CASE MANAGEMENT ORDER — ANNOTATED COPY
(INTERNAL WORK PRODUCT)
With Calderwood & Harkness LLP Internal Deadline Tracking and Practice Notes
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
VANTOR HOLDINGS CORP.,
Plaintiff,
v.
STONEFIELD LOGISTICS GROUP INC.,
Defendant.
Case No. 22-cv-07841 (MTC)
Before the Honorable Margaret T. Calloway, United States District Judge
CASE MANAGEMENT ORDER
Entered: February 17, 2023
ANNOTATION PREPARED BY: Simone Laroche, Associate Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, NY 10166
Date of Annotation: February 17, 2023
Matter No.: 1012-00005
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — NOT FOR PRODUCTION
This document constitutes the privileged and confidential attorney work product of Calderwood & Harkness LLP. It has been prepared in anticipation of litigation and for the purpose of providing legal advice to the client. This document is not to be disclosed, produced, or otherwise made available to any third party, opposing counsel, the Court, or any other person or entity outside the immediate distribution list identified below. Any inadvertent disclosure of this document shall not constitute a waiver of any applicable privilege or work product protection.
Distribution List:
INTRODUCTORY ANNOTATION NOTE
This document is Calderwood & Harkness LLP's internally annotated version of the Case Management Order entered by the Honorable Margaret T. Calloway, United States District Judge, on February 17, 2023, following the Initial Pretrial Conference held on February 10, 2023. The annotations contained herein are intended solely for use by the Calderwood & Harkness engagement team in managing the defense of Stonefield Logistics Group Inc. in this matter.
Throughout this document, the Court's language is presented as standard text. Calderwood & Harkness's internal annotations, practice notes, and strategic commentary appear in brackets and italicized text, clearly distinguishing them from the Court's original language. Where annotations follow immediately after a section of the Court's Order, they are introduced by the heading "[C&H ANNOTATION]" in bold brackets.
A companion internal deadline calendar has been created and entered in the firm's docketing system (CompuLaw/Vision) to reflect all deadlines established by this CMO. Helen Tsao, Senior Paralegal, is responsible for maintaining docket reminders and ensuring that all team members receive timely notifications in advance of each deadline. Docket reminders have been set at the intervals identified in the Master Internal Deadline Calendar at the conclusion of this document. Helen Tsao will independently monitor the ECF docket for this matter as a backup to the individual ECF notification registrations maintained by Samuel Eklund, Patrick Gallagher, and Simone Laroche.
This annotated CMO should be read in conjunction with the Joint Proposed Case Management Plan, which was prepared and submitted on February 7, 2023, by Patrick Gallagher (Calderwood & Harkness LLP) jointly with Jason Whitford (Caldwell Royce & Shapiro LLP) on behalf of Plaintiff. The Joint Proposed Case Management Plan was the product of a meet-and-confer between Patrick Gallagher and Jason Whitford conducted on January 31 and February 3, 2023, and reflected the parties' agreed-upon scheduling proposals for the Court's consideration.
The Court adopted the jointly proposed schedule in all material respects, with only one minor modification: the Court shortened the expert discovery period by two weeks from what was jointly proposed. Specifically, the parties had jointly proposed an expert discovery cutoff of January 26, 2024; the Court instead set the expert discovery cutoff at January 12, 2024. All other dates in the CMO are consistent with the jointly proposed schedule. The practical implications of this two-week compression are addressed in the annotations to Section 6 below.
SECTION 1: PARTIES AND COUNSEL
COURT'S TEXT:
The parties to this action and their respective counsel of record are identified as follows:
Plaintiff: Vantor Holdings Corp., a New York corporation, represented by Caldwell Royce & Shapiro LLP, 1 Liberty Plaza, 22nd Floor, New York, NY 10006. Lead Counsel: Harrison Caldwell. Associate Counsel: Jason Whitford, Alina Petrov.
Defendant: Stonefield Logistics Group Inc., a Delaware corporation, represented by Calderwood & Harkness LLP, 200 Park Avenue, 38th Floor, New York, NY 10166. Lead Counsel: Samuel Eklund. Associate Counsel: Patrick Gallagher, Simone Laroche.
All counsel identified above have entered appearances in this action and are authorized to receive service of all papers and filings on behalf of their respective clients.
[C&H ANNOTATION — Practice Notes]
[Note: Meredith Shapiro, Named Partner at Caldwell Royce & Shapiro LLP, is also engaged on this case on behalf of Vantor Holdings Corp. but did not appear at the Initial Pretrial Conference on February 10, 2023, and is not listed in the CMO as counsel of record. This may be an oversight by CRS or may reflect Shapiro's limited involvement in day-to-day case management. For service list purposes, Patrick Gallagher should confirm with Jason Whitford whether Shapiro should receive copies of filings served by mail or email. As a practical matter, ECF notifications will go to all attorneys who have entered appearances, and if Shapiro has not filed a Notice of Appearance, she may not be receiving ECF notifications. This is primarily a matter for CRS to manage, but we should be aware of it for any courtesy copy or service obligations.]
[Note: Helen Tsao (Senior Paralegal) and David Moretti (Litigation Support / eDiscovery Manager) are not listed in the CMO as counsel of record and would not be. However, both are integral members of the Calderwood & Harkness engagement team and should receive internal copies of all filings, orders, and correspondence in this matter. Helen Tsao is the docket custodian for this matter and David Moretti is managing the eDiscovery workflow with Pinnacle Forensics LLC. Both should be copied on all internal distributions.]
[Note: Kara Nystrom, Contract Associate, has been staffed for document review in this matter beginning in January 2023 and will continue in that role through the fact discovery period. Kara is not counsel of record and has not entered an appearance. Her involvement is limited to document review, privilege review, and related tasks under the supervision of Simone Laroche and Patrick Gallagher.]
