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PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

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

INTERNAL MEMORANDUM

Date: February 15, 2023

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

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

RE: Duplicative Damages Analysis — Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)

MATTER NO.: 1012-00005

PRIVILEGE DESIGNATION: Attorney-Client Privileged / Attorney Work Product — Do Not Distribute Outside of Counsel

I. EXECUTIVE SUMMARY

This memorandum analyzes whether Vantor Holdings Corp. ("Vantor") and its operating subsidiary Vantor Transport Services LLC ("VTS") may recover both (a) liquidated damages under Section 14.2 of the Transportation Services Agreement dated March 15, 2019 (the "TSA," Contract Reference No. SLG-VTS-2019-0315), and (b) lost profits as separately claimed in the Amended Complaint filed December 2, 2022. The question is central to Stonefield Logistics Group Inc.'s ("Stonefield" or "SLG") damages defense strategy, as the potential overlap between these two categories constitutes the single largest component of Vantor's total claim.

Bottom-Line Conclusion. Under New York law — the governing law of the TSA — Vantor cannot recover both liquidated damages in the amount of $67,230,000 and lost profits in the amount of $18,700,000. These two categories of damages compensate for the same underlying harm: the economic value of the contract that Vantor claims it lost due to Stonefield's alleged wrongful termination of the TSA on March 4, 2022. Permitting recovery of both would constitute an impermissible double recovery — a result that New York courts have consistently prohibited.

The significance of this overlap is considerable. Vantor's total claimed damages stand at $95,400,000. Of that amount, the liquidated damages claim ($67,230,000) and the lost profits claim ($18,700,000) together account for $85,930,000, or approximately 90% of the total claim. Eliminating the duplicative component would reduce Vantor's maximum potential recovery by at least $18,700,000 and, depending on which remedy Vantor elects, could reduce it by far more.

Recommendation. Stonefield should assert the duplicative damages argument both as an affirmative defense — which has already been pleaded as the Fourteenth Affirmative Defense in Stonefield's Answer filed January 13, 2023 — and as a basis for partial summary judgment when the case reaches the dispositive motion stage. Under the Case Management Order entered February 17, 2023 by the Honorable Margaret T. Calloway, U.S.D.J., the summary judgment motion deadline is currently set for March 1, 2024. This argument should be a centerpiece of Stonefield's damages briefing at that stage. As discussed in detail below, the argument also operates as a strategic complement to Stonefield's separate contention that the liquidated damages clause is an unenforceable penalty. Together, these two arguments ensure that Vantor's total contract-value recovery is constrained regardless of how the Court resolves the enforceability question.

II. BACKGROUND AND FACTUAL CONTEXT

A. The TSA and Its Key Financial Terms

On March 15, 2019, Stonefield Logistics Group Inc. ("Stonefield" or "SLG"), acting in the capacity of "Shipper-Broker," and Vantor Transport Services LLC ("VTS"), acting in the capacity of "Carrier-Provider," entered into the Transportation Services Agreement (the "TSA," Contract Reference No. SLG-VTS-2019-0315). The TSA was drafted by Ashford Meridian LLP on behalf of Stonefield and governs the provision of full-truckload and less-than-truckload transportation services by VTS across Stonefield's domestic logistics network.

The TSA establishes a five-year term commencing April 1, 2019 and expiring March 31, 2024. Article 22 of the TSA designates the State of New York as the governing law jurisdiction and provides for exclusive jurisdiction in the federal and state courts located in the Borough of Manhattan, New York County.

The central financial commitment of the TSA is the Annual Committed Volume ("ACV"). Under Section 4.1, Stonefield committed to tender to VTS a minimum of $43,200,000 per year in transportation charges, yielding a total five-year minimum commitment of $216,000,000. The ACV represents the floor of Stonefield's freight tendering obligation; actual volumes could exceed the ACV in any given year, and historically did so in 2019 and 2020.

The rate structure is defined in Schedule B to the TSA, which sets per-mile rates organized by lane (i.e., origin-destination pairs). These rates are subject to annual adjustment pursuant to Section 5.3's Rate Adjustment Mechanism, which indexes rate changes to a blended formula consisting of 70% of the change in the Department of Energy's national average diesel fuel index and 30% of the change in the Bureau of Labor Statistics' Consumer Price Index for All Urban Consumers (CPI-U). Adjustments take effect on each April 1 during the term. This mechanism was intended to ensure that the contract rates remained reflective of underlying cost conditions without requiring full renegotiation each year.

The TSA also contains extensive provisions governing service level obligations, insurance requirements, equipment standards, and operational protocols, but these provisions are not directly relevant to the duplicative damages analysis presented here. They are, however, central to Stonefield's primary defense that the termination was validly effected for Cause — a matter addressed in separate work product.

B. The Liquidated Damages Clause (Section 14.2)

Section 14.2 of the TSA contains the liquidated damages clause that lies at the heart of the present analysis. The clause provides, in relevant part:

In the event that Shipper-Broker terminates this Agreement other than for Cause as defined in Section 13.1, Shipper-Broker shall pay to Carrier-Provider, as liquidated damages and not as a penalty, an amount equal to seventy-five percent (75%) of the Annual Committed Volume multiplied by the number of full and partial Contract Years remaining in the then-current Term (each partial Contract Year to be prorated on a per diem basis using a 365-day year).

The clause further recites:

The Parties acknowledge and agree that the liquidated damages set forth herein represent a reasonable estimate of the damages that Carrier-Provider would suffer in the event of a termination by Shipper-Broker other than for Cause, and that such damages would be difficult or impossible to calculate with precision at the time of any such termination. The Parties further acknowledge and agree that the liquidated damages set forth herein are not a penalty.

Several features of this clause merit emphasis. First, the clause was designed and drafted to compensate VTS for the lost economic value of the contract in the event Stonefield walked away without contractual justification. That is, it was intended to serve as a substitute for the expected revenue, profit, and operational benefit VTS would have derived from Stonefield's freight tenders for the remainder of the term. Second, the formula — 75% of ACV multiplied by the remaining term — is generous by industry standards and significantly exceeds VTS's disclosed operating margin on the contract (approximately 12%, as discussed below). Third, the clause's own language ("a reasonable estimate of the damages that Carrier-Provider would suffer") confirms that it was intended as a comprehensive measure of the harm from wrongful termination, not as a partial or supplemental payment.

C. Stonefield's Termination

The events leading to Stonefield's termination of the TSA unfolded as follows:

On January 18, 2022, Raymond Hess, Director of Contract Compliance at Stonefield, sent a formal Cure Notice to Sandra Milescu, Chief Operating Officer of Vantor/VTS. The Cure Notice identified material breaches by VTS across all five Service Level Obligations ("SLOs") defined in Schedule C to the TSA during the fourth quarter of 2021 (October 1 through December 31, 2021). Specifically, the Cure Notice documented failures in on-time pickup performance, on-time delivery performance, cargo damage rates, equipment condition compliance, and driver safety and training certifications. The Cure Notice was transmitted by email and overnight courier, as required by Section 19.4 of the TSA, and invoked the 30-day cure period set forth in Section 13.1(a).

The 30-day cure period expired on February 17, 2022. During this period, VTS undertook certain remedial measures, but Stonefield contends — and its internal compliance records reflect — that VTS failed to cure the identified deficiencies to the contractually required levels.

On March 4, 2022, Tobias Wren, General Counsel of Stonefield, transmitted a Termination Letter to VTS and Vantor, terminating the TSA effective immediately for Cause under Section 13.1(a). The Termination Letter detailed the uncured breaches and stated that Stonefield had determined, in the exercise of its reasonable judgment pursuant to Section 13.1(a), that VTS's performance deficiencies constituted material breaches of the TSA that had not been remedied within the applicable cure period.

At the time of termination, approximately two years and twenty-seven days remained in the TSA's five-year term — that is, the period from March 4, 2022 through the original expiration date of March 31, 2024. This remaining term forms the basis for both the liquidated damages and lost profits calculations in the Amended Complaint.

D. Vantor's Claimed Damages per the Amended Complaint

Vantor filed its original Complaint on September 12, 2022, and the Amended Complaint on December 2, 2022. The Amended Complaint asserts three causes of action: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, and (3) unjust enrichment (pleaded in the alternative). For the breach of contract claim, the Amended Complaint alleges that Stonefield's termination was not validly effected for Cause, and that the termination therefore constitutes a breach entitling Vantor and VTS to damages.

The Amended Complaint quantifies Vantor's claimed damages as follows:

Several observations about this damages table are pertinent. The liquidated damages and lost profits claims together total $85,930,000 — approximately 90% of the entire claim. The Amended Complaint does not explain how these two categories relate to each other or why both may be recovered simultaneously. The Amended Complaint characterizes the lost profits as representing the "above-contract margin" that VTS would have earned on the remaining committed volume, calculated as an average 12% operating margin applied to approximately $86.4 million in remaining committed freight volume ($43.2M ACV × 2 remaining full years, with the 27-day partial year addressed in the liquidated damages calculation).

We anticipate that Vantor's damages expert, Dr. Philip Trask of Trask Greystone & Associates, will elaborate these figures when his expert report is served. Under the Case Management Order, Vantor's expert reports are due on May 15, 2023. While the specific methodology Dr. Trask will employ is not yet known, the Amended Complaint's own allegations provide a sufficient basis for the legal analysis set forth in this memorandum. We will supplement this analysis, as appropriate, after reviewing the Trask report.

E. Stonefield's Position

Stonefield's position, as set forth in its Answer filed January 13, 2023, is as follows:

First, Stonefield maintains that it terminated the TSA for valid Cause based on VTS's sustained, uncured material breaches of the Service Level Obligations. If the termination was for Cause, no damages of any kind are owed — neither liquidated damages (which are triggered only by a termination "other than for Cause") nor lost profits.

Second, even assuming arguendo that the termination were wrongful, Stonefield contends that Vantor cannot recover both liquidated damages and lost profits because these two categories compensate for the same loss: the expected economic benefit of the TSA for the remaining contract term. The liquidated damages clause, by its own terms and as expressly recited in Section 14.2, represents the parties' agreed estimate of the damages VTS would suffer from early termination without Cause. Lost profits, as calculated by Vantor, represent the actual economic harm from that same termination. These are alternative, not cumulative, measures of the same injury. Permitting recovery of both would provide Vantor with a windfall and contravene New York's fundamental prohibition on double recovery.

