PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
DRAFT — INTERNAL WORK PRODUCT — NOT FOR FILING
Defendant Stonefield Logistics Group Inc.'s Motion to Dismiss for Failure to Prosecute Pursuant to Fed. R. Civ. P. 41(b)
Prepared by: Patrick Gallagher and Simone Laroche Calderwood & Harkness LLP 200 Park Avenue, 38th Floor New York, New York 10166
Internal Matter No.: 1012-00005
Date: January 15, 2024
STATUS NOTE: DRAFT — Held in reserve pending Court's action on Order to Show Cause issued January 22, 2024. Do not file without approval from Samuel Eklund.
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
DEFENDANT STONEFIELD LOGISTICS GROUP INC.'S MOTION TO DISMISS PLAINTIFF'S CLAIMS WITH PREJUDICE FOR FAILURE TO PROSECUTE PURSUANT TO FED. R. CIV. P. 41(b)
CALDERWOOD & HARKNESS LLP
Samuel Eklund (Responsible Partner) Patrick Gallagher (Lead Associate) 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 530-4400 Facsimile: (212) 530-4401
Attorneys for Defendant Stonefield Logistics Group Inc.
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NOTICE OF MOTION
PLEASE TAKE NOTICE that Defendant Stonefield Logistics Group Inc. ("Stonefield" or "Defendant"), by and through its attorneys, Calderwood & Harkness LLP, respectfully moves this Court pursuant to Federal Rule of Civil Procedure 41(b) for an Order dismissing with prejudice all claims asserted by Plaintiff Vantor Holdings Corp. ("Vantor" or "Plaintiff") in its Amended Complaint, filed December 2, 2022 (ECF No. 18), for Plaintiff's failure to prosecute this action.
The grounds for this Motion are set forth fully in the accompanying Memorandum of Law in Support of Defendant Stonefield Logistics Group Inc.'s Motion to Dismiss for Failure to Prosecute and the Declaration of Patrick Gallagher, filed contemporaneously herewith, together with the exhibits annexed thereto.
In addition to dismissal of Plaintiff's Amended Complaint with prejudice, Stonefield respectfully requests the following relief:
1. Entry of a declaratory judgment on Stonefield's Counterclaim (ECF No. 25), declaring that (a) Stonefield's termination of the Transportation Services Agreement dated March 15, 2019 (Contract Ref. No. SLG-VTS-2019-0315) (the "TSA") was valid and for Cause under Section 13.1(a) of the TSA; (b) no liquidated damages are owed to Vantor or Vantor Transport Services LLC under Section 14.2 of the TSA; and (c) any material breach of the TSA was committed by Vantor Transport Services LLC. In the alternative, Stonefield requests dismissal of its Counterclaim without prejudice as moot, with full reservation of the right to reassert such claims in any future proceeding.
2. An award to Stonefield of its reasonable costs and attorneys' fees incurred in connection with this Motion.
3. Such other and further relief as this Court deems just and proper.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Samuel Eklund Patrick Gallagher 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 530-4400
Attorneys for Defendant Stonefield Logistics Group Inc.
Dated: New York, New York
[TO BE DETERMINED — HELD IN RESERVE]
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT STONEFIELD LOGISTICS GROUP INC.'S MOTION TO DISMISS PLAINTIFF'S CLAIMS WITH PREJUDICE FOR FAILURE TO PROSECUTE PURSUANT TO FED. R. CIV. P. 41(b)
I. PRELIMINARY STATEMENT
Plaintiff Vantor Holdings Corp. filed this breach of contract action on August 12, 2022, alleging that Defendant Stonefield Logistics Group Inc. wrongfully terminated a five-year Transportation Services Agreement (the "TSA") and seeking approximately $95.4 million in damages. The damages claimed include $67.23 million in alleged liquidated damages under Section 14.2 of the TSA, $18.7 million in purported lost profits, $5.2 million in so-called stranded asset costs, $2.87 million in workforce reduction and restructuring costs, and $1.4 million in alleged mitigation expenses. These claims, which Stonefield has vigorously defended against for more than sixteen months, have now been effectively abandoned by Plaintiff.
On October 3, 2023 — more than fourteen months after commencing this action — Vantor's counsel, Caldwell Royce & Shapiro LLP ("CRS"), moved to withdraw as counsel of record, citing "irreconcilable differences" with its client. The withdrawal papers disclosed, among other things, that CRS had billed Vantor approximately $2.1 million in legal fees over the life of the engagement, of which approximately $870,000 remained unpaid. This Court granted CRS's withdrawal on October 18, 2023, and entered an Order directing Vantor to retain substitute counsel and cause new counsel to file a notice of appearance within sixty (60) days — i.e., by December 17, 2023. The Court's Order expressly cautioned Vantor that failure to comply could result in sanctions, including dismissal of its claims.
The December 17, 2023 deadline has come and gone. No substitute counsel has filed a notice of appearance on Vantor's behalf. No motion for extension of time has been filed. No letter, status report, or any other communication from Vantor — or from any attorney purporting to represent Vantor — has appeared on the docket of this matter since CRS's withdrawal. The case has been at a complete standstill for nearly three months.
Vantor Holdings Corp. is a New York corporation. Under well-settled Second Circuit precedent, a corporation cannot appear or litigate pro se in federal court; it must at all times be represented by an attorney admitted to practice before this Court. Vantor's failure to retain counsel does not merely inconvenience the litigation — it renders Vantor legally incapable of prosecuting its claims, defending against Stonefield's Counterclaim, or participating in any proceeding before this Court.
