PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for internal use by Calderwood & Harkness LLP attorneys and authorized personnel working on this matter. Do not distribute, copy, or disclose without prior authorization from the Responsible Partner.
CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166
MEMORANDUM
TO: Samuel Eklund, Responsible Partner
FROM: Patrick Gallagher, Lead Associate; Simone Laroche, Working Associate
DATE: September 15, 2023
RE: Summary Judgment Roadmap — Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
Matter No.: 1012-00005
Classification: Attorney Work Product / Privileged and Confidential
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I. Executive Summary
This memorandum presents a comprehensive roadmap for an anticipated motion for summary judgment on behalf of our client, Stonefield Logistics Group Inc. ("SLG" or "Stonefield"), pursuant to Federal Rule of Civil Procedure 56, in the above-referenced action brought by Vantor Holdings Corp. ("Vantor") in the United States District Court for the Southern District of New York. The dispositive motion deadline established by the Case Management Order entered on February 17, 2023, by the Honorable Margaret T. Calloway, United States District Judge, is March 1, 2024. That deadline is currently subject to a de facto stay pending resolution of plaintiff's counsel situation, following Caldwell Royce & Shapiro LLP's motion to withdraw as counsel filed on October 3, 2023.
Having reviewed the entirety of the discovery record produced to date — including over 75,000 documents (approximately 298,000 pages) produced by the parties and third parties, five depositions (one still incomplete), and two expert reports — we recommend organizing the motion for summary judgment around the following four pillars:
Pillar 1: Valid Termination for Cause. Stonefield's termination of the Transportation Services Agreement dated March 15, 2019 (the "TSA") was valid "for Cause" under Section 13.1(a). The undisputed record establishes that Vantor Transport Services LLC ("VTS"), Vantor's wholly owned operating subsidiary and the signatory counterparty to the TSA, simultaneously breached all five Service Level Obligations in the fourth quarter of 2021 by substantial margins. VTS's failures were not the product of market forces or exogenous circumstances but were caused in significant part by VTS's own intentional and concealed decision to reassign 85 dedicated tractors to a competing shipper — as evidenced by a contemporaneous internal email from VTS's COO to Vantor's CEO stating, in relevant part, "SLG won't notice until January." Stonefield issued a properly detailed Cure Notice on January 18, 2022. VTS failed to cure within the 30-day period, and Stonefield exercised its contractual right to terminate on March 4, 2022.
Pillar 2: Unenforceable Liquidated Damages Clause. The liquidated damages clause in TSA Section 14.2 is an unenforceable penalty under New York law. The clause, which provides for payment of 75% of Annual Committed Volume multiplied by remaining contract years upon termination other than "for Cause," produces a claimed recovery of $67,230,000 — more than eight times the maximum actual damages of $8.2 million calculated by Stonefield's rebuttal expert. This gross disproportionality, coupled with the fact that actual damages were ascertainable at the time of contracting through standard industry data and financial analysis, renders the clause an unenforceable penalty.
Pillar 3: Consequential Damages Waiver. Vantor's claims for stranded asset costs ($5,200,000), workforce reduction costs ($2,870,000), and mitigation costs ($1,400,000) — totaling $9,470,000 — are barred by the mutual consequential damages waiver in TSA Section 15.1. These categories of loss are textbook consequential damages, and the waiver was freely negotiated between sophisticated commercial parties represented by counsel.
Pillar 4: Failure to Mitigate. Vantor failed to take any reasonable steps to mitigate its damages following the termination of the TSA, despite exceptionally favorable freight market conditions in the first half of 2022. Vantor's own witnesses could not identify a single concrete mitigation effort, and Vantor's interrogatory responses on the subject were evasive and non-specific.
Overall Assessment. The factual record strongly supports summary judgment on multiple fronts. We have high confidence in obtaining full or partial summary judgment on Pillars 2, 3, and 4, where the issues are primarily legal in nature and the material facts are largely undisputed. Pillar 1, while strongly supported by the undisputed evidence of VTS's catastrophic operational failures and intentional fleet diversion, presents a moderate risk of denial on the ground that certain disputed factual issues — principally surrounding the September 22, 2021 email from Janet Kirkwood (Stonefield's VP of Carrier Relations) and evidence that Stonefield was aware of an impending 14.3% rate adjustment — may preclude full summary judgment if the Court concludes a reasonable factfinder could infer that the termination was pretextual.
We recommend filing for full summary judgment on all four pillars, with a fallback position seeking partial summary judgment on Pillars 2, 3, and 4 even if genuine disputes preclude full resolution of Pillar 1. We further recommend incorporating Daubert arguments against Dr. Philip Trask's expert report (Trask Greystone & Associates) within the summary judgment briefing rather than filing a standalone motion, as this approach is more efficient and presents the Court with a unified analytical framework.
If the motion succeeds in full, Vantor's claims are dismissed with prejudice and Stonefield's counterclaim for declaratory judgment is granted. If the motion succeeds on Pillars 2, 3, and 4 alone, Vantor's total claimed damages of $95,400,000 are reduced to a maximum defensible exposure of approximately $8.2 million (per Dr. Evelyn Rosser of Kensington Analytics Group LLC), representing the worst-case lost-profits recovery under an alternative theory assuming arguendo that the termination was wrongful. If termination is upheld as valid for Cause, Stonefield's exposure is $0.
The key documents underlying this analysis include the TSA dated March 15, 2019 (Contract Ref. No. SLG-VTS-2019-0315); the Cure Notice dated January 18, 2022; the Termination Letter dated March 4, 2022; the depositions of Derek Pruitt (July 10, 2023), Janet Kirkwood (July 14, 2023), Raymond Hess (July 27, 2023), Sandra Milescu (August 4, 2023), and Nikolai Vantorovich (partially completed August 18, 2023); the Trask Greystone expert report served May 15, 2023; and the Kensington Analytics rebuttal expert report served August 25, 2023.
II. Procedural Background and Current Status
A. Case Posture
Vantor Holdings Corp. commenced this action by filing its original Complaint on August 12, 2022, in the United States District Court for the Southern District of New York. The Complaint asserted claims for breach of contract arising from Stonefield's termination of the TSA and sought damages in excess of $75 million (the precise figure was subsequently specified in the Amended Complaint at $95.4 million).