Third, Stonefield has separately argued that the liquidated damages clause is an unenforceable penalty, a position analyzed in the research memorandum dated September 19, 2022 by Simone Laroche (Document 15 in the matter file). That argument is distinct from the duplicative damages argument addressed here, and the two operate as complementary alternatives in Stonefield's damages defense strategy.

III. LEGAL ANALYSIS

A. New York's Prohibition on Double Recovery

The starting point for this analysis is a bedrock principle of New York damages law: a plaintiff may not recover duplicative damages that compensate for the same injury. This principle, sometimes referred to as the prohibition on "double recovery" or the "single satisfaction" rule, is rooted in the fundamental purpose of contract damages — to put the non-breaching party in the position it would have occupied had the contract been performed, without conferring a windfall. See Luitpold Pharms., Inc. v. Ed. Geistlich Söhne A.G. für Chemische Industrie, 784 F.3d 78, 95 (2d Cir. 2015) (applying New York law and holding that damages may not be recovered more than once for the same harm); Boyce v. Soundview Tech. Grp., Inc., 464 F.3d 376, 391 (2d Cir. 2006) (noting that "a double recovery for a single injury is not permitted").

The prohibition on double recovery applies regardless of how the plaintiff labels or categorizes its damages claims. What matters is the substance of the harm being compensated, not the formal designation attached to each category. A plaintiff cannot circumvent the rule by styling the same economic loss under two different headings — for example, by seeking "liquidated damages" to compensate for the loss of a contract's value and then additionally seeking "lost profits" to compensate for the profit it would have earned under that same contract. Where the underlying injury is the same, the recovery must be singular. See Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 497 (2d Cir. 1995) (holding under New York law that a plaintiff is not entitled to recover the same damages twice under different theories).

This principle has particular force in the context of contractual liquidated damages provisions. When parties include a liquidated damages clause in their agreement, they do so precisely to obviate the need for after-the-fact calculation of actual damages. The clause provides a predetermined amount that the parties agree represents a reasonable estimate of the harm the non-breaching party would suffer. It follows that the non-breaching party should not be permitted to invoke the liquidated damages clause and simultaneously seek to prove actual damages for the same breach — doing so would undermine the very purpose of the clause and produce an outcome that the parties could not have intended.

B. The Nature and Function of Liquidated Damages Under New York Law

New York law has long recognized the validity and enforceability of liquidated damages clauses, subject to certain well-established limitations. A liquidated damages clause is, at its core, an agreed-upon estimate of actual damages that would be difficult to calculate precisely at the time of breach. The clause represents the parties' ex ante assessment — made at the time of contracting — of the economic harm that would result from a particular breach scenario.

The enforceability of a liquidated damages clause under New York law is evaluated under a two-part test. First, the amount specified must be a reasonable estimate of the anticipated damages at the time of contracting. Second, actual damages must be difficult to ascertain at the time of contracting. See Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 357, 361 N.E.2d 1015 (1977); JMD Holding Corp. v. Cong. Fin. Corp., 4 N.Y.3d 373, 380, 828 N.E.2d 604 (2005). If both conditions are satisfied, the clause is enforceable; if either is lacking, the clause may be struck as an unenforceable penalty, and the non-breaching party is relegated to proving actual damages.

Critically, when a liquidated damages clause is enforceable, it replaces the need to prove actual damages. The non-breaching party receives the stipulated liquidated amount in lieu of proving lost profits, consequential damages, or other actual harm flowing from the covered breach. This substitutive function is central to the clause's utility: it provides certainty to both parties and avoids the expense, delay, and uncertainty of after-the-fact damages litigation. See Rattigan v. Commodore Int'l Ltd., 739 F. Supp. 167, 169 (S.D.N.Y. 1990) (explaining that where a liquidated damages clause is enforceable, the stipulated amount "stands in the place of actual damages"); Brettschneider v. Brettschneider, 97 A.D.3d 710, 711 (2d Dep't 2012) (noting that enforceable liquidated damages provisions "operate as a substitute for actual damages").

The implication for the present case is significant. If Section 14.2's liquidated damages clause is enforceable, it operates as the exclusive remedy for the breach it covers — namely, the harm resulting from Stonefield's termination of the TSA other than for Cause. The clause specifically addresses the loss of the remaining contract term's economic value. This is the identical harm that Vantor's lost profits claim seeks to recover. The liquidated damages clause thus forecloses a separate lost profits claim, because both the clause and the lost profits claim compensate for one and the same injury.

C. Vantor's Lost Profits Claim Compensates for the Same Harm as the Liquidated Damages

The overlap between Vantor's liquidated damages claim and its lost profits claim becomes strikingly apparent upon examination of how each is calculated.

The Lost Profits Claim. As set forth in the Amended Complaint, Vantor's lost profits claim of $18,700,000 is derived from VTS's average operating margin of approximately 12%, applied to the remaining committed volume of approximately $86.4 million (that is, $43.2M ACV multiplied by the two full contract years remaining in the term). The claim seeks to compensate VTS for the profit it would have earned by performing the TSA through March 31, 2024 — profit that VTS alleges it lost because Stonefield wrongfully terminated the agreement on March 4, 2022.

The Liquidated Damages Claim. Vantor's liquidated damages claim of $67,230,000 is derived from the formula in Section 14.2: 75% of the ACV ($43.2 million), multiplied by the number of remaining full and partial contract years (two full years plus a 27-day partial year). This formula was agreed upon by the parties as a reasonable approximation of the net economic value VTS would lose if Stonefield terminated the contract early without Cause.

The critical observation is that both calculations start from the same base — the ACV for the remaining contract term — and both seek to compensate VTS for the same injury: the loss of the economic benefit of performing the TSA through its original March 31, 2024 expiration date. The only difference between them is methodological. The liquidated damages clause uses a formulaic approach, applying a 75%-of-ACV multiplier agreed upon at the time of contracting. The lost profits claim uses an ex post analysis, applying VTS's actual historical operating margin to the same remaining revenue base.

But a difference in calculation methodology does not transform a single injury into two separate injuries. Regardless of whether the loss is measured at 75% of ACV or at 12% of ACV, the harm being compensated is the same: VTS's loss of the economic benefit of the contract for the remaining term. Allowing recovery under both measures would compensate VTS twice for the identical loss.

Moreover, the mathematical relationship between the two figures underscores the duplication. The liquidated damages amount ($67,230,000) already vastly exceeds any reasonable measure of VTS's actual lost profits on the remaining contract volume. On a $86.4 million revenue base, a 12% operating margin yields approximately $10,370,000 in pure operating profit. Even Dr. Trask's anticipated upward adjustment to $18,700,000 — presumably incorporating additional margin components beyond operating income — falls well short of the $67,230,000 liquidated damages figure. The 75%-of-ACV formula thus inherently includes and exceeds any lost profits component. This further demonstrates that the liquidated damages clause was intended to be a comprehensive substitute for all contract-value damages, including lost profits, and that a separate lost profits claim would result in impermissible overcompensation.

Under New York law, a plaintiff must elect between liquidated damages and actual damages for the same breach; it cannot recover both. See Walter E. Heller & Co. v. Am. Flyers Airline Corp., 459 F.2d 896, 899 (2d Cir. 1972) (holding that a party who invokes a liquidated damages clause cannot also seek actual damages for the same breach); Fifty States Mgmt. Corp. v. Pioneer Auto Parks, Inc., 46 N.Y.2d 573, 578, 389 N.E.2d 113 (1979) (recognizing that liquidated damages and actual damages are alternative, not cumulative, remedies for the same breach).

D. Election of Remedies Doctrine

The foregoing principles give rise to the election of remedies doctrine, which requires Vantor to choose between two inconsistent measures of damages for the same harm. Under New York law, when a contract provides a liquidated damages remedy for a particular breach and the non-breaching party also claims actual damages (including lost profits) for the same breach, the party must elect between the two. See JMD Holding Corp., 4 N.Y.3d at 380; Brettschneider, 97 A.D.3d at 711.

The Amended Complaint filed by Vantor does not clearly indicate whether it seeks liquidated damages as an alternative to lost profits, or in addition to them. The damages claims are presented as separate line items, and the prayer for relief seeks recovery of the full $95,400,000 — a figure that aggregates both the liquidated damages and lost profits claims without any indication that one is pleaded in the alternative. On its face, therefore, the Amended Complaint seeks cumulative recovery of both categories. This approach is impermissible under New York law.

The practical consequences of the required election are significant for both parties:

If Vantor elects liquidated damages, it forfeits the right to prove actual lost profits as a separate category of damages. Vantor would recover $67,230,000 under Section 14.2 (assuming the clause is enforceable), plus whatever additional, non-duplicative categories of damages survive the other defenses discussed below. Vantor would not be required to prove its actual lost profits with "reasonable certainty" — the liquidated damages formula substitutes for that burden.

If Vantor elects actual lost profits, it must prove those profits with "reasonable certainty," as required under New York law for contract damages. See Kenford Co. v. County of Erie, 67 N.Y.2d 257, 261, 493 N.E.2d 234 (1986). It may not also invoke the liquidated damages formula. If actual lost profits are lower than the liquidated amount — which appears likely given the 12% margin versus the 75%-of-ACV formula — Vantor's recovery would be correspondingly reduced.

In either case, Vantor is limited to one measure of contract-value damages, not both.

E. The Liquidated Damages Clause as an Exclusive Remedy

A separate but related question is whether Section 14.2's liquidated damages clause constitutes an exclusive remedy for termination-related damages — that is, whether the clause not only precludes cumulative recovery of lost profits but also limits Vantor's termination-related damages recovery exclusively to the liquidated amount.

The language of Section 14.2 provides for payment of liquidated damages if Stonefield terminates the TSA "other than for Cause." The clause does not expressly state that the liquidated amount is the "sole and exclusive remedy" for such a termination, nor does it use comparable limiting language. Neither, however, does the clause state that the liquidated amount is "in addition to" or "cumulative with" other remedies available to VTS.

Under New York law, when a liquidated damages clause addresses the specific harm at issue — here, the loss of the remaining contract term's economic value — it is generally construed as the exclusive measure of damages for that harm, unless the contract clearly provides otherwise. See JMD Holding Corp., 4 N.Y.3d at 380 (noting that an enforceable liquidated damages clause "fix[es] the damages that flow from a particular breach"); Truck Rent-A-Center, 41 N.Y.2d at 357 (treating liquidated damages as the measure of recovery for the covered breach, without permitting additional actual damages claims). The absence of express "exclusive remedy" language does not, by itself, transform the clause into a mere supplement to actual damages.