SECTION 2: NATURE OF THE ACTION
COURT'S TEXT:
This is a breach of contract action arising from the Defendant's termination of the Transportation Services Agreement dated March 15, 2019 (hereinafter the "TSA"; Contract Reference No. SLG-VTS-2019-0315), entered into between Stonefield Logistics Group Inc., acting as "Shipper-Broker," and Vantor Transport Services LLC, acting as "Carrier-Provider."
Plaintiff Vantor Holdings Corp. alleges that Defendant wrongfully terminated the TSA and seeks approximately $95.4 million in damages, including but not limited to: (a) liquidated damages pursuant to Section 14.2 of the TSA; (b) lost profits for the remaining term of the TSA; (c) stranded asset costs associated with tractors, trailers, and related equipment dedicated to the TSA; (d) workforce reduction costs, including severance and retraining expenses; and (e) mitigation costs incurred in redeploying assets and personnel.
Defendant Stonefield Logistics Group Inc. denies that the termination of the TSA was wrongful and asserts that termination was valid and authorized for Cause under Section 13.1(a) of the TSA based on Vantor Transport Services LLC's failure to meet the Service Level Objectives ("SLOs") set forth in Exhibit C to the TSA during the applicable measurement period, following expiration of the cure period provided in Section 13.2 of the TSA. Defendant has filed a Counterclaim seeking a declaratory judgment that the termination of the TSA was valid and that Defendant has no further liability to Plaintiff thereunder.
The parties agree that New York law governs this dispute, as provided in Section 15.4 of the TSA.
[C&H ANNOTATION — Practice Notes]
[Note: The CMO correctly identifies Vantor Transport Services LLC ("VTS") as the signatory counterparty to the TSA. However, the Amended Complaint is brought by Vantor Holdings Corp. ("VHC"), the parent corporation of VTS. The parent entity was not a party to the TSA and has no direct contractual relationship with Stonefield. The standing issue — i.e., whether VHC has standing to assert breach of contract claims arising from a contract to which only its subsidiary, VTS, was a party — was identified and analyzed in Simone Laroche's memorandum dated December 8, 2022 (Document 120 in Matter File). That memorandum concluded that Stonefield has a colorable standing defense but that VHC may seek to cure any standing deficiency through assignment, third-party beneficiary theories, or joinder of VTS. Calderwood & Harkness has elected, as a matter of strategy, not to lead with the standing defense at this stage. The defense is preserved among the 14 affirmative defenses raised in the Answer (Third Affirmative Defense). The strategic calculus may change depending on developments in discovery, and the April 14, 2023 pleading amendment/joinder deadline is the relevant date for any motion practice involving this issue (see Section 13 below).]
[Note: The damages figure of $95.4 million claimed by Vantor exceeds the $25 million litigation notification threshold established in Section 6.03(b) of the Lakeshore National Bank Credit Agreement (Ref. LNB-SLG-2017-CA-4402), pursuant to which Stonefield is required to notify Lakeshore of any litigation or proceeding in which the amount in controversy exceeds $25 million. Stonefield's General Counsel, Tobias Wren, notified Lakeshore (Catherine Devereaux, SVP, Loan Administration) of this litigation on August 24, 2022, following the filing of the Original Complaint. Quarterly status updates are ongoing, and the next update is due following Q1 2023 developments. Samuel Eklund is responsible for coordinating with Tobias Wren regarding the content of these updates.]
[Note: For the record, the Answer, Affirmative Defenses, and Counterclaim was filed on January 13, 2023, and asserts 14 affirmative defenses including: (1) failure to state a claim; (2) failure to mitigate; (3) lack of standing; (4) unenforceability of liquidated damages clause as penalty; (5) waiver; (6) estoppel; (7) unclean hands; (8) contractual limitation on consequential damages; (9) comparative fault; (10) setoff; (11) accord and satisfaction; (12) failure of condition precedent; (13) statute of limitations (as to certain discrete categories of damages); and (14) failure of consideration. Vantor's Answer to the Counterclaim was filed January 27, 2023, denying the allegations and asserting three affirmative defenses.]
SECTION 3: JURISDICTION AND VENUE
COURT'S TEXT:
The Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332(a) (diversity of citizenship jurisdiction). The amount in controversy exceeds $75,000, exclusive of interest and costs.
Plaintiff Vantor Holdings Corp. is a corporation organized and existing under the laws of the State of New York, with its principal place of business in New York, New York.
Defendant Stonefield Logistics Group Inc. is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102.
Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) and the forum selection clause set forth in Section 16 of the TSA, which designates the United States District Court for the Southern District of New York as a proper forum for the resolution of disputes arising under or in connection with the TSA.
[C&H ANNOTATION — Practice Notes]
[Note: No challenge to subject matter jurisdiction or venue was raised by Stonefield, and no such challenge is contemplated. The forum selection clause in TSA Section 16 is a permissive clause designating both the United States District Court for the Southern District of New York and the Supreme Court of the State of New York, New York County, as proper fora for any dispute arising out of or relating to the TSA. Diversity of citizenship is complete — VHC is a New York citizen and Stonefield is a citizen of both Delaware (state of incorporation) and Texas (principal place of business). The amount in controversy requirement is unquestionable at $95.4 million claimed. There is no basis for a jurisdictional or venue challenge and none is warranted.]
SECTION 4: PRIOR PROCEEDINGS
COURT'S TEXT:
The following is a summary of the significant prior proceedings in this action:
• August 12, 2022: Plaintiff Vantor Holdings Corp. filed the Original Complaint initiating this action, asserting claims for breach of contract and seeking damages in excess of $75 million.
• September 8, 2022: Calderwood & Harkness LLP filed a Notice of Appearance on behalf of Defendant Stonefield Logistics Group Inc.
• October 14, 2022: Defendant filed a Motion to Dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that certain claims were insufficiently pleaded and that the liquidated damages clause upon which Plaintiff relied was unenforceable as a matter of law.
• November 18, 2022: Plaintiff filed its Opposition to Defendant's Motion to Dismiss.