Meanwhile, Stonefield has borne — and continues to bear — the substantial burden of this litigation. Through October 2023, Stonefield incurred approximately $4.42 million in total legal spend in defending against Vantor's claims, comprising approximately $3.8 million in attorneys' fees and approximately $620,000 in litigation costs and disbursements. Stonefield produced over 42,000 documents, sat for multiple depositions, and retained and produced a rebuttal expert report. Stonefield was prepared to move for summary judgment and bring this matter to a prompt resolution. Instead, Stonefield — and this Court — have been left in indefinite limbo by a Plaintiff that has walked away from its own $95.4 million lawsuit.
For the reasons set forth below, Defendant Stonefield Logistics Group Inc. respectfully requests that this Court dismiss Plaintiff Vantor Holdings Corp.'s Amended Complaint with prejudice pursuant to Federal Rule of Civil Procedure 41(b) for failure to prosecute.
II. STATEMENT OF RELEVANT FACTS
A. Background of the Dispute
On March 15, 2019, Stonefield Logistics Group Inc. — a Delaware corporation headquartered at 4200 Commerce Parkway, Suite 800, Fort Worth, Texas 76102 — and Vantor Transport Services LLC ("VTS") — a New York limited liability company and wholly owned operating subsidiary of Plaintiff Vantor Holdings Corp. — executed the Transportation Services Agreement (Contract Ref. No. SLG-VTS-2019-0315) (the "TSA"). The TSA was drafted by Ashford Meridian LLP on behalf of Stonefield and is governed by New York law. It established a five-year term running from April 1, 2019 through March 31, 2024.
Under the TSA, VTS committed to providing dedicated freight transportation services to Stonefield across a defined lane network within the continental United States. The agreement established an Annual Committed Volume ("ACV") of $43.2 million per year, representing a total five-year minimum commitment of approximately $216 million. The TSA further required VTS to maintain certain Service Level Obligations ("SLOs") throughout the term. These SLOs included, among others: an on-time pickup rate of no less than 95%; an on-time delivery rate of no less than 93%; a tender acceptance rate of no less than 90%; a cargo claims ratio of no greater than 0.5% of shipment value; and equipment availability of no less than 85% of VTS's committed fleet, which consisted of 400 tractors and 1,200 trailers.
These SLOs were not aspirational targets. They were material contractual obligations, breach of which entitled Stonefield to exercise remedies under the TSA's termination provisions.
Beginning in the fourth quarter of 2021, VTS's performance deteriorated sharply and fell materially below every one of the SLOs specified in the TSA. The data showed the following:
• On-time pickup rate: 78.2% (versus the 95% SLO minimum — a shortfall of 16.8 percentage points);
• On-time delivery rate: 81.6% (versus the 93% SLO minimum — a shortfall of 11.4 percentage points);
• Tender acceptance rate: 71.4% (versus the 90% SLO minimum — a shortfall of 18.6 percentage points);
• Equipment availability: approximately 62%, representing roughly 248 tractors available versus the 400 tractors required under the committed fleet provisions (a shortfall of 23 percentage points);
• Cargo claims ratio: 1.07% of shipment value, more than double the 0.5% SLO maximum, representing $387,400 in claims across 16 separate incidents during November and December 2021 alone.
On January 18, 2022, Stonefield's Director of Contract Compliance, Raymond Hess, issued a formal Cure Notice to Sandra Milescu, Chief Operating Officer of Vantor and VTS, specifying each of the foregoing deficiencies with reasonable particularity as required by Section 13.2 of the TSA. The Cure Notice identified the specific SLO thresholds that had been breached, the measured performance data demonstrating each breach, the applicable cure period, and the consequences of failure to cure. The 30-day cure period established under Section 13.2 expired on February 17, 2022.
VTS did not cure any of the identified breaches within the cure period. Indeed, VTS did not meaningfully respond to the Cure Notice at all.
On March 4, 2022, Stonefield's General Counsel, Tobias Wren, issued a formal termination letter to Vantor and VTS, terminating the TSA effective immediately for Cause under Section 13.1(a). The termination letter identified each uncured breach, confirmed the expiration of the cure period without remediation, and stated Stonefield's position that no further payments were owed under the TSA.
By letter dated April 8, 2022, Vantor — through its counsel, Caldwell Royce & Shapiro LLP — disputed the termination and demanded $95.4 million in damages. The parties thereafter participated in two executive negotiation sessions, held on May 16, 2022 and June 3, 2022, as contemplated by the dispute resolution provisions of TSA Section 16. Those sessions did not result in a resolution, and the parties reached an impasse.
B. Procedural History
On August 12, 2022, Vantor filed its original Complaint in this Court, asserting claims for breach of contract and seeking the $95.4 million in damages referenced in its pre-litigation demand. The case was assigned to the Honorable Margaret T. Calloway, United States District Judge, and designated Case No. 22-cv-07841 (MTC).
On September 1, 2022, Stonefield retained Calderwood & Harkness LLP as defense counsel and assigned the engagement Internal Matter No. 1012-00005. On September 8, 2022, Calderwood & Harkness filed a Notice of Appearance on behalf of Stonefield.
On October 14, 2022, Stonefield filed a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), targeting, among other things, the enforceability of the liquidated damages clause in TSA Section 14.2 and the adequacy of Vantor's pleading of lost profits damages. Vantor filed its opposition brief on November 18, 2022.
Before the Court ruled on the pending motion, Vantor filed an Amended Complaint as of right on December 2, 2022, pursuant to Federal Rule of Civil Procedure 15(a)(1). The Amended Complaint added new allegations, including claims that Stonefield had itself breached the TSA through volume shortfalls below the ACV, had violated lane exclusivity provisions, and had terminated the TSA on a pretextual basis. On December 16, 2022, the Court denied Stonefield's Motion to Dismiss as moot in light of the Amended Complaint.