Vantor may argue that its lost profits represent a different category of harm — "above-contract margin" or "premium profits" beyond the liquidated amount — and that the liquidated damages clause was intended to address only the base-level harm of contract loss, leaving the additional "premium" available for separate recovery. This argument fails for the reasons discussed in Section V.A below: the 75%-of-ACV formula already captures far more than VTS's actual profit margin, and there is no basis for construing the clause as leaving room for supplemental lost-profits recovery.

Accordingly, if Section 14.2 is enforceable, it should be construed as the exclusive remedy for the harm it addresses — the loss of the remaining contract term — thereby precluding a separate lost profits claim for the same harm.

F. Separate Analysis: Non-Duplicative Damage Categories

The foregoing analysis focuses on the overlap between the liquidated damages and lost profits claims. It is important to note that Vantor's remaining damage categories — stranded assets and costs ($5,200,000), workforce reduction costs ($2,870,000), and mitigation costs ($1,400,000) — raise somewhat different considerations.

These three categories are arguably distinct from the liquidated damages and lost profits claims in that they address incremental, out-of-pocket costs rather than the expected value of future contract performance. Stranded asset costs represent the unrecoverable investment in equipment and leases dedicated to the Stonefield account. Workforce reduction costs represent severance obligations incurred upon the displacement of drivers and support staff who serviced Stonefield's freight. Mitigation costs represent expenditures incurred in seeking replacement business to offset the lost Stonefield volume.

Whether these categories are independently recoverable is a question that turns on separate legal issues not fully addressed in this memorandum. In particular, the mutual consequential damages waiver set forth in Section 15.1 of the TSA may independently bar recovery of all three categories, on the ground that they constitute consequential or incidental damages excluded by the parties' agreement. That analysis is the subject of a forthcoming separate memorandum and is being coordinated with the broader damages defense strategy.

For purposes of the present memorandum, the critical point is that even if these non-duplicative categories survive, eliminating the overlap between liquidated damages and lost profits would substantially reduce Vantor's maximum potential recovery. Specifically:

If Vantor elects liquidated damages: Maximum recovery = $67,230,000 (liquidated damages) + $5,200,000 (stranded assets) + $2,870,000 (workforce reduction) + $1,400,000 (mitigation) = $76,700,000 — a reduction of $18,700,000 from the claimed $95,400,000.

If Vantor elects lost profits: Maximum recovery = $18,700,000 (lost profits) + $5,200,000 (stranded assets) + $2,870,000 (workforce reduction) + $1,400,000 (mitigation) = $28,170,000 — a reduction of $67,230,000 from the claimed $95,400,000.

Both scenarios represent significant reductions from the $95,400,000 total claim, and the lost-profits-only scenario would reduce Stonefield's exposure by approximately 70%.

IV. APPLICATION TO SUMMARY JUDGMENT STRATEGY

The duplicative damages argument should be raised in the summary judgment briefing currently scheduled for March 1, 2024 under the Case Management Order entered February 17, 2023 by the Honorable Margaret T. Calloway, U.S.D.J. The argument is well-suited for resolution at the summary judgment stage for several reasons.

The Argument Presents a Legal Question. The duplicative damages analysis turns on the interpretation of Section 14.2 of the TSA and the application of well-established New York legal principles governing double recovery, election of remedies, and the function of liquidated damages clauses. These are legal questions amenable to resolution on summary judgment. They do not require credibility determinations, resolution of disputed factual narratives, or weighing of competing evidence — the kinds of determinations that are reserved for the jury. The relevant facts — the language of the TSA, the calculation methodology for each damages category, and the identity of the underlying harm — are either undisputed or ascertainable from the face of the contract and the Amended Complaint.

Relationship to Other Defenses. The duplicative damages argument complements but is distinct from Stonefield's primary defense — that the termination was validly effected for Cause under Section 13.1(a) and that therefore no damages of any kind are owed. The Cause defense turns on factual questions (whether VTS's SLO breaches were material, whether the cure was adequate) that may or may not be resolved on summary judgment. The duplicative damages argument, by contrast, is relevant only in the scenario where the Court determines that the termination was wrongful and proceeds to the question of remedies.

The duplicative damages argument is also distinct from Stonefield's separate contention that the liquidated damages clause is an unenforceable penalty. That argument, analyzed in the research memorandum dated September 19, 2022 by Simone Laroche (Document 15 in the matter file), asserts that the 75%-of-ACV formula is grossly disproportionate to any reasonable estimate of VTS's actual damages and therefore constitutes an unenforceable penalty under Truck Rent-A-Center and its progeny.

Strategic Tension and Complementarity. We note an important strategic dynamic between the duplicative damages argument and the penalty argument. The two arguments operate in tension with each other at a theoretical level but are complementary in their practical effect:

If Stonefield prevails on the penalty argument — that is, if the Court holds that Section 14.2 is an unenforceable penalty — then Vantor cannot recover the $67,230,000 liquidated damages amount at all. Vantor would be limited to proving its actual damages (including actual lost profits) with reasonable certainty. This would effectively cap Vantor's contract-value recovery at some amount significantly less than $67,230,000 and would subject that recovery to mitigation offsets and other defenses.

If Stonefield does not prevail on the penalty argument — that is, if the Court holds that Section 14.2 is enforceable — then the duplicative damages argument kicks in. Vantor would be entitled to the $67,230,000 liquidated damages amount but could not also recover lost profits, because the liquidated damages constitute the exclusive measure of contract-value damages. Vantor's lost profits claim ($18,700,000) would be eliminated.

Either way, Vantor cannot recover both. The two arguments work in tandem to ensure that Vantor's total contract-value damages are constrained to the greater of the enforceable liquidated amount or provable actual damages — but never both.

Recommendation. The duplicative damages argument should be presented as an alternative to the penalty argument in the summary judgment briefing. The brief should be structured so that Stonefield argues: (1) the liquidated damages clause is an unenforceable penalty, limiting Vantor to provable actual damages; and alternatively, (2) even if the clause is enforceable, it precludes separate recovery of lost profits, as the two categories compensate for the identical harm. This structure maximizes Stonefield's prospects of reducing Vantor's total damages regardless of the Court's threshold determination on enforceability.

V. POTENTIAL COUNTERARGUMENTS BY VANTOR

We anticipate that Vantor will raise several counterarguments to the duplicative damages analysis. Each is addressed below.

A. Lost Profits as "Additional" or "Excess" Damages

Vantor may argue that its lost profits claim represents a category of damages distinct from and in addition to the liquidated damages amount. Specifically, Vantor may contend that the liquidated damages compensate for the "revenue loss" associated with the termination — that is, the gross value of the contract that was lost — while the lost profits compensate for the "profit margin" that VTS would have earned above and beyond its costs in performing the contract. Under this theory, the two categories address different economic harms and may be recovered cumulatively.

Rebuttal. This argument fundamentally mischaracterizes the function of the liquidated damages clause. The 75%-of-ACV formula does not represent a "revenue replacement" — it does not purport to restore to VTS the full revenue stream it would have received under the TSA. Rather, as Section 14.2 expressly states, the formula represents "a reasonable estimate of the damages that Carrier-Provider would suffer" from a wrongful termination. The word "damages" is used advisedly: it refers to the net harm VTS would incur, not to a gross revenue figure.

Moreover, the arithmetic makes the argument untenable. The liquidated damages amount ($67,230,000) equals 75% of the remaining ACV ($86.4 million × 75% = $64.8 million for two full years, plus a prorated amount for the 27-day partial year). VTS's actual operating margin, as Vantor itself alleges, is approximately 12%. Twelve percent of $86.4 million is approximately $10,370,000 — far less than the $67,230,000 liquidated amount. Even the $18,700,000 lost profits figure advanced by Vantor (which presumably includes additional margin components) is less than one-third of the liquidated damages figure.

In other words, the liquidated damages amount already includes and vastly exceeds any reasonable measure of VTS's actual lost profits. The 75%-of-ACV formula is not a measure of lost revenue to which lost profits must be added; it is a comprehensive estimate of total damages that subsumes the profit component. Permitting additional lost-profits recovery would result in overcompensation and a windfall to Vantor — precisely the outcome that New York's prohibition on double recovery is designed to prevent.

B. Different Temporal or Causal Bases

Vantor may argue that certain components of its lost profits accrued during the cure period (January 18, 2022 through February 17, 2022) or under a different legal theory (for example, anticipatory breach during the cure period versus actual breach upon the March 4, 2022 termination). Under this theory, the lost profits claim encompasses harms that predate the termination event and are therefore not covered by the liquidated damages clause, which is triggered only upon termination.

Rebuttal. The Amended Complaint does not draw any such temporal distinction. Both the liquidated damages and lost profits claims, as pleaded, arise from the same event — the March 4, 2022 termination — and cover the same remaining term (March 4, 2022 through March 31, 2024). There is no allegation in the Amended Complaint that VTS suffered discrete, pre-termination lost profits during the cure period that are separable from the post-termination damages. Nor does the Amended Complaint assert an anticipatory breach theory with respect to any pre-termination period.

Even if Vantor were to attempt to recharacterize a portion of its lost profits as pre-termination damages, it would face a formidable factual obstacle: VTS was receiving freight tenders and transportation charges from Stonefield throughout the cure period. Any claim that VTS suffered lost profits during a period in which the contract was still being performed — and in which VTS was earning revenue from Stonefield — would be subject to serious challenge.

C. The TSA Does Not Expressly Preclude Cumulative Recovery

Vantor may argue that Section 14.2 does not contain "exclusive remedy" or "sole remedy" language, and that the absence of such language indicates that the parties intended the liquidated damages to be cumulative with, rather than a substitute for, other remedies.

Rebuttal. Under New York law, the absence of express "exclusive remedy" language does not entitle a party to cumulative recovery of liquidated damages and actual damages for the same breach. The default rule — derived from the fundamental nature of liquidated damages as a substitute for actual damages — is that an enforceable liquidated damages clause replaces actual damages for the covered breach, unless the contract expressly provides for cumulative recovery. See Brettschneider, 97 A.D.3d at 711; Rattigan, 739 F. Supp. at 169. The burden should be on the party seeking cumulative recovery to point to contract language affirmatively authorizing such a result. Section 14.2 contains no such language.