Calderwood & Harkness LLP was engaged by Stonefield on September 1, 2022, to serve as lead litigation counsel. Our Notice of Appearance was filed on September 8, 2022. After an initial review of the Complaint and the underlying contractual documents, the firm filed a Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1) on October 14, 2022. The motion challenged, among other things, Vantor Holdings Corp.'s standing to bring the action as a non-signatory parent corporation when the contracting party was its wholly owned subsidiary, VTS. Additionally, the motion argued that certain of Vantor's claims were insufficiently pleaded.
Before the Court ruled on the motion, Vantor filed an Amended Complaint on December 2, 2022, which added factual allegations and refined its legal theories. On December 16, 2022, Judge Calloway denied the Motion to Dismiss as moot in light of the superseding pleading. While we considered filing a renewed motion to dismiss directed at the Amended Complaint, the decision was made — in consultation with the client and after a cost-benefit analysis — to answer the Amended Complaint and proceed to discovery, preserving our substantive arguments for the summary judgment stage.
Stonefield's Answer, Affirmative Defenses, and Counterclaim were filed on January 13, 2023. The Answer asserted thirty-two affirmative defenses, including valid termination for Cause, unenforceability of the liquidated damages clause as a penalty, the consequential damages waiver, failure to mitigate, comparative fault, unclean hands, the first-to-breach doctrine, and standing. The Counterclaim sought a declaratory judgment that (a) Stonefield's termination of the TSA was valid for Cause under Section 13.1(a), (b) no liquidated damages are owed under Section 14.2, and (c) any material breach of the TSA was committed by VTS, not Stonefield.
Vantor filed its Answer to the Counterclaim on January 27, 2023, denying the material allegations and asserting affirmative defenses including waiver, estoppel, and unclean hands.
The Initial Pretrial Conference before Judge Calloway was held on February 10, 2023. During the conference, the Court addressed the scope of discovery, the parties' anticipated motion practice, and the overall case schedule. Judge Calloway encouraged the parties to explore early mediation, though neither side expressed willingness to do so at that stage. The Court indicated that it would entertain dispositive motions and expressed a preference for resolving such motions prior to setting a trial date.
The Case Management Order was entered on February 17, 2023, establishing the following deadlines:
•  Fact discovery deadline: September 29, 2023
•  Expert discovery deadline: January 12, 2024
•  Dispositive motions deadline: March 1, 2024
These deadlines have not been formally modified, though the practical effect of Caldwell Royce & Shapiro LLP's withdrawal motion (discussed below) may result in an extension or stay.
B. Discovery Completed
The parties have engaged in extensive discovery over the course of this litigation. The scope and volume of materials exchanged reflect the complexity of the underlying contractual relationship and the magnitude of the claimed damages.
Document Productions. Stonefield produced 42,387 documents, comprising approximately 186,000 pages, on April 14, 2023. This production was managed by Pinnacle Forensics LLC (Project ID: PF-SLG-2022-0914) and carries the Bates range SLG-000001 through SLG-042387. The production included internal communications regarding VTS performance, fleet management reports, the complete TSA and all amendments and schedules, Cure Notice correspondence, the Termination Letter, carrier performance data from Stonefield's internal monitoring systems, and business communications among Stonefield's senior management regarding the VTS relationship.
Vantor produced 28,914 documents, comprising approximately 112,000 pages, on April 28, 2023. Vantor's production included internal communications, financial records, fleet management data, customer correspondence, and human resources records related to the workforce reductions following the TSA termination.
On June 22, 2023, following Judge Calloway's June 9, 2023 order granting Stonefield's motion to compel, Vantor made a supplemental production of 4,218 documents (Bates range VHC-029001 through VHC-033218). These documents consisted of fleet redeployment records that Vantor had initially withheld on relevance grounds. The supplemental production proved critical to Stonefield's case, as it contained detailed records confirming VTS's reassignment of 85 tractors from the SLG dedicated lanes to the Northwind Distribution Co. account in October 2021 — corroborating the contemporaneous Milescu email and establishing the intentional nature of the fleet diversion.
Third-party productions were also received pursuant to subpoenas served on Cascade Freight Systems Inc. and Briarwood Trucking Co., two alternative carriers that Stonefield had utilized on Secondary Lanes during the period of VTS's performance failures. These productions were analyzed in early August 2023 and confirmed that Stonefield's use of Cascade and Briarwood was limited to lanes classified as "Secondary Lanes" under Schedule C, Section 2(b) of the TSA — lanes that were not subject to the exclusivity provisions.
Depositions. The following depositions have been completed or partially completed:
The Vantorovich deposition was suspended after approximately four and a half hours when Mr. Vantorovich claimed illness and was unable to continue. The Court subsequently ordered the deposition to be completed by October 20, 2023, but as of the date of this memorandum, the completion session has not yet been scheduled and remains outstanding.
Expert Reports. Expert reports have been exchanged as follows:
Dr. Philip Trask of Trask Greystone & Associates, retained by Vantor as its damages expert, served his opening report on May 15, 2023. Dr. Trask opines that Vantor's total damages amount to $95,400,000, consisting of liquidated damages, lost profits, stranded asset costs, workforce reduction costs, and mitigation costs. As discussed in detail in Section IX below, Dr. Trask's report suffers from significant methodological deficiencies that we intend to challenge through Daubert arguments incorporated within the summary judgment briefing.
Dr. Evelyn Rosser of Kensington Analytics Group LLC, retained by Stonefield as its rebuttal damages expert, served her report on August 25, 2023. Dr. Rosser's 48-page report concludes that (a) if the termination was valid for Cause, Vantor is entitled to $0 in damages, and (b) under an alternative lost-profits theory assuming arguendo wrongful termination, the maximum defensible damages figure is $8.2 million after proper adjustments for Vantor's own breaches, failure to mitigate, and correct margin calculations.
Expert depositions have not yet been scheduled and remain outstanding within the expert discovery period.
C. Outstanding Issues
Several significant procedural issues remain unresolved as of the date of this memorandum.
Vantorovich Deposition. As noted above, the deposition of Nikolai Vantorovich, Vantor's CEO and majority owner, was only partially completed on August 18, 2023. Judge Calloway's order requires completion by October 20, 2023, but Vantor's counsel (Caldwell Royce & Shapiro LLP) has not responded to our correspondence requesting dates. Given the pending withdrawal motion, it is unclear whether this deadline will be met.
Expert Depositions. Neither Dr. Trask nor Dr. Rosser has been deposed. Expert discovery closes January 12, 2024. These depositions are important for developing the record on Daubert issues and on the disproportionality analysis central to Pillar 2.