On January 13, 2023, Stonefield filed its Answer to the Amended Complaint, asserting fourteen Affirmative Defenses and interposing a Counterclaim for declaratory judgment that the termination of the TSA was valid and for Cause. Vantor filed its Answer to the Counterclaim on January 27, 2023.
On February 10, 2023, the Court held an Initial Pretrial Conference. On February 17, 2023, Judge Calloway entered a Case Management Order (the "CMO") establishing the following deadlines:
• Fact discovery: September 29, 2023;
• Expert discovery: January 12, 2024;
• Dispositive motions: March 1, 2024.
These deadlines were all stayed by the Court's October 18, 2023 Order pending the appearance of substitute counsel for Vantor. All deadlines remain stayed as of the date of this Motion.
C. Extensive discovery Completed by Stonefield
The parties engaged in substantial discovery over the course of approximately seven months. Stonefield, in particular, invested significant time, effort, and expense in both responding to Vantor's discovery demands and pursuing its own affirmative discovery.
On March 6, 2023, Stonefield served its First Set of Interrogatories (25 interrogatories), its First Request for Production of Documents (38 individual requests), and its First Set of Requests for Admission (30 requests). These discovery demands were carefully tailored to address the core factual disputes in the case, including VTS's service performance history, the circumstances surrounding the Cure Notice and termination, VTS's financial condition, and the factual bases for Vantor's claimed damages.
On April 14, 2023, Stonefield produced 42,387 documents — comprising approximately 186,000 pages — through Pinnacle Forensics LLC (Project ID: PF-SLG-2022-0914), a third-party e-discovery vendor engaged by Calderwood & Harkness for document collection, processing, and production. The production was accompanied by a detailed privilege log identifying 1,247 documents withheld or redacted on the basis of attorney-client privilege or work product protection. On the same date, Stonefield served its responses and objections to Vantor's First Set of Interrogatories (25 interrogatories), Vantor's First Request for Production of Documents (38 individual requests), and Vantor's Requests for Admission (25 requests).
On April 28, 2023, Vantor produced 28,914 documents, comprising approximately 112,000 pages.
On May 5, 2023, Stonefield served a Second Request for Production of Documents (12 targeted requests) focused on VTS's fleet redeployment records following the termination of the TSA — documents critical to Stonefield's defenses relating to Vantor's obligation to mitigate damages and to the proper calculation, if any, of lost profits.
A discovery dispute arose on May 30, 2023, when Vantor objected to and refused to produce the fleet redeployment records. The parties were unable to resolve the dispute through the meet-and-confer process, and the matter was brought before Judge Calloway. On June 9, 2023, the Court ordered Vantor to produce the fleet redeployment records. Vantor made a supplemental production of 4,218 documents on June 22, 2023.
On June 28, 2023, Stonefield issued third-party subpoenas to Cascade Freight Systems Inc. (Columbus, Ohio) and Briarwood Trucking Co. (Arlington, Virginia), entities believed to have information relevant to VTS's redeployment of equipment and personnel following the termination.
D. Depositions Taken
The parties conducted five depositions over the period from July through August 2023:
• July 10, 2023: Deposition of Derek Pruitt, Vice President of Business Development, Vantor Holdings Corp. Duration: approximately 7 hours;
• July 14, 2023: Deposition of Janet Kirkwood, Vice President of Carrier Relations, Stonefield Logistics Group Inc. Duration: approximately 6.5 hours;
• July 27, 2023: Deposition of Raymond Hess, Director of Contract Compliance, Stonefield Logistics Group Inc. Duration: approximately 5 hours;
• August 4, 2023: Deposition of Sandra Milescu, Chief Operating Officer, Vantor Holdings Corp. and Vantor Transport Services LLC. Duration: approximately 7 hours;
• August 18, 2023: Deposition of Nikolai Vantorovich, Chief Executive Officer and approximately 58% equity owner, Vantor Holdings Corp. Duration: approximately 4.5 hours (partial). The deposition was suspended after Mr. Vantorovich claimed illness. After briefing, the Court entered an Order on September 22, 2023, directing that the Vantorovich deposition be completed by October 20, 2023.
The Vantorovich deposition was never completed. By October 18, 2023, CRS had moved to withdraw, and the Court stayed all proceedings. The October 20 deadline passed without compliance, and the deposition remains incomplete as of the date of this Motion.
E. Expert Reports Exchanged
On May 15, 2023, Vantor served the expert report of Dr. Philip Trask of Trask Greystone & Associates, located at 400 Madison Avenue, Suite 900, New York, New York 10017. Dr. Trask opined that Vantor's total damages amounted to $95.4 million, comprising the same categories and amounts set forth in the Amended Complaint. Stonefield's counsel reviewed Dr. Trask's report and identified multiple analytical deficiencies, including his failure to account for VTS's contributory breach, his use of gross margin rather than net margin in calculating lost profits, and his failure to apply any mitigation offset.
On August 25, 2023, Stonefield served its rebuttal expert report, prepared by Dr. Evelyn Rosser of Kensington Analytics Group LLC, located at 1700 Market Street, Suite 2800, Philadelphia, Pennsylvania 19103. Dr. Rosser opined that if the termination was valid for Cause — as Stonefield contends — then damages are $0. In the alternative, under a hypothetical scenario in which the Court were to find that the termination was not for Cause, Dr. Rosser concluded that Vantor's maximum provable lost profits would total no more than $8.2 million, representing the present value of net margin contribution from the remaining TSA term after application of appropriate mitigation offsets.