• December 2, 2022: Plaintiff filed an Amended Complaint as of right pursuant to Federal Rule of Civil Procedure 15(a)(1)(B), within 21 days of Defendant's filing of the Motion to Dismiss.
• December 5, 2022: Defendant filed its Reply in Support of the Motion to Dismiss.
• December 16, 2022: The Court denied Defendant's Motion to Dismiss as moot in light of the filing of the Amended Complaint, without prejudice to the filing of a renewed motion addressed to the Amended Complaint.
• January 13, 2023: Defendant filed its Answer to the Amended Complaint, Affirmative Defenses, and Counterclaim for Declaratory Judgment.
• January 27, 2023: Plaintiff filed its Answer to Defendant's Counterclaim.
• February 7, 2023: The parties submitted a Joint Proposed Case Management Plan.
• February 10, 2023: The Court conducted the Initial Pretrial Conference.
[C&H ANNOTATION — Practice Notes]
[Note: The Motion to Dismiss was substantively strong. The principal arguments advanced were: (1) that the liquidated damages clause in Section 14.2 of the TSA is unenforceable as a penalty under New York law, relying on Northpoint Holdings v. Purdy Corp., 41 N.Y.2d 354 (1977), and Kestrel Corporation, 4 N.Y.3d 373 (2005); and (2) that the lost profits claim in the Original Complaint was inadequately pleaded, lacking sufficient factual allegations to support a reasonable basis for calculating lost profits with reasonable certainty. The MTD was mooted by Vantor's filing of the Amended Complaint as of right under Rule 15(a)(1)(B), which Vantor was entitled to file within 21 days of service of the MTD. The same substantive arguments are preserved for summary judgment and remain central to our defense strategy.]
[Note: The Amended Complaint added several new factual allegations and theories not present in the Original Complaint, including:]
(1) Allegations that Stonefield failed to tender Annual Contract Volume ("ACV") minimums during Contract Year 2 (April 2020–March 2021) and Contract Year 3 (April 2021–March 2022), in violation of Section 4.1 of the TSA, thereby constituting a material breach by Stonefield predating the termination;
(2) Allegations that Stonefield violated the exclusivity provisions of Section 5.2 of the TSA by diverting freight volume on certain designated lanes to Cascade Freight Systems Inc. (headquartered in Columbus, Ohio) and Briarwood Trucking Co. (headquartered in Arlington, Virginia), specifically with respect to Secondary Lanes 8 through 14 as identified in Exhibit B to the TSA;
(3) Allegations that Stonefield's purported termination for Cause was pretextual and was actually motivated by Stonefield's desire to avoid a rate adjustment of approximately 14.3% that was projected to take effect under the contractual rate escalator in Section 7.3 of the TSA beginning April 2022, which would have increased Stonefield's annual transportation costs by approximately $8.7 million.
[Cross-reference: Analysis of Amended Complaint prepared by Simone Laroche (Document 31, dated December 5, 2022), which provides a section-by-section comparison of the Original Complaint and Amended Complaint and identifies the new theories and their potential impact on Stonefield's defense.]
SECTION 5: DISCOVERY SCHEDULE — FACT DISCOVERY
COURT'S TEXT:
A. Fact discovery Period
All fact discovery in this action, including but not limited to document production, responses to interrogatories, responses to requests for admission, and depositions of fact witnesses, shall be completed no later than September 29, 2023.
B. Initial Disclosures
Initial Disclosures pursuant to Federal Rule of Civil Procedure 26(a)(1) shall be exchanged by the parties within fourteen (14) days of the entry of this Order, i.e., no later than March 3, 2023.
C. Written discovery
Written discovery, including interrogatories pursuant to Rule 33, requests for production of documents pursuant to Rule 34, and requests for admission pursuant to Rule 36, may be served beginning March 3, 2023. Responses to written discovery shall be served within thirty (30) days of service of the discovery requests.
Each party may serve no more than twenty-five (25) interrogatories, including discrete subparts, in accordance with Federal Rule of Civil Procedure 33(a)(1), except by written stipulation of the parties or leave of Court for good cause shown.
Each party may serve up to three (3) sets of requests for production of documents pursuant to Rule 34. There is no numerical limit on the individual requests within each set.
Each party may serve one (1) set of up to thirty (30) requests for admission pursuant to Federal Rule of Civil Procedure 36(a).
D. Fact Depositions
Each side is limited to ten (10) depositions of fact witnesses, each of a duration not to exceed seven (7) hours of testimony, in accordance with Federal Rule of Civil Procedure 30(a)(2)(A)(i) and 30(d)(1), except by written stipulation of the parties or leave of Court for good cause shown.
Depositions noticed pursuant to Federal Rule of Civil Procedure 30(b)(6) shall count toward the ten-deposition limit applicable to the noticing party.
Third-party subpoenas served pursuant to Federal Rule of Civil Procedure 45, including subpoenas duces tecum and subpoenas commanding the attendance of a witness at a deposition, are not subject to the ten-deposition limit but must be served with reasonable notice to all parties in accordance with Rule 45(a)(4).
[C&H ANNOTATION — Deadline Tracking Table]
[C&H ANNOTATION — Practice Notes]
[Written discovery Strategy: Calderwood & Harkness plans to serve Defendant Stonefield's First Set of Interrogatories (25 interrogatories, including subparts), First Request for Production of Documents (38 individual requests), and First Set of Requests for Admission (30 requests) on or about March 6, 2023 — the first business day after the March 3 opening date for written discovery. All three sets fall within the numerical limits established by the CMO. The interrogatories and RFP have been drafted by Simone Laroche and reviewed by Patrick Gallagher; final review by Samuel Eklund is scheduled for March 1–2, 2023. The RFAs have been drafted by Patrick Gallagher and focus on authentication of key documents, admission of uncontroverted facts regarding SLO performance metrics, and admission of Vantor's corporate structure (parent-subsidiary relationship between VHC and VTS).]