Caldwell Royce & Shapiro LLP Withdrawal. On October 3, 2023, Caldwell Royce & Shapiro LLP filed a motion to withdraw as counsel for Vantor, citing "irreconcilable differences" with the client. A hearing on the withdrawal motion is currently scheduled for October 18, 2023. If the motion is granted, Vantor — as a corporate entity — cannot proceed pro se and must retain substitute counsel. If Vantor fails to do so within a reasonable time, alternative disposition paths become available, including dismissal under FRCP 41(b) for failure to prosecute.
We note that the CRS withdrawal, if granted, may have significant implications for the overall case trajectory. If Vantor is unable or unwilling to retain new counsel, the filing of a summary judgment motion may be unnecessary, as dismissal for failure to prosecute would achieve the same result with substantially lower costs. However, this roadmap is prepared on the assumption that Vantor will retain substitute counsel and that dispositive motion practice will proceed on the currently established (or modestly adjusted) schedule.
III. The Parties and the TSA
A. The Parties
Stonefield Logistics Group Inc. SLG is a Delaware corporation headquartered at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102. Stonefield operates as a mid-market freight brokerage and managed transportation company, serving as an intermediary between shippers and carriers across a range of transportation modes, with a primary focus on truckload and less-than-truckload freight in the domestic U.S. market. As of fiscal year 2022, Stonefield reported revenues of approximately $1.28 billion and EBITDA of approximately $118 million. The company employs approximately 2,800 people, maintains relationships with approximately 12,000 approved carriers, and facilitates approximately 850,000 annual shipments.
Stonefield has been majority-owned (approximately 72%) by Ridgeline Capital Partners, LP, through Ridgeline Fund III, LP, since a leveraged buyout completed in October 2017 at an enterprise value of approximately $680 million. The balance of equity is held by management and other minority investors. The Ridgeline ownership structure is relevant to this matter in several respects, including budget authorization for litigation spend, coordination on settlement authority, and the requirement to provide periodic updates to Lakeshore National Bank, the senior secured lender under Stonefield's credit facility.
The key Stonefield personnel relevant to this matter include Tobias Wren, General Counsel, who executed the Termination Letter and serves as the primary client contact; Marcus Denton, CFO, who has been involved in financial aspects of the dispute; Janet Kirkwood, VP of Carrier Relations, who managed the VTS relationship and is the author of the September 22, 2021 email discussed extensively herein; Raymond Hess, Director of Contract Compliance, who issued the Cure Notice and monitored VTS performance metrics; and Carlos Medina, Senior Director of Operations, who was the recipient of the Kirkwood email.
Vantor Holdings Corp. Vantor is a New York corporation headquartered at 580 Eighth Avenue, 14th Floor, New York, New York 10018. Vantor functions as a holding company whose sole material operating subsidiary, Vantor Transport Services LLC ("VTS"), provides asset-based and asset-light trucking, warehousing, and regional distribution services primarily in the Northeast, Mid-Atlantic, and Southeast regions of the United States. In fiscal year 2021 — the last full fiscal year before the TSA termination — Vantor reported consolidated revenue of approximately $385 million. In fiscal year 2022, following the loss of the Stonefield contract and broader market declines, Vantor's revenue fell to approximately $310 million, a decline of approximately 19%.
Vantor employs approximately 1,900 people. VTS operates a fleet of approximately 650 owned tractors and approximately 2,100 trailers, though fleet size has fluctuated over the relevant period. The company is owned approximately 58% by Nikolai Vantorovich, who serves as CEO; approximately 12% by the Fielding Family Trust (a passive investor); and approximately 30% by various minority investors.
Vantor Transport Services LLC. VTS is a New York limited liability company whose sole member is Vantor Holdings Corp. VTS was the signatory counterparty to the TSA, where it is designated as the "Carrier-Provider." This distinction between Vantor (the parent and plaintiff in this action) and VTS (the subsidiary and actual contracting party) is relevant to the standing issue discussed in Section XI below. The key VTS personnel include Sandra Milescu, who holds the title of COO of both Vantor and VTS and was responsible for operational oversight of the Stonefield relationship, and Derek Pruitt, VP of Business Development, who served as the primary SLG relationship manager from Vantor's side.
B. Key TSA Terms
The Transportation Services Agreement was executed on March 15, 2019, and became effective on April 1, 2019. The TSA was drafted by Ashford Meridian LLP on behalf of Stonefield. The agreement establishes a five-year initial term running from April 1, 2019, through March 31, 2024, with one automatic two-year renewal period unless either party provides 180 days' advance written notice of non-renewal. The TSA is governed by New York law and contains a forum selection clause designating the United States District Court for the Southern District of New York or the Supreme Court of the State of New York, New York County, as the exclusive forums for dispute resolution.
The substantive terms of the TSA that are most relevant to this motion are summarized below.
Scope of Services. Under the TSA, VTS agreed to provide dedicated and on-demand truckload transportation services across specified lanes in the Northeast, Mid-Atlantic, and Southeast corridors of the United States. VTS was required to maintain a minimum fleet capacity of 400 tractors and 1,200 trailers dedicated to Stonefield freight, subject to certain adjustments for seasonal fluctuations.
Annual Committed Volume ("ACV"). Stonefield committed to tender a minimum Annual Committed Volume of $43.2 million per contract year to VTS, resulting in a total five-year minimum commitment of $216 million. The ACV was not broken down by month or quarter; it was expressed as an annual minimum subject to measurement at the end of each contract year.
Rate Structure. Per-mile rates were established on a lane-by-lane basis in Schedule B to the TSA. The rates were subject to annual adjustment pursuant to the Rate Adjustment Mechanism set forth in Section 5.3, which indexed rate changes to a blended formula of 70% diesel fuel index and 30% Consumer Price Index for All Urban Consumers ("CPI-U"). Adjustments were calculated and applied as of each April 1 during the term of the agreement. For the April 2022 adjustment — the adjustment that Vantor alleges motivated the termination — application of the contractual formula would have resulted in a weighted average rate increase from $2.87 per mile to $3.28 per mile, an increase of approximately 14.3%, representing approximately $6.2 million in additional annual transportation costs to Stonefield.
