1012-00005 · Stonefield Logistics Group · Settlement & Negotiation

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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

This memorandum is protected by the attorney-client privilege and constitutes attorney work product. It is intended solely for the use of the addressees and authorized representatives of Stonefield Logistics Group Inc. and Ridgeline Capital Partners, LP. Any dissemination, distribution, or copying of this memorandum to persons not authorized to receive it is strictly prohibited. If you have received this document in error, please notify Samuel Eklund at Calderwood & Harkness LLP immediately.

CALDERWOOD & HARKNESS LLP INTERNAL MEMORANDUM

September 28, 2023

TO: Tobias Wren, General Counsel, Stonefield Logistics Group Inc. Alison Trang, Partner / SLG Board Member, Ridgeline Capital Partners, LP

FROM: Samuel Eklund, Responsible Partner, Litigation (General), Calderwood & Harkness LLP

RE: Response to Vantor Holdings Corp. Settlement Overture — Recommendation to Defer

MATTER: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)

C&H MATTER NO.: 1012-00005

I. Purpose

On September 25, 2023, Harrison Caldwell of Caldwell Royce & Shapiro LLP ("CRS"), lead counsel for Vantor Holdings Corp. ("Vantor" or "VHC"), transmitted an email to the undersigned indicating that Vantor "would be open to discussing resolution" of this matter and proposing that the parties engage a mediator to facilitate settlement discussions. The email was brief and informal in nature, and notably did not specify a proposed settlement figure, range, or substantive terms. A copy of the email has been preserved in the matter file.

The purpose of this memorandum is threefold: (1) to describe and analyze the settlement overture in the context of recent developments in the litigation and in the Vantor–CRS attorney-client relationship; (2) to provide an updated assessment of Stonefield's litigation position as informed by the now-substantially-complete fact discovery record; and (3) to recommend a course of action in response to the overture.

Bottom-line recommendation: Stonefield should defer substantive settlement discussions at this time. Calderwood & Harkness recommends responding to Caldwell Royce with a noncommittal but professionally courteous reply indicating that Stonefield "remains open to reasonable discussions" but believes that the "current timing is not conducive to productive mediation." The principal reasons for deferral center on strong indications — discussed in detail in Section III below — that Caldwell Royce & Shapiro's relationship with its client, Vantor, is fracturing due to an apparent fee dispute, and that any settlement process initiated now would be either futile or affirmatively counterproductive to Stonefield's interests. Engaging prematurely in a mediation or settlement negotiation under these circumstances would risk projecting weakness, incurring unnecessary costs, and potentially providing Vantor's counsel with a fee-recovery event that serves CRS's interests rather than the interests of achieving a genuine resolution on terms favorable to Stonefield.

This memorandum should be read in conjunction with the Summary Judgment Roadmap Memorandum dated September 15, 2023, the September 20, 2023 Semi-Annual Risk Assessment, and the August 30, 2023 Updated Settlement Authority Analysis, copies of which have been previously circulated to Tobias and Alison.

II. Background: The Settlement Overture

A. The Caldwell Email

On September 25, 2023, at approximately 4:47 p.m. Eastern, Harrison Caldwell sent an email to the undersigned from his personal CRS email address. The email read, in relevant part:

Sam — I wanted to reach out informally to see whether your client might have any interest in exploring resolution of this matter. My client would be open to discussing resolution, and we think it could be productive for the parties to sit down with a mediator to see if there's a way to bring this to a close. Happy to discuss logistics if you and your client are amenable. — Harrison

Several aspects of this communication merit attention. First, the email was notably brief and informal, lacking the structured, detailed format that typically accompanies a serious settlement overture in a case of this magnitude. Caldwell did not specify a proposed settlement dollar figure or range, did not identify particular terms or conditions that Vantor would require, and did not reference the specific claims or damages theories that Vantor would seek to monetize in any resolution. Second, the email proposed mediation as the mechanism for settlement discussions — a process that involves scheduling, mediator selection, pre-mediation briefing, and associated costs — rather than suggesting a more preliminary exchange of views or positions. Third, and perhaps most significantly, the tone of the email carried a subtle but discernible sense of urgency, particularly in the phrase "bring this to a close," which is atypical for a plaintiff purportedly seeking nearly $100 million in damages.

B. Prior Settlement History

To place this overture in context, it is important to note that this is the first affirmative settlement overture from Vantor's side since the pre-suit phase of this dispute. The prior settlement history is as follows:

• April 8, 2022 — Pre-Suit Demand Letter: CRS, on behalf of Vantor, transmitted a formal demand letter to Stonefield's then-outside counsel (prior to Calderwood & Harkness's engagement) demanding $95.4 million in damages based on the liquidated damages clause in the Transportation Services Agreement (the "TSA"), alleged lost profits, and ancillary damages theories. The demand letter was detailed, aggressive in tone, and accompanied by a 14-page damages analysis prepared by Dr. Philip Trask of Trask Greystone & Associates.

• May 16, 2022 — First Executive Negotiation Session: Pursuant to Section 16 of the TSA, the parties convened an executive-level negotiation session. Vantor was represented by Nikolai Vantorovich (CEO) and Derek Pruitt (SVP, Business Development); Stonefield was represented by Tobias Wren (General Counsel) and Catherine Kirkwood (SVP, Supply Chain Operations). The session was unproductive. Vantor maintained its $95.4 million demand; Stonefield maintained that the termination was valid for Cause and that no payment was owed.

• June 3, 2022 — Second Executive Negotiation Session: A follow-up session was held, again without meaningful progress. At the conclusion of the session, the parties acknowledged that the mandatory 30-day executive negotiation period under Section 16 had been satisfied and that litigation could proceed.

• June 28, 2022 — Complaint Filed: Vantor filed its complaint in the Southern District of New York.

There have been no further settlement communications between the parties from June 2022 through September 24, 2023 — a period of approximately fifteen months during which the case has proceeded through pleadings, initial disclosures, extensive document production, and six fact depositions.

C. Contextual Timing

The timing of this overture is significant. The fact discovery deadline in this matter is September 29, 2023 — four days after Caldwell's email was sent. Expert discovery is scheduled to intensify in October and November 2023, with rebuttal expert reports due November 10, 2023 and expert depositions to follow. The overture thus arrives at a natural inflection point in the litigation: the transition from fact discovery, where costs have already been substantially incurred, to expert discovery and dispositive motion practice, where significant additional costs lie ahead.

As discussed in detail in Section III below, there are strong reasons to believe that this timing is driven not by a genuine reassessment of the merits of Vantor's claims, but by counsel-side considerations relating to CRS's relationship with its client and its ability or willingness to continue prosecuting this case through expert discovery, summary judgment, and trial.

III. Context: Indicators of Counsel-Client Breakdown at Caldwell Royce & Shapiro

A. Fee Dispute intelligence

Over the past several weeks, Calderwood & Harkness has observed a pattern of indicators, taken together, that suggest the attorney-client relationship between Caldwell Royce & Shapiro and Vantor Holdings Corp. is under significant strain, most likely due to a fee dispute.

We emphasize at the outset that we do not have direct evidence of a fee dispute — such information would be privileged and has not been disclosed to us. Rather, we have assembled a series of indirect signals and circumstantial indicators that, in the collective professional judgment of the litigation team, point strongly in that direction. These indicators include the following:

1. Irregular Litigation Conduct. Beginning in approximately mid-August 2023, CRS's litigation conduct has exhibited notable irregularities that are inconsistent with the firm's typical practice in this case and in commercial litigation generally. Specifically:

• Delayed responses to correspondence. CRS has failed to respond to three separate meet-and-confer emails sent by Calderwood & Harkness on August 17, August 28, and September 11, 2023, regarding outstanding discovery issues, including the production of documents from Vantor's European subsidiaries that were the subject of Judge Calloway's August 3, 2023 discovery order. Prior to mid-August, CRS had been reasonably responsive to discovery correspondence, typically responding within two to four business days.

• Failure to schedule the Vantorovich deposition completion. Nikolai Vantorovich's deposition was commenced on September 8, 2023 but was adjourned after approximately three hours due to a scheduling conflict raised by CRS. The Court's August 3, 2023 discovery order requires the deposition to be completed by October 20, 2023. Calderwood & Harkness has made three written requests to CRS (September 12, September 18, and September 25, 2023) to schedule the continuation, and CRS has not responded to any of them. This is particularly striking given that Vantorovich is CRS's own client and it is CRS's obligation to produce him for the completion of his deposition.

• General lack of engagement. CRS has not served any deposition notices, document requests, or interrogatories since July 2023, and its participation in the September 14, 2023 telephonic discovery conference before Magistrate Judge Parekh was notably perfunctory. CRS's associate, Melissa Chow, appeared on behalf of the firm and offered minimal substantive input on the disputed discovery issues.

2. Timing of the Settlement Overture. The timing of the overture — arriving at the tail end of the fact discovery period and immediately before the onset of expert discovery — is consistent with a scenario in which CRS is attempting to resolve the case before it would be required to incur further substantial fees that may go unpaid. Expert discovery in a case of this complexity would require significant additional investment by CRS, including preparation for and defense of Dr. Trask's deposition (which Calderwood & Harkness has noticed for December 2023), potential supplemental expert work, and pre-motion and summary judgment briefing. If CRS's fees are currently outstanding and Vantor is unable or unwilling to pay, CRS faces the prospect of investing additional hundreds of thousands of dollars in a case from which it may never be compensated.