[Second and Third Requests for Production: We anticipate needing a Second RFP targeting fleet redeployment records and internal VTS communications regarding the diversion of tractors and drivers from the Stonefield account to the Northwind Distribution Co. account during October–December 2021. This Second RFP should be served in the May 2023 timeframe, after reviewing Vantor's initial document production in response to our First RFP and after reviewing Vantor's responses to our interrogatories. A Third RFP may be needed depending on the sufficiency and completeness of Vantor's responses to the first two sets; the CMO allows up to three sets total, and we should preserve this option.]
[Deposition Allocation Strategy: The CMO provides for 10 depositions per side, each limited to 7 hours. Our current deposition plan contemplates a minimum of 5 Vantor witnesses:]
1. Derek Pruitt (VP, Business Development, Vantor) — Primary relationship manager with Stonefield; key witness on mitigation efforts (or lack thereof) and on VTS's awareness of SLO failures during Q3 and Q4 2021.
2. Sandra Milescu (COO, Vantor/VTS) — Author of the November 12, 2021 internal email (the "smoking gun" email) in which she directed fleet redeployment away from the Stonefield account; essential testimony regarding operational decision-making.
3. Nikolai Vantorovich (CEO and Founder, Vantor) — Overall corporate decision-making; awareness of SLO failures; potential conflicts regarding fee arrangements with CRS (possible leverage point).
4. Gregory Fielding (CFO, Vantor) — Damages calculations; financial condition of Vantor and VTS; revenue attributable to the TSA; mitigation cost figures.
5. Rule 30(b)(6) Designee(s) — Corporate topics including fleet management, contract performance, damages methodology, mitigation efforts, corporate structure (VHC/VTS relationship), and financial records.
[The remaining 5 deposition slots should be reserved for additional fact witnesses as identified during discovery or for follow-up depositions if warranted. Potential additional deponents include VTS drivers or dispatchers with knowledge of the fleet redeployment, and Vantor's in-house counsel if privilege waiver issues arise.]
[Third-Party Subpoenas: Calderwood & Harkness will serve third-party subpoenas duces tecum on Cascade Freight Systems Inc. (Columbus, OH) and Briarwood Trucking Co. (Arlington, VA) to obtain lane-specific usage records that will confirm (or rebut) Vantor's allegations that Stonefield diverted freight to these carriers on Secondary Lanes 8–14. These subpoenas do not count against the 10-deposition limit per the CMO. The subpoenas will be served through local counsel in the Southern District of Ohio (for Cascade) and the Eastern District of Virginia (for Briarwood). Patrick Gallagher to identify and retain local counsel in both jurisdictions by mid-March 2023.]
[Document Collection and Production Coordination: David Moretti to coordinate with Pinnacle Forensics LLC (Nathan Billings, Client Engagement Director; Project ID: PF-SLG-2022-0914) on the document collection, processing, hosting, and production timeline for Stonefield's documents. The target for Stonefield's first production of documents is mid-April 2023, which will allow sufficient time for collection, processing, TAR-based review, and privilege review. See Section 8 below for additional detail on ESI protocol and production format requirements.]
[Flag: Vantor's responses to Stonefield's First Set of Interrogatories, First RFP, and First Set of RFAs will be due approximately early April 2023 (30 days from service on or about March 6, 2023, i.e., approximately April 5, 2023). Calendar follow-up for deficiency review immediately upon receipt; Patrick Gallagher and Simone Laroche to conduct initial review within 5 business days of receipt and prepare deficiency letter if warranted.]
SECTION 6: DISCOVERY SCHEDULE — EXPERT DISCOVERY
COURT'S TEXT:
A. Expert discovery Period
All expert discovery in this action, including the service of expert reports and the completion of expert depositions, shall be completed no later than January 12, 2024.
B. Expert Reports
Plaintiff's opening expert reports shall be served no later than May 15, 2023.
Defendant's rebuttal expert reports shall be served no later than August 25, 2023.
Plaintiff's reply or sur-rebuttal expert reports, if any, shall be served no later than October 6, 2023.
C. Expert Depositions
All expert depositions shall be completed no later than January 12, 2024.
D. Number of Experts
Each side may designate up to three (3) expert witnesses. The designation of additional expert witnesses shall require leave of Court upon a showing of good cause.
E. Expert Report Requirements
All expert reports shall comply with the requirements of Federal Rule of Civil Procedure 26(a)(2)(B), including a complete statement of all opinions the witness will express and the basis and reasons for them, the facts or data considered by the witness in forming the opinions, any exhibits that will be used to summarize or support the opinions, the witness's qualifications and publications, a list of all other cases in which the witness testified as an expert at trial or by deposition during the preceding four years, and a statement of the compensation to be paid for the study and testimony in the case.
[C&H ANNOTATION — Deadline Tracking Table]
[C&H ANNOTATION — Practice Notes]
[Expert Retention — Dr. Evelyn Rosser: Kensington Analytics Group LLC ("KAG") has been retained on behalf of Stonefield to provide expert opinions on damages rebuttal. The primary expert will be Dr. Evelyn Rosser, Managing Director, KAG, supported by Michael Chung, Senior Analyst. The engagement letter is dated October 28, 2022. Hourly rates are $625/hour for Dr. Rosser and $375/hour for Mr. Chung. The preliminary budget estimate for KAG's engagement is $180,000–$250,000, depending on the complexity of Vantor's damages theories and the volume of data requiring analysis. KAG's invoices are billed monthly and passed through to Stonefield as a disbursement.]
[Expert Scope: An expert scope memorandum was sent to KAG on November 14, 2022, outlining the key issues for Dr. Rosser's anticipated testimony, including: (1) enforceability analysis of the liquidated damages clause in TSA Section 14.2, including whether the stipulated amount represents a reasonable forecast of just compensation or an unenforceable penalty; (2) alternative damages models and sensitivity analyses under various termination-date scenarios; (3) analysis of Vantor's mitigation efforts (or failure to mitigate), including the timeline and adequacy of VTS's fleet redeployment to alternative contracts; (4) VTS's financial condition and the causation link between the TSA termination and the claimed damages categories; and (5) market-based calculation of Vantor's actual losses, if any, using comparable carrier data and industry benchmarks.]