F. Counsel Withdrawal and Vantor's Failure to Prosecute
On October 3, 2023, Caldwell Royce & Shapiro LLP ("CRS"), with offices at 1 Liberty Plaza, 22nd Floor, New York, New York 10006, filed a Motion to Withdraw as counsel for Vantor. The motion cited "irreconcilable differences" between CRS and Vantor. The withdrawal papers disclosed that CRS had billed Vantor approximately $2.1 million in total fees over the course of the engagement, of which approximately $870,000 remained unpaid.
On October 18, 2023, the Court granted CRS's Motion to Withdraw. In its Order, the Court:
(a) Permitted CRS to withdraw as counsel of record for Vantor Holdings Corp.;
(b) Ordered Vantor to retain substitute counsel admitted to practice before this Court and to cause new counsel to file a notice of appearance within sixty (60) days — i.e., by December 17, 2023;
(c) Stayed all case deadlines pending the appearance of substitute counsel;
(d) Expressly warned Vantor that "failure to comply with this Order may result in sanctions, including but not limited to dismissal of Plaintiff's claims."
A true and correct copy of the Court's October 18, 2023 Order is attached to the Declaration of Patrick Gallagher as Exhibit A.
The December 17, 2023 deadline expired without any attorney filing a notice of appearance on behalf of Vantor. No motion for extension of time was filed. No letter or other communication was received from Vantor or from any prospective substitute counsel.
On January 8, 2024, Calderwood & Harkness filed a letter to the Court alerting the Court to Vantor's failure to comply with the October 18, 2023 Order and requesting either a status conference or consideration of dismissal. A copy of this letter was served upon Vantor at its headquarters address, 580 Eighth Avenue, 14th Floor, New York, New York 10018, by first-class mail and by email to Nikolai Vantorovich. A true and correct copy of this letter is attached to the Declaration of Patrick Gallagher as Exhibit B.
As of the date of this Motion, January 15, 2024:
• Eighty-nine (89) days have elapsed since the Court granted CRS's withdrawal on October 18, 2023;
• Twenty-nine (29) days have elapsed since the Court's December 17, 2023 deadline for substitute counsel expired;
• No attorney has entered an appearance for Vantor;
• No filing, letter, or communication of any kind has been made on Vantor's behalf since CRS's withdrawal;
• The Vantorovich deposition, which the Court ordered completed by October 20, 2023, remains unfinished;
• All CMO deadlines remain stayed, creating an indefinite delay in the resolution of this action.
Vantor Holdings Corp. is a New York corporation. Under settled Second Circuit law, a corporation is an artificial entity that can act only through its authorized agents. A corporation cannot appear pro se in any federal court proceeding; it must at all times be represented by an attorney duly admitted to practice before the Court. See Rowland v. California Men's Colony, 506 U.S. 194, 201–02 (1993); Lattanzio v. COMTA, 481 F.3d 137, 139–40 (2d Cir. 2007); Jones v. Niagara Frontier Transp. Auth., 722 F.2d 20, 22 (2d Cir. 1983). Because Vantor has no counsel of record, it is legally incapable of prosecuting its claims, responding to this Motion, or otherwise participating in this case.
III. LEGAL STANDARD — FEDERAL RULE OF CIVIL PROCEDURE 41(b)
Federal Rule of Civil Procedure 41(b) provides in relevant part:
"If the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against the defendant. Unless the dismissal order states otherwise, a dismissal under this subdivision (b) . . . operates as an adjudication on the merits."
The power to dismiss for failure to prosecute is an inherent aspect of the Court's authority to manage its docket and ensure the orderly administration of justice. See Link v. Wabash R.R. Co., 370 U.S. 626, 629–31 (1962). A Rule 41(b) dismissal is a "harsh remedy" that should be utilized "only in extreme situations." Lucas v. Miles, 84 F.3d 532, 535 (2d Cir. 1996). Nevertheless, the remedy is well-established and appropriate where the record demonstrates a pattern of delay, willful disregard of court orders, or effective abandonment of the litigation.
The Second Circuit applies a five-factor balancing test in evaluating motions to dismiss for failure to prosecute. The five factors are:
(1) The duration of the plaintiff's failure to prosecute;
(2) Whether the plaintiff was on notice that failure to prosecute would result in dismissal;
(3) Whether the defendant would be prejudiced by further delay;
(4) The balance between the Court's interest in managing its docket efficiently and the plaintiff's interest in receiving an opportunity to be heard on the merits; and
(5) Whether the Court has considered the efficacy of lesser sanctions as an alternative to dismissal.
See Drake v. City of New York, 837 F. App'x 826, 828 (2d Cir. 2020); Baptiste v. Sommers, 768 F.3d 212, 216 (2d Cir. 2014); United States ex rel. Drake v. Norden Sys., Inc., 375 F.3d 248, 254 (2d Cir. 2004); Shannon v. General Elec. Co., 186 F.3d 186, 193–94 (2d Cir. 1999).
No single factor is dispositive, and the Court is not required to find that all five factors favor dismissal. Rather, the Court must weigh the totality of the circumstances and exercise its sound discretion. LeSane v. Hall's Sec. Analyst, Inc., 239 F.3d 206, 209 (2d Cir. 2001).