3. Vantor's Financial Trajectory. Publicly available financial information and information obtained in discovery confirm that Vantor's financial condition has deteriorated significantly since the commencement of this litigation. VHC's fiscal year 2022 revenue declined to approximately $310 million from $385 million in fiscal year 2021, reflecting both the loss of the Stonefield contract (which represented approximately $43 million in annual committed volume) and broader market softening in the intermodal and dedicated trucking segments. While we do not have FY 2023 financials, the market conditions that drove the FY 2022 decline have not materially improved, and Vantor's loss of several other accounts (as reflected in its supplemental document production in July 2023) suggests continued revenue pressure. A company in this financial posture may well be unable or unwilling to continue funding litigation at the rates charged by a firm of CRS's caliber.

4. Absence of Internal Vantor Participation. In the early stages of the litigation, Vantor's in-house legal department — specifically, its Deputy General Counsel, Priya Ramachandran — was actively engaged in discovery coordination, privilege review, and strategic discussions (as reflected in several meet-and-confer communications that referenced Ms. Ramachandran's input). Since approximately June 2023, Ms. Ramachandran has not appeared on any correspondence, and CRS has not referenced her involvement. While this could have innocent explanations, it is consistent with a scenario in which the in-house legal function has disengaged from the litigation, potentially as a result of internal disagreements about case strategy or litigation spend.

We note that none of these indicators is, standing alone, conclusive evidence of a fee dispute or attorney-client breakdown. Taken together, however, they form a coherent pattern that is most parsimoniously explained by a fracturing of the CRS–Vantor relationship.

B. Implications of Potential Withdrawal

If the CRS–Vantor relationship does break down and CRS moves to withdraw as counsel, the consequences for Vantor's prosecution of this case would be severe.

1. Corporate Pro Se Prohibition. Vantor Holdings Corp. is a New York corporation. It is well-established in the Second Circuit that a corporation may not appear pro se in federal court; only natural persons may do so. See Rowland v. Cal. Men's Colony, 506 U.S. 194, 201–02 (1993); Lattanzio v. COMTA, 481 F.3d 137, 139–40 (2d Cir. 2007). Accordingly, if CRS withdraws and Vantor does not promptly retain substitute counsel, Vantor will be unable to prosecute its case, file papers, or appear at hearings. The Court would likely set a deadline for Vantor to obtain new counsel, and if Vantor failed to do so, the case would be subject to dismissal.

2. Stay of Deadlines and Case Delay. A withdrawal by CRS would almost certainly be accompanied by a motion for a stay of deadlines pending Vantor's retention of new counsel. Courts in the Southern District routinely grant such stays, typically for 30 to 60 days. If Vantor requires additional time — which is likely in a case of this complexity — the stay could extend further. This delay, while superficially neutral, redounds to Stonefield's benefit: it extends the period during which Stonefield incurs minimal litigation costs while Vantor bears the burden of finding, retaining, and transitioning to new counsel.

3. Difficulty Retaining Replacement Counsel. Given the nature and circumstances of the case, Vantor may face significant challenges in retaining competent replacement counsel willing to handle this matter on terms acceptable to Vantor. This case involves a complex commercial breach-of-contract dispute with substantial discovery already completed, requiring any new firm to invest significant time in familiarizing itself with the record. The case currently involves approximately 75,519 documents produced by both sides — 42,387 documents produced by Stonefield and 33,132 documents produced by Vantor (28,914 in its initial production and 4,218 in supplemental production pursuant to the Court's August 3, 2023 order). Six fact depositions have been conducted (Derek Pruitt, Catherine Kirkwood, Raymond Hess, Sandra Milescu, and the partial deposition of Nikolai Vantorovich), generating thousands of pages of transcript. Expert reports have been exchanged. Any new firm would need to absorb all of this material before it could competently represent Vantor going forward.

Moreover, if Vantor is in a fee dispute with CRS — a reputable and well-regarded commercial litigation firm — prospective replacement counsel would have legitimate concerns about Vantor's ability and willingness to pay. A firm willing to take the case on a contingency or hybrid fee arrangement would likely demand a substantial contingency percentage, which may be unattractive to Vantor given the speculative nature of the damages claim. Alternatively, a less experienced or less well-resourced firm might take the case but would be less effective in prosecuting it, further diminishing the value of Vantor's claims.

C. Strategic Advantage of Patience

The foregoing analysis leads to a clear strategic conclusion: patience is Stonefield's most valuable asset at this juncture.

1. Potential Dismissal for Failure to Prosecute. If CRS withdraws and Vantor fails to retain substitute counsel within the time period set by the Court, the case would be subject to dismissal for failure to prosecute under Federal Rule of Civil Procedure 41(b). While dismissal under Rule 41(b) is an extreme remedy and courts are reluctant to impose it without providing ample opportunity to cure, the practical reality is that a plaintiff corporation that cannot retain counsel is a plaintiff that cannot prosecute its case. A dismissal under Rule 41(b) would operate as an adjudication on the merits unless the Court specifies otherwise, potentially barring future re-filing.

2. New Counsel Ramp-Up Period. Even if Vantor does retain new counsel, the transition period would be significant. Any new firm would need to review and digest the full discovery record — 75,519 documents, six depositions, expert reports, and extensive motion practice and discovery correspondence — before it could competently participate in further proceedings. This ramp-up period could take months and would require Vantor to invest substantial additional funds at a time when its financial condition may not support such expenditure. During this period, the litigation would effectively be on hold, reducing Stonefield's ongoing costs to nominal levels.

3. Time Favors Stonefield. As a general matter, the passage of time favors the defendant in this case for several reasons. First, witnesses' memories fade, and Vantor's ability to present its case effectively at trial diminishes with time. Second, Vantor's financial condition may continue to deteriorate, further reducing both its ability to fund litigation and the practical collectibility of any judgment it might obtain. Third, the case becomes increasingly burdensome for any incoming plaintiff's counsel, who must assume the cost and risk of bringing a complex commercial case to trial with a client that may have difficulty paying its legal fees. Fourth, Stonefield's for-cause termination defense is based on documented, objective performance data that does not degrade with the passage of time, whereas Vantor's narrative defenses — which depend heavily on witness testimony regarding intentions, motivations, and business judgment — become less compelling as memories grow more distant.

For all of these reasons, Calderwood & Harkness recommends that Stonefield defer any substantive engagement with Caldwell Royce's settlement overture and instead adopt a posture of watchful patience.

IV. Current Assessment of Stonefield's Litigation Position

To provide a complete basis for the deferral recommendation, this Section presents an updated assessment of Stonefield's litigation position as informed by the substantially complete fact discovery record. This assessment reinforces and strengthens the conclusions reached in the August 30, 2023 Updated Settlement Authority Analysis.

A. Strength of the "For Cause" Termination Defense

Stonefield's primary defense is that its termination of the TSA was valid for Cause under Section 13.2(a) of the Agreement, which permits termination upon 30 days' written notice if the non-terminating party has committed a material breach that remains uncured following the Cure Period specified in Section 13.3. The discovery record overwhelmingly supports this defense.

1. Service Level Obligation Failures. The TSA established five Service Level Obligations ("SLOs") in Schedule B, Section 4, breach of any one of which for a period of two or more consecutive months constituted a "Material Performance Failure" triggering the Cure Notice right under Section 13.3. Vantor Transportation Services LLC ("VTS"), the operating subsidiary of VHC that performed under the TSA, failed all five SLOs during Q4 2021 (October, November, and December), constituting three consecutive months of Material Performance Failure. The specific metrics, as documented in Stonefield's contemporaneous records and confirmed by VTS's own Carrier Performance Portal data, are as follows:

These are not marginal failures. The variances across all five metrics are substantial, reflecting a systemic collapse in service quality rather than isolated or transient performance issues. The cargo claims data is particularly notable: 16 documented claims totaling $387,400 in cargo damage or loss were filed during November and December 2021 alone, more than double the rate that would be permissible under the SLO.

2. Hess Deposition Testimony. Raymond Hess, Stonefield's Director of Carrier Performance Management, testified at his deposition on July 27, 2023 that these metrics were derived from VTS's own Carrier Performance Portal — the system that VTS itself maintained and made available to Stonefield for tracking carrier performance — and that VTS did not dispute the accuracy of the metrics at any point, including in its February 14, 2022 response to Stonefield's Cure Notice. Hess further testified that VTS's response to the Cure Notice acknowledged "operational challenges" but attributed them to "market-wide driver shortages" and "unprecedented supply chain disruption" rather than contesting the underlying data. This testimony is critical because it eliminates a potential Vantor argument that the performance data was unreliable or was unilaterally generated by Stonefield.

3. The Milescu "Smoking Gun" Email. Among the most significant documents produced in this litigation is an internal VTS email from Sandra Milescu (VP, Fleet Operations) to Derek Pruitt (SVP, Business Development) dated November 12, 2021, bearing Bates number VHC-008417. The email states:

"We've pulled 85 tractors off the SLG dedicated lanes to cover [redacted] commitments. SLG won't notice until January."

