysis

This memorandum builds upon two prior internal work-product analyses of Dr. Trask's report:

First, the May 22, 2023 Analysis of Trask Greystone Expert Report, prepared jointly by the undersigned and Simone Laroche, which identified four principal methodological weaknesses in Dr. Trask's report: (1) the use of an inflated company-wide blended operating margin rather than account-specific data; (2) the failure to account for VTS's own material breaches; (3) the absence of any meaningful mitigation analysis; and (4) the duplicative nature of the liquidated damages and lost profits claims. That memorandum recommended retaining Dr. Rosser to prepare a detailed rebuttal report addressing each of these deficiencies and laid the groundwork for the rebuttal engagement with KAG.

Second, the September 5, 2023 *Daubert* Motion Research Memorandum, prepared by Simone Laroche, which analyzed the governing legal standards for Daubert motions in the S.D.N.Y. and evaluated the likelihood of success on each identified ground for exclusion. That memorandum concluded that there are viable grounds to exclude or limit Dr. Trask's lost profits opinion based on his inflated margin assumptions and failure to conduct account-level analysis, but recommended deferring any motion to the summary judgment stage for strategic reasons substantially consistent with those articulated herein.

III. Legal Standard — *Daubert* / Federal Rule of Evidence 702

Under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), and its progeny, the trial court acts as a "gatekeeper" charged with ensuring that expert testimony admitted under Federal Rule of Evidence 702 is both relevant and reliable. Rule 702, as amended effective December 1, 2023, provides that a witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion if:

(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(d) the expert's opinion reflects a reliable application of the principles and methods to the facts of the case.

The Supreme Court in Daubert identified four non-exclusive factors that may be relevant in assessing the reliability of expert testimony: (1) whether the theory or technique can be and has been tested; (2) whether the theory or technique has been subjected to peer review and publication; (3) the known or potential rate of error of the particular technique; and (4) whether the theory or methodology has been generally accepted within the relevant scientific or professional community. See Daubert, 509 U.S. at 593–94. The Court emphasized, however, that these factors are illustrative rather than exhaustive, and that the gatekeeping inquiry must be "flexible" and adapted to the particular circumstances of the case. Id. at 594; see also Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141–42 (1999) (extending Daubert framework to all expert testimony, including non-scientific expertise).

In the Second Circuit, the gatekeeping function is well-established. See Amorgianos v. Nat'l R.R. Passenger Corp., 303 F.3d 256, 265 (2d Cir. 2002) ("Under Daubert, the district court must act as a 'gatekeeper' by making a preliminary determination, pursuant to Rule 104(a), regarding whether the expert's testimony is reliable."). Courts in this Circuit apply the Daubert factors with a focus on the methodology employed by the expert, not the conclusions reached. See Nimely v. City of New York, 414 F.3d 381, 396 (2d Cir. 2005) ("A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered.") (quoting Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997)).

For damages experts in commercial litigation — the category most directly relevant here — courts in the S.D.N.Y. have excluded expert opinions based on speculative or unsupported assumptions, failure to account for market realities, and reliance on inflated or otherwise unsupported financial inputs. See, e.g., Boucher v. U.S. Suzuki Motor Corp., 73 F.3d 18, 21 (2d Cir. 1996) (excluding damages opinion based on speculative revenue projections); In re Northpoint Holdings Sec. Litig., 819 F.3d 642, 659 (2d Cir. 2016) (noting that a damages model must be "tied to the facts of the case"). At the same time, the Second Circuit has cautioned that Daubert exclusion is an "exacting standard" and that "[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence." Amorgianos, 303 F.3d at 267 (quoting Daubert, 509 U.S. at 596).

Critically, the burden of establishing the admissibility of expert testimony rests on the proponent of the evidence — here, Vantor — which must demonstrate admissibility by a preponderance of the evidence. See Daubert, 509 U.S. at 592 n.10; Zuchowicz v. United States, 140 F.3d 381, 386 (2d Cir. 1998). This allocation of the burden of proof is significant because it means that Vantor must affirmatively establish that Dr. Trask's opinions satisfy each element of Rule 702, including that his opinions reflect a reliable application of reliable principles to sufficient facts.

IV. Specific *Daubert* Arguments Against Dr. Trask's Report

We have identified six specific grounds on which Dr. Trask's expert report is vulnerable to a Daubert challenge. These arguments vary considerably in strength and in their suitability for a standalone Daubert motion versus incorporation into summary judgment briefing. Each is analyzed below in order of assessed strength.

A. Lost Profits Opinion — Inflated Operating Margin Assumptions (Strongest Argument)

Dr. Trask's lost profits calculation of $18,700,000 rests on an assumed 12% operating margin on Stonefield freight for the remaining term of the TSA (from the March 4, 2022 termination date through the contract's expiration on March 14, 2024). This 12% margin figure is the single most consequential assumption in the lost profits analysis, and it is, in our assessment, fundamentally unsupported by the factual record.

Dr. Trask derived the 12% margin figure from VTS's company-wide blended operating margin for fiscal year 2020. As we identified in our May 22, 2023 analysis, fiscal year 2020 was a COVID-impacted year characterized by unusually favorable carrier economics: fuel costs dropped precipitously in Q2 and Q3 2020 due to reduced demand, while limited transportation capacity simultaneously drove rate premiums as shippers competed for available carriers during supply-chain disruptions. These conditions produced an anomalously high company-wide margin for VTS that does not reflect the economics of the Stonefield account specifically, nor does it reflect normalized market conditions.

More fundamentally, VTS's actual operating margin on the Stonefield account specifically — as reflected in VTS's own internal Carrier Performance Portal data and financial records produced in discovery — was materially lower than the 12% company-wide blended figure that Dr. Trask employed:

• Contract Year 1 (April 2019 – March 2020): Approximately 6.8%–7.4%, after accounting for the dedicated fleet costs associated with the 400 tractors and 1,200 trailers committed to SLG lanes, including depreciation, insurance, and driver wages allocated to the Stonefield account.

• Contract Year 2 (April 2020 – March 2021): Approximately 5.1%–6.2%, reflecting the continued impact of dedicated fleet costs and declining per-mile revenue as the initial rate structure matured and certain fuel surcharge pass-through provisions were adjusted downward.

The difference between the 12% margin assumed by Dr. Trask and the 5.5%–6.5% account-level margin reflected in VTS's own records is not a matter of legitimate professional disagreement or reasonable approximation. Rather, Dr. Trask simply did not perform an account-level profitability analysis. His report uses a company-wide blended figure that includes higher-margin revenue streams — particularly VTS's warehouse and distribution operations — that are entirely unrelated to the Stonefield transportation services contract. The Stonefield account, as a dedicated-fleet arrangement with contractually fixed rates and significant capital commitments, was structurally a lower-margin business than VTS's asset-light brokerage and warehouse operations.

Dr. Rosser's rebuttal report identifies this as a fundamental methodological flaw. Using the account-level margin data from VTS's own financial records, Dr. Rosser calculates that a proper account-level margin of approximately 5.5%–6.5% would reduce the lost profits figure to approximately $4,800,000–$5,600,000 — even before applying any mitigation offsets, breach adjustments, or other reductions. This represents a reduction of approximately $13,100,000–$13,900,000, or roughly 70%–74%, from Dr. Trask's claimed lost profits figure.

This is the strongest *Daubert* argument available to Stonefield. Dr. Trask's failure to use account-specific data — when such data was available in VTS's own financial records and had been produced in discovery — renders his lost profits opinion unreliable under Rule 702. An expert who ignores the most directly relevant data in favor of an inflated proxy measure has not "reliably applied the principles and methods to the facts of the case" as required by Rule 702(d). See Boucher, 73 F.3d at 21; see also Lippe v. Bairnco Corp., 99 B.R. 548, 559 (Bankr. S.D.N.Y. 1989) (excluding damages opinion where expert "failed to consider the most directly relevant data available").

Notwithstanding the strength of this argument, it can be presented equally effectively in a summary judgment context, supported by Dr. Rosser's rebuttal report, the underlying VTS financial data produced in discovery, and the deposition testimony of Vantor's corporate representatives who were unable to explain why account-level data was not used.

B. Liquidated Damages — Legal Conclusion Disguised as Expert Opinion

The largest component of Dr. Trask's damages opinion is the liquidated damages claim of $67,230,000, which accounts for over 70% of the total claimed damages. Dr. Trask's report assumes the enforceability of the liquidated damages clause in TSA Section 14.2 without conducting any independent analysis of whether the clause satisfies the requirements for enforceability under New York law. The report simply states that "the liquidated damages provision represents the contractually agreed-upon measure of damages for early termination" and proceeds to apply the contractual formula mechanically.

This is a legal conclusion, not an expert damages opinion. Whether the liquidated damages clause in Section 14.2 is enforceable under New York law requires application of the well-established two-part test: (1) the amount fixed must have been a reasonable estimate of the probable damages at the time of contracting, and (2) the actual damages must have been difficult to ascertain at the time of contracting. See JMD Holding Corp. v. Cong. Fin. Corp., 4 N.Y.3d 373, 380 (2005); Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 358 (1977). If the liquidated amount is "grossly disproportionate" to the probable loss or constitutes a penalty, the clause is unenforceable and the non-breaching party is limited to its actual damages. This is a question of law for the Court, not a question of fact or a matter of expert opinion.

Dr. Trask's calculation under the Section 14.2 formula is as follows:

• Annual Contract Value ("ACV"): $43,200,000 (per TSA Schedule A)

• Liquidated damages rate: 75% of ACV per remaining year

• Remaining term at termination: 2 full years plus 27 days (March 4, 2022 through March 14, 2024)

• Calculation: (75% × $43,200,000 × 2) + (75% × $43,200,000 × 27/365) = $64,800,000 + $2,430,000 ≈ $67,230,000

There is a viable Daubert argument that Dr. Trask's liquidated damages "opinion" should be disregarded as an improper legal conclusion that invades the province of the Court. An expert may not offer opinions on questions of law or assume the answer to a contested legal issue as the premise of a damages calculation. See United States v. Bilzerian, 926 F.2d 1285, 1294 (2d Cir. 1991) (an expert may not "usurp the role" of the court on legal questions); see also Marx & Co. v. Diners' Club, Inc., 550 F.2d 505, 509–10 (2d Cir. 1977).

However, this argument is more effectively raised on summary judgment than in a standalone Daubert motion, for two reasons. First, the underlying arithmetic of Dr. Trask's liquidated damages calculation is not in dispute — the formula, the ACV figure, and the remaining term are all established by the contract terms. The only contested issue is the legal enforceability of the clause, which is a purely legal question that the Court will resolve on summary judgment through application of New York contract law principles. Second, if raised on a Daubert motion, the Court may simply note that the enforceability question is a legal issue and allow Dr. Trask to testify to the mathematical calculation subject to the Court's ultimate legal ruling on enforceability. This would not be a meaningful win, as it would leave Dr. Trask's testimony intact while merely reserving the legal question for later resolution — precisely the outcome that would occur in any event.