[Timeline Considerations: Vantor's opening expert report is due May 15, 2023. Upon receipt of that report, Patrick Gallagher must immediately transmit a copy to KAG along with any supporting data and documents referenced in the report. The Defendant's rebuttal report deadline is August 25, 2023 — approximately 3.5 months (approximately 14 weeks) after receipt of Vantor's opening report. This is a tight but workable timeline, provided that KAG has access to all relevant financial data and discovery materials well in advance of the May 15 trigger date. Patrick Gallagher and Simone Laroche should ensure that KAG receives ongoing document productions and relevant deposition transcripts on a rolling basis beginning in April 2023, rather than waiting for Vantor's expert report to initiate the substantive expert engagement.]
[Anticipated Opposing Expert: Based on information gathered during the Initial Pretrial Conference and informal discussions between Patrick Gallagher and Jason Whitford, we anticipate that Vantor will retain Trask Greystone & Associates, and specifically Dr. Philip Trask, to prepare its opening damages report. Dr. Trask is a well-known damages expert in commercial litigation with extensive experience in transportation and logistics disputes. His reports tend to be thorough but aggressive in methodology. Once Vantor's expert report is received, Simone Laroche should prepare a research memorandum analyzing the report's methodology and identifying potential grounds for a Daubert challenge under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993).]
[Expert Slots: The CMO allows a maximum of 3 expert witnesses per side. We are currently planning to designate only one expert — Dr. Rosser on damages rebuttal. The remaining two slots should be reserved for potential use, depending on case developments. Possible additional experts include: (a) an industry expert on transportation and logistics practices, SLO measurement, and carrier performance standards, to testify on the reasonableness of Stonefield's performance expectations and the significance of VTS's SLO failures; and (b) a contract interpretation expert, if the enforceability of the liquidated damages clause requires expert testimony on commercial reasonableness (though this may be more appropriate for legal briefing than expert testimony). No decision needs to be made on these additional experts until after review of Vantor's expert reports.]
[Note — Shortened Expert discovery Period: As noted in the Introductory Annotation, the Court shortened the expert discovery period by two weeks from what was jointly proposed. The parties had proposed an expert discovery cutoff of January 26, 2024; the Court set the cutoff at January 12, 2024. This means that all expert depositions — both Vantor's depositions of Dr. Rosser and Stonefield's depositions of Vantor's experts — must be completed by January 12, 2024, which is approximately three months after the October 6 sur-rebuttal report deadline. This is still a workable timeline, but scheduling must be coordinated promptly after sur-rebuttal reports are served (if any). Patrick Gallagher should reach out to CRS in early October 2023 to begin scheduling expert depositions.]
SECTION 7: DISPOSITIVE MOTIONS
COURT'S TEXT:
A. Filing Deadline
All dispositive motions, including motions for summary judgment pursuant to Federal Rule of Civil Procedure 56, shall be filed no later than March 1, 2024.
B. Briefing Schedule
Oppositions to dispositive motions shall be filed within twenty-eight (28) days of service of the motion.
Reply briefs in further support of dispositive motions shall be filed within fourteen (14) days of service of the opposition.
C. Daubert Motions
Motions challenging the admissibility of expert testimony under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), may be filed concurrently with dispositive motions or as separate motions. The Court encourages the parties to combine Daubert challenges with summary judgment briefing where appropriate and practicable, in the interest of judicial economy.
D. Page Limits
The following page limits shall apply to all dispositive motion briefing: opening memoranda of law shall not exceed thirty (30) pages; opposition memoranda of law shall not exceed thirty (30) pages; reply memoranda of law shall not exceed fifteen (15) pages. These page limits are exclusive of tables of contents, tables of authorities, and exhibits. Requests for leave to exceed these page limits shall be made by letter application to the Court and shall be disfavored.
[C&H ANNOTATION — Deadline Tracking Table]
[C&H ANNOTATION — Practice Notes]
[Summary Judgment Strategy: Calderwood & Harkness intends to file a motion for summary judgment on behalf of Stonefield Logistics Group Inc. on or before the March 1, 2024 deadline. Based on the current state of the pleadings, the defense strategy, and preliminary assessment of the factual record, the principal grounds for summary judgment are anticipated to include:]
(1) Valid Termination for Cause: The undisputed record will demonstrate that VTS failed to meet the Service Level Objectives ("SLOs") across all five metric categories in Q4 2021 — on-time pickup rate, on-time delivery rate, trailer utilization rate, claims ratio, and driver compliance score — and that these failures were uncured during the 60-day cure period following the Cure Notice issued January 18, 2022. Section 13.1(a) of the TSA authorizes termination for Cause upon uncured SLO failures, and Stonefield exercised that right by issuing the Termination Letter on March 4, 2022.
(2) Unenforceability of Liquidated Damages Clause: Under New York law, a liquidated damages provision is enforceable only if the stipulated amount is a reasonable forecast of just compensation for the harm caused by the breach and actual damages are difficult to ascertain at the time of contracting. The liquidated damages formula in Section 14.2 of the TSA — which computes damages based on 100% of the remaining contract value without discount for avoided costs — is disproportionate to any reasonably anticipated harm and constitutes an unenforceable penalty.
(3) Contractual Bar on Consequential Damages: Section 15.1 of the TSA contains a mutual waiver of consequential, incidental, and special damages. Vantor's claims for stranded asset costs, workforce reduction costs, and mitigation costs are properly characterized as consequential damages barred by this waiver. Lost profits may also be barred as consequential damages under New York law, depending on the circumstances. This is a strong candidate for partial summary judgment even if other issues present genuine disputes of material fact.