The "[redacted]" portion was redacted by CRS on relevance grounds; Calderwood & Harkness moved to compel the unredacted version, and following Judge Calloway's August 3, 2023 order, VHC produced the unredacted email revealing that the redacted client name was Northwind Distribution Co. ("Northwind"), another major VTS account.

This email is devastating to Vantor's case narrative for multiple reasons. First, it establishes that VTS deliberately diverted 85 tractors — more than 21% of the 400-tractor committed fleet — from Stonefield's dedicated lanes to serve another client's needs, directly causing or substantially contributing to the equipment availability failure (248 of 400 tractors, or 62%). Second, it demonstrates that VTS knew the diversion would harm Stonefield's service levels and deliberately chose to conceal it, expecting that Stonefield "won't notice until January." Third, it directly contradicts Vantor's litigation narrative that the Q4 2021 performance failures were caused by exogenous market conditions and Stonefield's own volume shortfalls.

4. Milescu Deposition Testimony. Sandra Milescu was deposed on August 4, 2023. She confirmed that approximately 85 tractors were reassigned from Stonefield dedicated lanes to service Northwind Distribution Co.'s account beginning in October 2021. She characterized the reassignment as "temporary" and driven by "commercial necessity," explaining that Northwind had threatened to terminate its contract with VTS if additional capacity was not made available. Milescu claimed that she expected the reassignment to last only "a few weeks" and that the tractors would be rotated back to Stonefield lanes once Northwind's surge period ended. However, she could not explain why Stonefield was not notified of the reassignment, as would have been required under Section 8.4 of the TSA (requiring 48-hour advance written notice of any material change in dedicated fleet allocation). She also could not explain why the tractors were not returned to Stonefield's dedicated lanes until after the termination notice was issued in January 2022. Milescu's testimony was credible in tone but substantively damaging; her admission that VTS prioritized another client's needs over Stonefield's contractual commitment, without notice or consent, is precisely the type of willful, material breach that justifies for-cause termination.

5. Pruitt Deposition Testimony. Derek Pruitt, VTS's Senior Vice President of Business Development and the VTS executive most directly responsible for the Stonefield account relationship, was deposed on July 10, 2023. Pruitt acknowledged that VTS "struggled" to maintain committed fleet capacity in Q4 2021. When asked what specific mitigation steps VTS took after receiving Stonefield's Cure Notice on January 18, 2022, Pruitt was unable to identify any concrete actions beyond "internal discussions" and "reviewing our capacity plan." He could not identify any tractors that were reassigned back to Stonefield's dedicated lanes during the cure period, could not identify any communications to Stonefield offering a remediation plan, and conceded that VTS did not request an extension of the 30-day cure period. Pruitt's inability to identify specific cure efforts fatally undermines Vantor's argument that the termination was premature or that VTS was denied a meaningful opportunity to cure.

B. Weakness in Vantor's Counterarguments

Vantor has advanced three principal counterarguments to Stonefield's for-cause termination defense: (1) that Stonefield's own volume shortfalls caused VTS's performance failures; (2) that Stonefield violated the exclusivity provisions of the TSA; and (3) that the termination was pretextual, motivated by a desire to avoid an impending rate increase. Each of these arguments is substantially weakened by the discovery record.

1. Volume Shortfall Argument. Vantor contends that Stonefield failed to tender the minimum annual committed volume ("ACV") specified in the TSA, and that VTS's performance failures were a direct consequence of Stonefield's under-tendering, which deprived VTS of the revenue necessary to maintain committed fleet capacity. This argument is substantially rebutted by the force majeure defense and by the actual tender data.

Stonefield properly invoked the force majeure clause of the TSA (Section 12.1) with respect to the COVID-19 pandemic, providing written notice to VTS on April 3, 2020. The force majeure period lasted from approximately April through September 2020, a period of six months during Contract Year 2 ("CY2," running April 2020 through March 2021). During this period, Stonefield's distribution volumes declined significantly due to government-mandated facility closures, supply chain disruptions, and reduced consumer demand — all of which constitute qualifying Force Majeure Events under the TSA's broad definition in Section 12.1(a).

Adjusting the CY2 ACV for the six-month force majeure period, the prorated minimum is $21.6 million ($43.2 million × 6/12). Stonefield's actual CY2 tenders totaled $31.8 million — exceeding the adjusted minimum by $10.2 million, or approximately 47%. Accordingly, Stonefield did not breach the ACV commitment for CY2, and Vantor's argument that volume shortfalls in CY2 caused cascading capacity problems in CY3 fails for want of a factual predicate.

With respect to Contract Year 3 ("CY3," April 2021 through March 2022), Stonefield's tenders for the partial period of April 2021 through January 2022 (ten of twelve months) totaled $36.5 million. Vantor argues that this pace would have resulted in a full-year total of approximately $43.8 million, which would fall below the CY3 ACV. Stonefield's position, however, is that the shortfall calculation is premature and methodologically flawed: the contract year was interrupted by the valid for-cause termination effective February 18, 2022, and it is improper to calculate ACV compliance for a contract year that was not completed due to the counterparty's own material breaches. Moreover, even accepting Vantor's arithmetic, the alleged shortfall would be modest (approximately $1.4 million below the $45.2 million CY3 ACV), and Vantor has not demonstrated a causal nexus between this marginal shortfall and VTS's catastrophic Q4 2021 performance failures, which — as the Milescu email demonstrates — were caused by VTS's deliberate diversion of resources to another client.

2. Exclusivity Violation Allegation. Vantor contends that Stonefield breached the TSA's exclusivity provisions by using alternative carriers — specifically, Cascade Freight Systems Inc. and Briarwood Trucking Co. — during the TSA term, and that this breach constitutes an independent basis for damages and/or excuses VTS's own performance failures.

This argument is weak and largely foreclosed by the contractual text and the third-party discovery record. Calderwood & Harkness served third-party subpoenas on both Cascade Freight and Briarwood in June 2023. The subpoena responses, which were received and analyzed on August 1 and August 3, 2023, respectively, confirm that Stonefield's use of these carriers was limited to Lanes 8 through 14. Under Schedule C, Section 2(b) of the TSA, Lanes 8 through 14 are expressly classified as "Secondary Lanes," and the exclusivity restriction in Section 6.1 applies only to "Primary Lanes" as defined in Schedule C, Section 2(a). Accordingly, Stonefield's use of Cascade Freight and Briarwood on Secondary Lanes was fully permitted under the contract, and Vantor's exclusivity argument is without merit.

Catherine Kirkwood, Stonefield's SVP of Supply Chain Operations, confirmed at her deposition on July 14, 2023 that the decision to engage alternative carriers on Secondary Lanes was driven by operational necessity — specifically, by VTS's declining service levels on those lanes beginning in late Q3 2021 — and that Stonefield's logistics team was careful to limit alternative carrier usage to lanes not subject to exclusivity restrictions. Kirkwood further testified that she personally reviewed the lane classifications with Stonefield's in-house counsel before authorizing the alternative carrier arrangements.

3. Rate Adjustment Motive Allegation. Vantor's most potent remaining argument is that Stonefield's termination of the TSA was pretextual — that the true motivation was to avoid the contractual rate adjustment scheduled for April 1, 2022, under Section 9.3 of the TSA. The rate adjustment, based on the formula specified in Schedule D, would have increased the weighted average per-mile rate from $2.87 to approximately $3.28, representing a 14.3% increase that would have added approximately $6.2 million to Stonefield's annual transportation costs.

Calderwood & Harkness acknowledges that this is a risk factor. Vantor will argue — and a finder of fact could potentially accept — that the temporal proximity between the anticipated rate increase and the termination suggests that the rate increase was the true motivating factor behind the termination, and that the for-cause grounds were pretextual.

However, this argument does not defeat the for-cause defense where objective Cause existed at the time of termination, as it indisputably did here. Under New York law, a party that has the contractual right to terminate for cause may exercise that right regardless of whether it also had other, non-contractual motivations for the termination. See, e.g., Ostrander National Bank Sec. LLC v. Voegeli, No. 11 Civ. 2967, 2012 WL 1377686, at *7 (S.D.N.Y. Apr. 19, 2012) (holding that the existence of a valid contractual ground for termination precludes a claim for wrongful termination even where other motives may have contributed to the decision). Stonefield need not prove that the rate increase played no role in its decision-making; it need only prove that a valid for-cause basis existed, which the record overwhelmingly supports.

The principal evidentiary risk in connection with this argument is the Catherine Kirkwood email of September 22, 2021, to Tobias Wren and James Paulson (Stonefield's CEO), which states:

"If VTS doesn't get its act together by Q1 I think we pull the plug on the whole contract."

Vantor will argue that this email — written before the Q4 2021 performance failures had fully materialized and before the Cure Notice process began — reveals a premeditated exit plan. This is a legitimate litigation risk that Calderwood & Harkness has flagged in prior assessments. However, Kirkwood testified credibly at her deposition on July 14, 2023 that the email reflected her frustration with VTS's declining service levels, which were already evident in Q3 2021, and did not reflect a decision to terminate the contract. She further testified that the phrase "pull the plug" was colloquial and referred to exploring alternative carrier options for Secondary Lanes — which is consistent with the Cascade Freight and Briarwood arrangements that followed — rather than to terminating the TSA itself. Kirkwood categorically denied that the rate adjustment influenced the termination decision, testifying that she "wasn't even aware of the specific rate adjustment numbers until after the termination notice was sent." While a fact-finder could choose to credit or discredit this testimony, it was delivered in a credible and consistent manner.