Indeed, the TSA's own recitals confirm the substitutive nature of the liquidated damages clause. The clause states that the liquidated amount "represent[s] a reasonable estimate of the damages" VTS would suffer and that "such damages would be difficult or impossible to calculate with precision at the time of any such termination." This language contemplates that the liquidated amount stands in for actual damages — not that it serves as a floor to which actual damages may be added. If the parties had intended the liquidated amount to be a minimum payment with actual damages available on top, one would expect the clause to say so explicitly. It does not.

VI. RELATIONSHIP TO OTHER DAMAGES DEFENSES

The duplicative damages argument is one component of a multi-faceted damages defense strategy. For completeness, we note the relationship between this argument and the other damages defenses under development.

Penalty Defense. As noted above, Stonefield has separately argued that the liquidated damages clause is an unenforceable penalty. That argument is analyzed in the research memorandum dated September 19, 2022 by Simone Laroche (Document 15 in the matter file). As discussed in Section IV, the duplicative damages argument and the penalty argument operate as complementary alternatives, ensuring that Vantor's total contract-value recovery is constrained regardless of the Court's ruling on enforceability.

Consequential Damages Waiver. Section 15.1 of the TSA contains a mutual waiver of consequential, incidental, and special damages. This provision may independently bar Vantor's claims for stranded assets ($5,200,000), workforce reduction costs ($2,870,000), and mitigation costs ($1,400,000), on the ground that these categories constitute consequential or incidental damages within the scope of the waiver. A separate memorandum analyzing the consequential damages waiver is forthcoming and is being coordinated with the broader defense strategy. If the consequential damages waiver is enforceable and applicable, it would eliminate $9,470,000 from Vantor's claim — an amount that, combined with the elimination of the duplicative lost profits claim ($18,700,000), would reduce Vantor's maximum recovery to the liquidated damages amount alone ($67,230,000), or even lower if the penalty defense prevails.

Expert Rebuttal. Kensington Analytics Group LLC ("KAG") has been retained to provide rebuttal expert testimony on damages. Dr. Evelyn Rosser, Managing Director of KAG, is the designated testifying expert. KAG was retained in October 2022 and is currently scoping its analysis, with the rebuttal expert report due under the Case Management Order after Vantor's expert report is served. Dr. Rosser's analysis is expected to address, among other things, the damages calculation methodology employed by Dr. Trask and the mathematical overlap between the liquidated damages and lost profits claims. From an economic perspective, Dr. Rosser should be able to demonstrate that the liquidated damages formula already subsumes and exceeds any reasonable measure of VTS's actual lost profits, reinforcing the legal argument that recovery of both would constitute impermissible double recovery. We will coordinate with KAG to ensure that this overlap analysis is prominently featured in the rebuttal report.

Failure to Mitigate. Stonefield intends to argue that Vantor failed to mitigate its damages by not diligently seeking replacement freight after the TSA termination. The failure-to-mitigate defense applies regardless of whether Vantor elects liquidated damages or lost profits. However, it bears noting that under New York law, the duty to mitigate may not apply to liquidated damages (which are fixed by a contractual formula and not dependent on the non-breaching party's post-breach conduct), but does apply to actual lost profits (which must be reduced by any amount the non-breaching party could have earned through reasonable mitigation efforts). See Holy Props. Ltd. v. Kenneth Cole Prods., Inc., 87 N.Y.2d 130, 133, 661 N.E.2d 694 (1995) (discussing the duty to mitigate in the context of contract damages).

This asymmetry creates an additional strategic consideration. If the liquidated damages clause is enforceable and exclusive, Vantor receives the stipulated amount without offset for mitigation. But if Vantor is permitted to seek actual lost profits, those profits are subject to mitigation offset — which could further reduce the recovery. This is yet another reason to argue that if the clause is enforceable, it is exclusive: Vantor should not be permitted to layer unmitigated lost-profits claims on top of the already-generous liquidated damages formula.

VII. RECOMMENDATIONS

Based on the analysis set forth above, I recommend the following action items:

1. Preserve the duplicative damages argument in dispositive briefing. The affirmative defense was asserted as the Fourteenth Affirmative Defense in Stonefield's Answer filed January 13, 2023, thereby preserving the argument from a pleading standpoint. The argument should be fully developed and presented in Stonefield's summary judgment motion, currently scheduled for filing on March 1, 2024. The brief should include a dedicated section analyzing the duplicative damages issue, supported by the TSA itself, the Amended Complaint, and governing New York authority.

2. Develop the discovery record on damages overlap. In connection with Stonefield's First Set of Interrogatories, served on March 6, 2023, Interrogatory No. 17 specifically asks Vantor to explain the relationship between its liquidated damages and lost profits claims and to identify what harm each category is intended to redress. Vantor's response to this interrogatory will be critical. If Vantor acknowledges that both claims seek to compensate for the loss of the contract's economic value, the admission will strongly support Stonefield's duplicative damages argument. If Vantor attempts to draw a distinction between the two categories, its explanation will provide the basis for targeted rebuttal. In either case, the interrogatory response should be carefully analyzed and, if necessary, followed up with deposition questioning of Vantor's designee on damages.

3. Coordinate with Kensington Analytics Group (Dr. Rosser). KAG should be directed to include in its rebuttal expert report a quantitative analysis demonstrating the mathematical overlap between the liquidated damages formula and the lost profits calculation. Specifically, Dr. Rosser should show that the liquidated damages amount ($67,230,000) already subsumes and exceeds any reasonable measure of VTS's actual lost profits, and that permitting recovery of both would produce aggregate damages that far exceed VTS's actual economic loss from the termination. This analysis will provide an empirical foundation for the legal argument and will be particularly useful if the Court requires briefing on the relationship between the two damages categories.

4. Present the duplicative damages argument as an alternative to the penalty argument. The summary judgment briefing should be structured so that the duplicative damages argument and the penalty argument operate as complementary alternatives. The brief should argue: first, that Section 14.2 is an unenforceable penalty, limiting Vantor to provable actual damages (which are far less than $67.23M); and second, in the alternative, that even if Section 14.2 is enforceable, it precludes separate recovery of lost profits. This structure ensures that regardless of the Court's threshold determination on enforceability, Vantor's total contract-value recovery is constrained.

5. Monitor Vantor's expert report. When Vantor's damages expert, Dr. Philip Trask of Trask Greystone & Associates, serves his expert report — anticipated for May 15, 2023 per the Case Management Order — the report should be reviewed with particular attention to how Dr. Trask treats the relationship between the liquidated damages and lost profits categories. If Dr. Trask's report treats the two as cumulative without explanation, this will be a vulnerability that can be exploited on cross-examination and in the summary judgment briefing. If the report acknowledges any overlap, or if its methodology implicitly relies on the same economic inputs for both calculations, the acknowledgment will support Stonefield's position. We should be prepared to supplement this memorandum following review of the Trask report.

VIII. CONCLUSION

Under New York law, Vantor cannot recover both $67,230,000 in liquidated damages and $18,700,000 in lost profits. These two categories of damages compensate for the identical harm — the loss of the economic benefit of the Transportation Services Agreement for the remaining contract term of approximately two years and twenty-seven days — and permitting recovery of both would constitute an impermissible double recovery that would confer a windfall on Vantor far in excess of its actual economic loss.

If the liquidated damages clause in Section 14.2 is enforceable, it operates as the exclusive measure of termination-related contract-value damages, precluding a separate lost profits claim. The clause was designed, drafted, and expressly described by the parties as "a reasonable estimate of the damages" VTS would suffer from a wrongful termination — a comprehensive substitute for actual damages, including lost profits. The 75%-of-ACV formula inherently includes and exceeds any reasonable calculation of VTS's actual lost profits, and there is no contractual or legal basis for treating the liquidated amount as a floor to which actual profits may be added.

If the liquidated damages clause is unenforceable — as Stonefield has separately argued on the ground that the clause constitutes a penalty — then Vantor is limited to proving its actual lost profits with reasonable certainty. In that scenario, the $67,230,000 liquidated damages claim falls away entirely, and Vantor's contract-value recovery is capped at whatever actual damages it can prove, subject to mitigation offsets and other defenses.

Either way, Vantor's maximum contract-value damages are capped at the greater of $67,230,000 (liquidated damages, if enforceable) or provable lost profits (which Stonefield contends are significantly lower than claimed, and which are subject to the duty to mitigate) — but not both. This argument, combined with the consequential damages waiver defense and the failure-to-mitigate defense, substantially reduces Stonefield's exposure from the claimed $95,400,000. I am available to discuss these recommendations and to coordinate the development of the summary judgment briefing at your convenience.

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

This memorandum is protected by the attorney-client privilege and the work product doctrine. It was prepared in anticipation of litigation and reflects the mental impressions, conclusions, opinions, and legal theories of counsel. It is not to be distributed, disclosed, or discussed with any person outside of counsel for Stonefield Logistics Group Inc. without the prior written authorization of the responsible partner.

Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166

Matter No. 1012-00005

Category	Amount	Derivation
Liquidated Damages (2 full contract years remaining)	$64,800,000	75% × $43.2M ACV × 2 years
Liquidated Damages (partial year, 27 days remaining)	$2,430,000	75% × $43.2M × (27/365), rounded
Total Liquidated Damages	$67,230,000	Sum of above
Lost Profits (above-contract operating margin)	$18,700,000	Avg. 12% operating margin × remaining committed volume (~$86.4M for 2 years), as stated in Amended Complaint
Stranded Assets & Costs	$5,200,000	Depreciation on tractors/trailers dedicated to SLG account; lease termination costs
Workforce Reduction Costs	$2,870,000	Severance payments for approximately 180 drivers and support staff
Mitigation Costs	$1,400,000	Costs incurred seeking replacement freight
Total Claimed Damages	$95,400,000

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166
INTERNAL MEMORANDUM
Date: February 15, 2023
TO: Samuel Eklund, Responsible Partner, Litigation (General)
FROM: Patrick Gallagher, Lead Associate, Litigation (General)
RE: Duplicative Damages Analysis — Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
MATTER NO.: 1012-00005
PRIVILEGE DESIGNATION: Attorney-Client Privileged / Attorney Work Product — Do Not Distribute Outside of Counsel
I. EXECUTIVE SUMMARY
This memorandum analyzes whether Vantor Holdings Corp. ("Vantor") and its operating subsidiary Vantor Transport Services LLC ("VTS") may recover both (a) liquidated damages under Section 14.2 of the Transportation Services Agreement dated March 15, 2019 (the "TSA," Contract Reference No. SLG-VTS-2019-0315), and (b) lost profits as separately claimed in the Amended Complaint filed December 2, 2022. The question is central to Stonefield Logistics Group Inc.'s ("Stonefield" or "SLG") damages defense strategy, as the potential overlap between these two categories constitutes the single largest component of Vantor's total claim.
Bottom-Line Conclusion. Under New York law — the governing law of the TSA — Vantor cannot recover both liquidated damages in the amount of $67,230,000 and lost profits in the amount of $18,700,000. These two categories of damages compensate for the same underlying harm: the economic value of the contract that Vantor claims it lost due to Stonefield's alleged wrongful termination of the TSA on March 4, 2022. Permitting recovery of both would constitute an impermissible double recovery — a result that New York courts have consistently prohibited.
The significance of this overlap is considerable. Vantor's total claimed damages stand at $95,400,000. Of that amount, the liquidated damages claim ($67,230,000) and the lost profits claim ($18,700,000) together account for $85,930,000, or approximately 90% of the total claim. Eliminating the duplicative component would reduce Vantor's maximum potential recovery by at least $18,700,000 and, depending on which remedy Vantor elects, could reduce it by far more.
Recommendation. Stonefield should assert the duplicative damages argument both as an affirmative defense — which has already been pleaded as the Fourteenth Affirmative Defense in Stonefield's Answer filed January 13, 2023 — and as a basis for partial summary judgment when the case reaches the dispositive motion stage. Under the Case Management Order entered February 17, 2023 by the Honorable Margaret T. Calloway, U.S.D.J., the summary judgment motion deadline is currently set for March 1, 2024. This argument should be a centerpiece of Stonefield's damages briefing at that stage. As discussed in detail below, the argument also operates as a strategic complement to Stonefield's separate contention that the liquidated damages clause is an unenforceable penalty. Together, these two arguments ensure that Vantor's total contract-value recovery is constrained regardless of how the Court resolves the enforceability question.
II. BACKGROUND AND FACTUAL CONTEXT
A. The TSA and Its Key Financial Terms
On March 15, 2019, Stonefield Logistics Group Inc. ("Stonefield" or "SLG"), acting in the capacity of "Shipper-Broker," and Vantor Transport Services LLC ("VTS"), acting in the capacity of "Carrier-Provider," entered into the Transportation Services Agreement (the "TSA," Contract Reference No. SLG-VTS-2019-0315). The TSA was drafted by Ashford Meridian LLP on behalf of Stonefield and governs the provision of full-truckload and less-than-truckload transportation services by VTS across Stonefield's domestic logistics network.
The TSA establishes a five-year term commencing April 1, 2019 and expiring March 31, 2024. Article 22 of the TSA designates the State of New York as the governing law jurisdiction and provides for exclusive jurisdiction in the federal and state courts located in the Borough of Manhattan, New York County.
The central financial commitment of the TSA is the Annual Committed Volume ("ACV"). Under Section 4.1, Stonefield committed to tender to VTS a minimum of $43,200,000 per year in transportation charges, yielding a total five-year minimum commitment of $216,000,000. The ACV represents the floor of Stonefield's freight tendering obligation; actual volumes could exceed the ACV in any given year, and historically did so in 2019 and 2020.
The rate structure is defined in Schedule B to the TSA, which sets per-mile rates organized by lane (i.e., origin-destination pairs). These rates are subject to annual adjustment pursuant to Section 5.3's Rate Adjustment Mechanism, which indexes rate changes to a blended formula consisting of 70% of the change in the Department of Energy's national average diesel fuel index and 30% of the change in the Bureau of Labor Statistics' Consumer Price Index for All Urban Consumers (CPI-U). Adjustments take effect on each April 1 during the term. This mechanism was intended to ensure that the contract rates remained reflective of underlying cost conditions without requiring full renegotiation each year.
The TSA also contains extensive provisions governing service level obligations, insurance requirements, equipment standards, and operational protocols, but these provisions are not directly relevant to the duplicative damages analysis presented here. They are, however, central to Stonefield's primary defense that the termination was validly effected for Cause — a matter addressed in separate work product.
B. The Liquidated Damages Clause (Section 14.2)
Section 14.2 of the TSA contains the liquidated damages clause that lies at the heart of the present analysis. The clause provides, in relevant part:
In the event that Shipper-Broker terminates this Agreement other than for Cause as defined in Section 13.1, Shipper-Broker shall pay to Carrier-Provider, as liquidated damages and not as a penalty, an amount equal to seventy-five percent (75%) of the Annual Committed Volume multiplied by the number of full and partial Contract Years remaining in the then-current Term (each partial Contract Year to be prorated on a per diem basis using a 365-day year).
The clause further recites:
The Parties acknowledge and agree that the liquidated damages set forth herein represent a reasonable estimate of the damages that Carrier-Provider would suffer in the event of a termination by Shipper-Broker other than for Cause, and that such damages would be difficult or impossible to calculate with precision at the time of any such termination. The Parties further acknowledge and agree that the liquidated damages set forth herein are not a penalty.
Several features of this clause merit emphasis. First, the clause was designed and drafted to compensate VTS for the lost economic value of the contract in the event Stonefield walked away without contractual justification. That is, it was intended to serve as a substitute for the expected revenue, profit, and operational benefit VTS would have derived from Stonefield's freight tenders for the remainder of the term. Second, the formula — 75% of ACV multiplied by the remaining term — is generous by industry standards and significantly exceeds VTS's disclosed operating margin on the contract (approximately 12%, as discussed below). Third, the clause's own language ("a reasonable estimate of the damages that Carrier-Provider would suffer") confirms that it was intended as a comprehensive measure of the harm from wrongful termination, not as a partial or supplemental payment.
C. Stonefield's Termination
The events leading to Stonefield's termination of the TSA unfolded as follows:
On January 18, 2022, Raymond Hess, Director of Contract Compliance at Stonefield, sent a formal Cure Notice to Sandra Milescu, Chief Operating Officer of Vantor/VTS. The Cure Notice identified material breaches by VTS across all five Service Level Obligations ("SLOs") defined in Schedule C to the TSA during the fourth quarter of 2021 (October 1 through December 31, 2021). Specifically, the Cure Notice documented failures in on-time pickup performance, on-time delivery performance, cargo damage rates, equipment condition compliance, and driver safety and training certifications. The Cure Notice was transmitted by email and overnight courier, as required by Section 19.4 of the TSA, and invoked the 30-day cure period set forth in Section 13.1(a).
The 30-day cure period expired on February 17, 2022. During this period, VTS undertook certain remedial measures, but Stonefield contends — and its internal compliance records reflect — that VTS failed to cure the identified deficiencies to the contractually required levels.
On March 4, 2022, Tobias Wren, General Counsel of Stonefield, transmitted a Termination Letter to VTS and Vantor, terminating the TSA effective immediately for Cause under Section 13.1(a). The Termination Letter detailed the uncured breaches and stated that Stonefield had determined, in the exercise of its reasonable judgment pursuant to Section 13.1(a), that VTS's performance deficiencies constituted material breaches of the TSA that had not been remedied within the applicable cure period.
At the time of termination, approximately two years and twenty-seven days remained in the TSA's five-year term — that is, the period from March 4, 2022 through the original expiration date of March 31, 2024. This remaining term forms the basis for both the liquidated damages and lost profits calculations in the Amended Complaint.
D. Vantor's Claimed Damages per the Amended Complaint
Vantor filed its original Complaint on September 12, 2022, and the Amended Complaint on December 2, 2022. The Amended Complaint asserts three causes of action: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, and (3) unjust enrichment (pleaded in the alternative). For the breach of contract claim, the Amended Complaint alleges that Stonefield's termination was not validly effected for Cause, and that the termination therefore constitutes a breach entitling Vantor and VTS to damages.
The Amended Complaint quantifies Vantor's claimed damages as follows:
Several observations about this damages table are pertinent. The liquidated damages and lost profits claims together total $85,930,000 — approximately 90% of the entire claim. The Amended Complaint does not explain how these two categories relate to each other or why both may be recovered simultaneously. The Amended Complaint characterizes the lost profits as representing the "above-contract margin" that VTS would have earned on the remaining committed volume, calculated as an average 12% operating margin applied to approximately $86.4 million in remaining committed freight volume ($43.2M ACV × 2 remaining full years, with the 27-day partial year addressed in the liquidated damages calculation).
We anticipate that Vantor's damages expert, Dr. Philip Trask of Trask Greystone & Associates, will elaborate these figures when his expert report is served. Under the Case Management Order, Vantor's expert reports are due on May 15, 2023. While the specific methodology Dr. Trask will employ is not yet known, the Amended Complaint's own allegations provide a sufficient basis for the legal analysis set forth in this memorandum. We will supplement this analysis, as appropriate, after reviewing the Trask report.
E. Stonefield's Position
Stonefield's position, as set forth in its Answer filed January 13, 2023, is as follows:
First, Stonefield maintains that it terminated the TSA for valid Cause based on VTS's sustained, uncured material breaches of the Service Level Obligations. If the termination was for Cause, no damages of any kind are owed — neither liquidated damages (which are triggered only by a termination "other than for Cause") nor lost profits.