(4) Failure to Mitigate: The evidence will demonstrate that Vantor/VTS failed to take reasonable steps to mitigate damages following the termination, including by delaying the redeployment of tractors and drivers to alternative contracts and by rejecting commercially reasonable offers from other shippers.
[Daubert Strategy: The Court's encouragement to combine Daubert challenges with summary judgment briefing aligns with our current strategic preference, as discussed with Samuel Eklund and as recommended by Patrick Gallagher. Rather than filing a standalone Daubert motion, we plan to incorporate challenges to the methodology and reliability of Vantor's damages expert (anticipated to be Dr. Philip Trask of Trask Greystone & Associates) into the summary judgment briefing. This approach conserves page space and allows us to present the Daubert challenge in the context of the broader legal arguments regarding damages. However, this decision should be revisited once Vantor's expert report is reviewed; if the report contains fundamental methodological deficiencies warranting exclusion, a standalone Daubert motion may be more effective.]
[Cross-reference: A Summary Judgment Roadmap Memorandum will be prepared once discovery closes. Target preparation date: September–October 2023, with initial outline by Patrick Gallagher and substantive drafting by Simone Laroche, with review by Samuel Eklund.]
[Risk Assessment for Full Summary Judgment: While the legal arguments supporting summary judgment are strong, there are factual risks that may preclude full summary judgment:]
— The Janet Kirkwood September 22, 2021 email (the "pull the plug" email), in which Kirkwood, Stonefield's VP of Carrier Relations, wrote to Carlos Medina (SVP, Operations) stating: "Honestly I think we should just pull the plug on the whole contract. The rate reset in April is going to kill us — 14.3% on these volumes is absurd. We could have Cascade and Briarwood up and running on most of these lanes inside of 90 days." This email may create a genuine dispute of material fact regarding whether the termination was pretextual — i.e., whether Stonefield's asserted Cause termination under Section 13.1(a) was actually motivated by a desire to avoid the contractual rate adjustment. On the other hand, the email predates both the Cure Notice (January 18, 2022) and the formal termination (March 4, 2022), and reflects one executive's internal opinion, not a corporate decision. Moreover, the email references Secondary Lanes, not Primary Lanes, and is responsive to VTS's own tender rejections during that period. Kirkwood witness preparation (see Section 9) will be critical to managing this risk.
— The enforceability of the liquidated damages clause is typically treated as a mixed question of law and fact under New York law, particularly where the reasonableness of the stipulated amount is disputed. Summary judgment may be obtainable if the clause is facially disproportionate, but the Court may decline to rule on this issue as a matter of law if there are disputed facts regarding the parties' intent at the time of contracting or the difficulty of estimating actual damages.
[Recommendation: Consider filing for partial summary judgment on the consequential damages bar (Section 15.1 waiver) and mitigation issues, even if full summary judgment on the breach/termination question is denied. Narrowing the issues for trial would significantly reduce trial exposure and complexity.]
[Page Limits: The 30/30/15 page limits are standard for the Southern District and should be sufficient given the scope of the issues. If the motion addresses multiple independent grounds (as anticipated), consider whether a letter application for additional pages is warranted, but this should be avoided if possible given the Court's stated disfavor.]
SECTION 8: ESI PROTOCOL AND DOCUMENT PRODUCTION
COURT'S TEXT:
A. ESI Protocol
The parties shall comply with the ESI Protocol attached as Exhibit A to this Order, which was developed through negotiation between the parties and governs the format of production, search methodology, privilege logging, and clawback procedures applicable to all electronically stored information ("ESI") produced in this action.
B. Production Format
Documents shall be produced in single-page TIFF format with extracted text (or, where extracted text is not available, OCR text) and standard metadata load files, in accordance with the specifications set forth in the ESI Protocol (Exhibit A). Spreadsheets, presentations, and other format-dependent documents shall be produced in their native format, with corresponding metadata.
C. Clawback Order (Fed. R. Evid. 502(d))
The parties have stipulated, and the Court hereby enters pursuant to Federal Rule of Evidence 502(d), the Clawback Order attached as Exhibit B to this Order. The Clawback Order provides that the inadvertent production of documents or information protected by the attorney-client privilege, the work product doctrine, or any other applicable privilege or protection shall not constitute a waiver of any such privilege or protection, provided that the producing party promptly notifies the receiving party upon discovery of the inadvertent production and the receiving party promptly returns, sequesters, or destroys the inadvertently produced materials in accordance with the procedures set forth in the Clawback Order.
D. Privilege Logs
Privilege logs shall be served concurrently with or within fourteen (14) days of each document production, and shall comply with the requirements of Local Civil Rule 26.2 of the Southern District of New York. Privilege log entries shall include, at a minimum, the date of the communication or document, the author or sender, the recipient(s) and any persons copied, a description of the subject matter of the communication or document sufficient to assess the claim of privilege, and the specific privilege or protection asserted.
[C&H ANNOTATION — Practice Notes]
[FRE 502(d) Clawback Order: The Clawback Order entered as Exhibit B to the CMO was based on the draft stipulation prepared jointly by Patrick Gallagher (C&H) and Jason Whitford (CRS) and submitted to the Court on February 15, 2023, two days before the CMO was entered. The Court adopted the stipulation without modification. This order provides critical protection against inadvertent waiver of the attorney-client privilege or work product protection during the large-scale document review that will be required in this matter. Under Rule 502(d), the order is binding not only on the parties but also on all other persons and entities, meaning that even if privileged documents are inadvertently produced and subsequently disclosed to third parties, the privilege is not waived. This protection is essential given the anticipated volume of Stonefield's document production (see below) and the use of technology-assisted review, which, while efficient, carries inherent risks of inadvertent inclusion of privileged documents in the production set.]