C. Damages Exposure Assessment

Even assuming arguendo that a fact-finder were to reject the for-cause defense and find the termination wrongful, Stonefield's damages exposure is significantly more limited than Vantor claims.

1. Stonefield's Expert — Dr. Evelyn Rosser. Dr. Evelyn Rosser of Kensington Analytics Group LLC served her rebuttal expert report on August 25, 2023. Dr. Rosser's opinions are as follows:

• If termination was valid for Cause: $0 in damages. No payment is owed because Stonefield exercised a valid contractual right.

• Under alternative lost-profits theory (assuming arguendo wrongful termination): Maximum damages of $8.2 million, after adjusting for (a) VTS's own breaches, which reduced the value of the TSA to VTS; (b) VTS's failure to mitigate damages by seeking replacement business (the record reflects no meaningful mitigation efforts until approximately July 2022, five months after termination); (c) volume shortfall offsets, reflecting volumes that VTS would not have received even absent the termination; and (d) a proper market-based lost-profits calculation using VTS's actual historical operating margins (approximately 6.4% in FY 2021) rather than the inflated assumptions used by Vantor's expert.

• Liquidated damages clause unenforceability: The liquidated damages clause in Section 14.2, which produces a calculated figure of $67.23 million based on the remaining contract term, is grossly disproportionate to any reasonable estimate of actual harm and is therefore unenforceable as a penalty under New York law. Dr. Rosser's report demonstrates that the liquidated damages formula fails the Truck Rent-A-Center proportionality test, as the formula does not account for VTS's ability to mitigate, does not adjust for VTS's own breaches, and produces results that exceed the maximum possible lost profits by a factor of approximately eight.

2. Vantor's Expert — Dr. Philip Trask. Dr. Philip Trask of Trask Greystone & Associates served his expert report on May 15, 2023, opining that Vantor's total damages are $95.4 million. Dr. Trask's report suffers from significant methodological weaknesses that will be the subject of a Daubert motion:

• Assumes enforceability of liquidated damages without legal analysis. Dr. Trask simply applies the contractual formula without conducting any analysis of whether the liquidated damages clause is enforceable as a reasonable pre-estimate of harm. This is a legal conclusion, not an economic one, and is outside the scope of Dr. Trask's expertise.

• Uses inflated operating margin assumptions. For his lost-profits calculation, Dr. Trask assumes a 12% operating margin for VTS, which is nearly double VTS's actual historical operating margin of approximately 6.4%. Dr. Trask justifies this by reference to "industry benchmarks" for dedicated fleet services, but fails to account for VTS's actual cost structure, which includes above-market driver compensation and high equipment lease obligations.

• Fails to account for VTS's own breaches. Dr. Trask's lost-profits model assumes that VTS would have performed the full remaining contract term at full volume, with no adjustment for VTS's own Material Performance Failures, which would have entitled Stonefield to withhold performance credits, volume adjustments, or further termination rights.

• Contains no meaningful mitigation analysis. Dr. Trask acknowledges that VTS "pursued alternative business opportunities" after the termination but does not quantify the revenue VTS obtained from alternative engagements or assess whether VTS's mitigation efforts were commercially reasonable. Under New York law, a non-breaching party has a duty to mitigate damages, and failure to do so reduces the recoverable amount. Dr. Trask's omission of mitigation analysis renders his damages figure unreliable.

3. Settlement Authority. The settlement authority previously approved by the Stonefield Board of Directors (upon the recommendation of General Counsel and Calderwood & Harkness) is $0 to $4.5 million, reflecting a nuisance value / litigation cost avoidance range. This authority was established in the November 8, 2022 Settlement Authority Memorandum and confirmed by Ridgeline Capital Partners on November 15, 2022, through Alison Trang's written concurrence. The authority was reviewed and reaffirmed in the August 30, 2023 Updated Settlement Authority Analysis, which concluded that the discovery developments described above — particularly the Milescu email and deposition testimony, the Hess confirmation of VTS's performance data, and the third-party subpoena responses on the exclusivity issue — have materially strengthened Stonefield's position and that the existing authority range remains appropriate. Calderwood & Harkness does not recommend increasing the authority at this time and, indeed, believes that the circumstances described in Section III above may create an opportunity for resolution at or near $0 if the CRS–Vantor relationship collapses.

V. Analysis: Why Deferral Is the Recommended Course

A. Futility of Mediation Under Current Circumstances

The most compelling reason to defer is that any mediation conducted under the current circumstances would be unlikely to produce a meaningful result. If the CRS–Vantor relationship is indeed fracturing — as the circumstantial indicators strongly suggest — then any mediation would be conducted with counsel who may lack functional settlement authority, a viable working relationship with the client, or the professional incentive to negotiate in Vantor's best interests as opposed to CRS's own fee-recovery interests.

Effective mediation requires both parties to participate in good faith with the genuine authority and intention to negotiate a resolution. If Vantor's counsel is distracted by a fee dispute, if Vantor itself is unresponsive or disengaged from the litigation, or if the settlement overture is being driven primarily by CRS's desire to generate a settlement fund from which its outstanding fees could be satisfied, then the mediation process would be fundamentally compromised. Stonefield would invest time, attention, and resources in preparing for a mediation that cannot succeed because the counterparty is not functioning as a coherent litigation participant.

There is a further, more specific risk: if CRS withdraws as counsel shortly after a mediation is scheduled — or, worse, shortly after a mediation is conducted — the process would have been entirely wasted. Mediation preparation costs for a case of this size and complexity are not trivial, typically involving preparation of a mediation statement, a confidential mediator submission, client preparation sessions, and the mediator's fees. Calderwood & Harkness estimates that Stonefield's costs for a one-day mediation would be approximately $75,000 to $100,000, including mediator fees, attorney time, and travel costs. Incurring these costs for a mediation that is unlikely to succeed — and that may be overtaken by events within weeks — would be an imprudent expenditure.

B. No Obligation to Mediate

There is no contractual, procedural, or legal obligation that requires Stonefield to accept Vantor's mediation proposal or to engage in settlement discussions at this time.

The TSA's dispute resolution provision, set forth in Section 16, requires only that the parties participate in a 30-day executive negotiation period before either party may initiate litigation. This requirement was satisfied in full through the May 16 and June 3, 2022 executive negotiation sessions. Section 16 does not impose any mediation requirement, and the parties did not enter into a separate mediation agreement at any point during the pre-suit or post-suit phases of this dispute.

The Case Management Order entered by Judge Calloway on February 17, 2023 likewise does not impose a mediation requirement. While the Case Management Order includes a standard provision noting that "the parties are encouraged to explore settlement at appropriate stages of the litigation," this is precatory language that creates no enforceable obligation. The order does not mandate mediation, does not require the parties to participate in a settlement conference, and does not set a deadline for settlement discussions.

Accordingly, Stonefield is free to decline the overture or to defer substantive engagement without consequence.

C. Preserving Strategic Position

Engaging in settlement discussions at this juncture would carry significant strategic risks that outweigh any potential benefits.

1. Signal of Weakness. Accepting a mediation invitation — particularly one that comes unsolicited from the plaintiff's side — could be interpreted by Vantor and its counsel as a signal that Stonefield is concerned about the outcome of the case and eager to resolve it. This interpretation would be contrary to the facts: Stonefield's litigation position is strong and has only grown stronger during discovery. An affirmative acceptance of the overture, or even an enthusiastic response, could embolden Vantor to adopt a more aggressive settlement posture and could undermine Stonefield's credibility in future negotiations by suggesting that Stonefield's prior confidence in its position was overstated.

2. Increased Leverage Through Patience. If Vantor's counsel withdraws and the case stalls, Stonefield's negotiating leverage increases dramatically. A Vantor that is unrepresented, facing a looming dismissal deadline, and unable to afford competent replacement counsel would be far more amenable to settlement on terms favorable to Stonefield — potentially including a walk-away or a nominal nuisance payment — than a Vantor that is fully represented and actively litigating. Engaging in a mediation now, before this dynamic has had an opportunity to develop, would sacrifice this potential upside for no corresponding gain.

3. Consistency with Ridgeline's Posture. Ridgeline Capital Partners, LP, as the majority equity holder in Stonefield, has consistently expressed a preference for an aggressive defense posture in this litigation. Alison Trang confirmed this preference in the November 15, 2022 settlement authority concurrence and reiterated it in discussions with the undersigned on August 30, 2023, in connection with the Updated Settlement Authority Analysis. Entering into a mediation at this juncture — particularly one proposed by the plaintiff's counsel under circumstances suggesting that the overture is driven by counsel's own interests rather than a genuine reassessment of the merits — would be inconsistent with Ridgeline's expressed preference and should not be undertaken without Ridgeline's affirmative concurrence. For the reasons stated in this memorandum, Calderwood & Harkness does not recommend seeking such concurrence at this time.