Second, even assuming arguendo that the termination were wrongful, Stonefield contends that Vantor cannot recover both liquidated damages and lost profits because these two categories compensate for the same loss: the expected economic benefit of the TSA for the remaining contract term. The liquidated damages clause, by its own terms and as expressly recited in Section 14.2, represents the parties' agreed estimate of the damages VTS would suffer from early termination without Cause. Lost profits, as calculated by Vantor, represent the actual economic harm from that same termination. These are alternative, not cumulative, measures of the same injury. Permitting recovery of both would provide Vantor with a windfall and contravene New York's fundamental prohibition on double recovery.
Third, Stonefield has separately argued that the liquidated damages clause is an unenforceable penalty, a position analyzed in the research memorandum dated September 19, 2022 by Simone Laroche (Document 15 in the matter file). That argument is distinct from the duplicative damages argument addressed here, and the two operate as complementary alternatives in Stonefield's damages defense strategy.
III. LEGAL ANALYSIS
A. New York's Prohibition on Double Recovery
The starting point for this analysis is a bedrock principle of New York damages law: a plaintiff may not recover duplicative damages that compensate for the same injury. This principle, sometimes referred to as the prohibition on "double recovery" or the "single satisfaction" rule, is rooted in the fundamental purpose of contract damages — to put the non-breaching party in the position it would have occupied had the contract been performed, without conferring a windfall. See Luitpold Pharms., Inc. v. Ed. Geistlich Söhne A.G. für Chemische Industrie, 784 F.3d 78, 95 (2d Cir. 2015) (applying New York law and holding that damages may not be recovered more than once for the same harm); Boyce v. Soundview Tech. Grp., Inc., 464 F.3d 376, 391 (2d Cir. 2006) (noting that "a double recovery for a single injury is not permitted").
The prohibition on double recovery applies regardless of how the plaintiff labels or categorizes its damages claims. What matters is the substance of the harm being compensated, not the formal designation attached to each category. A plaintiff cannot circumvent the rule by styling the same economic loss under two different headings — for example, by seeking "liquidated damages" to compensate for the loss of a contract's value and then additionally seeking "lost profits" to compensate for the profit it would have earned under that same contract. Where the underlying injury is the same, the recovery must be singular. See Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 497 (2d Cir. 1995) (holding under New York law that a plaintiff is not entitled to recover the same damages twice under different theories).
This principle has particular force in the context of contractual liquidated damages provisions. When parties include a liquidated damages clause in their agreement, they do so precisely to obviate the need for after-the-fact calculation of actual damages. The clause provides a predetermined amount that the parties agree represents a reasonable estimate of the harm the non-breaching party would suffer. It follows that the non-breaching party should not be permitted to invoke the liquidated damages clause and simultaneously seek to prove actual damages for the same breach — doing so would undermine the very purpose of the clause and produce an outcome that the parties could not have intended.
B. The Nature and Function of Liquidated Damages Under New York Law
New York law has long recognized the validity and enforceability of liquidated damages clauses, subject to certain well-established limitations. A liquidated damages clause is, at its core, an agreed-upon estimate of actual damages that would be difficult to calculate precisely at the time of breach. The clause represents the parties' ex ante assessment — made at the time of contracting — of the economic harm that would result from a particular breach scenario.
The enforceability of a liquidated damages clause under New York law is evaluated under a two-part test. First, the amount specified must be a reasonable estimate of the anticipated damages at the time of contracting. Second, actual damages must be difficult to ascertain at the time of contracting. See Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 357, 361 N.E.2d 1015 (1977); JMD Holding Corp. v. Cong. Fin. Corp., 4 N.Y.3d 373, 380, 828 N.E.2d 604 (2005). If both conditions are satisfied, the clause is enforceable; if either is lacking, the clause may be struck as an unenforceable penalty, and the non-breaching party is relegated to proving actual damages.
Critically, when a liquidated damages clause is enforceable, it replaces the need to prove actual damages. The non-breaching party receives the stipulated liquidated amount in lieu of proving lost profits, consequential damages, or other actual harm flowing from the covered breach. This substitutive function is central to the clause's utility: it provides certainty to both parties and avoids the expense, delay, and uncertainty of after-the-fact damages litigation. See Rattigan v. Commodore Int'l Ltd., 739 F. Supp. 167, 169 (S.D.N.Y. 1990) (explaining that where a liquidated damages clause is enforceable, the stipulated amount "stands in the place of actual damages"); Brettschneider v. Brettschneider, 97 A.D.3d 710, 711 (2d Dep't 2012) (noting that enforceable liquidated damages provisions "operate as a substitute for actual damages").
The implication for the present case is significant. If Section 14.2's liquidated damages clause is enforceable, it operates as the exclusive remedy for the breach it covers — namely, the harm resulting from Stonefield's termination of the TSA other than for Cause. The clause specifically addresses the loss of the remaining contract term's economic value. This is the identical harm that Vantor's lost profits claim seeks to recover. The liquidated damages clause thus forecloses a separate lost profits claim, because both the clause and the lost profits claim compensate for one and the same injury.
C. Vantor's Lost Profits Claim Compensates for the Same Harm as the Liquidated Damages
The overlap between Vantor's liquidated damages claim and its lost profits claim becomes strikingly apparent upon examination of how each is calculated.
The Lost Profits Claim. As set forth in the Amended Complaint, Vantor's lost profits claim of $18,700,000 is derived from VTS's average operating margin of approximately 12%, applied to the remaining committed volume of approximately $86.4 million (that is, $43.2M ACV multiplied by the two full contract years remaining in the term). The claim seeks to compensate VTS for the profit it would have earned by performing the TSA through March 31, 2024 — profit that VTS alleges it lost because Stonefield wrongfully terminated the agreement on March 4, 2022.
The Liquidated Damages Claim. Vantor's liquidated damages claim of $67,230,000 is derived from the formula in Section 14.2: 75% of the ACV ($43.2 million), multiplied by the number of remaining full and partial contract years (two full years plus a 27-day partial year). This formula was agreed upon by the parties as a reasonable approximation of the net economic value VTS would lose if Stonefield terminated the contract early without Cause.
The critical observation is that both calculations start from the same base — the ACV for the remaining contract term — and both seek to compensate VTS for the same injury: the loss of the economic benefit of performing the TSA through its original March 31, 2024 expiration date. The only difference between them is methodological. The liquidated damages clause uses a formulaic approach, applying a 75%-of-ACV multiplier agreed upon at the time of contracting. The lost profits claim uses an ex post analysis, applying VTS's actual historical operating margin to the same remaining revenue base.
But a difference in calculation methodology does not transform a single injury into two separate injuries. Regardless of whether the loss is measured at 75% of ACV or at 12% of ACV, the harm being compensated is the same: VTS's loss of the economic benefit of the contract for the remaining term. Allowing recovery under both measures would compensate VTS twice for the identical loss.
Moreover, the mathematical relationship between the two figures underscores the duplication. The liquidated damages amount ($67,230,000) already vastly exceeds any reasonable measure of VTS's actual lost profits on the remaining contract volume. On a $86.4 million revenue base, a 12% operating margin yields approximately $10,370,000 in pure operating profit. Even Dr. Trask's anticipated upward adjustment to $18,700,000 — presumably incorporating additional margin components beyond operating income — falls well short of the $67,230,000 liquidated damages figure. The 75%-of-ACV formula thus inherently includes and exceeds any lost profits component. This further demonstrates that the liquidated damages clause was intended to be a comprehensive substitute for all contract-value damages, including lost profits, and that a separate lost profits claim would result in impermissible overcompensation.
Under New York law, a plaintiff must elect between liquidated damages and actual damages for the same breach; it cannot recover both. See Walter E. Heller & Co. v. Am. Flyers Airline Corp., 459 F.2d 896, 899 (2d Cir. 1972) (holding that a party who invokes a liquidated damages clause cannot also seek actual damages for the same breach); Fifty States Mgmt. Corp. v. Pioneer Auto Parks, Inc., 46 N.Y.2d 573, 578, 389 N.E.2d 113 (1979) (recognizing that liquidated damages and actual damages are alternative, not cumulative, remedies for the same breach).
D. Election of Remedies Doctrine
The foregoing principles give rise to the election of remedies doctrine, which requires Vantor to choose between two inconsistent measures of damages for the same harm. Under New York law, when a contract provides a liquidated damages remedy for a particular breach and the non-breaching party also claims actual damages (including lost profits) for the same breach, the party must elect between the two. See JMD Holding Corp., 4 N.Y.3d at 380; Brettschneider, 97 A.D.3d at 711.
The Amended Complaint filed by Vantor does not clearly indicate whether it seeks liquidated damages as an alternative to lost profits, or in addition to them. The damages claims are presented as separate line items, and the prayer for relief seeks recovery of the full $95,400,000 — a figure that aggregates both the liquidated damages and lost profits claims without any indication that one is pleaded in the alternative. On its face, therefore, the Amended Complaint seeks cumulative recovery of both categories. This approach is impermissible under New York law.
The practical consequences of the required election are significant for both parties:
If Vantor elects liquidated damages, it forfeits the right to prove actual lost profits as a separate category of damages. Vantor would recover $67,230,000 under Section 14.2 (assuming the clause is enforceable), plus whatever additional, non-duplicative categories of damages survive the other defenses discussed below. Vantor would not be required to prove its actual lost profits with "reasonable certainty" — the liquidated damages formula substitutes for that burden.
If Vantor elects actual lost profits, it must prove those profits with "reasonable certainty," as required under New York law for contract damages. See Kenford Co. v. County of Erie, 67 N.Y.2d 257, 261, 493 N.E.2d 234 (1986). It may not also invoke the liquidated damages formula. If actual lost profits are lower than the liquidated amount — which appears likely given the 12% margin versus the 75%-of-ACV formula — Vantor's recovery would be correspondingly reduced.
In either case, Vantor is limited to one measure of contract-value damages, not both.
E. The Liquidated Damages Clause as an Exclusive Remedy
A separate but related question is whether Section 14.2's liquidated damages clause constitutes an exclusive remedy for termination-related damages — that is, whether the clause not only precludes cumulative recovery of lost profits but also limits Vantor's termination-related damages recovery exclusively to the liquidated amount.
The language of Section 14.2 provides for payment of liquidated damages if Stonefield terminates the TSA "other than for Cause." The clause does not expressly state that the liquidated amount is the "sole and exclusive remedy" for such a termination, nor does it use comparable limiting language. Neither, however, does the clause state that the liquidated amount is "in addition to" or "cumulative with" other remedies available to VTS.