Critically, where a corporate plaintiff fails to retain counsel within a court-ordered deadline, dismissal for failure to prosecute is particularly appropriate. A corporation cannot proceed pro se, and without counsel, the plaintiff is incapable of advancing its claims. The corporation's failure to secure representation is therefore not merely a procedural lapse — it is a functional abandonment of the case. See Shapiro, Bernstein & Co. v. Continental Record Co., 386 F.2d 426, 427 (2d Cir. 1967) (affirming dismissal where corporate plaintiff failed to obtain substitute counsel within court-ordered deadline); Commercial Cleaning Servs., L.L.C. v. Colin Serv. Sys., Inc., 271 F.3d 374, 380 (2d Cir. 2001); Pecarsky v. Galaxiworld.com, Ltd., 249 F.3d 167, 172–73 (2d Cir. 2001).
IV. ARGUMENT
All five of the Second Circuit's factors weigh decisively in favor of dismissal with prejudice. The record before this Court reflects not a momentary delay or inadvertent oversight, but a deliberate and continuing abdication of prosecution by a corporate plaintiff that has failed to retain counsel, failed to comply with a court order, and failed to take any action whatsoever to advance its claims for nearly three months.
A. Factor 1: Duration of Failure — Extended and Ongoing
The duration of Vantor's failure to prosecute is significant and, indeed, continuing. Vantor has been without counsel since October 18, 2023 — the date on which this Court granted CRS's Motion to Withdraw. At the time of this Motion, nearly three months have elapsed since Vantor lost its legal representation.
More significantly, the Court-imposed deadline of December 17, 2023 — established with the express purpose of ensuring continuity of prosecution — has passed without any compliance whatsoever. As of January 15, 2024, twenty-nine days have elapsed since that deadline expired. No attorney has filed a notice of appearance. No motion for extension of time has been submitted. No letter has been filed with the Court indicating that substitute counsel is being sought, that negotiations with prospective counsel are underway, or that Vantor intends to continue prosecuting this action. The docket is entirely bare of any activity attributable to Plaintiff.
The case has been effectively at a complete standstill since October 2023. Discovery has been stayed. The deposition of Vantor's CEO and majority owner, Nikolai Vantorovich — which the Court specifically ordered to be completed by October 20, 2023 — remains incomplete, constituting a separate and independent violation of a court order. Expert discovery deadlines have been stayed. Dispositive motion practice, which Stonefield was prepared to commence, has been indefinitely postponed.
The duration of Vantor's failure is comparable to or exceeds the periods found sufficient to warrant dismissal in analogous Second Circuit decisions involving corporate plaintiffs who failed to retain substitute counsel. See, e.g., Shapiro, Bernstein & Co., 386 F.2d at 427 (affirming dismissal where corporate plaintiff failed to obtain counsel within court-ordered period); Caussade v. United States, 293 F.R.D. 625, 629–30 (S.D.N.Y. 2013) (dismissal appropriate where plaintiff failed to act for period of months following counsel withdrawal); Ruzsa v. Rubenstein & Sendy Attorneys at Law, 520 F.3d 176, 177 (2d Cir. 2008) (affirming dismissal after months of inaction). Moreover, unlike cases involving individual pro se litigants who may experience personal hardships affecting their ability to litigate, Vantor is a corporate entity with — as recently as FY 2022 — hundreds of millions of dollars in revenue. Its failure to retain counsel for nearly three months cannot be attributed to inability to locate an available attorney.
The failure is not isolated. When viewed alongside the incomplete Vantorovich deposition and the total absence of any docket activity, the picture that emerges is one of wholesale abandonment. This factor weighs heavily in favor of dismissal.
B. Factor 2: Notice to Plaintiff — Explicit and Unambiguous
The second factor — whether Plaintiff was on notice that failure to prosecute could result in dismissal — is satisfied beyond any reasonable dispute. Vantor received explicit, unambiguous notice from this Court that its failure to retain counsel could lead to dismissal of its claims.
The Court's October 18, 2023 Order expressly warned Vantor that "failure to comply with this Order may result in sanctions, including but not limited to dismissal of Plaintiff's claims." This language could not have been clearer. The Order was entered on the public docket. It was served upon Vantor at its principal business address. Vantor has been on express judicial notice since October 18, 2023 that the consequence of non-compliance was potentially terminal to its case.
Moreover, Calderwood & Harkness's January 8, 2024 letter to the Court — a copy of which was served upon Vantor at its headquarters, 580 Eighth Avenue, 14th Floor, New York, New York 10018, by first-class mail and electronic mail directed to Nikolai Vantorovich — further highlighted Vantor's failure to retain substitute counsel and expressly requested that the Court consider dismissal or schedule a status conference to address the situation. This letter placed Vantor on additional, direct notice that Stonefield would seek dismissal if the failure persisted.
Vantor's CEO and founder, Nikolai Vantorovich, who owns approximately 58% of the company's equity, is intimately familiar with this litigation. He was personally deposed on August 18, 2023. He was privy to the Cure Notice, the termination, the pre-litigation demand, and the executive negotiation sessions. He cannot credibly claim ignorance of the pending litigation or the Court's orders.
In light of the explicit judicial warning contained in the October 18, 2023 Order, supplemented by Stonefield's January 8, 2024 letter, this factor is conclusively satisfied. Vantor was on full, unequivocal notice that its failure to retain counsel could result in dismissal.
C. Factor 3: Prejudice to Defendant — Substantial and Concrete
Stonefield has suffered and continues to suffer substantial, concrete prejudice as a direct result of Vantor's failure to prosecute.
Financial Prejudice. Through October 2023, Stonefield has expended approximately $4.42 million in total legal costs defending against Vantor's claims, comprising approximately $3.8 million in attorneys' fees and approximately $620,000 in litigation costs and disbursements. These costs encompass, among other things, the engagement of Calderwood & Harkness LLP as defense counsel, the retention of Pinnacle Forensics LLC as an e-discovery vendor, the production of 42,387 documents, the preparation of detailed interrogatory responses and responses to requests for production, the defense and conduct of five depositions, the retention of Kensington Analytics Group LLC and its principal, Dr. Evelyn Rosser, as a rebuttal damages expert, and the preparation of a comprehensive summary judgment roadmap. Every dollar of this investment is placed at risk by Vantor's abandonment, as indefinite delay degrades the utility of discovery already conducted and may necessitate additional expenditure if the case is ever revived.