Service Level Obligations ("SLOs"). The TSA established five quantitative Service Level Obligations that VTS was required to maintain throughout the term:
These SLOs were central to the value proposition that VTS offered to Stonefield. As a freight brokerage, Stonefield's business reputation depends on the reliability of its carrier partners. Chronic failures to meet SLOs expose Stonefield to its own service failures with end-customers and to reputational harm in a competitive market.
Liquidated Damages (Section 14.2). Section 14.2 provides that if Stonefield terminates the TSA other than "for Cause," Stonefield shall pay VTS liquidated damages equal to 75% of the ACV multiplied by the number of remaining full and partial contract years. The provision includes a recital in which both parties "acknowledge and agree that the liquidated damages set forth herein represent a reasonable estimate of the damages that [VTS] would suffer from an early termination" and that such damages are "not a penalty." This language, while favorable to Vantor's position on enforceability, must be weighed against the objective economic evidence of gross disproportionality, as discussed in Pillar 2 below.
Termination for Cause (Section 13.1). The TSA provides four independent grounds for termination for Cause:
(a) A material breach of any provision of this Agreement that remains uncured for thirty (30) calendar days after written notice specifying the breach with reasonable particularity (Section 13.1(a));
(b) Insolvency, bankruptcy, or the making of an assignment for the benefit of creditors by the breaching party (Section 13.1(b));
(c) Failure to maintain required insurance coverage for more than fifteen (15) consecutive calendar days (Section 13.1(c)); and
(d) A material violation of applicable law, including without limitation regulations promulgated by the United States Department of Transportation and the Federal Motor Carrier Safety Administration (Section 13.1(d)).
Cure Notice Requirement (Section 13.2). Section 13.2 establishes the procedural prerequisites for termination under Section 13.1(a). The non-breaching party must provide written notice "specifying with reasonable particularity the alleged breach or breaches" and the applicable cure period must expire without cure before the termination becomes effective.
Consequential Damages Waiver (Section 15.1). Section 15.1 contains a mutual waiver under which both parties agreed that "[i]n no event shall either party be liable to the other for any consequential, incidental, or indirect damages arising out of or in connection with this Agreement, regardless of whether such liability is based on breach of contract, tort, strict liability, breach of warranty, failure of essential purpose, or otherwise." This is a standard commercial limitation of liability provision, and its enforceability under New York law between sophisticated parties represented by counsel is well established.
Exclusivity Provisions (Schedule C). Schedule C to the TSA established a limited exclusivity arrangement. Under Schedule C, Section 2(a), VTS was designated as the exclusive carrier for 14 designated origin-destination pairs classified as "Primary Lanes." Under Schedule C, Section 2(b), a separate category of lanes classified as "Secondary Lanes" was expressly excluded from the exclusivity obligation, with the TSA providing that Stonefield "retains the right to tender freight on Secondary Lanes to any carrier at its discretion."
Force Majeure (Section 12.1). Section 12.1 excuses performance to the extent prevented by events beyond a party's reasonable control, including but not limited to natural disasters, acts of God, epidemics, pandemics, government-imposed restrictions, labor strikes (other than of the affected party's own employees), and war.
Dispute Resolution (Section 16). Section 16 requires a mandatory 30-day executive negotiation period before either party may initiate litigation. This requirement was satisfied prior to the filing of the Complaint, as reflected in the pre-litigation correspondence between Tobias Wren and Nikolai Vantorovich in May and June 2022.
IV. Vantor's Claims and Damages
A. Claims in the Amended Complaint
The Amended Complaint, filed on December 2, 2022, asserts four counts against Stonefield, each arising from the termination of the TSA. The claims are as follows:
Count I: Breach of Contract — Wrongful Termination of TSA. Vantor alleges that Stonefield's termination of the TSA on March 4, 2022, was not valid "for Cause" under Section 13.1(a) and therefore constituted a material breach of the agreement by Stonefield. Vantor contends that VTS's Q4 2021 performance shortfalls did not rise to the level of "material breach," that VTS substantially cured the identified deficiencies, and that the termination was pretextual — motivated not by genuine Cause but by Stonefield's desire to avoid the impending April 2022 rate adjustment.
Count II: Breach of Contract — Failure to Tender Minimum Committed Volumes. Vantor alleges that Stonefield failed to tender the Annual Committed Volume of $43.2 million in Contract Year 2 (April 2020 through March 2021), tendering only $31.8 million, and in Contract Year 3 (April 2021 through termination), tendering only $36.5 million. Vantor contends that these shortfalls themselves constituted material breaches by Stonefield and either excused VTS's performance obligations or gave rise to independent claims for damages.
Count III: Breach of Contract — Exclusivity Violation. Vantor alleges that Stonefield violated the exclusivity provisions of Schedule C by diverting freight volume to Cascade Freight Systems Inc. and Briarwood Trucking Co. during Contract Year 3. Vantor characterizes this as a material breach that damaged VTS by depriving it of contracted revenue.
Count IV: Breach of Implied Covenant of Good Faith and Fair Dealing. Vantor alleges that Stonefield's termination of the TSA violated the implied covenant of good faith and fair dealing under New York law because the termination was pretextual — motivated by Stonefield's desire to avoid the April 2022 rate adjustment (a 14.3% increase translating to approximately $6.2 million in additional annual transportation costs). Vantor points to the Kirkwood email and the Ashford Meridian rate adjustment analysis memo as evidence of this motive.
B. Vantor's Claimed Damages ($95.4 Million)
Dr. Philip Trask, Vantor's damages expert, calculates total damages of $95,400,000, broken down into the following categories:
As discussed in detail in Pillars 2 through 4 below, we believe these damage figures are fundamentally flawed and dramatically overstated. The liquidated damages calculation depends on a clause that is an unenforceable penalty. The lost profits claim both duplicates the liquidated damages theory and relies on inflated margin assumptions not supported by VTS's actual financial data. The stranded assets, workforce, and mitigation cost categories are consequential damages barred by Section 15.1 of the TSA. And the entire damages analysis fails to account for Vantor's failure to mitigate. Stonefield's rebuttal expert, Dr. Evelyn Rosser, has concluded that the maximum defensible damages figure — assuming arguendo that the termination was wrongful — is $8.2 million, and that the appropriate figure if termination was valid for Cause is $0.