D. Costs of Continued Litigation vs. Settlement Now

A practical comparison of the costs of continued litigation versus the costs of settlement at this stage further supports the deferral recommendation.

1. Litigation Costs to Date. Total Calderwood & Harkness fees and disbursements incurred in this matter through approximately October 2023 are estimated at $4.42 million, consisting of approximately $3.8 million in attorney and paraprofessional fees and approximately $620,000 in costs and disbursements. The latter category includes expert fees (Dr. Rosser and Kensington Analytics Group), eDiscovery hosting and processing through Pinnacle Forensics LLC, deposition transcript and videography costs, court reporter fees, and travel costs associated with depositions conducted in New York, Chicago, and Houston.

2. Projected Costs Through Disposition. The September 20, 2023 Semi-Annual Risk Assessment projected total spend through disposition — encompassing expert discovery, summary judgment briefing, and trial preparation — at $5.5 to $7.2 million, representing an additional $1.1 to $2.8 million in incremental spend beyond the current run rate. The lower end of this range assumes a successful summary judgment motion that disposes of the case without trial; the upper end assumes denial of summary judgment and a full trial.

3. Cost Scenario if Case Becomes Dormant. If CRS withdraws and the case becomes dormant pending Vantor's retention of substitute counsel — or ultimately dismissed for failure to prosecute — Stonefield's ongoing litigation costs would be minimal. Calderwood & Harkness would maintain quarterly docket monitoring, periodic client updates, and preservation of work product, at an estimated cost of $5,000 to $10,000 per quarter. This represents a dramatic reduction from the current monthly run rate and would result in significant cost savings relative to either continued active litigation or a settlement accompanied by negotiation and documentation costs.

4. Settlement Cost Analysis. Any settlement at this juncture would involve not only a settlement payment (which, given Vantor's stated demand and the current dynamics, would likely start at a figure well in excess of Stonefield's $0–$4.5 million authority), but also the transactional costs of negotiating and documenting the settlement, including mediation fees, settlement agreement drafting and negotiation, mutual release language, and potential confidentiality and non-disparagement provisions. These transactional costs would be incremental to the settlement amount and would not serve Stonefield's interests if the case can be resolved for less — or eliminated entirely — through patience.

VI. Proposed Response to Caldwell Royce

Calderwood & Harkness recommends that Stonefield respond to Harrison Caldwell's September 25, 2023 email with a brief, professionally courteous reply that (1) acknowledges the overture, (2) communicates Stonefield's general openness to reasonable discussions, and (3) declines to commit to a specific process or timeline at this time.

The proposed response should convey the following substantive points:

• Stonefield "remains open to reasonable discussions" regarding the matter, consistent with its obligation of good faith and its general approach to dispute resolution.

• However, Stonefield believes that "current timing is not conducive to productive mediation," in light of the current stage of the litigation and the parties' respective positions.

• Stonefield would be willing to revisit the question of settlement discussions at a later time if circumstances warrant.

The response should be calibrated to avoid several potential pitfalls:

• The response should not close the door entirely. An outright rejection of the overture could be viewed unfavorably by the Court if subsequently disclosed (e.g., in connection with a motion for sanctions or a request for a settlement conference) and could be characterized by Vantor as evidence of Stonefield's bad faith or intransigence. A noncommittal response that leaves the door open preserves Stonefield's flexibility without committing to any action.

• The response should not commit to any specific process, timeline, or dollar range. Any specificity — such as a proposed mediation date, a suggestion of mediator candidates, or an indication of settlement parameters — would be premature and would signal a level of engagement that is inconsistent with the deferral strategy.

• The response should not reference any knowledge or suspicion of the fee dispute or potential withdrawal. Referencing such matters would be inappropriate, as the CRS–Vantor attorney-client relationship is privileged and Stonefield has no basis to comment on it. Moreover, creating a written record of Stonefield's knowledge or suspicion of the fee dispute could complicate future proceedings — for example, if Vantor later argues that Stonefield engaged in bad faith by deliberately timing its response to take advantage of CRS's withdrawal. The response should be drafted as though Stonefield is unaware of any issues in the CRS–Vantor relationship and is declining the overture purely on the basis of timing and case posture.

A draft response email will be prepared by Calderwood & Harkness and circulated to Tobias Wren and Alison Trang for review and comment before transmission. We anticipate that the response can be finalized and sent within two to three business days of receiving approval of the deferral recommendation.

VII. Recommended Next Steps

Based on the foregoing analysis, Calderwood & Harkness recommends the following action items:

1. Approve Deferral. Tobias Wren and Alison Trang should confirm their agreement with the recommendation to defer substantive settlement discussions at this time. This confirmation may be communicated by email, telephone, or in-person meeting, at their convenience. Calderwood & Harkness is available to discuss this memorandum and its recommendations at any time.

2. Send Response. Upon receipt of approval, Samuel Eklund will transmit the noncommittal response email to Harrison Caldwell at Caldwell Royce & Shapiro LLP. The draft response will be circulated to Tobias and Alison for review before transmission, as described in Section VI above.

3. Monitor for Withdrawal Motion. Calderwood & Harkness will closely monitor the docket in Case No. 22-cv-07841 for any motion by Caldwell Royce & Shapiro to withdraw as counsel for Vantor Holdings Corp. If such a motion is filed, Calderwood & Harkness will promptly notify Tobias and Alison and will prepare a response or statement of position as appropriate, including any request for conditions on withdrawal (such as a deadline for Vantor to retain substitute counsel and consequences for failure to do so).

4. Preserve Summary Judgment Work Product. The Summary Judgment Roadmap Memorandum (dated September 15, 2023) and supporting research memoranda, including the analysis of the enforceability of the liquidated damages clause, the force majeure defense, and the Daubert arguments against Dr. Trask's expert testimony, should be preserved and maintained in a state of readiness for activation. If the case resumes — whether with the same counsel, new plaintiff's counsel, or on an accelerated schedule set by the Court — Calderwood & Harkness must be prepared to move promptly to summary judgment briefing.

5. Contingency for New Counsel. If Vantor does retain new counsel and the case proceeds, Calderwood & Harkness will reassess the settlement posture at that time based on new counsel's approach, any changes in case dynamics resulting from the transition, and any new information that emerges. The reassessment will include an evaluation of whether the existing settlement authority of $0–$4.5 million remains appropriate or should be adjusted, and will be the subject of a supplemental memorandum to Tobias and Alison.

6. Ridgeline Notification. Alison Trang should brief Douglas Whitmore (Managing Partner, Ridgeline Capital Partners, LP) as appropriate regarding the settlement overture, the indicators of the CRS–Vantor relationship strain, and the recommended deferral. The timing and level of detail of this briefing is within Alison's discretion, but Calderwood & Harkness recommends that the briefing occur promptly so that Ridgeline is fully informed of the current posture and can provide input if desired.

VIII. Conclusion

The settlement overture received from Caldwell Royce & Shapiro on September 25, 2023 appears, based on the totality of the circumstances, to be driven by counsel's own interests — most likely an effort to resolve the case before a deteriorating fee relationship renders continued representation untenable — rather than by a genuine reassessment of Vantor's litigation position or a newfound willingness to negotiate in a range that would be acceptable to Stonefield.

Stonefield's defense position is strong. It has been materially reinforced by the discovery record developed over the past fifteen months of litigation, particularly: (i) the Milescu email (VHC-008417), which establishes that VTS deliberately diverted dedicated fleet capacity to another client without notice to Stonefield; (ii) the Milescu and Pruitt deposition testimony, which confirms VTS's failure to maintain committed capacity and its failure to undertake meaningful cure efforts; (iii) the Hess testimony confirming that the Q4 2021 performance data was drawn from VTS's own systems and was not disputed by VTS; and (iv) the third-party subpoena responses from Cascade Freight and Briarwood Trucking, which confirm that Stonefield's use of alternative carriers was limited to Secondary Lanes not subject to exclusivity restrictions.

Deferral carries minimal risk and substantial potential upside. If the CRS–Vantor relationship collapses and Vantor is unable to retain competent substitute counsel, the case may be subject to dismissal for failure to prosecute, or Vantor may be forced to negotiate a resolution on terms dramatically more favorable to Stonefield than anything achievable today. In contrast, engaging in settlement discussions now offers no strategic benefit — the mediation would likely be futile, the costs would be wasted, and Stonefield would project a degree of concern about the case outcome that is unwarranted by the facts.

Accordingly, Calderwood & Harkness recommends that Stonefield defer substantive settlement discussions, respond to Caldwell Royce with a noncommittal but courteous reply, and maintain its current aggressive defense posture while monitoring the docket for developments in the CRS–Vantor relationship.