Impact on Stakeholders. Stonefield is a portfolio company of Ridgeline Capital Partners, LP, a private equity firm located at 300 Crescent Court, Suite 1500, Dallas, Texas 75201. Ridgeline Fund III, LP holds approximately 72% of Stonefield's equity. The pendency of a $95.4 million claim creates significant litigation overhang that directly affects portfolio reporting, valuation, and the operational flexibility of the Stonefield management team. Alison Trang, a Partner at Ridgeline Capital Partners who serves on Stonefield's Board of Directors, receives regular litigation status reports. The indefinite continuation of this matter imposes ongoing burdens on Stonefield's governance and reporting obligations to its private equity sponsor.
Lender Reporting Obligations. Stonefield is the borrower under a $425 million senior secured credit facility with Lakeshore National Bank, located at 135 South LaSalle Street, Chicago, Illinois 60603, as administrative agent (Credit Agreement Ref. No. LNB-SLG-2017-CA-4402). Pursuant to Section 6.03(b) of the Credit Agreement, Stonefield is required to provide quarterly notification of any litigation with potential exposure in excess of $25 million. The $95.4 million claim asserted by Vantor far exceeds this threshold and has required Stonefield to provide ongoing quarterly litigation status updates to Lakeshore National Bank and the syndicate of participating lenders. The continuing pendency of this claim — now in a state of apparent abandonment — creates an ongoing lender reporting burden and raises reputational concerns with Stonefield's capital providers regarding the management and resolution of material contingencies.
Audit and Financial Reporting Impact. Stonefield's independent auditor, Clarendon Partners LLP (500 West 5th Street, Suite 1200, Austin, Texas 78701; engagement partner Robert Farraday), requires annual litigation status assessments for purposes of financial statement disclosure under ASC 450 (contingencies). The pendency of the Vantor claim requires ongoing evaluation for possible loss accrual or disclosure in Stonefield's audited financial statements. The indefinite, unresolved status of the claim complicates this assessment and imposes additional costs and management attention.
Witness Memory and Evidentiary Degradation. The delay caused by Vantor's failure to prosecute also threatens the integrity of the evidentiary record. Key depositions — of Derek Pruitt, Sandra Milescu, and Nikolai Vantorovich — were conducted in July and August 2023. Any trial of this matter would now be postponed indefinitely, further distancing witnesses from the events at issue and degrading the reliability of their recollections. Documentary evidence, while preserved, becomes more difficult to contextualize as the individuals responsible for creating it become further removed in time from the relevant events.
Expiration of the TSA. The TSA, by its original terms, was set to expire on March 31, 2024. The underlying commercial relationship between Stonefield and VTS is now entirely historical. There is no ongoing business context in which these disputes have practical significance beyond the litigation itself. The expiration of the TSA underscores the urgency of resolving this matter promptly.
Thwarted Summary Judgment Preparation. Finally, Stonefield had substantially completed preparation for summary judgment. Calderwood & Harkness developed a comprehensive summary judgment roadmap organizing Stonefield's dispositive arguments around four pillars: (1) that the termination was valid for Cause under TSA Section 13.1(a), given VTS's undisputed failure to meet any SLO during Q4 2021 and its failure to cure within the 30-day cure period; (2) that the liquidated damages clause in TSA Section 14.2 is unenforceable as an impermissible penalty under New York law; (3) that consequential and lost-profits damages are barred by the limitation-of-liability provision in TSA Section 15.1; and (4) that Vantor failed to mitigate its damages by redeploying its fleet and workforce. Stonefield was prepared to file its motion for summary judgment in advance of the March 1, 2024 dispositive motions deadline, but has been unable to proceed due to the stay entered upon CRS's withdrawal. The inability to bring dispositive motions — and potentially end this case without trial — constitutes direct and cognizable prejudice.
The totality of these circumstances establishes substantial, concrete, and ongoing prejudice to Stonefield. This factor weighs heavily in favor of dismissal.
D. Factor 4: Balancing Docket Management and Plaintiff's Right to Be Heard
The fourth factor requires the Court to balance its institutional interest in the efficient management of its docket against the Plaintiff's interest in an opportunity to be heard on the merits. Both considerations favor dismissal here.
The Court's Docket Management Interest. This Court has a strong and recognized interest in ensuring that cases on its docket progress toward resolution in an orderly and timely manner. See Lyell Theatre Corp. v. Loews Corp., 682 F.2d 37, 42–43 (2d Cir. 1982) (recognizing courts' interest in clearing their calendars of cases that have remained dormant). This case has consumed substantial judicial resources over its more than sixteen-month lifespan. The Court conducted an Initial Pretrial Conference on February 10, 2023. The Court resolved a discovery dispute on June 9, 2023. The Court entered an Order on September 22, 2023 directing completion of the Vantorovich deposition. The Court addressed and ruled upon CRS's withdrawal motion on October 18, 2023. Each of these proceedings required the Court's time and attention. Allowing this case to languish indefinitely on the docket, without any realistic prospect of Plaintiff's prosecution of its claims, squanders those judicial resources and displaces matters where the parties are actively seeking resolution.