Under New York law, when a liquidated damages clause addresses the specific harm at issue — here, the loss of the remaining contract term's economic value — it is generally construed as the exclusive measure of damages for that harm, unless the contract clearly provides otherwise. See JMD Holding Corp., 4 N.Y.3d at 380 (noting that an enforceable liquidated damages clause "fix[es] the damages that flow from a particular breach"); Truck Rent-A-Center, 41 N.Y.2d at 357 (treating liquidated damages as the measure of recovery for the covered breach, without permitting additional actual damages claims). The absence of express "exclusive remedy" language does not, by itself, transform the clause into a mere supplement to actual damages.
Vantor may argue that its lost profits represent a different category of harm — "above-contract margin" or "premium profits" beyond the liquidated amount — and that the liquidated damages clause was intended to address only the base-level harm of contract loss, leaving the additional "premium" available for separate recovery. This argument fails for the reasons discussed in Section V.A below: the 75%-of-ACV formula already captures far more than VTS's actual profit margin, and there is no basis for construing the clause as leaving room for supplemental lost-profits recovery.
Accordingly, if Section 14.2 is enforceable, it should be construed as the exclusive remedy for the harm it addresses — the loss of the remaining contract term — thereby precluding a separate lost profits claim for the same harm.
F. Separate Analysis: Non-Duplicative Damage Categories
The foregoing analysis focuses on the overlap between the liquidated damages and lost profits claims. It is important to note that Vantor's remaining damage categories — stranded assets and costs ($5,200,000), workforce reduction costs ($2,870,000), and mitigation costs ($1,400,000) — raise somewhat different considerations.
These three categories are arguably distinct from the liquidated damages and lost profits claims in that they address incremental, out-of-pocket costs rather than the expected value of future contract performance. Stranded asset costs represent the unrecoverable investment in equipment and leases dedicated to the Stonefield account. Workforce reduction costs represent severance obligations incurred upon the displacement of drivers and support staff who serviced Stonefield's freight. Mitigation costs represent expenditures incurred in seeking replacement business to offset the lost Stonefield volume.
Whether these categories are independently recoverable is a question that turns on separate legal issues not fully addressed in this memorandum. In particular, the mutual consequential damages waiver set forth in Section 15.1 of the TSA may independently bar recovery of all three categories, on the ground that they constitute consequential or incidental damages excluded by the parties' agreement. That analysis is the subject of a forthcoming separate memorandum and is being coordinated with the broader damages defense strategy.
For purposes of the present memorandum, the critical point is that even if these non-duplicative categories survive, eliminating the overlap between liquidated damages and lost profits would substantially reduce Vantor's maximum potential recovery. Specifically:
If Vantor elects liquidated damages: Maximum recovery = $67,230,000 (liquidated damages) + $5,200,000 (stranded assets) + $2,870,000 (workforce reduction) + $1,400,000 (mitigation) = $76,700,000 — a reduction of $18,700,000 from the claimed $95,400,000.
If Vantor elects lost profits: Maximum recovery = $18,700,000 (lost profits) + $5,200,000 (stranded assets) + $2,870,000 (workforce reduction) + $1,400,000 (mitigation) = $28,170,000 — a reduction of $67,230,000 from the claimed $95,400,000.
Both scenarios represent significant reductions from the $95,400,000 total claim, and the lost-profits-only scenario would reduce Stonefield's exposure by approximately 70%.
IV. APPLICATION TO SUMMARY JUDGMENT STRATEGY
The duplicative damages argument should be raised in the summary judgment briefing currently scheduled for March 1, 2024 under the Case Management Order entered February 17, 2023 by the Honorable Margaret T. Calloway, U.S.D.J. The argument is well-suited for resolution at the summary judgment stage for several reasons.
The Argument Presents a Legal Question. The duplicative damages analysis turns on the interpretation of Section 14.2 of the TSA and the application of well-established New York legal principles governing double recovery, election of remedies, and the function of liquidated damages clauses. These are legal questions amenable to resolution on summary judgment. They do not require credibility determinations, resolution of disputed factual narratives, or weighing of competing evidence — the kinds of determinations that are reserved for the jury. The relevant facts — the language of the TSA, the calculation methodology for each damages category, and the identity of the underlying harm — are either undisputed or ascertainable from the face of the contract and the Amended Complaint.
Relationship to Other Defenses. The duplicative damages argument complements but is distinct from Stonefield's primary defense — that the termination was validly effected for Cause under Section 13.1(a) and that therefore no damages of any kind are owed. The Cause defense turns on factual questions (whether VTS's SLO breaches were material, whether the cure was adequate) that may or may not be resolved on summary judgment. The duplicative damages argument, by contrast, is relevant only in the scenario where the Court determines that the termination was wrongful and proceeds to the question of remedies.
The duplicative damages argument is also distinct from Stonefield's separate contention that the liquidated damages clause is an unenforceable penalty. That argument, analyzed in the research memorandum dated September 19, 2022 by Simone Laroche (Document 15 in the matter file), asserts that the 75%-of-ACV formula is grossly disproportionate to any reasonable estimate of VTS's actual damages and therefore constitutes an unenforceable penalty under Truck Rent-A-Center and its progeny.
Strategic Tension and Complementarity. We note an important strategic dynamic between the duplicative damages argument and the penalty argument. The two arguments operate in tension with each other at a theoretical level but are complementary in their practical effect:
If Stonefield prevails on the penalty argument — that is, if the Court holds that Section 14.2 is an unenforceable penalty — then Vantor cannot recover the $67,230,000 liquidated damages amount at all. Vantor would be limited to proving its actual damages (including actual lost profits) with reasonable certainty. This would effectively cap Vantor's contract-value recovery at some amount significantly less than $67,230,000 and would subject that recovery to mitigation offsets and other defenses.
If Stonefield does not prevail on the penalty argument — that is, if the Court holds that Section 14.2 is enforceable — then the duplicative damages argument kicks in. Vantor would be entitled to the $67,230,000 liquidated damages amount but could not also recover lost profits, because the liquidated damages constitute the exclusive measure of contract-value damages. Vantor's lost profits claim ($18,700,000) would be eliminated.
Either way, Vantor cannot recover both. The two arguments work in tandem to ensure that Vantor's total contract-value damages are constrained to the greater of the enforceable liquidated amount or provable actual damages — but never both.
Recommendation. The duplicative damages argument should be presented as an alternative to the penalty argument in the summary judgment briefing. The brief should be structured so that Stonefield argues: (1) the liquidated damages clause is an unenforceable penalty, limiting Vantor to provable actual damages; and alternatively, (2) even if the clause is enforceable, it precludes separate recovery of lost profits, as the two categories compensate for the identical harm. This structure maximizes Stonefield's prospects of reducing Vantor's total damages regardless of the Court's threshold determination on enforceability.
V. POTENTIAL COUNTERARGUMENTS BY VANTOR
We anticipate that Vantor will raise several counterarguments to the duplicative damages analysis. Each is addressed below.
A. Lost Profits as "Additional" or "Excess" Damages
Vantor may argue that its lost profits claim represents a category of damages distinct from and in addition to the liquidated damages amount. Specifically, Vantor may contend that the liquidated damages compensate for the "revenue loss" associated with the termination — that is, the gross value of the contract that was lost — while the lost profits compensate for the "profit margin" that VTS would have earned above and beyond its costs in performing the contract. Under this theory, the two categories address different economic harms and may be recovered cumulatively.
Rebuttal. This argument fundamentally mischaracterizes the function of the liquidated damages clause. The 75%-of-ACV formula does not represent a "revenue replacement" — it does not purport to restore to VTS the full revenue stream it would have received under the TSA. Rather, as Section 14.2 expressly states, the formula represents "a reasonable estimate of the damages that Carrier-Provider would suffer" from a wrongful termination. The word "damages" is used advisedly: it refers to the net harm VTS would incur, not to a gross revenue figure.
Moreover, the arithmetic makes the argument untenable. The liquidated damages amount ($67,230,000) equals 75% of the remaining ACV ($86.4 million × 75% = $64.8 million for two full years, plus a prorated amount for the 27-day partial year). VTS's actual operating margin, as Vantor itself alleges, is approximately 12%. Twelve percent of $86.4 million is approximately $10,370,000 — far less than the $67,230,000 liquidated amount. Even the $18,700,000 lost profits figure advanced by Vantor (which presumably includes additional margin components) is less than one-third of the liquidated damages figure.
In other words, the liquidated damages amount already includes and vastly exceeds any reasonable measure of VTS's actual lost profits. The 75%-of-ACV formula is not a measure of lost revenue to which lost profits must be added; it is a comprehensive estimate of total damages that subsumes the profit component. Permitting additional lost-profits recovery would result in overcompensation and a windfall to Vantor — precisely the outcome that New York's prohibition on double recovery is designed to prevent.
B. Different Temporal or Causal Bases
Vantor may argue that certain components of its lost profits accrued during the cure period (January 18, 2022 through February 17, 2022) or under a different legal theory (for example, anticipatory breach during the cure period versus actual breach upon the March 4, 2022 termination). Under this theory, the lost profits claim encompasses harms that predate the termination event and are therefore not covered by the liquidated damages clause, which is triggered only upon termination.
Rebuttal. The Amended Complaint does not draw any such temporal distinction. Both the liquidated damages and lost profits claims, as pleaded, arise from the same event — the March 4, 2022 termination — and cover the same remaining term (March 4, 2022 through March 31, 2024). There is no allegation in the Amended Complaint that VTS suffered discrete, pre-termination lost profits during the cure period that are separable from the post-termination damages. Nor does the Amended Complaint assert an anticipatory breach theory with respect to any pre-termination period.
Even if Vantor were to attempt to recharacterize a portion of its lost profits as pre-termination damages, it would face a formidable factual obstacle: VTS was receiving freight tenders and transportation charges from Stonefield throughout the cure period. Any claim that VTS suffered lost profits during a period in which the contract was still being performed — and in which VTS was earning revenue from Stonefield — would be subject to serious challenge.
C. The TSA Does Not Expressly Preclude Cumulative Recovery
Vantor may argue that Section 14.2 does not contain "exclusive remedy" or "sole remedy" language, and that the absence of such language indicates that the parties intended the liquidated damages to be cumulative with, rather than a substitute for, other remedies.