We stand ready to discuss this memorandum and its recommendations further at Tobias's or Alison's convenience. Please do not hesitate to contact me directly at (212) 555-0184 or by email at seklund@calderwoodharkness.com.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Samuel Eklund Responsible Partner, Litigation (General) 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 555-0184

Email: seklund@calderwoodharkness.com

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT Matter No. 1012-00005

Service Level Obligation	Contractual Minimum	Actual Q4 2021 Performance	Variance
On-time pickup rate	95%	78.2%	-16.8 pp
On-time delivery rate	93%	81.6%	-11.4 pp
Tender acceptance rate	90%	71.4%	-18.6 pp
Equipment availability (dedicated fleet)	400 tractors	~248 tractors (62%)	-38%
Cargo claims ratio	≤0.5%	1.07%	+0.57 pp

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
This memorandum is protected by the attorney-client privilege and constitutes attorney work product. It is intended solely for the use of the addressees and authorized representatives of Stonefield Logistics Group Inc. and Ridgeline Capital Partners, LP. Any dissemination, distribution, or copying of this memorandum to persons not authorized to receive it is strictly prohibited. If you have received this document in error, please notify Samuel Eklund at Calderwood & Harkness LLP immediately.
CALDERWOOD & HARKNESS LLP INTERNAL MEMORANDUM
September 28, 2023
TO: Tobias Wren, General Counsel, Stonefield Logistics Group Inc. Alison Trang, Partner / SLG Board Member, Ridgeline Capital Partners, LP
FROM: Samuel Eklund, Responsible Partner, Litigation (General), Calderwood & Harkness LLP
RE: Response to Vantor Holdings Corp. Settlement Overture — Recommendation to Defer
MATTER: Vantor Holdings Corp. v. Stonefield Logistics Group Inc., Case No. 22-cv-07841 (S.D.N.Y.)
C&H MATTER NO.: 1012-00005
I. Purpose
On September 25, 2023, Harrison Caldwell of Caldwell Royce & Shapiro LLP ("CRS"), lead counsel for Vantor Holdings Corp. ("Vantor" or "VHC"), transmitted an email to the undersigned indicating that Vantor "would be open to discussing resolution" of this matter and proposing that the parties engage a mediator to facilitate settlement discussions. The email was brief and informal in nature, and notably did not specify a proposed settlement figure, range, or substantive terms. A copy of the email has been preserved in the matter file.
The purpose of this memorandum is threefold: (1) to describe and analyze the settlement overture in the context of recent developments in the litigation and in the Vantor–CRS attorney-client relationship; (2) to provide an updated assessment of Stonefield's litigation position as informed by the now-substantially-complete fact discovery record; and (3) to recommend a course of action in response to the overture.
Bottom-line recommendation: Stonefield should defer substantive settlement discussions at this time. Calderwood & Harkness recommends responding to Caldwell Royce with a noncommittal but professionally courteous reply indicating that Stonefield "remains open to reasonable discussions" but believes that the "current timing is not conducive to productive mediation." The principal reasons for deferral center on strong indications — discussed in detail in Section III below — that Caldwell Royce & Shapiro's relationship with its client, Vantor, is fracturing due to an apparent fee dispute, and that any settlement process initiated now would be either futile or affirmatively counterproductive to Stonefield's interests. Engaging prematurely in a mediation or settlement negotiation under these circumstances would risk projecting weakness, incurring unnecessary costs, and potentially providing Vantor's counsel with a fee-recovery event that serves CRS's interests rather than the interests of achieving a genuine resolution on terms favorable to Stonefield.
This memorandum should be read in conjunction with the Summary Judgment Roadmap Memorandum dated September 15, 2023, the September 20, 2023 Semi-Annual Risk Assessment, and the August 30, 2023 Updated Settlement Authority Analysis, copies of which have been previously circulated to Tobias and Alison.
II. Background: The Settlement Overture
A. The Caldwell Email
On September 25, 2023, at approximately 4:47 p.m. Eastern, Harrison Caldwell sent an email to the undersigned from his personal CRS email address. The email read, in relevant part:
Sam — I wanted to reach out informally to see whether your client might have any interest in exploring resolution of this matter. My client would be open to discussing resolution, and we think it could be productive for the parties to sit down with a mediator to see if there's a way to bring this to a close. Happy to discuss logistics if you and your client are amenable. — Harrison
Several aspects of this communication merit attention. First, the email was notably brief and informal, lacking the structured, detailed format that typically accompanies a serious settlement overture in a case of this magnitude. Caldwell did not specify a proposed settlement dollar figure or range, did not identify particular terms or conditions that Vantor would require, and did not reference the specific claims or damages theories that Vantor would seek to monetize in any resolution. Second, the email proposed mediation as the mechanism for settlement discussions — a process that involves scheduling, mediator selection, pre-mediation briefing, and associated costs — rather than suggesting a more preliminary exchange of views or positions. Third, and perhaps most significantly, the tone of the email carried a subtle but discernible sense of urgency, particularly in the phrase "bring this to a close," which is atypical for a plaintiff purportedly seeking nearly $100 million in damages.
B. Prior Settlement History
To place this overture in context, it is important to note that this is the first affirmative settlement overture from Vantor's side since the pre-suit phase of this dispute. The prior settlement history is as follows:
• April 8, 2022 — Pre-Suit Demand Letter: CRS, on behalf of Vantor, transmitted a formal demand letter to Stonefield's then-outside counsel (prior to Calderwood & Harkness's engagement) demanding $95.4 million in damages based on the liquidated damages clause in the Transportation Services Agreement (the "TSA"), alleged lost profits, and ancillary damages theories. The demand letter was detailed, aggressive in tone, and accompanied by a 14-page damages analysis prepared by Dr. Philip Trask of Trask Greystone & Associates.
• May 16, 2022 — First Executive Negotiation Session: Pursuant to Section 16 of the TSA, the parties convened an executive-level negotiation session. Vantor was represented by Nikolai Vantorovich (CEO) and Derek Pruitt (SVP, Business Development); Stonefield was represented by Tobias Wren (General Counsel) and Catherine Kirkwood (SVP, Supply Chain Operations). The session was unproductive. Vantor maintained its $95.4 million demand; Stonefield maintained that the termination was valid for Cause and that no payment was owed.
• June 3, 2022 — Second Executive Negotiation Session: A follow-up session was held, again without meaningful progress. At the conclusion of the session, the parties acknowledged that the mandatory 30-day executive negotiation period under Section 16 had been satisfied and that litigation could proceed.
• June 28, 2022 — Complaint Filed: Vantor filed its complaint in the Southern District of New York.
There have been no further settlement communications between the parties from June 2022 through September 24, 2023 — a period of approximately fifteen months during which the case has proceeded through pleadings, initial disclosures, extensive document production, and six fact depositions.
C. Contextual Timing
The timing of this overture is significant. The fact discovery deadline in this matter is September 29, 2023 — four days after Caldwell's email was sent. Expert discovery is scheduled to intensify in October and November 2023, with rebuttal expert reports due November 10, 2023 and expert depositions to follow. The overture thus arrives at a natural inflection point in the litigation: the transition from fact discovery, where costs have already been substantially incurred, to expert discovery and dispositive motion practice, where significant additional costs lie ahead.
As discussed in detail in Section III below, there are strong reasons to believe that this timing is driven not by a genuine reassessment of the merits of Vantor's claims, but by counsel-side considerations relating to CRS's relationship with its client and its ability or willingness to continue prosecuting this case through expert discovery, summary judgment, and trial.
III. Context: Indicators of Counsel-Client Breakdown at Caldwell Royce & Shapiro
A. Fee Dispute intelligence
Over the past several weeks, Calderwood & Harkness has observed a pattern of indicators, taken together, that suggest the attorney-client relationship between Caldwell Royce & Shapiro and Vantor Holdings Corp. is under significant strain, most likely due to a fee dispute.
We emphasize at the outset that we do not have direct evidence of a fee dispute — such information would be privileged and has not been disclosed to us. Rather, we have assembled a series of indirect signals and circumstantial indicators that, in the collective professional judgment of the litigation team, point strongly in that direction. These indicators include the following:
1. Irregular Litigation Conduct. Beginning in approximately mid-August 2023, CRS's litigation conduct has exhibited notable irregularities that are inconsistent with the firm's typical practice in this case and in commercial litigation generally. Specifically:
• Delayed responses to correspondence. CRS has failed to respond to three separate meet-and-confer emails sent by Calderwood & Harkness on August 17, August 28, and September 11, 2023, regarding outstanding discovery issues, including the production of documents from Vantor's European subsidiaries that were the subject of Judge Calloway's August 3, 2023 discovery order. Prior to mid-August, CRS had been reasonably responsive to discovery correspondence, typically responding within two to four business days.
• Failure to schedule the Vantorovich deposition completion. Nikolai Vantorovich's deposition was commenced on September 8, 2023 but was adjourned after approximately three hours due to a scheduling conflict raised by CRS. The Court's August 3, 2023 discovery order requires the deposition to be completed by October 20, 2023. Calderwood & Harkness has made three written requests to CRS (September 12, September 18, and September 25, 2023) to schedule the continuation, and CRS has not responded to any of them. This is particularly striking given that Vantorovich is CRS's own client and it is CRS's obligation to produce him for the completion of his deposition.
• General lack of engagement. CRS has not served any deposition notices, document requests, or interrogatories since July 2023, and its participation in the September 14, 2023 telephonic discovery conference before Magistrate Judge Parekh was notably perfunctory. CRS's associate, Melissa Chow, appeared on behalf of the firm and offered minimal substantive input on the disputed discovery issues.
