letter-to-court-failure-to-retain-counsel.docx

1012-00005 · Stonefield Logistics Group · Pleadings & Court Filings

letter-to-court-failure-to-retain-counsel.docx DOCUMENT Litigation

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CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 506-4000 Facsimile: (212) 506-4001 www.calderwoodharkness.com

Samuel Eklund Partner Direct Dial: (212) 506-4138 Direct Fax: (212) 506-4139 seklund@calderwoodharkness.com

January 8, 2024

VIA ECF

The Honorable Margaret T. Calloway United States District Judge United States District Court for the Southern District of New York Daniel Patrick Moynihan United States Courthouse 500 Pearl Street New York, New York 10007

Re: *Vantor Holdings Corp. v. Stonefield Logistics Group Inc.*, Case No. 22-cv-07841 (S.D.N.Y.) Calderwood & Harkness Matter No. 1012-00005

Dear Judge Calloway:

This firm represents Defendant Stonefield Logistics Group Inc. ("Stonefield" or "SLG") in the above-captioned matter. We write respectfully to bring to the Court's attention that Plaintiff Vantor Holdings Corp. ("Vantor") has failed to retain substitute counsel of record by the deadline established by the Court in its October 18, 2023 Order, and to respectfully request that the Court (i) schedule a status conference at its earliest convenience, and (ii) consider dismissal of this action for failure to prosecute pursuant to Federal Rule of Civil Procedure 41(b), or, at a minimum, issue an Order to Show Cause directing Vantor to demonstrate why its claims should not be dismissed.

I. Background — Withdrawal of Plaintiff's Prior Counsel

On October 3, 2023, Caldwell Royce & Shapiro LLP ("CRS"), counsel of record for Plaintiff Vantor Holdings Corp. since the inception of this litigation, filed a Motion to Withdraw as counsel for Vantor. The motion cited "irreconcilable differences" between CRS and its client, Vantor, as the basis for the requested withdrawal. Among other things, the motion papers referenced a significant fee dispute between CRS and Vantor, indicating that Vantor had failed to pay approximately $870,000 in outstanding legal invoices owed to CRS. CRS represented in its motion that it had made repeated efforts to resolve the fee dispute with Vantor and that its continued representation had become untenable.

On October 18, 2023, after considering the parties' submissions and hearing oral argument by telephone conference, the Court granted CRS's Motion to Withdraw. In the same Order, the Court expressly directed Vantor to retain new counsel and cause such counsel to file a notice of appearance on the docket within sixty (60) days of the date of the Order — i.e., by no later than December 17, 2023. The Court's Order made clear that, as a corporate entity, Vantor could not proceed in this action without licensed counsel and that the failure to retain counsel within the specified period could have consequences for the prosecution of Vantor's claims.

Simultaneously, the Court stayed all case deadlines pending the appearance of new counsel for Vantor. At the time of the stay, the following deadlines under the Case Management Order entered on February 17, 2023 were pending or imminent:

• Fact discovery deadline: September 29, 2023 (already passed; certain discovery remained incomplete, including the continuation of the deposition of Nikolai Vantorovich, Vantor's CEO and a key fact witness, which the Court had ordered completed by October 20, 2023, pursuant to its September 22, 2023 Order resolving a discovery dispute between the parties);

• Expert discovery deadline: January 12, 2024; and

• Dispositive motions deadline: March 1, 2024.

Since the entry of the October 18, 2023 Order, the case has been at a complete standstill. The stay imposed by the Court was intended to afford Vantor a reasonable period to secure new representation so that the case could proceed in an orderly fashion. That period has now expired without any action by Vantor whatsoever.

II. Expiration of the Deadline Without Compliance

The December 17, 2023 deadline established by the Court has now passed. As of the date of this letter — January 8, 2024 — more than three weeks have elapsed since the expiration of the Court's deadline. Notwithstanding the passage of this period, the following facts are apparent from the docket and from undersigned counsel's own experience in the case:

1. No new counsel has filed a notice of appearance on behalf of Vantor on the docket of this case.

2. No motion for extension of the December 17, 2023 deadline has been filed by Vantor or by any attorney on its behalf.

3. No communication of any kind has been received by undersigned counsel from any attorney purporting to represent or considering representation of Vantor in connection with this matter.