C. Failure to Account for Vantor's Own Breaches and Contributory Conduct

Dr. Trask's damages model assumes that Vantor and VTS were fully performing parties under the TSA at the time of termination and does not incorporate any offset, adjustment, or reduction to account for VTS's own material breaches and performance failures. This assumption is directly contradicted by the discovery record, which establishes that VTS was in substantial breach of multiple provisions of the TSA in the months preceding the termination.

Specifically, the record reflects the following undisputed or well-documented VTS performance failures:

Fleet Redeployment: VTS undisclosed reassigned approximately 85 tractors from SLG-dedicated lanes to the Northwind Distribution Co. account in October 2021, without Stonefield's knowledge or consent. This redeployment is documented in an internal email from Dmitri Milescu (VTS's Vice President of Operations) to Anatol Vantorovich (Vantor's CEO) dated November 12, 2021 (Bates No. VHC-008417), in which Milescu acknowledged the reassignment and its potential impact on service levels. Additional fleet redeployment records produced in Vantor's supplemental document production corroborate the scope and timing of the reassignment.

Q4 2021 Performance Failures: VTS's performance in the fourth quarter of 2021 fell materially below the Service Level Objectives ("SLOs") specified in TSA Schedule C across every measured metric:

These performance failures are not peripheral or disputed facts. They are documented in VTS's own operational records, confirmed in Stonefield's contemporaneous performance notices under TSA Section 12.3, and acknowledged in the deposition testimony of Dmitri Milescu, who testified on August 4, 2023, that VTS's Q4 2021 service levels were "below our normal standards" and attributed the decline in part to the fleet redeployment to Northwind.

Dr. Trask's failure to apply any offset or adjustment for VTS's own performance failures renders his damages opinion unreliable because it assumes a "but for" world in which VTS was a fully performing counterparty — a factual premise that is directly and materially contradicted by the documentary record and deposition testimony. A "but for" damages model that ignores the non-breaching party's own contributory conduct does not reflect a reliable application of accepted damages principles. See Tractebel Energy Mktg., Inc. v. AEP Power Mktg., Inc., 487 F.3d 89, 110 (2d Cir. 2007) (damages must be established with "reasonable certainty" and may not rest on speculative assumptions about the counterfactual).

This argument has genuine Daubert merit, as it goes to the reliability of the expert's factual assumptions and the adequacy of the data considered. However, it is also fundamentally a merits argument that plays more powerfully in the summary judgment context. On summary judgment, the undisputed factual record regarding VTS's breaches can be presented holistically — not merely as a challenge to the expert's methodology, but as an independent ground for reducing or eliminating Vantor's damages based on its own contributory conduct and the valid-for-Cause termination defense.

D. No Meaningful Mitigation Analysis

Under well-established New York law and general damages principles, a party claiming lost profits or other expectation damages bears the burden of demonstrating that it took reasonable steps to mitigate its losses following the breach. See, e.g., Vireo Trust Bank v. Marlowe Commerce Bank Asset Capital Corp., 424 F.3d 195, 208 (2d Cir. 2005) ("A party may not sit idly by and allow damages to accumulate when reasonable action could prevent them."). Correspondingly, a damages expert who purports to quantify lost profits must account for mitigation — either by incorporating mitigation offsets into the damages model or by providing a reasoned basis for concluding that no mitigation offset is appropriate.

Dr. Trask's report devotes less than two paragraphs to the question of whether Vantor mitigated its damages after the March 4, 2022 termination. In those brief passages, Dr. Trask acknowledged that "mitigation efforts are relevant to the computation of damages" but then concluded that no mitigation offset was appropriate because, in his opinion, the "loss of the Stonefield contract was not readily replaceable" given VTS's dedicated-fleet business model and the specialized nature of the SLG transportation requirements.

This assumption is contradicted by readily available market data and the discovery record. Freight market data for Q1 and Q2 of 2022 shows that spot rates in the truckload segment were elevated approximately 35% above historical five-year averages, driven by persistent supply-chain disruptions, elevated consumer demand, and a tight labor market for commercial drivers. In this environment, replacement freight was not merely "available" — it was abundant and available at premium rates. A carrier with 400 tractors and 1,200 trailers of available capacity, freed from a dedicated-fleet commitment, would have been well-positioned to secure replacement revenue in the spot and contract markets.

The deposition testimony of Derek Pruitt, Vantor's designated corporate representative on damages topics, further undermines Dr. Trask's mitigation assumption. In his July 10, 2023 deposition, Pruitt testified that he "could not identify specific mitigation steps" taken by Vantor or VTS after the Stonefield termination. When asked whether VTS had actively marketed its available capacity to potential replacement customers, Pruitt stated that he was "not aware of those details" and would need to "check with operations." This testimony suggests, at a minimum, that Vantor cannot affirmatively establish that it undertook reasonable mitigation efforts — a significant evidentiary gap that should have been addressed in Dr. Trask's analysis.

Moreover, Vantor's supplemental document production of June 22, 2023 — comprising 4,218 documents bearing Bates numbers VHC-029001 through VHC-033218 — contains fleet management records indicating that VTS did not actively seek replacement freight accounts for the SLG-dedicated capacity for at least four months following the termination. During this period, the tractors and trailers previously dedicated to Stonefield lanes appear to have been parked or operated at minimal utilization rates, with no documented sales or marketing outreach to potential replacement shippers.

Dr. Rosser's rebuttal report applies a proper mitigation analysis, incorporating available freight market data, VTS's fleet utilization records, and industry benchmarks for fleet redeployment timelines. After accounting for reasonable mitigation, Dr. Rosser's alternative damages calculation reduces the maximum figure to approximately $8,200,000 — a reduction that reflects both the replacement revenue VTS could have earned through reasonable mitigation efforts and the cost savings associated with redeployment of the dedicated fleet.

This is a viable Daubert argument. An expert who fails to apply an accepted damages methodology — here, the requirement to account for mitigation — has not employed reliable methods under Rule 702. However, this argument overlaps heavily with Stonefield's affirmative defense of failure to mitigate, which is better presented on summary judgment with the full factual context of Vantor's post-termination conduct, the freight market data, Pruitt's deposition testimony, and the fleet management records from the supplemental production. In a summary judgment context, the failure to mitigate can be presented not merely as a deficiency in the expert's analysis but as an independent legal basis for reducing or barring Vantor's damages recovery.

E. Consequential Damages Categories — Barred by TSA Section 15.1

Three of Dr. Trask's five damages categories — stranded assets ($5,200,000), workforce reduction costs ($2,870,000), and mitigation costs ($1,400,000) — collectively totaling $9,470,000, are arguably consequential damages barred by the mutual consequential damages waiver contained in TSA Section 15.1. That provision states, in relevant part:

"IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE PERFORMANCE OR BREACH THEREOF, INCLUDING BUT NOT LIMITED TO DAMAGES FOR LOST PROFITS (EXCEPT AS EXPRESSLY PROVIDED IN SECTION 14.2), LOSS OF GOODWILL, BUSINESS INTERRUPTION, OR LOSS OF DATA, REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED IN CONTRACT, TORT, STRICT LIABILITY, OR ANY OTHER THEORY."

The stranded assets category ($5,200,000) represents the alleged decline in residual value of VTS's dedicated fleet equipment (tractors and trailers) resulting from the early termination of the TSA, which Dr. Trask attributes to the loss of the dedicated-use context that supported higher equipment valuations. The workforce reduction costs ($2,870,000) encompass severance payments, benefits continuation, and retraining costs for drivers and operational personnel displaced by the termination. The mitigation costs ($1,400,000) relate to expenses incurred by VTS in attempting to secure replacement business for the freed capacity.

Each of these categories represents an indirect or consequential harm flowing from the alleged breach — not a direct damages measure. They do not compensate Vantor for the value of the contract itself (which is the province of the liquidated damages and lost profits claims) but rather for secondary economic consequences of the termination. Under New York law, such damages are properly classified as consequential and are subject to contractual waivers. See Biotronik A.G. v. Conor Medsystems Ireland, Ltd., 22 N.Y.3d 799, 806 (2014) (analyzing the distinction between direct and consequential damages in the context of a contractual limitation of liability).

Dr. Trask's report does not address TSA Section 15.1 or analyze whether these three damages categories are properly classified as direct or consequential damages. His report simply includes them as part of the aggregate damages figure without any discussion of the contractual limitation. This omission is notable but is primarily a legal argument (contract interpretation and application of the consequential damages waiver) rather than a Daubert issue concerning the reliability of the expert's methodology. The Court is more likely to address the applicability of Section 15.1 in the summary judgment context through application of New York contract interpretation principles, rather than as a gatekeeping question under Rule 702.

This analysis is consistent with the April 5, 2023 memorandum by Simone Laroche analyzing the scope and enforceability of the consequential damages bar under Section 15.1, which concluded that Stonefield has a strong argument for exclusion of all three categories under the waiver provision.

F. Duplicative Recovery — Liquidated Damages and Lost Profits

Dr. Trask's report claims both liquidated damages ($67,230,000) and lost profits ($18,700,000) as separate damages categories, for a combined total of $85,930,000. Both categories purport to compensate Vantor for the same underlying harm: the economic value of the remaining term of the TSA that was lost as a result of the alleged wrongful termination. The liquidated damages formula in Section 14.2 is expressly designed to approximate the value of the remaining contract; the lost profits analysis independently calculates the projected net revenue from the remaining contract term. To award both would result in impermissible double recovery.

Under New York law, a plaintiff may not recover both liquidated damages and actual (lost profits) damages for the same breach. If the liquidated damages clause is enforceable, it is the exclusive remedy for contract-value loss, and the plaintiff is limited to the contractually specified amount. If the clause is unenforceable, the plaintiff may recover its actual lost profits, but not the liquidated amount. See JMD Holding Corp., 4 N.Y.3d at 380; see also Bayer AG v. Schein Pharm., Inc., 88 F. Supp. 2d 253, 260 (S.D.N.Y. 2000) (holding that a party may not "stack" liquidated and actual damages for the same breach). There is no scenario under New York law in which both damages measures are available simultaneously.

This is a valid challenge to Dr. Trask's methodology, and the duplicative nature of the two largest damages categories represents a significant deficiency in his report. However, as with several of the other arguments identified herein, this is more efficiently and effectively raised on summary judgment as a matter of law rather than as a Daubert challenge to the expert's reliability. On summary judgment, Stonefield can seek a ruling that, as a matter of law, Vantor must elect between its liquidated damages claim and its lost profits claim — and that, whichever measure is selected, it is subject to the further reductions identified in Dr. Rosser's rebuttal report.

The February 15, 2023 memorandum by Patrick Gallagher analyzing the duplicative damages issue provides a detailed treatment of the relevant case law and should be consulted in preparing the summary judgment brief.