Plaintiff's Opportunity to Be Heard. Vantor's right to be heard has not been denied — it has been forfeited. Vantor had ample opportunity to prosecute its claims and, for over a year, did so vigorously. Vantor filed an Amended Complaint on December 2, 2022, expanding the scope of its allegations. Vantor answered Stonefield's Counterclaim on January 27, 2023. Vantor participated extensively in discovery through September 2023, producing thousands of documents, serving and responding to written discovery, and presenting five witnesses for deposition. Vantor served an expert report through Dr. Philip Trask on May 15, 2023. Vantor was afforded every procedural protection available under the Federal Rules.
What has changed is not the Court's willingness to hear Vantor's claims, but Vantor's willingness to prosecute them. Vantor's failure to retain counsel is not the result of external circumstances beyond its control — an inability to locate willing counsel, an extraordinary personal hardship, or a systemic barrier to representation. Rather, the evidence in the record strongly suggests that Vantor's failure stems from its own decision not to pay its former counsel's fees. CRS's withdrawal motion disclosed approximately $870,000 in unpaid legal invoices. Having chosen not to fund its own litigation, Vantor cannot now claim that it was deprived of an opportunity to be heard. The deprivation is self-inflicted.
The Court's October 18, 2023 Order was specifically designed to protect Vantor's right to counsel. The Court granted a generous sixty-day window for Vantor to retain substitute counsel. Vantor failed to avail itself of that opportunity. Having been given a fair and reasonable chance to cure the problem — and having done nothing — Vantor's interest in being heard does not outweigh the Court's interest in managing its docket.
This factor favors dismissal.
E. Factor 5: Lesser Sanctions — Inappropriate Here
The fifth and final factor requires the Court to consider whether lesser sanctions would be adequate to address Plaintiff's failure to prosecute. They would not.
The fundamental problem is not that Vantor has missed a deadline or failed to comply with a particular discovery obligation — the kinds of procedural failures that can often be remedied through monetary sanctions, preclusion orders, or conditional dismissal. The fundamental problem is that Vantor, as a corporate entity, cannot proceed without counsel. It is legally incapable of filing motions, attending conferences, conducting depositions, presenting witnesses at trial, or taking any other action necessary to prosecute its claims. No monetary sanction, preclusion order, or adverse inference instruction can cure that incapacity.
There is no indication in the record that Vantor is actively seeking substitute counsel or that it intends to prosecute this action at all. In the nearly three months since CRS's withdrawal, Vantor has not filed any communication with the Court — not a request for extension of time, not a status report, not even a letter acknowledging the Court's Order or the deadline it imposed. The silence is total. The inference of abandonment is inescapable.
The fee dispute with CRS further suggests that lesser sanctions would be futile. If Vantor was unwilling or unable to pay $870,000 in outstanding fees to CRS — its counsel of record, which had shepherded this case through sixteen months of active litigation — there is little reason to believe Vantor will retain and fund new counsel. Granting additional extensions would merely prolong the uncertainty and prejudice that Stonefield has already endured.
This inference is reinforced by Vantor's apparent financial trajectory. Vantor's fiscal year 2022 revenue declined to approximately $310 million, down from approximately $385 million in fiscal year 2021 — a decline of approximately 19.5%, reflecting, among other things, the loss of the Stonefield contract and broader market headwinds. While Vantor's current financial condition is not fully known, the revenue decline and the unpaid legal bills suggest that Vantor may lack the financial capacity to retain and fund substitute counsel for a complex commercial litigation of this magnitude.
Dismissal with prejudice is the only sanction that will provide finality to the parties, relieve Stonefield of the indefinite prejudice it has suffered, and restore this case to the Court's docket. As the Second Circuit has recognized, when lesser sanctions are unlikely to be effective, dismissal with prejudice is appropriate. See Martens v. Thomann, 273 F.3d 159, 180–81 (2d Cir. 2001); Minnette v. Time Warner, 997 F.2d 1023, 1027 (2d Cir. 1993).
In the alternative, should the Court be inclined to grant Vantor one final opportunity to retain counsel, Stonefield respectfully requests that the Court impose a short and firm deadline — no more than thirty (30) days — with an express order providing that failure to file a notice of appearance within that period will result in automatic dismissal of Plaintiff's claims with prejudice, without further motion or hearing. Any extension should be conditioned upon Vantor's filing a sworn affidavit from a corporate officer demonstrating good-faith, concrete efforts to retain substitute counsel.
V. STONEFIELD'S COUNTERCLAIM
In addition to defending against Vantor's claims, Stonefield filed a Counterclaim (ECF No. 25) on January 13, 2023, seeking a declaratory judgment that:
(a) Stonefield's March 4, 2022 termination of the TSA was valid and for Cause under Section 13.1(a) of the TSA;
(b) No liquidated damages are owed to Vantor or VTS under Section 14.2 of the TSA; and
(c) Any material breach of the TSA was committed by VTS, not by Stonefield.
Vantor filed an Answer to the Counterclaim on January 27, 2023. Since that date — and particularly since CRS's withdrawal — Vantor has been unable to defend against the Counterclaim, as it has no counsel of record and cannot appear pro se as a corporate entity.
If the Court grants this Motion and dismisses Vantor's Amended Complaint with prejudice, Stonefield respectfully requests that the Court also enter a default declaratory judgment on the Counterclaim. Vantor's failure to retain counsel and its resulting inability to defend against the Counterclaim constitutes a failure to defend within the meaning of Federal Rule of Civil Procedure 55. The factual record developed through extensive discovery — including the undisputed SLO performance data, the Cure Notice, the termination letter, and the depositions of key witnesses — fully supports the relief sought in the Counterclaim.