2. Timing of the Settlement Overture. The timing of the overture — arriving at the tail end of the fact discovery period and immediately before the onset of expert discovery — is consistent with a scenario in which CRS is attempting to resolve the case before it would be required to incur further substantial fees that may go unpaid. Expert discovery in a case of this complexity would require significant additional investment by CRS, including preparation for and defense of Dr. Trask's deposition (which Calderwood & Harkness has noticed for December 2023), potential supplemental expert work, and pre-motion and summary judgment briefing. If CRS's fees are currently outstanding and Vantor is unable or unwilling to pay, CRS faces the prospect of investing additional hundreds of thousands of dollars in a case from which it may never be compensated.
3. Vantor's Financial Trajectory. Publicly available financial information and information obtained in discovery confirm that Vantor's financial condition has deteriorated significantly since the commencement of this litigation. VHC's fiscal year 2022 revenue declined to approximately $310 million from $385 million in fiscal year 2021, reflecting both the loss of the Stonefield contract (which represented approximately $43 million in annual committed volume) and broader market softening in the intermodal and dedicated trucking segments. While we do not have FY 2023 financials, the market conditions that drove the FY 2022 decline have not materially improved, and Vantor's loss of several other accounts (as reflected in its supplemental document production in July 2023) suggests continued revenue pressure. A company in this financial posture may well be unable or unwilling to continue funding litigation at the rates charged by a firm of CRS's caliber.
4. Absence of Internal Vantor Participation. In the early stages of the litigation, Vantor's in-house legal department — specifically, its Deputy General Counsel, Priya Ramachandran — was actively engaged in discovery coordination, privilege review, and strategic discussions (as reflected in several meet-and-confer communications that referenced Ms. Ramachandran's input). Since approximately June 2023, Ms. Ramachandran has not appeared on any correspondence, and CRS has not referenced her involvement. While this could have innocent explanations, it is consistent with a scenario in which the in-house legal function has disengaged from the litigation, potentially as a result of internal disagreements about case strategy or litigation spend.
We note that none of these indicators is, standing alone, conclusive evidence of a fee dispute or attorney-client breakdown. Taken together, however, they form a coherent pattern that is most parsimoniously explained by a fracturing of the CRS–Vantor relationship.
B. Implications of Potential Withdrawal
If the CRS–Vantor relationship does break down and CRS moves to withdraw as counsel, the consequences for Vantor's prosecution of this case would be severe.
1. Corporate Pro Se Prohibition. Vantor Holdings Corp. is a New York corporation. It is well-established in the Second Circuit that a corporation may not appear pro se in federal court; only natural persons may do so. See Rowland v. Cal. Men's Colony, 506 U.S. 194, 201–02 (1993); Lattanzio v. COMTA, 481 F.3d 137, 139–40 (2d Cir. 2007). Accordingly, if CRS withdraws and Vantor does not promptly retain substitute counsel, Vantor will be unable to prosecute its case, file papers, or appear at hearings. The Court would likely set a deadline for Vantor to obtain new counsel, and if Vantor failed to do so, the case would be subject to dismissal.
2. Stay of Deadlines and Case Delay. A withdrawal by CRS would almost certainly be accompanied by a motion for a stay of deadlines pending Vantor's retention of new counsel. Courts in the Southern District routinely grant such stays, typically for 30 to 60 days. If Vantor requires additional time — which is likely in a case of this complexity — the stay could extend further. This delay, while superficially neutral, redounds to Stonefield's benefit: it extends the period during which Stonefield incurs minimal litigation costs while Vantor bears the burden of finding, retaining, and transitioning to new counsel.
3. Difficulty Retaining Replacement Counsel. Given the nature and circumstances of the case, Vantor may face significant challenges in retaining competent replacement counsel willing to handle this matter on terms acceptable to Vantor. This case involves a complex commercial breach-of-contract dispute with substantial discovery already completed, requiring any new firm to invest significant time in familiarizing itself with the record. The case currently involves approximately 75,519 documents produced by both sides — 42,387 documents produced by Stonefield and 33,132 documents produced by Vantor (28,914 in its initial production and 4,218 in supplemental production pursuant to the Court's August 3, 2023 order). Six fact depositions have been conducted (Derek Pruitt, Catherine Kirkwood, Raymond Hess, Sandra Milescu, and the partial deposition of Nikolai Vantorovich), generating thousands of pages of transcript. Expert reports have been exchanged. Any new firm would need to absorb all of this material before it could competently represent Vantor going forward.
Moreover, if Vantor is in a fee dispute with CRS — a reputable and well-regarded commercial litigation firm — prospective replacement counsel would have legitimate concerns about Vantor's ability and willingness to pay. A firm willing to take the case on a contingency or hybrid fee arrangement would likely demand a substantial contingency percentage, which may be unattractive to Vantor given the speculative nature of the damages claim. Alternatively, a less experienced or less well-resourced firm might take the case but would be less effective in prosecuting it, further diminishing the value of Vantor's claims.
C. Strategic Advantage of Patience
The foregoing analysis leads to a clear strategic conclusion: patience is Stonefield's most valuable asset at this juncture.
1. Potential Dismissal for Failure to Prosecute. If CRS withdraws and Vantor fails to retain substitute counsel within the time period set by the Court, the case would be subject to dismissal for failure to prosecute under Federal Rule of Civil Procedure 41(b). While dismissal under Rule 41(b) is an extreme remedy and courts are reluctant to impose it without providing ample opportunity to cure, the practical reality is that a plaintiff corporation that cannot retain counsel is a plaintiff that cannot prosecute its case. A dismissal under Rule 41(b) would operate as an adjudication on the merits unless the Court specifies otherwise, potentially barring future re-filing.
2. New Counsel Ramp-Up Period. Even if Vantor does retain new counsel, the transition period would be significant. Any new firm would need to review and digest the full discovery record — 75,519 documents, six depositions, expert reports, and extensive motion practice and discovery correspondence — before it could competently participate in further proceedings. This ramp-up period could take months and would require Vantor to invest substantial additional funds at a time when its financial condition may not support such expenditure. During this period, the litigation would effectively be on hold, reducing Stonefield's ongoing costs to nominal levels.
3. Time Favors Stonefield. As a general matter, the passage of time favors the defendant in this case for several reasons. First, witnesses' memories fade, and Vantor's ability to present its case effectively at trial diminishes with time. Second, Vantor's financial condition may continue to deteriorate, further reducing both its ability to fund litigation and the practical collectibility of any judgment it might obtain. Third, the case becomes increasingly burdensome for any incoming plaintiff's counsel, who must assume the cost and risk of bringing a complex commercial case to trial with a client that may have difficulty paying its legal fees. Fourth, Stonefield's for-cause termination defense is based on documented, objective performance data that does not degrade with the passage of time, whereas Vantor's narrative defenses — which depend heavily on witness testimony regarding intentions, motivations, and business judgment — become less compelling as memories grow more distant.
For all of these reasons, Calderwood & Harkness recommends that Stonefield defer any substantive engagement with Caldwell Royce's settlement overture and instead adopt a posture of watchful patience.
IV. Current Assessment of Stonefield's Litigation Position
To provide a complete basis for the deferral recommendation, this Section presents an updated assessment of Stonefield's litigation position as informed by the substantially complete fact discovery record. This assessment reinforces and strengthens the conclusions reached in the August 30, 2023 Updated Settlement Authority Analysis.
A. Strength of the "For Cause" Termination Defense
Stonefield's primary defense is that its termination of the TSA was valid for Cause under Section 13.2(a) of the Agreement, which permits termination upon 30 days' written notice if the non-terminating party has committed a material breach that remains uncured following the Cure Period specified in Section 13.3. The discovery record overwhelmingly supports this defense.
1. Service Level Obligation Failures. The TSA established five Service Level Obligations ("SLOs") in Schedule B, Section 4, breach of any one of which for a period of two or more consecutive months constituted a "Material Performance Failure" triggering the Cure Notice right under Section 13.3. Vantor Transportation Services LLC ("VTS"), the operating subsidiary of VHC that performed under the TSA, failed all five SLOs during Q4 2021 (October, November, and December), constituting three consecutive months of Material Performance Failure. The specific metrics, as documented in Stonefield's contemporaneous records and confirmed by VTS's own Carrier Performance Portal data, are as follows:
These are not marginal failures. The variances across all five metrics are substantial, reflecting a systemic collapse in service quality rather than isolated or transient performance issues. The cargo claims data is particularly notable: 16 documented claims totaling $387,400 in cargo damage or loss were filed during November and December 2021 alone, more than double the rate that would be permissible under the SLO.
2. Hess Deposition Testimony. Raymond Hess, Stonefield's Director of Carrier Performance Management, testified at his deposition on July 27, 2023 that these metrics were derived from VTS's own Carrier Performance Portal — the system that VTS itself maintained and made available to Stonefield for tracking carrier performance — and that VTS did not dispute the accuracy of the metrics at any point, including in its February 14, 2022 response to Stonefield's Cure Notice. Hess further testified that VTS's response to the Cure Notice acknowledged "operational challenges" but attributed them to "market-wide driver shortages" and "unprecedented supply chain disruption" rather than contesting the underlying data. This testimony is critical because it eliminates a potential Vantor argument that the performance data was unreliable or was unilaterally generated by Stonefield.