4. No other filing of any kind — whether a letter, a motion, a request for a conference, or any other submission — has been made by or on behalf of Vantor since the Court granted CRS's withdrawal on October 18, 2023.

In short, Vantor has taken no discernible steps to comply with the Court's Order or to advance its claims in any manner since October 2023.

As the Court is aware, it is well-established that a corporation cannot appear or proceed pro se in federal court. A corporation is an artificial entity that can act only through its agents, and in judicial proceedings, it must be represented by licensed counsel admitted to practice before the court. See Rowland v. California Men's Colony, 506 U.S. 194, 201–02 (1993) (noting that "it has been the law for the better part of two centuries . . . that a corporation may appear in the federal courts only through licensed counsel"); Jones v. Niagara Frontier Transp. Auth., 722 F.2d 20, 22 (2d Cir. 1983) ("It is established that a corporation, which is an artificial entity that can only act through agents, cannot appear pro se."); see also Lattanzio v. COMTA, 481 F.3d 137, 139–40 (2d Cir. 2007). Accordingly, absent the appearance of new counsel, Vantor is unable to prosecute its affirmative claims or defend against Stonefield's counterclaim. The case is effectively frozen at Vantor's sole initiative, to the continuing detriment of Stonefield and the Court's docket.

III. Procedural History Demonstrating Failure to Prosecute

A brief review of the procedural history of this matter underscores the degree to which this litigation has stalled. This action has been pending since August 12, 2022, when Vantor filed its original Complaint asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference with business relations, and unjust enrichment. The case proceeded actively through the pleading and discovery phases in 2022 and 2023:

• On December 2, 2022, Vantor filed an Amended Complaint, adding a claim for fraudulent inducement.

• On January 13, 2023, Stonefield filed its Answer to the Amended Complaint, Affirmative Defenses, and Counterclaim for declaratory judgment regarding the validity of its termination of the Transportation Services Agreement at issue.

• The parties engaged in extensive document discovery. Stonefield produced 42,387 documents in response to Vantor's requests for production, and Vantor produced 28,914 documents plus a supplemental production of 4,218 documents.

• Five depositions were conducted during the fact discovery phase:

• Derek Pruitt (Stonefield's former Vice President of Operations) — July 10, 2023;

• Janet Kirkwood (Stonefield's Chief Financial Officer) — July 14, 2023;

• Raymond Hess (Vantor Transport Services LLC's Director of Fleet Management) — July 27, 2023;

• Sandra Milescu (Vantor Holdings Corp.'s Controller) — August 4, 2023; and

• Nikolai Vantorovich (Vantor Holdings Corp.'s CEO) — partial deposition, August 18, 2023.

• The deposition of Mr. Vantorovich on August 18, 2023 was cut short after only approximately four and a half (4.5) hours when Mr. Vantorovich claimed illness and left the examination. By Order dated September 22, 2023, the Court directed that the continuation of Mr. Vantorovich's deposition be completed by October 20, 2023. That continuation was never scheduled and never took place.

• Expert reports were exchanged. Vantor's expert, Dr. Philip Trask of Trask Greystone & Associates, served his damages report on May 15, 2023. Stonefield's rebuttal expert, Dr. Evelyn Rosser of Kensington Analytics Group LLC, served her rebuttal report on August 25, 2023. Expert depositions, which were to be conducted during the expert discovery period, were never noticed and never took place.

• No dispositive motions have been filed.

In sum, while significant work was accomplished through the summer of 2023, this case has been effectively at a standstill since October 2023 — nearly three months as of the date of this letter. The completion of Mr. Vantorovich's deposition, the conduct of expert depositions, and the filing of dispositive motions all remain outstanding. No action of any kind has been taken by Vantor to advance this case since the withdrawal of its prior counsel, and the Court's Order directing retention of new counsel within sixty days has been disregarded.

IV. Request for Status Conference

In light of the foregoing, Stonefield respectfully requests that the Court schedule a status conference at its earliest convenience to address the following matters:

1. The current status of Vantor's efforts, if any, to retain new counsel of record for this matter;

2. The impact of Vantor's failure to retain counsel on the case schedule, including the completion of outstanding fact and expert discovery and the deadline for dispositive motions, as well as the impact on Stonefield's pending counterclaim for declaratory judgment;

3. The appropriate course of action given Vantor's apparent inability or unwillingness to prosecute its claims; and

4. Such other matters as the Court deems appropriate.

Because Vantor is currently without counsel of record, Stonefield anticipates that the Court may wish to direct Vantor to designate an authorized corporate representative to appear at any such conference, or to take such other steps as the Court deems necessary to ensure Vantor's participation.