C. Stonefield's Counterclaim
Stonefield's Counterclaim, filed with the Answer on January 13, 2023, seeks a declaratory judgment under 28 U.S.C. § 2201 establishing that: (a) Stonefield's termination of the TSA was valid for Cause under Section 13.1(a); (b) no liquidated damages are owed under Section 14.2; and (c) any material breach of the TSA was committed by VTS, not Stonefield. The Counterclaim serves both a substantive purpose — establishing Stonefield's affirmative right to terminate — and a strategic purpose, ensuring that the burden of proof on the Cause question is properly allocated and that the Court addresses the issue regardless of whether Vantor bears the ultimate burden on its breach claims.
V. Pillar 1: Valid Termination for Cause Under Section 13.1(a)
A. Legal Standard — Material Breach Under New York Law
Stonefield's primary defense is that it validly terminated the TSA for Cause pursuant to Section 13.1(a), which authorizes termination upon "a material breach of any provision of this Agreement that remains uncured for thirty (30) calendar days after written notice specifying the breach with reasonable particularity." This defense, if established, is fully dispositive of all four of Vantor's claims: if the termination was for Cause, Stonefield did not breach the contract by terminating it, and no liquidated damages, lost profits, or other damages are owed.
Under well-settled New York law, a material breach is one that "goes to the essence of the contract" and "defeats the object of the parties in making the contract." 241 Partners, LLC v. Gemini Ins. Co., 2018 WL 4762356, at 5 (S.D.N.Y. 2018). New York courts assess materiality by considering a cluster of factors, including: (1) the severity of the breach — the extent to which the injured party will be deprived of the benefit reasonably expected; (2) the likelihood that the breaching party will cure the breach; (3) whether the non-breaching party received substantially what it bargained for; (4) the adequacy of compensation available for the harm caused by the breach; and (5) the extent to which the breaching party acted in good faith. These factors are drawn from the Restatement (Second) of Contracts § 241, which New York courts have adopted and regularly apply. See, e.g., Bear, Stearns Funding, Inc. v. Interface Grp.-Nev., Inc.*, 361 F. Supp. 2d 283, 291 (S.D.N.Y. 2005).
Critically, where the parties have contractually defined what constitutes a "material breach" or have established quantitative performance metrics whose violation triggers termination rights, New York courts enforce the parties' own definition. The TSA does not merely require generic "satisfactory performance"; it establishes five specific, measurable Service Level Obligations with numerical thresholds. A failure to meet those thresholds, left uncured after proper notice, constitutes a breach "for Cause" under the plain language of Section 13.1(a). The Court need not engage in an abstract materiality analysis where the parties themselves have quantified the standards of performance.
As to burden of proof, Stonefield bears the burden of establishing its affirmative defense of valid termination for Cause. Stonefield also bears the burden on its counterclaim for declaratory judgment. However, as detailed below, the factual record supporting Cause is largely undisputed, consisting primarily of VTS's own performance data, VTS's own internal communications, and admissions by VTS personnel in deposition testimony and in responses to requests for admission.
B. Undisputed Facts Establishing Cause
The record evidence supporting the existence of Cause for termination is overwhelming. The critical facts fall into four categories: (1) VTS's Q4 2021 performance failures across all five SLOs; (2) the Milescu "smoking gun" email establishing intentional and concealed fleet diversion; (3) the adequacy of Stonefield's Cure Notice; and (4) VTS's failure to cure within the contractual cure period.
1. VTS Q4 2021 Performance Metrics
During the fourth quarter of 2021 — the measurement period referenced in the Cure Notice — VTS failed all five Service Level Obligations simultaneously and by substantial margins. The following table sets forth the contractual SLO thresholds alongside VTS's actual performance:
Several aspects of these metrics warrant emphasis for purposes of the summary judgment motion.
First, the failures are not marginal — they are catastrophic. VTS did not narrowly miss a single SLO; it failed every SLO by double-digit percentage points (or, in the case of cargo claims, more than doubled the maximum permissible ratio). When a carrier commits to a 95% on-time pickup rate and delivers 78.2%, the resulting 16.8-percentage-point deficit represents a fundamental failure of the carrier's core operational obligation. Similarly, a tender acceptance rate of 71.4% against a 90% SLO means that VTS was rejecting nearly 30% of the freight Stonefield tendered — leaving Stonefield scrambling to find alternative capacity on short notice for nearly one-third of its loads.
Second, these metrics are derived from VTS's own data and are essentially undisputed. Raymond Hess, Stonefield's Director of Contract Compliance, testified at his deposition on July 27, 2023, that the Q4 2021 performance metrics were extracted from VTS's own entries in the Carrier Performance Portal, a shared electronic platform through which carriers reported pickup and delivery events. VTS did not challenge the accuracy of these metrics in its February 14, 2022 response to the Cure Notice. And Vantor admitted in its responses to Stonefield's Requests for Admission that VTS's on-time pickup rate in Q4 2021 was 78.2%. While Vantor's RFA responses quibbled with certain other metrics, the overall pattern of failure is not in genuine dispute.
Third, VTS's own internal documents corroborate the severity of the failures. The VTS Q4 2021 Performance Report, an internal VTS document produced in discovery (VHC-012844), tracks actual performance across all five SLO categories and confirms metrics materially below the contractual thresholds in every instance. This is not a case where Stonefield's data conflicts with VTS's data; both sides' records tell the same story.
2. The "Smoking Gun" — Milescu Email (VHC-008417, November 12, 2021)
Perhaps the single most important document in this case is an internal VTS email from Sandra Milescu, VTS's COO, to Nikolai Vantorovich, Vantor's CEO, dated November 12, 2021 (produced by Vantor at Bates number VHC-008417). The email states, in relevant part:
"We've pulled 85 tractors off the SLG dedicated lanes to cover [redacted] commitments. SLG won't notice until January."
This email is devastating to Vantor's position for multiple reasons.
First, it demonstrates that VTS intentionally and unilaterally reduced the fleet capacity dedicated to Stonefield. The TSA required VTS to maintain a minimum fleet of 400 tractors for SLG freight. By pulling 85 tractors, VTS reduced its available fleet from approximately 333 tractors (already below the 400-tractor commitment) to approximately 248 tractors — representing only 62% of the committed capacity. This single decision was the proximate cause of VTS's equipment availability failure and contributed directly to the tender acceptance and on-time performance failures.
Second, the email demonstrates active concealment. The phrase "SLG won't notice until January" reflects a deliberate decision to hide the fleet reduction from Stonefield. This is not a case of a carrier struggling with exogenous market forces and keeping its customer informed of operational challenges; it is a case of a carrier deliberately diverting contracted assets to a competing customer's account and affirmatively concealing that diversion from the counterparty.