V. Strategic Analysis — Standalone *Daubert* Motion vs. Combined Summary Judgment Approach

A. Arguments for Filing a Standalone *Daubert* Motion

We recognize that there are legitimate strategic arguments in favor of filing a standalone Daubert motion, and we have carefully considered each before reaching our recommendation to defer.

1. Narrowing the Damages Case. A successful Daubert motion — even a partially successful one — could narrow Vantor's claimed damages exposure from $95.4 million before summary judgment. Excluding the lost profits opinion alone would reduce the claimed figure by $18.7 million; excluding the consequential damages categories would reduce it by an additional $9.47 million. Narrowing the damages case before summary judgment could simplify the dispositive motion and focus the Court's attention on the remaining claims.

2. Settlement Leverage. If settlement discussions resume — they have been dormant since CRS's withdrawal — the exclusion of a significant portion of Dr. Trask's damages opinion could create substantial leverage for Stonefield. A $95.4 million claimed exposure creates a very different negotiating dynamic than a $67 million or $49 million exposure, and a Court order excluding specific damages categories would provide concrete, authoritative support for Stonefield's position that Vantor's damages are grossly inflated.

3. Early Demonstration of Damages Deficiencies. Filing a standalone Daubert motion would demonstrate to Judge Calloway at an early stage that Vantor's damages theory is fundamentally flawed. This could shape the Court's perception of the case going into summary judgment briefing and, potentially, trial. An early win on Daubert could establish a favorable framework for subsequent proceedings.

4. Simplification of Summary Judgment. Partial exclusion of Dr. Trask's testimony — particularly the consequential damages categories or the duplicative recovery claim — would simplify the summary judgment motion by removing certain issues from the briefing and allowing Stonefield to focus its arguments on the merits of the remaining claims.

B. Arguments Against Filing a Standalone *Daubert* Motion (Favoring Combined Approach)

Despite the potential benefits identified above, we believe the arguments against a standalone Daubert motion — and in favor of incorporating the Daubert challenges into the summary judgment brief — are substantially more compelling. We identify six principal considerations.

1. Risk of Alerting and Curing. A standalone Daubert motion filed before summary judgment would telegraph the specific evidentiary vulnerabilities in Dr. Trask's report to Vantor and its counsel (whether CRS or successor counsel). This advance notice could enable Vantor to submit a supplemental or corrected expert report addressing the identified deficiencies — most importantly, the inflated operating margin assumption — before the summary judgment stage or trial. Courts in the Second Circuit have permitted supplemental expert reports to address Daubert deficiencies, particularly where the expert's underlying methodology is sound but the application was flawed. See, e.g., Softel, Inc. v. Dragon Med. & Sci. Commc'ns, Inc., 118 F.3d 955, 965 (2d Cir. 1997) (noting that the appropriate remedy for a "curable" expert deficiency may be supplementation rather than exclusion); see also Restivo v. Hessemann, 846 F.3d 547, 577 (2d Cir. 2017) (recognizing district courts' discretion to permit supplemental expert disclosures). A standalone Daubert motion would provide precisely the roadmap that Vantor would need to correct the most significant flaws in Dr. Trask's analysis. By combining the Daubert arguments into summary judgment, Stonefield reduces the window for cure and presents the challenge at a stage where supplementation is procedurally more difficult and less likely to be permitted.

2. Overlapping Arguments. At least four of the six Daubert arguments identified in Section IV — the liquidated damages enforceability issue (Section IV.B), the consequential damages bar (Section IV.E), the duplicative recovery issue (Section IV.F), and the failure to mitigate (Section IV.D) — are fundamentally legal and merits arguments rather than Daubert methodology challenges. These arguments are more naturally and more powerfully raised in a summary judgment framework, where the Court evaluates entitlement to damages as a matter of law, rather than in a Daubert framework, where the Court evaluates the admissibility of expert testimony. Filing these arguments as Daubert challenges risks having the Court address them in the admissibility framework — potentially yielding a ruling that the testimony is "admissible" even though the legal theory underlying the damages claim is meritless. Such a ruling could create an adverse impression going into summary judgment. In contrast, raising these arguments on summary judgment allows the Court to rule directly on whether Vantor is entitled to these damages categories as a matter of law, which is the ultimate question.

3. Risk of Partial Denial. Daubert motions in the S.D.N.Y. are frequently denied in whole or in part, particularly in commercial disputes where the challenged expert's methodology is generally accepted and the dispute goes to the application of that methodology to the specific facts. Courts in this District tend to favor "letting the jury decide" on disputes about the weight and credibility of competing expert damages opinions, reserving exclusion for cases where the expert's methodology is fundamentally unreliable. See, e.g., In re Fosamax Prods. Liab. Litig., 645 F. Supp. 2d 164, 173 (S.D.N.Y. 2009) (noting the "liberal admissibility standards" for expert testimony). Judge Calloway's published decisions and her treatment of Daubert motions in prior commercial cases on her docket do not suggest a tendency toward aggressive gatekeeping. A partial denial — e.g., the Court ruling that Dr. Trask's methodology is "sufficiently reliable" while noting that the margin assumptions go to the weight of his testimony — could create adverse precedent within the case that would be cited by Vantor in opposition to summary judgment. This is a significant and, in our view, unacceptable risk.

4. Current Case Posture. The case is in an unusual and uncertain procedural posture. Vantor has been without counsel since CRS's withdrawal on October 18, 2023, and the Court has effectively stayed all deadlines pending Vantor's retention of successor counsel. Filing a standalone Daubert motion in this posture would be premature and procedurally awkward: there is no opposing counsel to respond to the motion, the Court may decline to consider it during the stay, and if the case is ultimately dismissed for failure to prosecute under Rule 41(b) — which becomes increasingly likely as the period of non-representation extends — the motion would have been entirely unnecessary. The most prudent course is to preserve the arguments and deploy them if and when the case becomes active again.

5. Efficiency and Cost. A standalone Daubert motion would require the preparation and filing of a motion brief (estimated 30–40 pages), supporting declarations from Dr. Rosser and counsel, compilation of the relevant deposition transcripts and documentary exhibits, an opposition brief from Vantor (if represented), a reply brief from Stonefield, and potentially oral argument before Judge Calloway. Based on the anticipated scope and complexity of the briefing, we estimate the additional cost at approximately $75,000–$120,000 in attorney and expert fees. This expenditure would be largely duplicative of the summary judgment briefing, which will necessarily address the same factual record, the same expert opinions, and many of the same legal arguments. The combined approach avoids this duplication and leverages the same factual record and legal analysis in a single, comprehensive filing.

6. Strongest Argument Is Equally Effective on Summary Judgment. The most compelling Daubert argument — Dr. Trask's use of an inflated 12% company-wide operating margin rather than the 5.5%–6.5% account-specific margin documented in VTS's own financial records — can be presented with equal force and effectiveness in a summary judgment context. Dr. Rosser's rebuttal report, the underlying VTS financial data, and the deposition testimony of Vantor's representatives provide a comprehensive evidentiary record supporting this challenge. On summary judgment, the argument can be presented both as a Daubert-style challenge to the reliability of Dr. Trask's methodology (seeking exclusion or limitation of his testimony) and as a merits argument that Vantor's lost profits damages, if cognizable at all, are limited to the $4,800,000–$5,600,000 range calculated by Dr. Rosser. This dual presentation is more powerful than a standalone Daubert motion, which would address only the admissibility question in isolation.

C. Assessment. The balance of strategic considerations strongly favors deferral. The combined summary judgment approach preserves all six Daubert arguments for deployment at the dispositive motion stage, avoids the risks of premature disclosure and adverse partial rulings, eliminates approximately $75,000–$120,000 in duplicative briefing costs, and positions the Daubert challenges within the broader merits framework where they are most likely to produce a favorable and meaningful outcome.

If the case resumes — i.e., Vantor retains successor counsel and the Court lifts the stay on deadlines — the September 15, 2023 Summary Judgment Roadmap Memorandum already contemplates incorporating Daubert-style challenges as an integral component of Stonefield's four-pillar summary judgment strategy:

Pillar 1: Valid termination for Cause under TSA Section 13.1(a), based on VTS's material breaches (fleet redeployment, persistent SLO failures, cargo claims).

Pillar 2: Unenforceability of the liquidated damages clause under TSA Section 14.2 as an impermissible penalty under New York law, given the gross disproportion between the $67.2 million liquidated amount and Vantor's actual damages.

Pillar 3: Consequential damages bar under TSA Section 15.1, eliminating $9.47 million in stranded assets, workforce reduction, and mitigation cost claims.

Pillar 4: Failure to mitigate and reduction of any remaining damages, incorporating Dr. Rosser's rebuttal analysis and the factual record regarding VTS's post-termination conduct.

The Daubert arguments regarding Dr. Trask's inflated margins and failure to perform a mitigation analysis would be raised primarily under Pillar 4, with a dedicated evidentiary section within the summary judgment brief seeking exclusion or limitation of Dr. Trask's testimony under Rule 702 to the extent it is based on unreliable assumptions. The liquidated damages, consequential damages, and duplicative recovery arguments would be raised under Pillars 2 and 3 as matters of law, with the Daubert framework serving as a supporting basis rather than the primary vehicle for the challenges.

VI. Recommended Approach if Case Resumes

A. Incorporation into Summary Judgment Motion

If the case becomes active again and proceeds to the dispositive motion stage, the summary judgment brief should include a dedicated section challenging the admissibility and reliability of Dr. Trask's damages testimony under Daubert and Rule 702. This section should be positioned within the damages portion of the brief, following the legal arguments regarding enforceability and contract interpretation, and should serve as both an evidentiary challenge (seeking exclusion or limitation of specific opinions) and a merits argument (demonstrating that Vantor's damages, even if not excluded, are dramatically overstated).

The specific arguments to be included in this section are:

1. Inflated Operating Margin (Lost Profits). Dr. Trask's lost profits opinion should be excluded or substantially discounted because it relies on an inflated 12% company-wide operating margin rather than the 5.5%–6.5% account-level margin supported by VTS's own internal financial records and Carrier Performance Portal data. The failure to use the most directly relevant data available — account-specific profitability data — renders the opinion unreliable under Rule 702(d) and produces a lost profits figure that is overstated by approximately $13 million.

2. Liquidated Damages as Legal Conclusion. Dr. Trask's liquidated damages "opinion" is an improper legal conclusion and should be disregarded by the Court. Whether the liquidated damages clause in TSA Section 14.2 is enforceable under New York law is a question of law for the Court, not a matter of expert opinion. The Court should resolve the enforceability question on summary judgment and, if the clause is held unenforceable, exclude the $67.23 million liquidated damages figure entirely.

3. Failure to Account for VTS's Breaches. Dr. Trask's "but for" damages model is unreliable because it assumes a counterfactual world in which VTS was a fully performing counterparty — an assumption directly contradicted by the undisputed record of VTS's fleet redeployment, persistent SLO failures, and other material breaches in the months preceding the termination.