V. Request for Consideration of Dismissal Under Federal Rule of Civil Procedure 41(b)

Should Vantor be unable to demonstrate at the status conference — or by any other means the Court directs — that it is actively and diligently pursuing substitute counsel, Stonefield respectfully submits that the Court should consider dismissal of Vantor's affirmative claims pursuant to Federal Rule of Civil Procedure 41(b) for failure to prosecute.

Rule 41(b) provides that "[i]f 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 it." Fed. R. Civ. P. 41(b). An involuntary dismissal under Rule 41(b) "operates as an adjudication on the merits" unless the Court otherwise specifies. Id.

The Second Circuit has articulated a well-established five-factor test for evaluating whether dismissal for failure to prosecute is warranted. The Court considers: (1) the duration of the plaintiff's failure to comply with court orders or otherwise prosecute the action; (2) whether the plaintiff received notice that further delays would result in dismissal; (3) whether the defendant is likely to be prejudiced by further delay; (4) the balance between alleviating calendar congestion and protecting the plaintiff's right to an opportunity for a day in court; and (5) the efficacy of lesser sanctions. See LeSane v. Hall's Sec. Analyst, Inc., 239 F.3d 206, 209 (2d Cir. 2001); see also Drake v. Norden Sys., Inc., 375 F.3d 248, 254 (2d Cir. 2004); Shannon v. Gen. Elec. Co., 186 F.3d 186, 193–94 (2d Cir. 1999).

Several of these factors already weigh in favor of dismissal or, at a minimum, the entry of an Order to Show Cause:

Duration of failure to comply. Vantor has failed to comply with the Court's October 18, 2023 Order requiring retention of new counsel within sixty days. More than eighty days have now elapsed since that Order was entered, and more than twenty days have passed since the December 17, 2023 deadline. Since October 2023, there has been no docket activity whatsoever by or on behalf of Vantor. No explanation for this inaction has been offered.

Prejudice to Stonefield. Stonefield continues to incur significant ongoing costs associated with this litigation during the period of Vantor's inaction. These costs include, but are not limited to, the costs of monitoring the case and preserving documents in compliance with litigation hold obligations, the costs of maintaining the electronic discovery platform hosted by Pinnacle Forensics LLC (which charges Stonefield a monthly hosting fee for the database containing the parties' document productions and deposition transcripts), and the costs of providing quarterly litigation updates to its administrative agent, Lakeshore National Bank, as required under Section 6.08(c) of Stonefield's senior secured credit facility. Perhaps most significantly, the pendency of $95.4 million in unresolved claims asserted by Vantor creates substantial ongoing uncertainty for Stonefield's business operations, financial reporting, and lender and investor relations. This uncertainty has a direct and continuing impact on Stonefield's ability to plan, budget, and operate its business.

Lesser sanctions. Lesser sanctions have already been implicitly afforded. The Court granted Vantor a sixty-day period — a substantial and generous period — in which to retain new counsel. Vantor allowed that entire period to expire without taking any action and without requesting additional time. The stay of all case deadlines further afforded Vantor a respite from any litigation obligations during the transition period. Vantor has not availed itself of any of these accommodations.

At a minimum, and regardless of whether the Court is inclined to dismiss at this juncture, Stonefield respectfully requests that the Court issue an Order to Show Cause directing Vantor Holdings Corp. to demonstrate, on or before a date certain, why its claims should not be dismissed for failure to prosecute under Federal Rule of Civil Procedure 41(b) and for failure to comply with the Court's orders under Federal Rule of Civil Procedure 16(f). Such an Order would serve the dual purpose of providing Vantor with formal notice that its continued inaction may result in dismissal and establishing a clear record in the event that further relief becomes necessary.

VI. Preservation of Stonefield's Counterclaim

Stonefield respectfully notes that it has a pending counterclaim in this action. Specifically, Stonefield seeks a declaratory judgment that its termination of the Transportation Services Agreement dated March 15, 2019 (Contract Reference No. SLG-VTS-2019-0315) between Stonefield and Vantor Transport Services LLC ("VTS"), a wholly owned subsidiary of Vantor Holdings Corp., was valid and for Cause under Section 13.1 of the TSA; that no liquidated damages are owed to Vantor or VTS under Section 13.3 or any other provision of the TSA; and that any material breach of the TSA was committed by VTS. Stonefield has a significant and continuing interest in obtaining a final adjudication of these issues.