Third, Sandra Milescu confirmed at her deposition on August 4, 2023, that 85 tractors were reassigned from SLG dedicated lanes to the Northwind Distribution Co. account in October 2021. While Milescu attempted to characterize the reassignment as "temporary" and driven by "commercial necessity," she was unable to explain why Stonefield was not notified of the redeployment, and she could not point to any contractual provision authorizing unilateral fleet reductions. Her testimony that the reassignment was "temporary" is belied by the fact that the tractors had not been returned to SLG service by the time of the Cure Notice in January 2022 — more than three months later.
Fourth, the fleet management records from Vantor's supplemental production (June 22, 2023; VHC-029001 through VHC-033218) — the very documents Vantor initially resisted producing — provide detailed, contemporaneous documentation of the reassignment of each of the 85 tractors to Northwind Distribution Co., including tractor identification numbers, reassignment dates, and lane-level deployment data. These records were produced only after Judge Calloway's June 9, 2023 order compelling their production and provide powerful corroboration of the Milescu email.
3. Adequacy of Cure Notice (January 18, 2022)
On January 18, 2022, Raymond Hess, Stonefield's Director of Contract Compliance, sent a written Cure Notice to Sandra Milescu at VTS. The Cure Notice satisfied the procedural requirements of TSA Section 13.2 by specifying with "reasonable particularity" the alleged breaches. Specifically, the Cure Notice:
(a) Identified each of the five SLO categories that VTS had breached;
(b) Stated the contractual SLO threshold for each category;
(c) Stated VTS's actual performance figure for Q4 2021 in each category;
(d) Cited the applicable TSA sections establishing the SLO requirements;
(e) Referenced VTS's chronic failure to provide substitute equipment or surge capacity as required by Section 7.4 of the TSA; and
(f) Stated that VTS had 30 calendar days from the date of the notice to cure the identified breaches.
The adequacy of the Cure Notice is not subject to genuine factual dispute. The notice is a written document whose contents speak for themselves. It identifies specific breaches, provides numerical data supporting each breach, and clearly communicates the cure period — satisfying the "reasonable particularity" requirement of Section 13.2 by any reasonable standard.
4. Failure to Cure
The 30-day cure period expired on February 17, 2022. VTS's response to the Cure Notice, sent by Derek Pruitt (Vantor's VP of Business Development) to Janet Kirkwood (Stonefield's VP of Carrier Relations) on February 14, 2022, failed to demonstrate actual remediation of any of the identified SLO failures.
The Pruitt letter acknowledged "operational challenges" but sought to deflect responsibility by pointing to exogenous factors, including the nationwide driver shortage, and by blaming Stonefield's own alleged volume shortfalls for disrupting VTS's operational planning. The letter disputed certain aspects of the cargo claims data without providing alternative calculations or supporting documentation. At no point did the letter demonstrate that VTS had actually corrected any of the five SLO failures or implemented concrete remedial measures.
Post-cure-period performance data, obtained from Stonefield's internal monitoring systems, confirms that VTS's performance in March 2022 — the period immediately following the expiration of the cure period — continued to fall short of SLO thresholds across multiple categories. This evidence forecloses any argument that VTS substantially cured during the cure period and demonstrates that the pattern of failure was chronic, not episodic.
The Termination Letter was sent by Tobias Wren, Stonefield's General Counsel, on March 4, 2022, addressed to both Vantor Holdings Corp. and VTS. The letter stated that VTS had "failed to cure the material breaches identified in the Cure Notice dated January 18, 2022, within the applicable cure period," and that the TSA was thereby terminated immediately pursuant to Section 13.1(a). The letter reserved all of Stonefield's rights and remedies.
C. The First-to-Breach Doctrine
Independent of the for-Cause termination analysis, Stonefield is entitled to invoke the first-to-breach doctrine under New York law. Under this well-established principle, a party who commits the first material breach of a contract cannot recover damages for the other party's subsequent nonperformance. RBS Citizens, N.A. v. Hyde Park Assocs., 16-cv-03755 (PKC) (S.D.N.Y. 2017); see also Ashgrove & Co. v. Camberwell Industries, 500 F.3d 171, 186 (2d Cir. 2007) ("It is well settled under New York law that a party's performance under a contract is excused where the other party has substantially failed to perform its side of the bargain . . . .").
The timeline is clear and undisputed. VTS committed the first material breach by unilaterally reducing fleet capacity in October 2021, when it reassigned 85 tractors from SLG dedicated lanes to Northwind Distribution Co. without notice to Stonefield. This breach — which violated VTS's fleet commitment under the TSA and directly precipitated the cascade of SLO failures documented in Q4 2021 — preceded any alleged breach by Stonefield. Vantor's claims that Stonefield breached the TSA by failing to tender minimum volumes or by diverting freight to Cascade and Briarwood are temporally subsequent to VTS's own breach and are therefore not actionable.
The first-to-breach analysis is reinforced by the Milescu email's evidence of concealment. VTS did not merely breach its fleet commitment; it affirmatively concealed the breach from Stonefield, preventing Stonefield from taking corrective action and compounding the harm. This conduct undermines any claim that VTS acted in good faith and independently excuses Stonefield's subsequent performance.
D. Vantor's Counter-Arguments and Disputed Issues
1. Volume Shortfall Defense
Vantor's principal defensive argument is that Stonefield's own volume shortfalls — its alleged failure to tender the ACV in Contract Years 2 and 3 — caused or contributed to VTS's operational failures and either excuse those failures or constitute independent breaches by Stonefield.
Contract Year 2 (April 2020 – March 2021). Vantor contends that Stonefield tendered only $31.8 million against a $43.2 million ACV, resulting in a $11.4 million shortfall. However, this calculation ignores the force majeure provision in Section 12.1 of the TSA. Stonefield properly invoked force majeure for the period of April through September 2020 (six months), when freight demand was materially impacted by the COVID-19 pandemic and associated government-imposed restrictions. Force majeure was communicated to VTS via written notice dated May 12, 2020, and VTS did not challenge the invocation at the time. Adjusting the CY2 ACV for the six-month force majeure period reduces the applicable minimum to $21.6 million ($43.2M × 6/12). Stonefield's actual tenders of $31.8 million exceeded the adjusted minimum by $10.2 million. There was no volume shortfall in CY2.