4. Failure to Perform Mitigation Analysis. Dr. Trask's failure to perform a meaningful mitigation analysis renders his damages opinion methodologically deficient and inconsistent with accepted damages quantification principles. The freight market data, Pruitt's deposition testimony, and VTS's fleet management records all demonstrate that reasonable mitigation efforts would have substantially reduced VTS's losses.

5. Duplicative Recovery. Dr. Trask's claim for both liquidated damages ($67.23 million) and lost profits ($18.7 million) is duplicative as a matter of New York law, and the Court should require Vantor to elect between the two measures.

6. Consequential Damages Bar. Dr. Trask's inclusion of stranded assets, workforce reduction costs, and mitigation costs — totaling $9.47 million — should be excluded as consequential damages barred by the mutual waiver in TSA Section 15.1.

Each of these arguments should be supported by citations to the record (deposition transcripts, documentary exhibits, financial data), Dr. Rosser's rebuttal report, and the relevant case law. The brief should request that the Court either exclude Dr. Trask's testimony in its entirety or, in the alternative, limit his testimony to a properly calculated damages figure that accounts for the identified deficiencies.

B. Alternative: In Limine Motion

If the case proceeds to trial — i.e., if summary judgment is denied or granted only in part — Calderwood & Harkness should file a motion in limine to exclude Dr. Trask's testimony in whole or in part. The motion in limine should focus on the most compelling and judicially manageable Daubert arguments, particularly:

• The inflated margin assumptions and failure to perform account-level profitability analysis, which render the lost profits opinion unreliable;

• The absence of a meaningful mitigation analysis, which renders the overall damages model methodologically deficient; and

• The duplicative nature of the liquidated damages and lost profits claims, which should be resolved as a matter of law before trial to avoid jury confusion.

The motion in limine would serve as the last pre-trial opportunity to exclude or limit Dr. Trask's testimony and would benefit from the full factual record developed through discovery and any rulings issued on summary judgment. It should be filed in accordance with the Court's pre-trial order and served sufficiently in advance of trial to allow for full briefing and, if requested, oral argument.

VII. Preservation of Work Product

All research, analysis, memoranda, and draft briefs prepared in connection with the evaluation of a potential Daubert motion against Dr. Trask should be preserved in Calderwood & Harkness's document management system under Matter No. 1012-00005 for use in either a combined summary judgment brief or a standalone Daubert/in limine motion if circumstances change. Specifically:

• The May 22, 2023 Analysis of Trask Greystone Expert Report (Gallagher/Laroche) should be maintained as the baseline assessment of methodological weaknesses.

• The September 5, 2023 Daubert Motion Research Memorandum (Laroche) should be maintained as the primary legal research document on the applicable Daubert standards in the S.D.N.Y.

• Dr. Rosser's rebuttal expert report (served August 25, 2023, 48 pages) is the foundational evidentiary document supporting any Daubert challenge and should be maintained in its final, executed form. Any drafts, notes, or communications with Dr. Rosser and Michael Chung related to the preparation of the rebuttal report should also be preserved, subject to the work-product and consultant-to-counsel privileges.

• Key deposition transcripts to be cross-referenced and indexed for summary judgment preparation include:

• Derek Pruitt (July 10, 2023) — Vantor's corporate representative on damages topics; inability to identify specific mitigation steps.

• Dmitri Milescu (August 4, 2023) — VTS Vice President of Operations; testimony regarding Q4 2021 performance failures and fleet redeployment to Northwind Distribution Co.

• Anatol Vantorovich (partial deposition, August 18, 2023) — Vantor CEO; deposition suspended and not yet completed due to CRS's withdrawal; to be rescheduled if the case resumes.

• The April 5, 2023 memorandum (Laroche) analyzing the consequential damages bar under TSA Section 15.1, and the February 15, 2023 memorandum (Gallagher) analyzing duplicative damages, should be maintained for incorporation into the summary judgment brief.

• The September 15, 2023 Summary Judgment Roadmap Memorandum should be treated as the master strategic document for the dispositive motion stage and updated as circumstances develop.

VIII. Conclusion

For the reasons set forth in this memorandum, we recommend that Stonefield not file a standalone *Daubert* motion against Dr. Philip Trask's expert report at this time. All six identified Daubert arguments should be deferred and incorporated into the summary judgment motion, which will present the full factual record and legal arguments in a unified, comprehensive framework that is more likely to produce a favorable and decisive outcome.

The strongest specific argument — Dr. Trask's reliance on an inflated 12% company-wide operating margin rather than the 5.5%–6.5% account-level margin documented in VTS's own financial records — should serve as a centerpiece of the damages section of the summary judgment brief. This argument, supported by Dr. Rosser's rebuttal analysis, the underlying financial data produced in discovery, and the deposition testimony of Vantor's corporate representatives, is compelling on its merits and is equally effective whether presented in a Daubert framework or a summary judgment context.

We recommend that the team continue to monitor the case posture following CRS's withdrawal. The Court has set an April 12, 2024 deadline for Vantor to retain successor counsel and file a notice of appearance. If Vantor fails to do so, Stonefield may move for dismissal for failure to prosecute under Rule 41(b), and the Daubert arguments — along with the broader summary judgment strategy — become moot. If Vantor retains new counsel and the case resumes, we should proceed with the combined summary judgment approach as outlined in the September 15, 2023 Summary Judgment Roadmap Memorandum, incorporating the Daubert challenges into the four-pillar strategy described in Section V.C above.

The estimated cost savings from deferral versus a standalone Daubert motion are approximately $75,000–$120,000 in duplicative attorney and expert fees — savings that can be reallocated to the summary judgment briefing effort if the case resumes, or preserved entirely if the case is dismissed.

I am available to discuss this analysis at your convenience and to begin preparing the Daubert-related sections of the summary judgment brief as soon as the case posture warrants.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Patrick Gallagher Lead Associate, Litigation (General) 200 Park Avenue, 38th Floor New York, New York 10166 Tel: (212) 555-4100 pgallagher@calderwoodharkness.com

cc: Linda Osei, Billing Partner (internal file copy) Simone Laroche, Working Associate (internal file copy)

This memorandum is protected by the attorney-client privilege and the work-product doctrine. It is intended solely for use by the attorneys and staff of Calderwood & Harkness LLP in connection with the representation of Stonefield Logistics Group Inc. in the above-referenced matter. Any unauthorized disclosure, distribution, or copying of this memorandum is strictly prohibited.

Damages Category	Amount
Liquidated Damages (TSA § 14.2)	$67,230,000
Lost Profits	$18,700,000
Stranded Assets	$5,200,000
Workforce Reduction Costs	$2,870,000
Mitigation Costs	$1,400,000
Total	$95,400,000
Metric	SLO Requirement	VTS Actual (Q4 2021)	Shortfall
On-Time Pickup	95%	78.2%	-16.8 points
On-Time Delivery	93%	81.6%	-11.4 points
Tender Acceptance	90%	71.4%	-18.6 points
Equipment Availability	85%	62%	-23.0 points
Cargo Claims Ratio	≤ 0.5%	1.07%	+0.57 points (excess)