Stonefield intends to pursue its counterclaim to final resolution and respectfully requests that any dismissal of Vantor's affirmative claims not prejudice or otherwise impair Stonefield's right to adjudicate its counterclaim on the merits. See Revere Copper & Brass Inc. v. Adriatic Specialty Insurance, 426 F.2d 709, 715 (5th Cir. 1970) (dismissal of complaint does not dispose of properly pleaded compulsory counterclaims); Mobil Oil Corp. v. Higginbotham, 436 U.S. 618, 623 n.6 (1978); see also 8 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2373 (4th ed.) (noting that a counterclaim is not automatically dismissed upon dismissal of the plaintiff's complaint).

VII. Service on Vantor

Because Vantor is currently without counsel of record, and no attorney has appeared on its behalf since the withdrawal of CRS, undersigned counsel is serving a copy of this letter directly on Vantor Holdings Corp. at its principal business address: 580 Eighth Avenue, 14th Floor, New York, New York 10018, Attention: Nikolai Vantorovich, Chief Executive Officer. Service is being made by both regular first-class mail and electronic mail, in accordance with Federal Rule of Civil Procedure 5(b)(2)(C). A copy of this letter was deposited in the United States mail, postage prepaid, and transmitted by email to Mr. Vantorovich at his last known email address, on the date hereof.

Stonefield respectfully requests that the Court grant the relief requested herein, including the scheduling of a status conference and the issuance of an Order to Show Cause, or such other relief as the Court deems just and appropriate under the circumstances. We are available for a conference at the Court's convenience and stand ready to provide any additional information the Court may require.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Samuel Eklund Partner

200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 506-4138 Facsimile: (212) 506-4139 seklund@calderwoodharkness.com

Attorneys for Defendant Stonefield Logistics Group Inc.

cc: Vantor Holdings Corp. 580 Eighth Avenue, 14th Floor New York, New York 10018

Attn: Nikolai Vantorovich, CEO

(by first-class mail and email)