Contract Year 3 (April 2021 – January 2022 termination). Vantor calculates a $6.7 million shortfall by comparing 10 months of actual tenders ($36.5 million) against the full-year ACV of $43.2 million. This comparison is misleading because CY3 was truncated by the termination. Annualizing VTS's actual 10-month tender volume produces a run rate of approximately $43.8 million ($36.5M × 12/10), which exceeds the ACV. Moreover, the TSA measures the ACV on an annual basis and does not specify prorated enforcement on a monthly or quarterly basis. Vantor cannot create an artificial shortfall by measuring a partial year against a full-year commitment.
Critically, even if a volume shortfall existed — and we submit it did not — it would not excuse VTS's independent obligation to maintain the Service Level Obligations. The SLOs are unconditional performance requirements. The TSA does not contain any provision conditioning VTS's SLO obligations on Stonefield's tender of minimum volumes. Whether Stonefield tendered $30 million or $50 million in a given year, VTS was required to maintain on-time pickup rates of 95%, on-time delivery rates of 93%, tender acceptance rates of 90%, equipment availability of 85%, and cargo claims ratios of 0.5% or less on whatever volume was tendered. VTS's argument that lower volumes somehow justified lower performance standards finds no support in the contract.
2. Exclusivity Violation Defense
Vantor alleges that Stonefield violated the exclusivity provisions of Schedule C by diverting freight to Cascade Freight Systems Inc. and Briarwood Trucking Co. This argument fails as a matter of contract interpretation.
Schedule C to the TSA establishes two categories of lanes. Under Section 2(a) of Schedule C, 14 designated origin-destination pairs are classified as "Primary Lanes," and VTS holds exclusive carrier status on those lanes. Under Section 2(b), all other lanes served under the TSA are classified as "Secondary Lanes," on which Stonefield "retains the right to tender freight . . . to any carrier at its discretion."
The third-party subpoena responses from Cascade (analyzed August 1, 2023) and Briarwood (analyzed August 3, 2023) confirm, on a shipment-by-shipment basis, that Stonefield's use of these alternative carriers was confined to Lanes 8 through 14, all of which are classified as Secondary Lanes under Schedule C. There is no evidence in the record that Stonefield diverted any Primary Lane freight to Cascade, Briarwood, or any other carrier.
Furthermore, Stonefield's decision to utilize alternative carriers on Secondary Lanes was operationally necessary and directly attributable to VTS's own failures. With VTS rejecting nearly 30% of tendered loads (71.4% tender acceptance rate against a 90% SLO), Stonefield had no choice but to secure alternative capacity to serve its own customers. Stonefield's use of Cascade and Briarwood on non-exclusive lanes was not a breach; it was a commercially reasonable response to VTS's breach.
3. Pretextual Termination / Rate Adjustment Motive
This is the most significant risk area for summary judgment on Pillar 1, and it warrants careful analysis.
Vantor alleges that Stonefield's termination was not genuinely motivated by VTS's performance failures but was instead a pretext to avoid the April 2022 rate adjustment. The scheduled rate adjustment, computed under the Section 5.3 formula, would have increased the weighted average per-mile rate from $2.87 to $3.28 — a 14.3% increase that would have added approximately $6.2 million in annual transportation costs. Vantor argues that Stonefield engineered the termination to exit the TSA before the rate increase took effect, using VTS's admitted operational challenges as a convenient justification.
Two pieces of evidence support this narrative.
First, the Ashford Meridian rate adjustment analysis memorandum, prepared in February 2022 by Stonefield's outside counsel, confirms that Stonefield was aware of the upcoming rate increase and its magnitude. While awareness alone is not evidence of bad faith — any rational commercial party would track the financial implications of contractual rate adjustments — the memo's existence provides a factual predicate for Vantor's argument that cost avoidance was a motivating factor.
Second, and more significantly, the Kirkwood email dated September 22, 2021, from Janet Kirkwood (Stonefield's VP of Carrier Relations) to Carlos Medina (Stonefield's Senior Director of Operations), states:
"VTS is a mess. We're already moving volume to Cascade and Briarwood on Lanes 8–14. If VTS doesn't get its act together by Q1 I think we pull the plug on the whole contract."
Vantor will argue that this email demonstrates premeditated intent to terminate the TSA, calling into question whether the subsequent Cure Notice and termination were undertaken in good faith or were merely a procedural formality designed to provide cover for a predetermined outcome. The phrase "pull the plug" is particularly susceptible to an adverse interpretation, suggesting that the decision to terminate had been made — or at least seriously contemplated — months before the Cure Notice was issued.
However, the favorable interpretation of the Kirkwood email is at least equally compelling, and we believe it is the more natural reading in context:
(a) The email is dated September 22, 2021 — before the Q4 2021 performance data confirmed the severity of VTS's SLO failures. Kirkwood was expressing frustration with known operational problems, not announcing a decision to terminate.
(b) The email references moving volume "on Lanes 8–14" — i.e., on Secondary Lanes where Stonefield had the contractual right to use alternative carriers. This demonstrates operational frustration, not contract manipulation.
(c) The email is explicitly conditional: "If VTS doesn't get its act together by Q1." This language presupposes a good-faith expectation that VTS might improve and that termination would be pursued only if performance did not improve.
(d) Kirkwood testified at her deposition on July 14, 2023, that the email reflected operational frustration with VTS's declining performance, not a premeditated plan to terminate the TSA. She testified that the rate adjustment "did not factor into" the termination decision and that she was not aware of the rate adjustment analysis at the time she sent the September 2021 email.
Legal Analysis. The central legal question is whether, under New York law, the existence of objective contractual grounds for termination renders the terminating party's subjective motivation irrelevant. We believe the weight of New York authority supports the proposition that when a party terminates for objectively valid Cause, courts do not inquire into whether the party also had other, concurrent motivations for the termination. See, e.g., Faulkner v. Nat'l Geographic Soc'y, 220 F. Supp. 2d 237, 240 (S.D.N.Y. 2002) (noting that where the contract provides a right to terminate, the exercise of that right is not rendered wrongful by the existence of additional motives); Moran v. Erk, 11 N.Y.3d 452, 457 (2008) (emphasizing the primacy of objective contract rights over subjective intent). However, if the Court construes Vantor's pretext argument as raising a genuine issue about whether Cause actually existed — i.e., whether the SLO failures were real or manufactured, or whether the Cure Notice was a sham — then the subjective motive evidence could become material.