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166
MEMORANDUM
September 18, 2023
TO: Samuel Eklund, Responsible Partner, Litigation (General)
FROM: Patrick Gallagher, Lead Associate, Litigation (General)
RE: Strategic Analysis — Potential Daubert Motion Against Expert Report of Dr. Philip Trask (Trask Greystone & Associates); Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
MATTER NO.: 1012-00005
CLIENT: Stonefield Logistics Group Inc.
I. Executive Summary and Recommendation
This memorandum evaluates whether our client, Stonefield Logistics Group Inc. ("Stonefield" or "SLG"), should file a standalone Daubert motion to exclude the expert testimony of Dr. Philip Trask, Founder and Lead Expert of Trask Greystone & Associates (400 Madison Avenue, Suite 900, New York, NY 10017), who serves as Vantor Holdings Corp.'s ("Vantor") damages expert in this matter, or instead defer the Daubert challenge and incorporate it into summary judgment briefing at the dispositive motion stage. This memorandum also identifies the specific grounds available for challenging Dr. Trask's expert report, assesses the relative strength of each argument, and recommends a strategic approach that accounts for the current procedural posture of the case.
Dr. Trask's expert report, served on May 15, 2023, opines that Vantor's total damages resulting from Stonefield's alleged wrongful termination of the Transportation Services Agreement dated March 15, 2019 (the "TSA") amount to $95,400,000, distributed across five categories:
Recommendation: Stonefield should defer the filing of a standalone Daubert motion. Instead, we recommend incorporating Daubert-based challenges to Dr. Trask's testimony into a combined summary judgment motion when the case proceeds to the dispositive motion stage, currently scheduled for March 1, 2024, pursuant to the Case Management Order entered on February 17, 2023, by the Honorable Margaret T. Calloway. We note, however, that all deadlines are currently stayed following the withdrawal of Vantor's counsel of record, Caldwell Royce & Shapiro LLP ("CRS"), effective October 18, 2023, and the case is effectively dormant pending Vantor's retention of new counsel or further order of the Court.
The rationale for deferral rests on four principal considerations:
First, combining the Daubert arguments into summary judgment briefing is more efficient and avoids alerting Vantor to specific evidentiary vulnerabilities in Dr. Trask's report that could be cured through a supplemental or corrected expert report before trial. Courts in the Second Circuit have permitted such supplemental submissions to address Daubert deficiencies, and a premature standalone motion would provide a roadmap for correction.
Second, several of the Daubert arguments overlap substantially with the merits arguments that will form the core of Stonefield's summary judgment motion — specifically, the unenforceability of the liquidated damages clause under New York law, Vantor's failure to mitigate, and the consequential damages bar under TSA Section 15.1. These arguments are more powerfully presented in a merits framework (addressing entitlement to damages) than in a gatekeeping framework (addressing admissibility of testimony).
Third, a standalone Daubert motion carries the risk of partial denial, which is a common outcome in this District, particularly before Judge Calloway, whose record does not suggest aggressive gatekeeping on Daubert issues in commercial disputes. A partial denial could create an adverse impression or unfavorable case law within the proceeding that would undermine the subsequent summary judgment motion.
Fourth, the current procedural posture — with Vantor unrepresented following CRS's withdrawal — makes the timing and utility of any motion uncertain. If the case is ultimately dismissed for failure to prosecute under Federal Rule of Civil Procedure 41(b), the motion would be entirely unnecessary.
This analysis is consistent with, and should be read in conjunction with, the September 5, 2023 Daubert Motion Research Memorandum prepared by Simone Laroche, which reached a substantially similar conclusion regarding the viability of specific grounds for exclusion (particularly with respect to the lost profits opinion) while independently recommending deferral to the summary judgment stage.
II. Background
A. The Trask Greystone Expert Report
Dr. Philip Trask's expert report was served on May 15, 2023, by CRS on behalf of Vantor. Dr. Trask is the Founder and Lead Expert of Trask Greystone & Associates, a New York-based consulting firm specializing in damages quantification in complex commercial disputes. His curriculum vitae, attached as Exhibit A to the report, lists a Ph.D. in applied economics from Columbia University, over twenty years of consulting experience, and approximately forty prior engagements as a testifying expert, primarily in transportation, logistics, and supply-chain disputes.
The report purports to quantify the damages suffered by Vantor and its wholly owned operating subsidiary, Vantor Transport Services LLC ("VTS"), as a result of Stonefield's alleged wrongful termination of the TSA (Contract Ref. No. SLG-VTS-2019-0315) on March 4, 2022. The TSA was a five-year transportation services agreement under which VTS served as a dedicated carrier for Stonefield's domestic freight operations, with VTS committing approximately 400 tractors and 1,200 trailers to SLG-dedicated lanes across the eastern and central United States.
Dr. Trask's report is organized into seven sections and spans sixty-three pages, exclusive of exhibits. The report quantifies Vantor's total claimed damages at $95,400,000, allocated across the five categories identified in Section I above. The liquidated damages claim of $67,230,000 — by far the largest component — is derived from the formula set forth in TSA Section 14.2, which Dr. Trask applied mechanically without independently analyzing the enforceability of that provision under New York law. The lost profits claim of $18,700,000 is based on a "but for" analysis comparing VTS's projected revenue from the SLG contract over the remaining term against projected costs, using a 12% operating margin assumption that is a central focus of this memorandum.
The three remaining categories — stranded assets ($5,200,000), workforce reduction costs ($2,870,000), and mitigation costs ($1,400,000) — collectively account for $9,470,000 and relate to alleged consequential harms flowing from the termination, including the asserted decline in value of VTS's dedicated fleet equipment, severance and retraining costs for displaced drivers and operational personnel, and costs incurred in seeking replacement business.
B. Stonefield's Rebuttal Expert Report
Stonefield's rebuttal expert report was served on August 25, 2023, by Dr. Evelyn Rosser, Managing Director of Kensington Analytics Group LLC ("KAG"), located at 1700 Market Street, Suite 2800, Philadelphia, PA 19103. Dr. Rosser was assisted in the preparation of the report by Senior Analyst Michael Chung. Dr. Rosser holds a Ph.D. in financial economics from the Wharton School of the University of Pennsylvania and has served as a testifying expert in over sixty commercial disputes involving damages quantification, with particular expertise in the transportation and logistics industries.
Dr. Rosser's forty-eight-page rebuttal report reaches three principal opinions. First, if Stonefield's termination of the TSA was valid "for Cause" under TSA Section 13.1(a) — as Stonefield contends — then Vantor is entitled to $0 in damages, because the Cause termination provision does not provide for any payment or damages obligation to the terminated party. Second, under an alternative lost-profits theory — assuming arguendo that the termination was wrongful — maximum damages would be approximately $8,200,000 after adjusting for: (i) VTS's own material breaches of the TSA, including the undisclosed fleet redeployment and persistent service-level failures in Q4 2021; (ii) Vantor's failure to mitigate damages by seeking replacement freight business for VTS's SLG-dedicated capacity; and (iii) recalculation of operating margins using account-specific financial data rather than the inflated company-wide blended margin employed by Dr. Trask. Third, the liquidated damages formula in Section 14.2, when applied to the facts of this case, produces a result grossly disproportionate to Vantor's actual harm, supporting unenforceability as an impermissible penalty under New York law.
Dr. Rosser's report will be the foundational evidentiary document supporting any Daubert or summary judgment challenge to Dr. Trask's opinions, and its conclusions are cross-referenced throughout this memorandum.
C. Prior Analysis
This memorandum builds upon two prior internal work-product analyses of Dr. Trask's report:
First, the May 22, 2023 Analysis of Trask Greystone Expert Report, prepared jointly by the undersigned and Simone Laroche, which identified four principal methodological weaknesses in Dr. Trask's report: (1) the use of an inflated company-wide blended operating margin rather than account-specific data; (2) the failure to account for VTS's own material breaches; (3) the absence of any meaningful mitigation analysis; and (4) the duplicative nature of the liquidated damages and lost profits claims. That memorandum recommended retaining Dr. Rosser to prepare a detailed rebuttal report addressing each of these deficiencies and laid the groundwork for the rebuttal engagement with KAG.
Second, the September 5, 2023 *Daubert* Motion Research Memorandum, prepared by Simone Laroche, which analyzed the governing legal standards for Daubert motions in the S.D.N.Y. and evaluated the likelihood of success on each identified ground for exclusion. That memorandum concluded that there are viable grounds to exclude or limit Dr. Trask's lost profits opinion based on his inflated margin assumptions and failure to conduct account-level analysis, but recommended deferring any motion to the summary judgment stage for strategic reasons substantially consistent with those articulated herein.
III. Legal Standard — *Daubert* / Federal Rule of Evidence 702
Under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), and its progeny, the trial court acts as a "gatekeeper" charged with ensuring that expert testimony admitted under Federal Rule of Evidence 702 is both relevant and reliable. Rule 702, as amended effective December 1, 2023, provides that a witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion if:
(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert's opinion reflects a reliable application of the principles and methods to the facts of the case.
The Supreme Court in Daubert identified four non-exclusive factors that may be relevant in assessing the reliability of expert testimony: (1) whether the theory or technique can be and has been tested; (2) whether the theory or technique has been subjected to peer review and publication; (3) the known or potential rate of error of the particular technique; and (4) whether the theory or methodology has been generally accepted within the relevant scientific or professional community. See Daubert, 509 U.S. at 593–94. The Court emphasized, however, that these factors are illustrative rather than exhaustive, and that the gatekeeping inquiry must be "flexible" and adapted to the particular circumstances of the case. Id. at 594; see also Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141–42 (1999) (extending Daubert framework to all expert testimony, including non-scientific expertise).
In the Second Circuit, the gatekeeping function is well-established. See Amorgianos v. Nat'l R.R. Passenger Corp., 303 F.3d 256, 265 (2d Cir. 2002) ("Under Daubert, the district court must act as a 'gatekeeper' by making a preliminary determination, pursuant to Rule 104(a), regarding whether the expert's testimony is reliable."). Courts in this Circuit apply the Daubert factors with a focus on the methodology employed by the expert, not the conclusions reached. See Nimely v. City of New York, 414 F.3d 381, 396 (2d Cir. 2005) ("A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered.") (quoting Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997)).
For damages experts in commercial litigation — the category most directly relevant here — courts in the S.D.N.Y. have excluded expert opinions based on speculative or unsupported assumptions, failure to account for market realities, and reliance on inflated or otherwise unsupported financial inputs. See, e.g., Boucher v. U.S. Suzuki Motor Corp., 73 F.3d 18, 21 (2d Cir. 1996) (excluding damages opinion based on speculative revenue projections); In re Northpoint Holdings Sec. Litig., 819 F.3d 642, 659 (2d Cir. 2016) (noting that a damages model must be "tied to the facts of the case"). At the same time, the Second Circuit has cautioned that Daubert exclusion is an "exacting standard" and that "[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence." Amorgianos, 303 F.3d at 267 (quoting Daubert, 509 U.S. at 596).
Critically, the burden of establishing the admissibility of expert testimony rests on the proponent of the evidence — here, Vantor — which must demonstrate admissibility by a preponderance of the evidence. See Daubert, 509 U.S. at 592 n.10; Zuchowicz v. United States, 140 F.3d 381, 386 (2d Cir. 1998). This allocation of the burden of proof is significant because it means that Vantor must affirmatively establish that Dr. Trask's opinions satisfy each element of Rule 702, including that his opinions reflect a reliable application of reliable principles to sufficient facts.
IV. Specific *Daubert* Arguments Against Dr. Trask's Report
We have identified six specific grounds on which Dr. Trask's expert report is vulnerable to a Daubert challenge. These arguments vary considerably in strength and in their suitability for a standalone Daubert motion versus incorporation into summary judgment briefing. Each is analyzed below in order of assessed strength.