CALDERWOOD & HARKNESS LLP 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 506-4000 Facsimile: (212) 506-4001 www.calderwoodharkness.com
Samuel Eklund Partner Direct Dial: (212) 506-4138 Direct Fax: (212) 506-4139 seklund@calderwoodharkness.com
January 8, 2024
VIA ECF
The Honorable Margaret T. Calloway United States District Judge United States District Court for the Southern District of New York Daniel Patrick Moynihan United States Courthouse 500 Pearl Street New York, New York 10007
Re: *Vantor Holdings Corp. v. Stonefield Logistics Group Inc.*, Case No. 22-cv-07841 (S.D.N.Y.) Calderwood & Harkness Matter No. 1012-00005
Dear Judge Calloway:
This firm represents Defendant Stonefield Logistics Group Inc. ("Stonefield" or "SLG") in the above-captioned matter. We write respectfully to bring to the Court's attention that Plaintiff Vantor Holdings Corp. ("Vantor") has failed to retain substitute counsel of record by the deadline established by the Court in its October 18, 2023 Order, and to respectfully request that the Court (i) schedule a status conference at its earliest convenience, and (ii) consider dismissal of this action for failure to prosecute pursuant to Federal Rule of Civil Procedure 41(b), or, at a minimum, issue an Order to Show Cause directing Vantor to demonstrate why its claims should not be dismissed.
I. Background — Withdrawal of Plaintiff's Prior Counsel
On October 3, 2023, Caldwell Royce & Shapiro LLP ("CRS"), counsel of record for Plaintiff Vantor Holdings Corp. since the inception of this litigation, filed a Motion to Withdraw as counsel for Vantor. The motion cited "irreconcilable differences" between CRS and its client, Vantor, as the basis for the requested withdrawal. Among other things, the motion papers referenced a significant fee dispute between CRS and Vantor, indicating that Vantor had failed to pay approximately $870,000 in outstanding legal invoices owed to CRS. CRS represented in its motion that it had made repeated efforts to resolve the fee dispute with Vantor and that its continued representation had become untenable.
On October 18, 2023, after considering the parties' submissions and hearing oral argument by telephone conference, the Court granted CRS's Motion to Withdraw. In the same Order, the Court expressly directed Vantor to retain new counsel and cause such counsel to file a notice of appearance on the docket within sixty (60) days of the date of the Order — i.e., by no later than December 17, 2023. The Court's Order made clear that, as a corporate entity, Vantor could not proceed in this action without licensed counsel and that the failure to retain counsel within the specified period could have consequences for the prosecution of Vantor's claims.
Simultaneously, the Court stayed all case deadlines pending the appearance of new counsel for Vantor. At the time of the stay, the following deadlines under the Case Management Order entered on February 17, 2023 were pending or imminent:
• Fact discovery deadline: September 29, 2023 (already passed; certain discovery remained incomplete, including the continuation of the deposition of Nikolai Vantorovich, Vantor's CEO and a key fact witness, which the Court had ordered completed by October 20, 2023, pursuant to its September 22, 2023 Order resolving a discovery dispute between the parties);
• Expert discovery deadline: January 12, 2024; and
• Dispositive motions deadline: March 1, 2024.
Since the entry of the October 18, 2023 Order, the case has been at a complete standstill. The stay imposed by the Court was intended to afford Vantor a reasonable period to secure new representation so that the case could proceed in an orderly fashion. That period has now expired without any action by Vantor whatsoever.
II. Expiration of the Deadline Without Compliance
The December 17, 2023 deadline established by the Court has now passed. As of the date of this letter — January 8, 2024 — more than three weeks have elapsed since the expiration of the Court's deadline. Notwithstanding the passage of this period, the following facts are apparent from the docket and from undersigned counsel's own experience in the case:
1. No new counsel has filed a notice of appearance on behalf of Vantor on the docket of this case.
2. No motion for extension of the December 17, 2023 deadline has been filed by Vantor or by any attorney on its behalf.
3. No communication of any kind has been received by undersigned counsel from any attorney purporting to represent or considering representation of Vantor in connection with this matter.
4. No other filing of any kind — whether a letter, a motion, a request for a conference, or any other submission — has been made by or on behalf of Vantor since the Court granted CRS's withdrawal on October 18, 2023.
In short, Vantor has taken no discernible steps to comply with the Court's Order or to advance its claims in any manner since October 2023.
As the Court is aware, it is well-established that a corporation cannot appear or proceed pro se in federal court. A corporation is an artificial entity that can act only through its agents, and in judicial proceedings, it must be represented by licensed counsel admitted to practice before the court. See Rowland v. California Men's Colony, 506 U.S. 194, 201–02 (1993) (noting that "it has been the law for the better part of two centuries . . . that a corporation may appear in the federal courts only through licensed counsel"); Jones v. Niagara Frontier Transp. Auth., 722 F.2d 20, 22 (2d Cir. 1983) ("It is established that a corporation, which is an artificial entity that can only act through agents, cannot appear pro se."); see also Lattanzio v. COMTA, 481 F.3d 137, 139–40 (2d Cir. 2007). Accordingly, absent the appearance of new counsel, Vantor is unable to prosecute its affirmative claims or defend against Stonefield's counterclaim. The case is effectively frozen at Vantor's sole initiative, to the continuing detriment of Stonefield and the Court's docket.