We do not believe the record supports an inference that Cause was fabricated. The SLO failures are documented in VTS's own data, confirmed by VTS's own internal reports, admitted in VTS's RFA responses, and corroborated by VTS's own COO's deposition testimony. The Milescu email demonstrates that VTS itself caused the failures through intentional fleet diversion. No reasonable factfinder could conclude that Stonefield "manufactured" Cause by manipulating performance data — the data came from VTS's own systems.
Assessment. There is a moderate risk that the Court will find the Kirkwood email and rate adjustment evidence sufficient to create a genuine dispute of material fact on the motive/pretext issue. While we believe the legal argument for irrelevance of subjective motive is strong, and while the undisputed factual record of SLO failures and intentional fleet diversion substantially mitigates the risk, the email's "pull the plug" language creates a colorable narrative that a jury might credit. This is the principal vulnerability in Pillar 1.
4. "Substantial Cure" Argument
Vantor may contend that its February 14, 2022 response to the Cure Notice constituted "substantial cure" sufficient to defeat the termination. This argument lacks merit for several reasons.
The February 14, 2022 Pruitt letter did not demonstrate actual remediation of any SLO failure. It acknowledged "operational challenges" in general terms and deflected responsibility to external factors and Stonefield's alleged volume shortfalls. It did not include data showing improved performance, a remediation plan with measurable targets, or evidence that the 85 diverted tractors had been returned to SLG service. Under New York law, cure requires actual correction of the breach, not merely the expression of an intention to improve or an assertion that the breach was not the breaching party's fault. See, e.g., Bisk Indus., Inc. v. Galex Inc., 86 A.D.2d 697 (2d Dep't 1982).
Moreover, post-cure-period performance data obtained from Stonefield's internal systems confirms that VTS's performance in March 2022 — after the cure period had expired — continued to fall below SLO thresholds across multiple categories. If VTS had in fact cured, the March 2022 data would reflect improved performance. It does not.
E. Summary Judgment Recommendation — Pillar 1
Full Summary Judgment. We recommend seeking full summary judgment on the ground that the termination was valid for Cause as a matter of law. The factual record — VTS's catastrophic SLO failures, the Milescu email documenting intentional fleet diversion and concealment, the adequacy of the Cure Notice, VTS's failure to cure, and the first-to-breach doctrine — provides a strong foundation. We will argue that objective Cause is dispositive under New York law regardless of any concurrent subjective motivations, and that the undisputed facts foreclose any inference that Cause was fabricated or pretextual.
Partial Summary Judgment. If the Court determines that the Kirkwood email and rate adjustment evidence create a genuine dispute of material fact on the motive/pretext issue, we should seek partial summary judgment establishing the following undisputed facts as a matter of law: (a) VTS's Q4 2021 SLO failures are undisputed; (b) the Cure Notice satisfied the procedural requirements of Section 13.2; (c) VTS failed to cure within the 30-day cure period; and (d) VTS committed the first material breach by reassigning 85 tractors to Northwind Distribution Co. without notice to Stonefield. These rulings would narrow the trial issues to the question of motive/pretext only, significantly simplifying the case for trial and enhancing settlement leverage.
Briefing Approach. We recommend addressing the motive/pretext issue head-on rather than ignoring it. The motion should proactively acknowledge the Kirkwood email and rate adjustment evidence, contextualize them within the full factual record, and argue that they are legally irrelevant where objective Cause exists and factually insufficient to create a genuine dispute about whether Cause actually existed.
VI. Pillar 2: Unenforceability of Liquidated Damages Clause (Section 14.2) as Penalty
A. Legal Standard Under New York Law
Liquidated damages clauses are enforceable under New York law only if two conditions are met: (1) the stipulated amount is a reasonable estimate of probable damages at the time the contract was made, and (2) the actual damages flowing from a breach are difficult to ascertain at the time of contracting. See Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354, 358 (1977); JMD Holding Corp. v. Cong. Fin. Corp., 4 N.Y.3d 373, 380 (2005). If either condition is not satisfied, the clause is deemed an unenforceable penalty, and the non-breaching party's recovery is limited to its actual damages as proven at trial. Id.
New York courts have further explained that a liquidated damages clause will be struck down as a penalty where the stipulated amount is "grossly disproportionate" to the probable loss at the time the contract was formed. 172 Van Duzer Realty Corp. v. Globe Alumni Student Assistance Ass'n, 24 N.Y.3d 528, 536 (2014). The relevant inquiry focuses on the relationship between the liquidated amount and the anticipated or actual harm — not merely on whether the parties characterized the provision as a "liquidated damages" clause or disclaimed its characterization as a "penalty."
While New York courts generally respect the freedom of sophisticated commercial parties to negotiate the terms of their agreements, including liquidated damages provisions, such deference is not absolute. The courts retain an independent obligation to assess the reasonableness of the stipulated amount, particularly where the evidence demonstrates gross disproportionality. See Leasing Serv. Corp. v. Justice, 673 F.2d 70, 73 (2d Cir. 1982) (applying New York law and noting that "even where sophisticated business parties have negotiated a liquidated damages clause at arm's length, the court will not enforce the clause if it operates as a penalty").
The burden of demonstrating unenforceability rests with the party challenging the clause — here, Stonefield.
B. Arguments for Unenforceability
We believe Stonefield has strong arguments that the Section 14.2 liquidated damages clause is an unenforceable penalty.
Gross Disproportionality. The total liquidated damages claimed by Vantor under the Section 14.2 formula amount to $67,230,000 ($64.8 million for two full remaining contract years plus $2.43 million for the 27-day partial year). By contrast, Dr. Rosser's analysis demonstrates that the maximum actual damages under an alternative lost-profits theory — assuming arguendo wrongful termination and using VTS's actual financial data — are $8.2 million. This produces a ratio of greater than 8:1 between the liquidated amount and the estimated actual harm. A ratio of this magnitude is the hallmark of a penalty. While New York courts have not established a bright-line ratio threshold, ratios significantly lower than 8:1 have been found to support unenforceability. See, e.g., Beasley v. Severin Securities, 235 A.D.2d 156, 160 (1st Dep't 1997).
Ascertainability of Actual Damages. The second prong of the New York test requires that actual damages be difficult to ascertain at the time of contracting. Here, the parties had access at the time the TSA was executed in March 2019 to extensive market data, VTS's historical operating margins, industry benchmarks for trucking and freight brokerage profitability, and standard financial modeling tools that would have permi