A. Lost Profits Opinion — Inflated Operating Margin Assumptions (Strongest Argument)
Dr. Trask's lost profits calculation of $18,700,000 rests on an assumed 12% operating margin on Stonefield freight for the remaining term of the TSA (from the March 4, 2022 termination date through the contract's expiration on March 14, 2024). This 12% margin figure is the single most consequential assumption in the lost profits analysis, and it is, in our assessment, fundamentally unsupported by the factual record.
Dr. Trask derived the 12% margin figure from VTS's company-wide blended operating margin for fiscal year 2020. As we identified in our May 22, 2023 analysis, fiscal year 2020 was a COVID-impacted year characterized by unusually favorable carrier economics: fuel costs dropped precipitously in Q2 and Q3 2020 due to reduced demand, while limited transportation capacity simultaneously drove rate premiums as shippers competed for available carriers during supply-chain disruptions. These conditions produced an anomalously high company-wide margin for VTS that does not reflect the economics of the Stonefield account specifically, nor does it reflect normalized market conditions.
More fundamentally, VTS's actual operating margin on the Stonefield account specifically — as reflected in VTS's own internal Carrier Performance Portal data and financial records produced in discovery — was materially lower than the 12% company-wide blended figure that Dr. Trask employed:
• Contract Year 1 (April 2019 – March 2020): Approximately 6.8%–7.4%, after accounting for the dedicated fleet costs associated with the 400 tractors and 1,200 trailers committed to SLG lanes, including depreciation, insurance, and driver wages allocated to the Stonefield account.
• Contract Year 2 (April 2020 – March 2021): Approximately 5.1%–6.2%, reflecting the continued impact of dedicated fleet costs and declining per-mile revenue as the initial rate structure matured and certain fuel surcharge pass-through provisions were adjusted downward.
The difference between the 12% margin assumed by Dr. Trask and the 5.5%–6.5% account-level margin reflected in VTS's own records is not a matter of legitimate professional disagreement or reasonable approximation. Rather, Dr. Trask simply did not perform an account-level profitability analysis. His report uses a company-wide blended figure that includes higher-margin revenue streams — particularly VTS's warehouse and distribution operations — that are entirely unrelated to the Stonefield transportation services contract. The Stonefield account, as a dedicated-fleet arrangement with contractually fixed rates and significant capital commitments, was structurally a lower-margin business than VTS's asset-light brokerage and warehouse operations.
Dr. Rosser's rebuttal report identifies this as a fundamental methodological flaw. Using the account-level margin data from VTS's own financial records, Dr. Rosser calculates that a proper account-level margin of approximately 5.5%–6.5% would reduce the lost profits figure to approximately $4,800,000–$5,600,000 — even before applying any mitigation offsets, breach adjustments, or other reductions. This represents a reduction of approximately $13,100,000–$13,900,000, or roughly 70%–74%, from Dr. Trask's claimed lost profits figure.
This is the strongest *Daubert* argument available to Stonefield. Dr. Trask's failure to use account-specific data — when such data was available in VTS's own financial records and had been produced in discovery — renders his lost profits opinion unreliable under Rule 702. An expert who ignores the most directly relevant data in favor of an inflated proxy measure has not "reliably applied the principles and methods to the facts of the case" as required by Rule 702(d). See Boucher, 73 F.3d at 21; see also Lippe v. Bairnco Corp., 99 B.R. 548, 559 (Bankr. S.D.N.Y. 1989) (excluding damages opinion where expert "failed to consider the most directly relevant data available").
Notwithstanding the strength of this argument, it can be presented equally effectively in a summary judgment context, supported by Dr. Rosser's rebuttal report, the underlying VTS financial data produced in discovery, and the deposition testimony of Vantor's corporate representatives who were unable to explain why account-level data was not used.
B. Liquidated Damages — Legal Conclusion Disguised as Expert Opinion
The largest component of Dr. Trask's damages opinion is the liquidated damages claim of $67,230,000, which accounts for over 70% of the total claimed damages. Dr. Trask's report assumes the enforceability of the liquidated damages clause in TSA Section 14.2 without conducting any independent analysis of whether the clause satisfies the requirements for enforceability under New York law. The report simply states that "the liquidated damages provision represents the contractually agreed-upon measure of damages for early termination" and proceeds to apply the contractual formula mechanically.
This is a legal conclusion, not an expert damages opinion. Whether the liquidated damages clause in Section 14.2 is enforceable under New York law requires application of the well-established two-part test: (1) the amount fixed must have been a reasonable estimate of the probable damages at the time of contracting, and (2) the actual damages must have been difficult to ascertain at the time of contracting. See JMD Holding Corp. v. Cong. Fin. Corp., 4 N.Y.3d 373, 380 (2005); Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 358 (1977). If the liquidated amount is "grossly disproportionate" to the probable loss or constitutes a penalty, the clause is unenforceable and the non-breaching party is limited to its actual damages. This is a question of law for the Court, not a question of fact or a matter of expert opinion.
Dr. Trask's calculation under the Section 14.2 formula is as follows:
• Annual Contract Value ("ACV"): $43,200,000 (per TSA Schedule A)
• Liquidated damages rate: 75% of ACV per remaining year
• Remaining term at termination: 2 full years plus 27 days (March 4, 2022 through March 14, 2024)
• Calculation: (75% × $43,200,000 × 2) + (75% × $43,200,000 × 27/365) = $64,800,000 + $2,430,000 ≈ $67,230,000
There is a viable Daubert argument that Dr. Trask's liquidated damages "opinion" should be disregarded as an improper legal conclusion that invades the province of the Court. An expert may not offer opinions on questions of law or assume the answer to a contested legal issue as the premise of a damages calculation. See United States v. Bilzerian, 926 F.2d 1285, 1294 (2d Cir. 1991) (an expert may not "usurp the role" of the court on legal questions); see also Marx & Co. v. Diners' Club, Inc., 550 F.2d 505, 509–10 (2d Cir. 1977).
However, this argument is more effectively raised on summary judgment than in a standalone Daubert motion, for two reasons. First, the underlying arithmetic of Dr. Trask's liquidated damages calculation is not in dispute — the formula, the ACV figure, and the remaining term are all established by the contract terms. The only contested issue is the legal enforceability of the clause, which is a purely legal question that the Court will resolve on summary judgment through application of New York contract law principles. Second, if raised on a Daubert motion, the Court may simply note that the enforceability question is a legal issue and allow Dr. Trask to testify to the mathematical calculation subject to the Court's ultimate legal ruling on enforceability. This would not be a meaningful win, as it would leave Dr. Trask's testimony intact while merely reserving the legal question for later resolution — precisely the outcome that would occur in any event.
C. Failure to Account for Vantor's Own Breaches and Contributory Conduct
Dr. Trask's damages model assumes that Vantor and VTS were fully performing parties under the TSA at the time of termination and does not incorporate any offset, adjustment, or reduction to account for VTS's own material breaches and performance failures. This assumption is directly contradicted by the discovery record, which establishes that VTS was in substantial breach of multiple provisions of the TSA in the months preceding the termination.
Specifically, the record reflects the following undisputed or well-documented VTS performance failures:
Fleet Redeployment: VTS undisclosed reassigned approximately 85 tractors from SLG-dedicated lanes to the Northwind Distribution Co. account in October 2021, without Stonefield's knowledge or consent. This redeployment is documented in an internal email from Dmitri Milescu (VTS's Vice President of Operations) to Anatol Vantorovich (Vantor's CEO) dated November 12, 2021 (Bates No. VHC-008417), in which Milescu acknowledged the reassignment and its potential impact on service levels. Additional fleet redeployment records produced in Vantor's supplemental document production corroborate the scope and timing of the reassignment.
Q4 2021 Performance Failures: VTS's performance in the fourth quarter of 2021 fell materially below the Service Level Objectives ("SLOs") specified in TSA Schedule C across every measured metric:
These performance failures are not peripheral or disputed facts. They are documented in VTS's own operational records, confirmed in Stonefield's contemporaneous performance notices under TSA Section 12.3, and acknowledged in the deposition testimony of Dmitri Milescu, who testified on August 4, 2023, that VTS's Q4 2021 service levels were "below our normal standards" and attributed the decline in part to the fleet redeployment to Northwind.
Dr. Trask's failure to apply any offset or adjustment for VTS's own performance failures renders his damages opinion unreliable because it assumes a "but for" world in which VTS was a fully performing counterparty — a factual premise that is directly and materially contradicted by the documentary record and deposition testimony. A "but for" damages model that ignores the non-breaching party's own contributory conduct does not reflect a reliable application of accepted damages principles. See Tractebel Energy Mktg., Inc. v. AEP Power Mktg., Inc., 487 F.3d 89, 110 (2d Cir. 2007) (damages must be established with "reasonable certainty" and may not rest on speculative assumptions about the counterfactual).
This argument has genuine Daubert merit, as it goes to the reliability of the expert's factual assumptions and the adequacy of the data considered. However, it is also fundamentally a merits argument that plays more powerfully in the summary judgment context. On summary judgment, the undisputed factual record regarding VTS's breaches can be presented holistically — not merely as a challenge to the expert's methodology, but as an independent ground for reducing or eliminating Vantor's damages based on its own contributory conduct and the valid-for-Cause termination defense.
D. No Meaningful Mitigation Analysis
Under well-established New York law and general damages principles, a party claiming lost profits or other expectation damages bears the burden of demonstrating that it took reasonable steps to mitigate its losses following the breach. See, e.g., Vireo Trust Bank v. Marlowe Commerce Bank Asset Capital Corp., 424 F.3d 195, 208 (2d Cir. 2005) ("A party may not sit idly by and allow damages to accumulate when reasonable action could prevent them."). Correspondingly, a damages expert who purports to quantify lost profits must account for mitigation — either by incorporating mitigation offsets into the damages model or by providing a reasoned basis for concluding that no mitigation offset is appropriate.
Dr. Trask's report devotes less than two paragraphs to the question of whether Vantor mitigated its damages after the March 4, 2022 termination. In those brief passages, Dr. Trask acknowledged that "mitigation efforts are relevant to the computation of damages" but then concluded that no mitigation offset was appropriate because, in his opinion, the "loss of the Stonefield contract was not readily replaceable" given VTS's dedicated-fleet business model and the specialized nature of the SLG transportation requirements.
This assumption is contradicted by readily available market data and the discovery record. Freight market data for Q1 and Q2 of 2022 shows that spot rates in the truckload segment were elevated approximately 35% above historical five-year averages, driven by persistent supply-chain disruptions, elevated consumer demand, and a tight labor market for commercial drivers. In this environment, replacement freight was not merely "available" — it was abundant and available at premium rates. A carrier with 400 tractors and 1,200 trailers of available capacity, freed from a dedicated-fleet commitment, would have been well-positioned to secure replacement revenue in the spot and contract markets.
The deposition testimony of Derek Pruitt, Vantor's designated corporate representative on damages topics, further undermines Dr. Trask's mitigation assumption. In his July 10, 2023 deposition, Pruitt testified that he "could not identify specific mitigation steps" taken by Vantor or VTS after the Stonefield termination. When asked whether VTS had actively marketed its available capacity to potential replacement customers, Pruitt stated that he was "not aware of those details" and would need to "check with operations." This testimony suggests, at a minimum, that Vantor cannot affirmatively establish that it undertook reasonable mitigation efforts — a significant evidentiary gap that should have been addressed in Dr. Trask's analysis.
Moreover, Vantor's supplemental document production of June 22, 2023 — comprising 4,218 documents bearing Bates numbers VHC-029001 through VHC-033218 — contains fleet management records indicating that VTS did not actively seek replacement freight accounts for the SLG-dedicated capacity for at least four months following the termination. During this period, the tractors and trailers previously dedicated to Stonefield lanes appear to have been parked or operated at minimal utilization rates, with no documented sales or marketing outreach to potential replacement shippers.