III. Procedural History Demonstrating Failure to Prosecute
A brief review of the procedural history of this matter underscores the degree to which this litigation has stalled. This action has been pending since August 12, 2022, when Vantor filed its original Complaint asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference with business relations, and unjust enrichment. The case proceeded actively through the pleading and discovery phases in 2022 and 2023:
• On December 2, 2022, Vantor filed an Amended Complaint, adding a claim for fraudulent inducement.
• On January 13, 2023, Stonefield filed its Answer to the Amended Complaint, Affirmative Defenses, and Counterclaim for declaratory judgment regarding the validity of its termination of the Transportation Services Agreement at issue.
• The parties engaged in extensive document discovery. Stonefield produced 42,387 documents in response to Vantor's requests for production, and Vantor produced 28,914 documents plus a supplemental production of 4,218 documents.
• Five depositions were conducted during the fact discovery phase:
• Derek Pruitt (Stonefield's former Vice President of Operations) — July 10, 2023;
• Janet Kirkwood (Stonefield's Chief Financial Officer) — July 14, 2023;
• Raymond Hess (Vantor Transport Services LLC's Director of Fleet Management) — July 27, 2023;
• Sandra Milescu (Vantor Holdings Corp.'s Controller) — August 4, 2023; and
• Nikolai Vantorovich (Vantor Holdings Corp.'s CEO) — partial deposition, August 18, 2023.
• The deposition of Mr. Vantorovich on August 18, 2023 was cut short after only approximately four and a half (4.5) hours when Mr. Vantorovich claimed illness and left the examination. By Order dated September 22, 2023, the Court directed that the continuation of Mr. Vantorovich's deposition be completed by October 20, 2023. That continuation was never scheduled and never took place.
• Expert reports were exchanged. Vantor's expert, Dr. Philip Trask of Trask Greystone & Associates, served his damages report on May 15, 2023. Stonefield's rebuttal expert, Dr. Evelyn Rosser of Kensington Analytics Group LLC, served her rebuttal report on August 25, 2023. Expert depositions, which were to be conducted during the expert discovery period, were never noticed and never took place.
• No dispositive motions have been filed.
In sum, while significant work was accomplished through the summer of 2023, this case has been effectively at a standstill since October 2023 — nearly three months as of the date of this letter. The completion of Mr. Vantorovich's deposition, the conduct of expert depositions, and the filing of dispositive motions all remain outstanding. No action of any kind has been taken by Vantor to advance this case since the withdrawal of its prior counsel, and the Court's Order directing retention of new counsel within sixty days has been disregarded.
IV. Request for Status Conference
In light of the foregoing, Stonefield respectfully requests that the Court schedule a status conference at its earliest convenience to address the following matters:
1. The current status of Vantor's efforts, if any, to retain new counsel of record for this matter;
2. The impact of Vantor's failure to retain counsel on the case schedule, including the completion of outstanding fact and expert discovery and the deadline for dispositive motions, as well as the impact on Stonefield's pending counterclaim for declaratory judgment;
3. The appropriate course of action given Vantor's apparent inability or unwillingness to prosecute its claims; and
4. Such other matters as the Court deems appropriate.
Because Vantor is currently without counsel of record, Stonefield anticipates that the Court may wish to direct Vantor to designate an authorized corporate representative to appear at any such conference, or to take such other steps as the Court deems necessary to ensure Vantor's participation.
V. Request for Consideration of Dismissal Under Federal Rule of Civil Procedure 41(b)
Should Vantor be unable to demonstrate at the status conference — or by any other means the Court directs — that it is actively and diligently pursuing substitute counsel, Stonefield respectfully submits that the Court should consider dismissal of Vantor's affirmative claims pursuant to Federal Rule of Civil Procedure 41(b) for failure to prosecute.
Rule 41(b) provides that "[i]f 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 it." Fed. R. Civ. P. 41(b). An involuntary dismissal under Rule 41(b) "operates as an adjudication on the merits" unless the Court otherwise specifies. Id.
The Second Circuit has articulated a well-established five-factor test for evaluating whether dismissal for failure to prosecute is warranted. The Court considers: (1) the duration of the plaintiff's failure to comply with court orders or otherwise prosecute the action; (2) whether the plaintiff received notice that further delays would result in dismissal; (3) whether the defendant is likely to be prejudiced by further delay; (4) the balance between alleviating calendar congestion and protecting the plaintiff's right to an opportunity for a day in court; and (5) the efficacy of lesser sanctions. See LeSane v. Hall's Sec. Analyst, Inc., 239 F.3d 206, 209 (2d Cir. 2001); see also Drake v. Norden Sys., Inc., 375 F.3d 248, 254 (2d Cir. 2004); Shannon v. Gen. Elec. Co., 186 F.3d 186, 193–94 (2d Cir. 1999).
Several of these factors already weigh in favor of dismissal or, at a minimum, the entry of an Order to Show Cause:
Duration of failure to comply. Vantor has failed to comply with the Court's October 18, 2023 Order requiring retention of new counsel within sixty days. More than eighty days have now elapsed since that Order was entered, and more than twenty days have passed since the December 17, 2023 deadline. Since October 2023, there has been no docket activity whatsoever by or on behalf of Vantor. No explanation for this inaction has been offered.
Prejudice to Stonefield. Stonefield continues to incur significant ongoing costs associated with this litigation during the period of Vantor's inaction. These costs include, but are not limited to, the costs of monitoring the case and preserving documents in compliance with litigation hold obligations, the costs of maintaining the electronic discovery platform hosted by Pinnacle Forensics LLC (which charges Stonefield a monthly hosting fee for the database containing the parties' document productions and deposition transcripts), and the costs of providing quarterly litigation updates to its administrative agent, Lakeshore National Bank, as required under Section 6.08(c) of Stonefield's senior secured credit facility. Perhaps most significantly, the pendency of $95.4 million in unresolved claims asserted by Vantor creates substantial ongoing uncertainty for Stonefield's business operations, financial reporting, and lender and investor relations. This uncertainty has a direct and continuing impact on Stonefield's ability to plan, budget, and operate its business.
Lesser sanctions. Lesser sanctions have already been implicitly afforded. The Court granted Vantor a sixty-day period — a substantial and generous period — in which to retain new counsel. Vantor allowed that entire period to expire without taking any action and without requesting additional time. The stay of all case deadlines further afforded Vantor a respite from any litigation obligations during the transition period. Vantor has not availed itself of any of these accommodations.
At a minimum, and regardless of whether the Court is inclined to dismiss at this juncture, Stonefield respectfully requests that the Court issue an Order to Show Cause directing Vantor Holdings Corp. to demonstrate, on or before a date certain, why its claims should not be dismissed for failure to prosecute under Federal Rule of Civil Procedure 41(b) and for failure to comply with the Court's orders under Federal Rule of Civil Procedure 16(f). Such an Order would serve the dual purpose of providing Vantor with formal notice that its continued inaction may result in dismissal and establishing a clear record in the event that further relief becomes necessary.
VI. Preservation of Stonefield's Counterclaim
Stonefield respectfully notes that it has a pending counterclaim in this action. Specifically, Stonefield seeks a declaratory judgment that its termination of the Transportation Services Agreement dated March 15, 2019 (Contract Reference No. SLG-VTS-2019-0315) between Stonefield and Vantor Transport Services LLC ("VTS"), a wholly owned subsidiary of Vantor Holdings Corp., was valid and for Cause under Section 13.1 of the TSA; that no liquidated damages are owed to Vantor or VTS under Section 13.3 or any other provision of the TSA; and that any material breach of the TSA was committed by VTS. Stonefield has a significant and continuing interest in obtaining a final adjudication of these issues.
Stonefield intends to pursue its counterclaim to final resolution and respectfully requests that any dismissal of Vantor's affirmative claims not prejudice or otherwise impair Stonefield's right to adjudicate its counterclaim on the merits. See Revere Copper & Brass Inc. v. Adriatic Specialty Insurance, 426 F.2d 709, 715 (5th Cir. 1970) (dismissal of complaint does not dispose of properly pleaded compulsory counterclaims); Mobil Oil Corp. v. Higginbotham, 436 U.S. 618, 623 n.6 (1978); see also 8 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2373 (4th ed.) (noting that a counterclaim is not automatically dismissed upon dismissal of the plaintiff's complaint).
VII. Service on Vantor
Because Vantor is currently without counsel of record, and no attorney has appeared on its behalf since the withdrawal of CRS, undersigned counsel is serving a copy of this letter directly on Vantor Holdings Corp. at its principal business address: 580 Eighth Avenue, 14th Floor, New York, New York 10018, Attention: Nikolai Vantorovich, Chief Executive Officer. Service is being made by both regular first-class mail and electronic mail, in accordance with Federal Rule of Civil Procedure 5(b)(2)(C). A copy of this letter was deposited in the United States mail, postage prepaid, and transmitted by email to Mr. Vantorovich at his last known email address, on the date hereof.
Stonefield respectfully requests that the Court grant the relief requested herein, including the scheduling of a status conference and the issuance of an Order to Show Cause, or such other relief as the Court deems just and appropriate under the circumstances. We are available for a conference at the Court's convenience and stand ready to provide any additional information the Court may require.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Samuel Eklund Partner
200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 506-4138 Facsimile: (212) 506-4139 seklund@calderwoodharkness.com
Attorneys for Defendant Stonefield Logistics Group Inc.
cc: Vantor Holdings Corp. 580 Eighth Avenue, 14th Floor New York, New York 10018
Attn: Nikolai Vantorovich, CEO
(by first-class mail and email)

VIA ECF

CALDERWOOD & HARKNESS LLP

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