[Production Coordination with Pinnacle Forensics LLC: David Moretti is the primary liaison with Pinnacle Forensics LLC ("Pinnacle"), the eDiscovery vendor retained for this matter. The Pinnacle engagement is managed under Project ID: PF-SLG-2022-0914, with Nathan Billings as Client Engagement Director. Pinnacle is responsible for the collection, processing, hosting, and production of Stonefield's ESI. Moretti should coordinate with Pinnacle to ensure that all productions comply with the format specifications in the ESI Protocol (Exhibit A), including single-page TIFF imaging, extracted text files, and metadata load files conforming to the agreed-upon field mapping. Native-format production of spreadsheets (including Excel workbooks containing SLO performance data, rate calculations, and financial models) and Northgate Services Inc. presentations must be coordinated separately.]
[Anticipated Production Volume: Based on the initial data mapping and collection performed by Pinnacle in October–November 2022, Stonefield's anticipated production volume is approximately 186,000 pages comprising approximately 42,387 documents. This estimate is subject to revision based on the results of the TAR 2.0 (technology-assisted review) workflow, which is currently underway. The TAR seed set is being developed by Simone Laroche, Kara Nystrom, and David Moretti, with the goal of training the TAR algorithm on an initial sample of approximately 2,500 documents by mid-March 2023. The TAR workflow was approved by Patrick Gallagher and Samuel Eklund and is consistent with the search methodology provisions of the ESI Protocol (Exhibit A).]
[Privilege Review and Logging: Privilege review is a critical component of the document production process. Simone Laroche and Helen Tsao are jointly responsible for preparing the privilege log concurrent with each document production, as required by the CMO. Based on initial review of custodian files, we anticipate approximately 1,200 or more privilege log entries.]
[Important — Pre-Litigation Attorney-Client Communications: Communications between Stonefield personnel (including Tobias Wren, General Counsel; Raymond Hess, Director of Contract Compliance; and Janet Kirkwood, VP of Carrier Relations) and Ashford Meridian LLP (Lorraine Beckwith, Partner; Troy Nakamura, Senior Associate) regarding the interpretation of the TSA and the potential termination of the TSA during the period of January 2022 through March 2022 are protected by the attorney-client privilege. Ashford Meridian was Stonefield's outside counsel prior to the filing of the Original Complaint and was involved in advising Stonefield on the Cure Notice (January 18, 2022) and the Termination Letter (March 4, 2022). These communications are at the core of the attorney-client relationship and must be withheld from production and properly logged. Simone Laroche should prepare a privilege review memorandum identifying all Ashford Meridian communications — approximately 84 documents have been identified for the privilege log based on the initial custodian-level review — and ensuring that the privilege designations are consistent and defensible. The privilege review memorandum should be completed by mid-March 2023, before the first production is assembled.]
[Privilege Log Format: Per Local Civil Rule 26.2 and the CMO, each privilege log entry must include: (1) the date of the communication or document; (2) the author or sender; (3) all recipients and persons copied; (4) a description of the subject matter sufficient to assess the claim of privilege (without revealing privileged content); and (5) the specific privilege or protection asserted (attorney-client privilege, work product doctrine, joint defense privilege, etc.).]
[Cross-reference: A Document Review Protocol Memorandum is being prepared and should be finalized by mid-March 2023. David Moretti and Patrick Gallagher are leading this effort. The memorandum will address: review workflow, TAR protocol, coding categories, privilege review procedures, quality control measures, and production timeline.]
SECTION 9: DEPOSITIONS — SCHEDULING AND PROCEDURES
COURT'S TEXT:
A. Conduct of Depositions
All depositions in this action shall be conducted in accordance with Federal Rule of Civil Procedure 30 and the Federal Rules of Civil Procedure generally applicable to discovery depositions.
B. Location. Unless otherwise stipulated by the parties or ordered by the Court, depositions of party witnesses shall be taken at the offices of counsel for the witness. Depositions of non-party witnesses shall be taken at the deponent's place of business or such other location as may be agreed upon or ordered.
C. Scheduling. Counsel shall confer in good faith to schedule depositions and shall provide at least fourteen (14) calendar days' written notice of any deposition, unless a shorter notice period is agreed upon by the parties.
D. Transcripts. Deposition transcripts shall be provided to all parties within thirty (30) days of the deposition.
E. Videotaped Depositions
Videotaped depositions are permitted upon ten (10) days' prior written notice to all parties and to the deponent, specifying that the deposition will be recorded by audiovisual means in addition to stenographic recording.
[C&H ANNOTATION — Practice Notes]
[Priority Deposition Targets — Vantor Witnesses: The following is the current deposition priority list for Vantor witnesses, organized in order of strategic importance:]
1. Derek Pruitt (Vice President, Business Development, Vantor Holdings Corp.) — Pruitt was the primary relationship manager for the Vantor/Stonefield account and participated in all quarterly business reviews. He is a key witness on: (a) VTS's awareness of SLO failures during Q3 and Q4 2021; (b) communications between VTS and Stonefield regarding performance issues; (c) Vantor's mitigation efforts (or lack thereof) following termination; and (d) Vantor's internal deliberations regarding fleet redeployment. Pruitt's deposition should be noticed early in the deposition schedule (target: mid-July 2023).
2. Sandra Milescu (Chief Operating Officer, Vantor Holdings Corp. / Vantor Transport Services LLC) — Milescu is the author of the November 12, 2021 internal email (the "smoking gun" email) directing the redeployment of approximately 85 tractors and 140 trailers from the Stonefield account to the Northwind Distribution Co. account, which directly contributed to VTS's inability to meet SLOs in Q4 2021. This email is a central document in the case. Milescu's deposition must cover: (a) the basis for the redeployment decision; (b) her awareness that redeployment would impact SLO compliance; (c) whether she consulted with Vantorovich or others before directing the redeployment; and (d) the timeline and execution of the redeployment. Consider videotaping this deposition for potential trial use.