In the alternative, if the Court declines to enter a declaratory judgment on the Counterclaim at this juncture, Stonefield requests that its Counterclaim be dismissed without prejudice, with full reservation of the right to reassert the Counterclaim or the substantive claims embodied therein in any future proceeding, including any action that Vantor or any related entity may initiate in any forum.
VI. CONCLUSION
For all of the foregoing reasons, Vantor's prolonged failure to retain substitute counsel — in direct violation of this Court's express October 18, 2023 Order — its failure to advance this case in any manner since its counsel's withdrawal, and its apparent complete abandonment of claims seeking $95.4 million in damages warrant dismissal with prejudice under Federal Rule of Civil Procedure 41(b).
All five of the Second Circuit's factors weigh in favor of dismissal. The failure to prosecute has persisted for nearly three months and continues with no end in sight. Vantor received explicit judicial warning that dismissal could result from its non-compliance. Stonefield has been substantially and concretely prejudiced, having expended over $4.42 million in defense costs while maintaining burdensome lender and audit reporting obligations relating to a claim that Plaintiff has effectively abandoned. The Court's interest in managing its docket outweighs any residual interest Vantor may claim in being heard, particularly given that Vantor's predicament is entirely self-inflicted. And lesser sanctions are incapable of curing the fundamental problem — a corporate plaintiff without counsel.
Accordingly, Defendant Stonefield Logistics Group Inc. respectfully requests that the Court enter an Order:
1. Dismissing Plaintiff Vantor Holdings Corp.'s Amended Complaint (ECF No. 18) with prejudice pursuant to Federal Rule of Civil Procedure 41(b) for failure to prosecute;
2. Entering a declaratory judgment on Stonefield's Counterclaim (ECF No. 25) that (a) the termination of the TSA was valid and 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, or, in the alternative, dismissing Stonefield's Counterclaim without prejudice;
3. Awarding Stonefield its reasonable costs and attorneys' fees incurred in connection with this Motion; and
4. Granting such other and further relief as this Court deems just and proper.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Samuel Eklund Patrick Gallagher 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 530-4400 Facsimile: (212) 530-4401
Attorneys for Defendant Stonefield Logistics Group Inc.
Dated: New York, New York
[TO BE DETERMINED — HELD IN RESERVE]
CERTIFICATE OF SERVICE
I, Patrick Gallagher, an attorney admitted to practice before this Court and an associate at Calderwood & Harkness LLP, hereby certify that on the date this Motion is filed, I caused a true and correct copy of the following documents to be served:
1. Defendant Stonefield Logistics Group Inc.'s Motion to Dismiss Plaintiff's Claims with Prejudice for Failure to Prosecute Pursuant to Fed. R. Civ. P. 41(b);
2. Memorandum of Law in Support of Defendant's Motion to Dismiss;
3. Declaration of Patrick Gallagher, with Exhibits A through E; and
4. Proposed Order
upon the following by the means indicated:
Vantor Holdings Corp. (Plaintiff — no counsel of record)
Vantor Holdings Corp.
Attn: Nikolai Vantorovich, Chief Executive Officer
580 Eighth Avenue, 14th Floor New York, New York 10018
By first-class mail, postage prepaid, and by email to Nikolai Vantorovich
Note: Plaintiff's former counsel, Caldwell Royce & Shapiro LLP, 1 Liberty Plaza, 22nd Floor, New York, New York 10006, was granted leave to withdraw as counsel of record by Order of this Court dated October 18, 2023 (ECF No. 47). No substitute counsel has entered an appearance for Plaintiff. Accordingly, service has been directed to Plaintiff at its principal place of business, in care of its Chief Executive Officer.
________________________________________
Patrick Gallagher
Dated: New York, New York
[TO BE DETERMINED — HELD IN RESERVE]
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
[PROPOSED] ORDER DISMISSING PLAINTIFF'S AMENDED COMPLAINT WITH PREJUDICE FOR FAILURE TO PROSECUTE
The Court, having considered Defendant Stonefield Logistics Group Inc.'s Motion to Dismiss Plaintiff Vantor Holdings Corp.'s Amended Complaint with Prejudice for Failure to Prosecute Pursuant to Federal Rule of Civil Procedure 41(b) (the "Motion"), the Memorandum of Law in support thereof, the Declaration of Patrick Gallagher and the exhibits annexed thereto, the entire record in this matter, and the Court's prior Orders — including the Court's October 18, 2023 Order granting withdrawal of Plaintiff's counsel and directing Plaintiff to retain substitute counsel within sixty (60) days — and good cause having been shown:
IT IS HEREBY ORDERED as follows:
1. Defendant's Motion is GRANTED.
2. Plaintiff Vantor Holdings Corp.'s Amended Complaint (ECF No. 18) is DISMISSED WITH PREJUDICE pursuant to Federal Rule of Civil Procedure 41(b) for failure to prosecute.
3. [Alternative A:] Declaratory judgment is entered in favor of Defendant Stonefield Logistics Group Inc. on its Counterclaim (ECF No. 25). The Court hereby declares that (a) Defendant's termination of the Transportation Services Agreement dated March 15, 2019 (Contract Ref. No. SLG-VTS-2019-0315) was valid and for Cause under Section 13.1(a) thereof; (b) no liquidated damages are owed to Plaintiff or Vantor Transport Services LLC under Section 14.2 of the Transportation Services Agreement; and (c) any material breach of the Transportation Services Agreement was committed by Vantor Transport Services LLC.
[Alternative B:] Defendant's Counterclaim (ECF No. 25) is DISMISSED WITHOUT PREJUDICE, with Defendant's right to reassert such claims fully reserved.
4. The Clerk of Court is respectfully directed to enter judgment in accordance with this Order and to close this case.