Dr. Rosser's rebuttal report applies a proper mitigation analysis, incorporating available freight market data, VTS's fleet utilization records, and industry benchmarks for fleet redeployment timelines. After accounting for reasonable mitigation, Dr. Rosser's alternative damages calculation reduces the maximum figure to approximately $8,200,000 — a reduction that reflects both the replacement revenue VTS could have earned through reasonable mitigation efforts and the cost savings associated with redeployment of the dedicated fleet.
This is a viable Daubert argument. An expert who fails to apply an accepted damages methodology — here, the requirement to account for mitigation — has not employed reliable methods under Rule 702. However, this argument overlaps heavily with Stonefield's affirmative defense of failure to mitigate, which is better presented on summary judgment with the full factual context of Vantor's post-termination conduct, the freight market data, Pruitt's deposition testimony, and the fleet management records from the supplemental production. In a summary judgment context, the failure to mitigate can be presented not merely as a deficiency in the expert's analysis but as an independent legal basis for reducing or barring Vantor's damages recovery.
E. Consequential Damages Categories — Barred by TSA Section 15.1
Three of Dr. Trask's five damages categories — stranded assets ($5,200,000), workforce reduction costs ($2,870,000), and mitigation costs ($1,400,000) — collectively totaling $9,470,000, are arguably consequential damages barred by the mutual consequential damages waiver contained in TSA Section 15.1. That provision states, in relevant part:
"IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE PERFORMANCE OR BREACH THEREOF, INCLUDING BUT NOT LIMITED TO DAMAGES FOR LOST PROFITS (EXCEPT AS EXPRESSLY PROVIDED IN SECTION 14.2), LOSS OF GOODWILL, BUSINESS INTERRUPTION, OR LOSS OF DATA, REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED IN CONTRACT, TORT, STRICT LIABILITY, OR ANY OTHER THEORY."
The stranded assets category ($5,200,000) represents the alleged decline in residual value of VTS's dedicated fleet equipment (tractors and trailers) resulting from the early termination of the TSA, which Dr. Trask attributes to the loss of the dedicated-use context that supported higher equipment valuations. The workforce reduction costs ($2,870,000) encompass severance payments, benefits continuation, and retraining costs for drivers and operational personnel displaced by the termination. The mitigation costs ($1,400,000) relate to expenses incurred by VTS in attempting to secure replacement business for the freed capacity.
Each of these categories represents an indirect or consequential harm flowing from the alleged breach — not a direct damages measure. They do not compensate Vantor for the value of the contract itself (which is the province of the liquidated damages and lost profits claims) but rather for secondary economic consequences of the termination. Under New York law, such damages are properly classified as consequential and are subject to contractual waivers. See Biotronik A.G. v. Conor Medsystems Ireland, Ltd., 22 N.Y.3d 799, 806 (2014) (analyzing the distinction between direct and consequential damages in the context of a contractual limitation of liability).
Dr. Trask's report does not address TSA Section 15.1 or analyze whether these three damages categories are properly classified as direct or consequential damages. His report simply includes them as part of the aggregate damages figure without any discussion of the contractual limitation. This omission is notable but is primarily a legal argument (contract interpretation and application of the consequential damages waiver) rather than a Daubert issue concerning the reliability of the expert's methodology. The Court is more likely to address the applicability of Section 15.1 in the summary judgment context through application of New York contract interpretation principles, rather than as a gatekeeping question under Rule 702.
This analysis is consistent with the April 5, 2023 memorandum by Simone Laroche analyzing the scope and enforceability of the consequential damages bar under Section 15.1, which concluded that Stonefield has a strong argument for exclusion of all three categories under the waiver provision.
F. Duplicative Recovery — Liquidated Damages and Lost Profits
Dr. Trask's report claims both liquidated damages ($67,230,000) and lost profits ($18,700,000) as separate damages categories, for a combined total of $85,930,000. Both categories purport to compensate Vantor for the same underlying harm: the economic value of the remaining term of the TSA that was lost as a result of the alleged wrongful termination. The liquidated damages formula in Section 14.2 is expressly designed to approximate the value of the remaining contract; the lost profits analysis independently calculates the projected net revenue from the remaining contract term. To award both would result in impermissible double recovery.
Under New York law, a plaintiff may not recover both liquidated damages and actual (lost profits) damages for the same breach. If the liquidated damages clause is enforceable, it is the exclusive remedy for contract-value loss, and the plaintiff is limited to the contractually specified amount. If the clause is unenforceable, the plaintiff may recover its actual lost profits, but not the liquidated amount. See JMD Holding Corp., 4 N.Y.3d at 380; see also Bayer AG v. Schein Pharm., Inc., 88 F. Supp. 2d 253, 260 (S.D.N.Y. 2000) (holding that a party may not "stack" liquidated and actual damages for the same breach). There is no scenario under New York law in which both damages measures are available simultaneously.
This is a valid challenge to Dr. Trask's methodology, and the duplicative nature of the two largest damages categories represents a significant deficiency in his report. However, as with several of the other arguments identified herein, this is more efficiently and effectively raised on summary judgment as a matter of law rather than as a Daubert challenge to the expert's reliability. On summary judgment, Stonefield can seek a ruling that, as a matter of law, Vantor must elect between its liquidated damages claim and its lost profits claim — and that, whichever measure is selected, it is subject to the further reductions identified in Dr. Rosser's rebuttal report.
The February 15, 2023 memorandum by Patrick Gallagher analyzing the duplicative damages issue provides a detailed treatment of the relevant case law and should be consulted in preparing the summary judgment brief.
V. Strategic Analysis — Standalone *Daubert* Motion vs. Combined Summary Judgment Approach
A. Arguments for Filing a Standalone *Daubert* Motion
We recognize that there are legitimate strategic arguments in favor of filing a standalone Daubert motion, and we have carefully considered each before reaching our recommendation to defer.
1. Narrowing the Damages Case. A successful Daubert motion — even a partially successful one — could narrow Vantor's claimed damages exposure from $95.4 million before summary judgment. Excluding the lost profits opinion alone would reduce the claimed figure by $18.7 million; excluding the consequential damages categories would reduce it by an additional $9.47 million. Narrowing the damages case before summary judgment could simplify the dispositive motion and focus the Court's attention on the remaining claims.
2. Settlement Leverage. If settlement discussions resume — they have been dormant since CRS's withdrawal — the exclusion of a significant portion of Dr. Trask's damages opinion could create substantial leverage for Stonefield. A $95.4 million claimed exposure creates a very different negotiating dynamic than a $67 million or $49 million exposure, and a Court order excluding specific damages categories would provide concrete, authoritative support for Stonefield's position that Vantor's damages are grossly inflated.
3. Early Demonstration of Damages Deficiencies. Filing a standalone Daubert motion would demonstrate to Judge Calloway at an early stage that Vantor's damages theory is fundamentally flawed. This could shape the Court's perception of the case going into summary judgment briefing and, potentially, trial. An early win on Daubert could establish a favorable framework for subsequent proceedings.
4. Simplification of Summary Judgment. Partial exclusion of Dr. Trask's testimony — particularly the consequential damages categories or the duplicative recovery claim — would simplify the summary judgment motion by removing certain issues from the briefing and allowing Stonefield to focus its arguments on the merits of the remaining claims.
B. Arguments Against Filing a Standalone *Daubert* Motion (Favoring Combined Approach)
Despite the potential benefits identified above, we believe the arguments against a standalone Daubert motion — and in favor of incorporating the Daubert challenges into the summary judgment brief — are substantially more compelling. We identify six principal considerations.
1. Risk of Alerting and Curing. A standalone Daubert motion filed before summary judgment would telegraph the specific evidentiary vulnerabilities in Dr. Trask's report to Vantor and its counsel (whether CRS or successor counsel). This advance notice could enable Vantor to submit a supplemental or corrected expert report addressing the identified deficiencies — most importantly, the inflated operating margin assumption — before the summary judgment stage or trial. Courts in the Second Circuit have permitted supplemental expert reports to address Daubert deficiencies, particularly where the expert's underlying methodology is sound but the application was flawed. See, e.g., Softel, Inc. v. Dragon Med. & Sci. Commc'ns, Inc., 118 F.3d 955, 965 (2d Cir. 1997) (noting that the appropriate remedy for a "curable" expert deficiency may be supplementation rather than exclusion); see also Restivo v. Hessemann, 846 F.3d 547, 577 (2d Cir. 2017) (recognizing district courts' discretion to permit supplemental expert disclosures). A standalone Daubert motion would provide precisely the roadmap that Vantor would need to correct the most significant flaws in Dr. Trask's analysis. By combining the Daubert arguments into summary judgment, Stonefield reduces the window for cure and presents the challenge at a stage where supplementation is procedurally more difficult and less likely to be permitted.
2. Overlapping Arguments. At least four of the six Daubert arguments identified in Section IV — the liquidated damages enforceability issue (Section IV.B), the consequential damages bar (Section IV.E), the duplicative recovery issue (Section IV.F), and the failure to mitigate (Section IV.D) — are fundamentally legal and merits arguments rather than Daubert methodology challenges. These arguments are more naturally and more powerfully raised in a summary judgment framework, where the Court evaluates entitlement to damages as a matter of law, rather than in a Daubert framework, where the Court evaluates the admissibility of expert testimony. Filing these arguments as Daubert challenges risks having the Court address them in the admissibility framework — potentially yielding a ruling that the testimony is "admissible" even though the legal theory underlying the damages claim is meritless. Such a ruling could create an adverse impression going into summary judgment. In contrast, raising these arguments on summary judgment allows the Court to rule directly on whether Vantor is entitled to these damages categories as a matter of law, which is the ultimate question.
3. Risk of Partial Denial. Daubert motions in the S.D.N.Y. are frequently denied in whole or in part, particularly in commercial disputes where the challenged expert's methodology is generally accepted and the dispute goes to the application of that methodology to the specific facts. Courts in this District tend to favor "letting the jury decide" on disputes about the weight and credibility of competing expert damages opinions, reserving exclusion for cases where the expert's methodology is fundamentally unreliable. See, e.g., In re Fosamax Prods. Liab. Litig., 645 F. Supp. 2d 164, 173 (S.D.N.Y. 2009) (noting the "liberal admissibility standards" for expert testimony). Judge Calloway's published decisions and her treatment of Daubert motions in prior commercial cases on her docket do not suggest a tendency toward aggressive gatekeeping. A partial denial — e.g., the Court ruling that Dr. Trask's methodology is "sufficiently reliable" while noting that the margin assumptions go to the weight of his testimony — could create adverse precedent within the case that would be cited by Vantor in opposition to summary judgment. This is a significant and, in our view, unacceptable risk.
4. Current Case Posture. The case is in an unusual and uncertain procedural posture. Vantor has been without counsel since CRS's withdrawal on October 18, 2023, and the Court has effectively stayed all deadlines pending Vantor's retention of successor counsel. Filing a standalone Daubert motion in this posture would be premature and procedurally awkward: there is no opposing counsel to respond to the motion, the Court may decline to consider it during the stay, and if the case is ultimately dismissed for failure to prosecute under Rule 41(b) — which becomes increasingly likely as the period of non-representation extends — the motion would have been entirely unnecessary. The most prudent course is to preserve the arguments and deploy them if and when the case becomes active again.