3. Nikolai Vantorovich (CEO and Founder, Vantor Holdings Corp.) — Vantorovich is the ultimate decision-maker at Vantor and had overall responsibility for the company's relationship with Stonefield. Key topics include: (a) awareness of SLO failures; (b) authorization of the fleet redeployment; (c) role in the decision to file suit; (d) overall corporate strategy and financial condition. Note: informal intelligence suggests that Vantorovich may have a fee dispute or strained relationship with Caldwell Royce & Shapiro, which could create dynamics worth exploring during deposition. Consider videotaping this deposition.
4. Gregory Fielding (CFO, Vantor Holdings Corp.) — Fielding is the principal witness on damages and financial matters. Key topics include: (a) preparation and methodology of Vantor's damages calculations; (b) financial condition of Vantor and VTS before and after termination; (c) revenue attributable to the TSA; (d) mitigation costs; (e) alternative revenue sources post-termination.
5. Rule 30(b)(6) Designee(s) — Corporate deposition topics to be noticed include: fleet management policies and procedures; contract performance metrics and SLO compliance; damages methodology and computation; mitigation efforts and timeline; corporate structure (VHC/VTS relationship, including assignments, guarantees, and intercompany transactions); and financial records and accounting practices.
[Stonefield Witness Preparation — Key Witnesses Requiring Preparation:]
1. Janet Kirkwood (Vice President, Carrier Relations, Stonefield Logistics Group Inc.) — Kirkwood oversaw the Stonefield-Vantor relationship on behalf of Stonefield and is the author of the September 22, 2021 internal email (the "pull the plug" email). This email is the single most significant risk document in the case. In it, Kirkwood wrote to Carlos Medina: "Honestly I think we should just pull the plug on the whole contract. The rate reset in April is going to kill us — 14.3% on these volumes is absurd. We could have Cascade and Briarwood up and running on most of these lanes inside of 90 days." Vantor will use this email to argue that the Cause termination was pretextual and that Stonefield's true motive was rate avoidance. Kirkwood must be prepared to explain the context of this email — specifically, that (a) the email was written in response to VTS's repeated tender rejections on Secondary Lanes during Q3 2021, not as a directive to terminate; (b) the reference to "these lanes" refers to non-Primary Lanes (Secondary Lanes 8–14), not the full contract scope; (c) Kirkwood was not involved in the formal Cure Notice or Termination Letter process, which was handled by Raymond Hess (Contract Compliance) under the direction of Tobias Wren (General Counsel); and (d) the formal termination decision was made in January–March 2022 based on documented SLO failures, not in September 2021 based on rate projections. Kirkwood witness preparation sessions should be scheduled for at least two full days before her anticipated deposition. Patrick Gallagher to lead preparation with Samuel Eklund attending key sessions.
2. Raymond Hess (Director, Contract Compliance, Stonefield Logistics Group Inc.) — Hess was responsible for monitoring VTS's performance against the SLOs and issued the Cure Notice on January 18, 2022. Hess must be prepared to testify regarding: (a) the metric verification methodology used to determine SLO non-compliance (based on data from VTS's own Carrier Performance Portal, which is the agreed-upon data source under TSA Exhibit C, Section 3); (b) the specific SLO failures across all five metric categories in Q4 2021; (c) the cure period process and VTS's failure to cure within the 60-day period; and (d) the preparation and issuance of the Termination Letter dated March 4, 2022 (signed and sent by Tobias Wren). Note: the Termination Letter was drafted by Ashford Meridian LLP and reviewed by Hess before Wren's signature; privilege considerations apply to any communications between Hess and Ashford Meridian during this period.
3. Carlos Medina (SVP, Operations, Stonefield Logistics Group Inc.) — Medina was the recipient of the Kirkwood "pull the plug" email and may have additional responsive communications. Medina may be designated as a 30(b)(6) witness or may be deposed individually on operational decisions, including lane allocation, carrier selection, and the decision to engage Cascade and Briarwood on Secondary Lanes. Preparation should address the distinction between Secondary Lane and Primary Lane operations.
4. Tobias Wren (General Counsel, Stonefield Logistics Group Inc.) — Wren signed the Termination Letter dated March 4, 2022. Although Wren is an attorney and many of his communications will be privileged, he may be deposed on non-privileged factual matters, including the factual basis for the termination decision and the issuance of the Cure Notice and Termination Letter. Careful privilege preparation is essential; Patrick Gallagher should prepare a privilege assertion protocol for use during Wren's deposition, identifying categories of questions likely to implicate attorney-client privilege and the appropriate objection formulations.
[Deposition Schedule: Target deposition schedule is July–August 2023, following the completion of document productions from both sides and sufficient time for review and analysis of produced documents. Patrick Gallagher to initiate scheduling discussions with Jason Whitford (CRS) in late May or early June 2023.]
[Videotaping: Consider videotaping key adverse depositions (Milescu, Vantorovich) for potential trial use under Fed. R. Civ. P. 32. Videotaped depositions require 10 days' prior written notice under the CMO. C&H should also retain a videographer (coordinate with Pinnacle Forensics or engage a separate videography service). Budget for videography services to be included in the updated litigation budget.]
SECTION 10: SETTLEMENT AND ADR
COURT'S TEXT:
A. Settlement Encouragement
The parties are encouraged to explore settlement at all stages of the litigation. The Court recognizes that early resolution of disputes serves the interests of the parties and the administration of justice.
B. Mediation/Settlement Letter
Within sixty (60) days of the close of fact discovery, the parties shall submit a joint letter to the Court advising whether they wish to be referred to the Court's mediation program administered by the Alternative Dispute Resolution Department of this Court, or whether they wish to engage a private mediator. The joint letter shall also advise the Court of any settlement discussions that have occurred and the parties' respective positions regarding the utility of further settlement efforts.
C. Settlement Conference
The Court may, in its discretion, order the parties to participate in a settlement conference before a United States Magistrate Judge assigned to this matter. The Court will advise the parties of any such order at the appropriate time.
[C&H ANNOTATION — Practice Notes]