Rebuttal. Under New York law, the absence of express "exclusive remedy" language does not entitle a party to cumulative recovery of liquidated damages and actual damages for the same breach. The default rule — derived from the fundamental nature of liquidated damages as a substitute for actual damages — is that an enforceable liquidated damages clause replaces actual damages for the covered breach, unless the contract expressly provides for cumulative recovery. See Brettschneider, 97 A.D.3d at 711; Rattigan, 739 F. Supp. at 169. The burden should be on the party seeking cumulative recovery to point to contract language affirmatively authorizing such a result. Section 14.2 contains no such language.
Indeed, the TSA's own recitals confirm the substitutive nature of the liquidated damages clause. The clause states that the liquidated amount "represent[s] a reasonable estimate of the damages" VTS would suffer and that "such damages would be difficult or impossible to calculate with precision at the time of any such termination." This language contemplates that the liquidated amount stands in for actual damages — not that it serves as a floor to which actual damages may be added. If the parties had intended the liquidated amount to be a minimum payment with actual damages available on top, one would expect the clause to say so explicitly. It does not.
VI. RELATIONSHIP TO OTHER DAMAGES DEFENSES
The duplicative damages argument is one component of a multi-faceted damages defense strategy. For completeness, we note the relationship between this argument and the other damages defenses under development.
Penalty Defense. As noted above, Stonefield has separately argued that the liquidated damages clause is an unenforceable penalty. That argument is analyzed in the research memorandum dated September 19, 2022 by Simone Laroche (Document 15 in the matter file). As discussed in Section IV, the duplicative damages argument and the penalty argument operate as complementary alternatives, ensuring that Vantor's total contract-value recovery is constrained regardless of the Court's ruling on enforceability.
Consequential Damages Waiver. Section 15.1 of the TSA contains a mutual waiver of consequential, incidental, and special damages. This provision may independently bar Vantor's claims for stranded assets ($5,200,000), workforce reduction costs ($2,870,000), and mitigation costs ($1,400,000), on the ground that these categories constitute consequential or incidental damages within the scope of the waiver. A separate memorandum analyzing the consequential damages waiver is forthcoming and is being coordinated with the broader defense strategy. If the consequential damages waiver is enforceable and applicable, it would eliminate $9,470,000 from Vantor's claim — an amount that, combined with the elimination of the duplicative lost profits claim ($18,700,000), would reduce Vantor's maximum recovery to the liquidated damages amount alone ($67,230,000), or even lower if the penalty defense prevails.
Expert Rebuttal. Kensington Analytics Group LLC ("KAG") has been retained to provide rebuttal expert testimony on damages. Dr. Evelyn Rosser, Managing Director of KAG, is the designated testifying expert. KAG was retained in October 2022 and is currently scoping its analysis, with the rebuttal expert report due under the Case Management Order after Vantor's expert report is served. Dr. Rosser's analysis is expected to address, among other things, the damages calculation methodology employed by Dr. Trask and the mathematical overlap between the liquidated damages and lost profits claims. From an economic perspective, Dr. Rosser should be able to demonstrate that the liquidated damages formula already subsumes and exceeds any reasonable measure of VTS's actual lost profits, reinforcing the legal argument that recovery of both would constitute impermissible double recovery. We will coordinate with KAG to ensure that this overlap analysis is prominently featured in the rebuttal report.
Failure to Mitigate. Stonefield intends to argue that Vantor failed to mitigate its damages by not diligently seeking replacement freight after the TSA termination. The failure-to-mitigate defense applies regardless of whether Vantor elects liquidated damages or lost profits. However, it bears noting that under New York law, the duty to mitigate may not apply to liquidated damages (which are fixed by a contractual formula and not dependent on the non-breaching party's post-breach conduct), but does apply to actual lost profits (which must be reduced by any amount the non-breaching party could have earned through reasonable mitigation efforts). See Holy Props. Ltd. v. Kenneth Cole Prods., Inc., 87 N.Y.2d 130, 133, 661 N.E.2d 694 (1995) (discussing the duty to mitigate in the context of contract damages).
This asymmetry creates an additional strategic consideration. If the liquidated damages clause is enforceable and exclusive, Vantor receives the stipulated amount without offset for mitigation. But if Vantor is permitted to seek actual lost profits, those profits are subject to mitigation offset — which could further reduce the recovery. This is yet another reason to argue that if the clause is enforceable, it is exclusive: Vantor should not be permitted to layer unmitigated lost-profits claims on top of the already-generous liquidated damages formula.
VII. RECOMMENDATIONS
Based on the analysis set forth above, I recommend the following action items:
1.  Preserve the duplicative damages argument in dispositive briefing. The affirmative defense was asserted as the Fourteenth Affirmative Defense in Stonefield's Answer filed January 13, 2023, thereby preserving the argument from a pleading standpoint. The argument should be fully developed and presented in Stonefield's summary judgment motion, currently scheduled for filing on March 1, 2024. The brief should include a dedicated section analyzing the duplicative damages issue, supported by the TSA itself, the Amended Complaint, and governing New York authority.
2.  Develop the discovery record on damages overlap. In connection with Stonefield's First Set of Interrogatories, served on March 6, 2023, Interrogatory No. 17 specifically asks Vantor to explain the relationship between its liquidated damages and lost profits claims and to identify what harm each category is intended to redress. Vantor's response to this interrogatory will be critical. If Vantor acknowledges that both claims seek to compensate for the loss of the contract's economic value, the admission will strongly support Stonefield's duplicative damages argument. If Vantor attempts to draw a distinction between the two categories, its explanation will provide the basis for targeted rebuttal. In either case, the interrogatory response should be carefully analyzed and, if necessary, followed up with deposition questioning of Vantor's designee on damages.
3.  Coordinate with Kensington Analytics Group (Dr. Rosser). KAG should be directed to include in its rebuttal expert report a quantitative analysis demonstrating the mathematical overlap between the liquidated damages formula and the lost profits calculation. Specifically, Dr. Rosser should show that the liquidated damages amount ($67,230,000) already subsumes and exceeds any reasonable measure of VTS's actual lost profits, and that permitting recovery of both would produce aggregate damages that far exceed VTS's actual economic loss from the termination. This analysis will provide an empirical foundation for the legal argument and will be particularly useful if the Court requires briefing on the relationship between the two damages categories.
4.  Present the duplicative damages argument as an alternative to the penalty argument. The summary judgment briefing should be structured so that the duplicative damages argument and the penalty argument operate as complementary alternatives. The brief should argue: first, that Section 14.2 is an unenforceable penalty, limiting Vantor to provable actual damages (which are far less than $67.23M); and second, in the alternative, that even if Section 14.2 is enforceable, it precludes separate recovery of lost profits. This structure ensures that regardless of the Court's threshold determination on enforceability, Vantor's total contract-value recovery is constrained.
5.  Monitor Vantor's expert report. When Vantor's damages expert, Dr. Philip Trask of Trask Greystone & Associates, serves his expert report — anticipated for May 15, 2023 per the Case Management Order — the report should be reviewed with particular attention to how Dr. Trask treats the relationship between the liquidated damages and lost profits categories. If Dr. Trask's report treats the two as cumulative without explanation, this will be a vulnerability that can be exploited on cross-examination and in the summary judgment briefing. If the report acknowledges any overlap, or if its methodology implicitly relies on the same economic inputs for both calculations, the acknowledgment will support Stonefield's position. We should be prepared to supplement this memorandum following review of the Trask report.
VIII. CONCLUSION
Under New York law, Vantor cannot recover both $67,230,000 in liquidated damages and $18,700,000 in lost profits. These two categories of damages compensate for the identical harm — the loss of the economic benefit of the Transportation Services Agreement for the remaining contract term of approximately two years and twenty-seven days — and permitting recovery of both would constitute an impermissible double recovery that would confer a windfall on Vantor far in excess of its actual economic loss.
If the liquidated damages clause in Section 14.2 is enforceable, it operates as the exclusive measure of termination-related contract-value damages, precluding a separate lost profits claim. The clause was designed, drafted, and expressly described by the parties as "a reasonable estimate of the damages" VTS would suffer from a wrongful termination — a comprehensive substitute for actual damages, including lost profits. The 75%-of-ACV formula inherently includes and exceeds any reasonable calculation of VTS's actual lost profits, and there is no contractual or legal basis for treating the liquidated amount as a floor to which actual profits may be added.
If the liquidated damages clause is unenforceable — as Stonefield has separately argued on the ground that the clause constitutes a penalty — then Vantor is limited to proving its actual lost profits with reasonable certainty. In that scenario, the $67,230,000 liquidated damages claim falls away entirely, and Vantor's contract-value recovery is capped at whatever actual damages it can prove, subject to mitigation offsets and other defenses.
Either way, Vantor's maximum contract-value damages are capped at the greater of $67,230,000 (liquidated damages, if enforceable) or provable lost profits (which Stonefield contends are significantly lower than claimed, and which are subject to the duty to mitigate) — but not both. This argument, combined with the consequential damages waiver defense and the failure-to-mitigate defense, substantially reduces Stonefield's exposure from the claimed $95,400,000. I am available to discuss these recommendations and to coordinate the development of the summary judgment briefing at your convenience.
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
This memorandum is protected by the attorney-client privilege and the work product doctrine. It was prepared in anticipation of litigation and reflects the mental impressions, conclusions, opinions, and legal theories of counsel. It is not to be distributed, disclosed, or discussed with any person outside of counsel for Stonefield Logistics Group Inc. without the prior written authorization of the responsible partner.
Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166
Matter No. 1012-00005
Category | Amount | Derivation
Liquidated Damages (2 full contract years remaining) | $64,800,000 | 75% × $43.2M ACV × 2 years
Liquidated Damages (partial year, 27 days remaining) | $2,430,000 | 75% × $43.2M × (27/365), rounded
Total Liquidated Damages | $67,230,000 | Sum of above
Lost Profits (above-contract operating margin) | $18,700,000 | Avg. 12% operating margin × remaining committed volume (~$86.4M for 2 years), as stated in Amended Complaint
Stranded Assets & Costs | $5,200,000 | Depreciation on tractors/trailers dedicated to SLG account; lease termination costs
Workforce Reduction Costs | $2,870,000 | Severance payments for approximately 180 drivers and support staff
Mitigation Costs | $1,400,000 | Costs incurred seeking replacement freight
Total Claimed Damages | $95,400,000

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

INTERNAL MEMORANDUM

MATTER NO.: 1012-00005

I. EXECUTIVE SUMMARY

II. BACKGROUND AND FACTUAL CONTEXT

III. LEGAL ANALYSIS

IV. APPLICATION TO SUMMARY JUDGMENT STRATEGY

V. POTENTIAL COUNTERARGUMENTS BY VANTOR

VI. RELATIONSHIP TO OTHER DAMAGES DEFENSES

VII. RECOMMENDATIONS

VIII. CONCLUSION

Record

Parties

Dates

Amounts