5. Efficiency and Cost. A standalone Daubert motion would require the preparation and filing of a motion brief (estimated 30–40 pages), supporting declarations from Dr. Rosser and counsel, compilation of the relevant deposition transcripts and documentary exhibits, an opposition brief from Vantor (if represented), a reply brief from Stonefield, and potentially oral argument before Judge Calloway. Based on the anticipated scope and complexity of the briefing, we estimate the additional cost at approximately $75,000–$120,000 in attorney and expert fees. This expenditure would be largely duplicative of the summary judgment briefing, which will necessarily address the same factual record, the same expert opinions, and many of the same legal arguments. The combined approach avoids this duplication and leverages the same factual record and legal analysis in a single, comprehensive filing.
6. Strongest Argument Is Equally Effective on Summary Judgment. The most compelling Daubert argument — Dr. Trask's use of an inflated 12% company-wide operating margin rather than the 5.5%–6.5% account-specific margin documented in VTS's own financial records — can be presented with equal force and effectiveness in a summary judgment context. Dr. Rosser's rebuttal report, the underlying VTS financial data, and the deposition testimony of Vantor's representatives provide a comprehensive evidentiary record supporting this challenge. On summary judgment, the argument can be presented both as a Daubert-style challenge to the reliability of Dr. Trask's methodology (seeking exclusion or limitation of his testimony) and as a merits argument that Vantor's lost profits damages, if cognizable at all, are limited to the $4,800,000–$5,600,000 range calculated by Dr. Rosser. This dual presentation is more powerful than a standalone Daubert motion, which would address only the admissibility question in isolation.
C. Assessment. The balance of strategic considerations strongly favors deferral. The combined summary judgment approach preserves all six Daubert arguments for deployment at the dispositive motion stage, avoids the risks of premature disclosure and adverse partial rulings, eliminates approximately $75,000–$120,000 in duplicative briefing costs, and positions the Daubert challenges within the broader merits framework where they are most likely to produce a favorable and meaningful outcome.
If the case resumes — i.e., Vantor retains successor counsel and the Court lifts the stay on deadlines — the September 15, 2023 Summary Judgment Roadmap Memorandum already contemplates incorporating Daubert-style challenges as an integral component of Stonefield's four-pillar summary judgment strategy:
Pillar 1: Valid termination for Cause under TSA Section 13.1(a), based on VTS's material breaches (fleet redeployment, persistent SLO failures, cargo claims).
Pillar 2: Unenforceability of the liquidated damages clause under TSA Section 14.2 as an impermissible penalty under New York law, given the gross disproportion between the $67.2 million liquidated amount and Vantor's actual damages.
Pillar 3: Consequential damages bar under TSA Section 15.1, eliminating $9.47 million in stranded assets, workforce reduction, and mitigation cost claims.
Pillar 4: Failure to mitigate and reduction of any remaining damages, incorporating Dr. Rosser's rebuttal analysis and the factual record regarding VTS's post-termination conduct.
The Daubert arguments regarding Dr. Trask's inflated margins and failure to perform a mitigation analysis would be raised primarily under Pillar 4, with a dedicated evidentiary section within the summary judgment brief seeking exclusion or limitation of Dr. Trask's testimony under Rule 702 to the extent it is based on unreliable assumptions. The liquidated damages, consequential damages, and duplicative recovery arguments would be raised under Pillars 2 and 3 as matters of law, with the Daubert framework serving as a supporting basis rather than the primary vehicle for the challenges.
VI. Recommended Approach if Case Resumes
A. Incorporation into Summary Judgment Motion
If the case becomes active again and proceeds to the dispositive motion stage, the summary judgment brief should include a dedicated section challenging the admissibility and reliability of Dr. Trask's damages testimony under Daubert and Rule 702. This section should be positioned within the damages portion of the brief, following the legal arguments regarding enforceability and contract interpretation, and should serve as both an evidentiary challenge (seeking exclusion or limitation of specific opinions) and a merits argument (demonstrating that Vantor's damages, even if not excluded, are dramatically overstated).
The specific arguments to be included in this section are:
1. Inflated Operating Margin (Lost Profits). Dr. Trask's lost profits opinion should be excluded or substantially discounted because it relies on an inflated 12% company-wide operating margin rather than the 5.5%–6.5% account-level margin supported by VTS's own internal financial records and Carrier Performance Portal data. The failure to use the most directly relevant data available — account-specific profitability data — renders the opinion unreliable under Rule 702(d) and produces a lost profits figure that is overstated by approximately $13 million.
2. Liquidated Damages as Legal Conclusion. Dr. Trask's liquidated damages "opinion" is an improper legal conclusion and should be disregarded by the Court. Whether the liquidated damages clause in TSA Section 14.2 is enforceable under New York law is a question of law for the Court, not a matter of expert opinion. The Court should resolve the enforceability question on summary judgment and, if the clause is held unenforceable, exclude the $67.23 million liquidated damages figure entirely.
3. Failure to Account for VTS's Breaches. Dr. Trask's "but for" damages model is unreliable because it assumes a counterfactual world in which VTS was a fully performing counterparty — an assumption directly contradicted by the undisputed record of VTS's fleet redeployment, persistent SLO failures, and other material breaches in the months preceding the termination.
4. Failure to Perform Mitigation Analysis. Dr. Trask's failure to perform a meaningful mitigation analysis renders his damages opinion methodologically deficient and inconsistent with accepted damages quantification principles. The freight market data, Pruitt's deposition testimony, and VTS's fleet management records all demonstrate that reasonable mitigation efforts would have substantially reduced VTS's losses.
5. Duplicative Recovery. Dr. Trask's claim for both liquidated damages ($67.23 million) and lost profits ($18.7 million) is duplicative as a matter of New York law, and the Court should require Vantor to elect between the two measures.
6. Consequential Damages Bar. Dr. Trask's inclusion of stranded assets, workforce reduction costs, and mitigation costs — totaling $9.47 million — should be excluded as consequential damages barred by the mutual waiver in TSA Section 15.1.
Each of these arguments should be supported by citations to the record (deposition transcripts, documentary exhibits, financial data), Dr. Rosser's rebuttal report, and the relevant case law. The brief should request that the Court either exclude Dr. Trask's testimony in its entirety or, in the alternative, limit his testimony to a properly calculated damages figure that accounts for the identified deficiencies.
B. Alternative: In Limine Motion
If the case proceeds to trial — i.e., if summary judgment is denied or granted only in part — Calderwood & Harkness should file a motion in limine to exclude Dr. Trask's testimony in whole or in part. The motion in limine should focus on the most compelling and judicially manageable Daubert arguments, particularly:
• The inflated margin assumptions and failure to perform account-level profitability analysis, which render the lost profits opinion unreliable;
• The absence of a meaningful mitigation analysis, which renders the overall damages model methodologically deficient; and
• The duplicative nature of the liquidated damages and lost profits claims, which should be resolved as a matter of law before trial to avoid jury confusion.
The motion in limine would serve as the last pre-trial opportunity to exclude or limit Dr. Trask's testimony and would benefit from the full factual record developed through discovery and any rulings issued on summary judgment. It should be filed in accordance with the Court's pre-trial order and served sufficiently in advance of trial to allow for full briefing and, if requested, oral argument.
VII. Preservation of Work Product
All research, analysis, memoranda, and draft briefs prepared in connection with the evaluation of a potential Daubert motion against Dr. Trask should be preserved in Calderwood & Harkness's document management system under Matter No. 1012-00005 for use in either a combined summary judgment brief or a standalone Daubert/in limine motion if circumstances change. Specifically:
• The May 22, 2023 Analysis of Trask Greystone Expert Report (Gallagher/Laroche) should be maintained as the baseline assessment of methodological weaknesses.
• The September 5, 2023 Daubert Motion Research Memorandum (Laroche) should be maintained as the primary legal research document on the applicable Daubert standards in the S.D.N.Y.
• Dr. Rosser's rebuttal expert report (served August 25, 2023, 48 pages) is the foundational evidentiary document supporting any Daubert challenge and should be maintained in its final, executed form. Any drafts, notes, or communications with Dr. Rosser and Michael Chung related to the preparation of the rebuttal report should also be preserved, subject to the work-product and consultant-to-counsel privileges.
• Key deposition transcripts to be cross-referenced and indexed for summary judgment preparation include:
• Derek Pruitt (July 10, 2023) — Vantor's corporate representative on damages topics; inability to identify specific mitigation steps.
• Dmitri Milescu (August 4, 2023) — VTS Vice President of Operations; testimony regarding Q4 2021 performance failures and fleet redeployment to Northwind Distribution Co.
• Anatol Vantorovich (partial deposition, August 18, 2023) — Vantor CEO; deposition suspended and not yet completed due to CRS's withdrawal; to be rescheduled if the case resumes.
• The April 5, 2023 memorandum (Laroche) analyzing the consequential damages bar under TSA Section 15.1, and the February 15, 2023 memorandum (Gallagher) analyzing duplicative damages, should be maintained for incorporation into the summary judgment brief.
• The September 15, 2023 Summary Judgment Roadmap Memorandum should be treated as the master strategic document for the dispositive motion stage and updated as circumstances develop.
VIII. Conclusion
For the reasons set forth in this memorandum, we recommend that Stonefield not file a standalone *Daubert* motion against Dr. Philip Trask's expert report at this time. All six identified Daubert arguments should be deferred and incorporated into the summary judgment motion, which will present the full factual record and legal arguments in a unified, comprehensive framework that is more likely to produce a favorable and decisive outcome.
The strongest specific argument — Dr. Trask's reliance on an inflated 12% company-wide operating margin rather than the 5.5%–6.5% account-level margin documented in VTS's own financial records — should serve as a centerpiece of the damages section of the summary judgment brief. This argument, supported by Dr. Rosser's rebuttal analysis, the underlying financial data produced in discovery, and the deposition testimony of Vantor's corporate representatives, is compelling on its merits and is equally effective whether presented in a Daubert framework or a summary judgment context.
We recommend that the team continue to monitor the case posture following CRS's withdrawal. The Court has set an April 12, 2024 deadline for Vantor to retain successor counsel and file a notice of appearance. If Vantor fails to do so, Stonefield may move for dismissal for failure to prosecute under Rule 41(b), and the Daubert arguments — along with the broader summary judgment strategy — become moot. If Vantor retains new counsel and the case resumes, we should proceed with the combined summary judgment approach as outlined in the September 15, 2023 Summary Judgment Roadmap Memorandum, incorporating the Daubert challenges into the four-pillar strategy described in Section V.C above.
The estimated cost savings from deferral versus a standalone Daubert motion are approximately $75,000–$120,000 in duplicative attorney and expert fees — savings that can be reallocated to the summary judgment briefing effort if the case resumes, or preserved entirely if the case is dismissed.
I am available to discuss this analysis at your convenience and to begin preparing the Daubert-related sections of the summary judgment brief as soon as the case posture warrants.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Patrick Gallagher Lead Associate, Litigation (General) 200 Park Avenue, 38th Floor New York, New York 10166 Tel: (212) 555-4100 pgallagher@calderwoodharkness.com
cc: Linda Osei, Billing Partner (internal file copy) Simone Laroche, Working Associate (internal file copy)
This memorandum is protected by the attorney-client privilege and the work-product doctrine. It is intended solely for use by the attorneys and staff of Calderwood & Harkness LLP in connection with the representation of Stonefield Logistics Group Inc. in the above-referenced matter. Any unauthorized disclosure, distribution, or copying of this memorandum is strictly prohibited.
Damages Category | Amount
Liquidated Damages (TSA § 14.2) | $67,230,000
Lost Profits | $18,700,000
Stranded Assets | $5,200,000
Workforce Reduction Costs | $2,870,000
Mitigation Costs | $1,400,000
Total | $95,400,000
Metric | SLO Requirement | VTS Actual (Q4 2021) | Shortfall
On-Time Pickup | 95% | 78.2% | -16.8 points
On-Time Delivery | 93% | 81.6% | -11.4 points
Tender Acceptance | 90% | 71.4% | -18.6 points
Equipment Availability | 85% | 62% | -23.0 points
Cargo Claims Ratio | ≤ 0.5% | 1.07% | +0.57 points (excess)

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1012-00005

CALDERWOOD & HARKNESS LLP

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