3. The Milescu "Smoking Gun" Email. Among the most significant documents produced in this litigation is an internal VTS email from Sandra Milescu (VP, Fleet Operations) to Derek Pruitt (SVP, Business Development) dated November 12, 2021, bearing Bates number VHC-008417. The email states:
"We've pulled 85 tractors off the SLG dedicated lanes to cover [redacted] commitments. SLG won't notice until January."
The "[redacted]" portion was redacted by CRS on relevance grounds; Calderwood & Harkness moved to compel the unredacted version, and following Judge Calloway's August 3, 2023 order, VHC produced the unredacted email revealing that the redacted client name was Northwind Distribution Co. ("Northwind"), another major VTS account.
This email is devastating to Vantor's case narrative for multiple reasons. First, it establishes that VTS deliberately diverted 85 tractors — more than 21% of the 400-tractor committed fleet — from Stonefield's dedicated lanes to serve another client's needs, directly causing or substantially contributing to the equipment availability failure (248 of 400 tractors, or 62%). Second, it demonstrates that VTS knew the diversion would harm Stonefield's service levels and deliberately chose to conceal it, expecting that Stonefield "won't notice until January." Third, it directly contradicts Vantor's litigation narrative that the Q4 2021 performance failures were caused by exogenous market conditions and Stonefield's own volume shortfalls.
4. Milescu Deposition Testimony. Sandra Milescu was deposed on August 4, 2023. She confirmed that approximately 85 tractors were reassigned from Stonefield dedicated lanes to service Northwind Distribution Co.'s account beginning in October 2021. She characterized the reassignment as "temporary" and driven by "commercial necessity," explaining that Northwind had threatened to terminate its contract with VTS if additional capacity was not made available. Milescu claimed that she expected the reassignment to last only "a few weeks" and that the tractors would be rotated back to Stonefield lanes once Northwind's surge period ended. However, she could not explain why Stonefield was not notified of the reassignment, as would have been required under Section 8.4 of the TSA (requiring 48-hour advance written notice of any material change in dedicated fleet allocation). She also could not explain why the tractors were not returned to Stonefield's dedicated lanes until after the termination notice was issued in January 2022. Milescu's testimony was credible in tone but substantively damaging; her admission that VTS prioritized another client's needs over Stonefield's contractual commitment, without notice or consent, is precisely the type of willful, material breach that justifies for-cause termination.
5. Pruitt Deposition Testimony. Derek Pruitt, VTS's Senior Vice President of Business Development and the VTS executive most directly responsible for the Stonefield account relationship, was deposed on July 10, 2023. Pruitt acknowledged that VTS "struggled" to maintain committed fleet capacity in Q4 2021. When asked what specific mitigation steps VTS took after receiving Stonefield's Cure Notice on January 18, 2022, Pruitt was unable to identify any concrete actions beyond "internal discussions" and "reviewing our capacity plan." He could not identify any tractors that were reassigned back to Stonefield's dedicated lanes during the cure period, could not identify any communications to Stonefield offering a remediation plan, and conceded that VTS did not request an extension of the 30-day cure period. Pruitt's inability to identify specific cure efforts fatally undermines Vantor's argument that the termination was premature or that VTS was denied a meaningful opportunity to cure.
B. Weakness in Vantor's Counterarguments
Vantor has advanced three principal counterarguments to Stonefield's for-cause termination defense: (1) that Stonefield's own volume shortfalls caused VTS's performance failures; (2) that Stonefield violated the exclusivity provisions of the TSA; and (3) that the termination was pretextual, motivated by a desire to avoid an impending rate increase. Each of these arguments is substantially weakened by the discovery record.
1. Volume Shortfall Argument. Vantor contends that Stonefield failed to tender the minimum annual committed volume ("ACV") specified in the TSA, and that VTS's performance failures were a direct consequence of Stonefield's under-tendering, which deprived VTS of the revenue necessary to maintain committed fleet capacity. This argument is substantially rebutted by the force majeure defense and by the actual tender data.
Stonefield properly invoked the force majeure clause of the TSA (Section 12.1) with respect to the COVID-19 pandemic, providing written notice to VTS on April 3, 2020. The force majeure period lasted from approximately April through September 2020, a period of six months during Contract Year 2 ("CY2," running April 2020 through March 2021). During this period, Stonefield's distribution volumes declined significantly due to government-mandated facility closures, supply chain disruptions, and reduced consumer demand — all of which constitute qualifying Force Majeure Events under the TSA's broad definition in Section 12.1(a).
Adjusting the CY2 ACV for the six-month force majeure period, the prorated minimum is $21.6 million ($43.2 million × 6/12). Stonefield's actual CY2 tenders totaled $31.8 million — exceeding the adjusted minimum by $10.2 million, or approximately 47%. Accordingly, Stonefield did not breach the ACV commitment for CY2, and Vantor's argument that volume shortfalls in CY2 caused cascading capacity problems in CY3 fails for want of a factual predicate.
With respect to Contract Year 3 ("CY3," April 2021 through March 2022), Stonefield's tenders for the partial period of April 2021 through January 2022 (ten of twelve months) totaled $36.5 million. Vantor argues that this pace would have resulted in a full-year total of approximately $43.8 million, which would fall below the CY3 ACV. Stonefield's position, however, is that the shortfall calculation is premature and methodologically flawed: the contract year was interrupted by the valid for-cause termination effective February 18, 2022, and it is improper to calculate ACV compliance for a contract year that was not completed due to the counterparty's own material breaches. Moreover, even accepting Vantor's arithmetic, the alleged shortfall would be modest (approximately $1.4 million below the $45.2 million CY3 ACV), and Vantor has not demonstrated a causal nexus between this marginal shortfall and VTS's catastrophic Q4 2021 performance failures, which — as the Milescu email demonstrates — were caused by VTS's deliberate diversion of resources to another client.
2. Exclusivity Violation Allegation. Vantor contends that Stonefield breached the TSA's exclusivity provisions by using alternative carriers — specifically, Cascade Freight Systems Inc. and Briarwood Trucking Co. — during the TSA term, and that this breach constitutes an independent basis for damages and/or excuses VTS's own performance failures.
This argument is weak and largely foreclosed by the contractual text and the third-party discovery record. Calderwood & Harkness served third-party subpoenas on both Cascade Freight and Briarwood in June 2023. The subpoena responses, which were received and analyzed on August 1 and August 3, 2023, respectively, confirm that Stonefield's use of these carriers was limited to Lanes 8 through 14. Under Schedule C, Section 2(b) of the TSA, Lanes 8 through 14 are expressly classified as "Secondary Lanes," and the exclusivity restriction in Section 6.1 applies only to "Primary Lanes" as defined in Schedule C, Section 2(a). Accordingly, Stonefield's use of Cascade Freight and Briarwood on Secondary Lanes was fully permitted under the contract, and Vantor's exclusivity argument is without merit.
Catherine Kirkwood, Stonefield's SVP of Supply Chain Operations, confirmed at her deposition on July 14, 2023 that the decision to engage alternative carriers on Secondary Lanes was driven by operational necessity — specifically, by VTS's declining service levels on those lanes beginning in late Q3 2021 — and that Stonefield's logistics team was careful to limit alternative carrier usage to lanes not subject to exclusivity restrictions. Kirkwood further testified that she personally reviewed the lane classifications with Stonefield's in-house counsel before authorizing the alternative carrier arrangements.
3. Rate Adjustment Motive Allegation. Vantor's most potent remaining argument is that Stonefield's termination of the TSA was pretextual — that the true motivation was to avoid the contractual rate adjustment scheduled for April 1, 2022, under Section 9.3 of the TSA. The rate adjustment, based on the formula specified in Schedule D, would have increased the weighted average per-mile rate from $2.87 to approximately $3.28, representing a 14.3% increase that would have added approximately $6.2 million to Stonefield's annual transportation costs.
Calderwood & Harkness acknowledges that this is a risk factor. Vantor will argue — and a finder of fact could potentially accept — that the temporal proximity between the anticipated rate increase and the termination suggests that the rate increase was the true motivating factor behind the termination, and that the for-cause grounds were pretextual.
However, this argument does not defeat the for-cause defense where objective Cause existed at the time of termination, as it indisputably did here. Under New York law, a party that has the contractual right to terminate for cause may exercise that right regardless of whether it also had other, non-contractual motivations for the termination. See, e.g., Ostrander National Bank Sec. LLC v. Voegeli, No. 11 Civ. 2967, 2012 WL 1377686, at *7 (S.D.N.Y. Apr. 19, 2012) (holding that the existence of a valid contractual ground for termination precludes a claim for wrongful termination even where other motives may have contributed to the decision). Stonefield need not prove that the rate increase played no role in its decision-making; it need only prove that a valid for-cause basis existed, which the record overwhelmingly supports.
The principal evidentiary risk in connection with this argument is the Catherine Kirkwood email of September 22, 2021, to Tobias Wren and James Paulson (Stonefield's CEO), which states:
"If VTS doesn't get its act together by Q1 I think we pull the plug on the whole contract."
Vantor will argue that this email — written before the Q4 2021 performance failures had fully materialized and before the Cure Notice process began — reveals a premeditated exit plan. This is a legitimate litigation risk that Calderwood & Harkness has flagged in prior assessments. However, Kirkwood testified credibly at her deposition on July 14, 2023 that the email reflected her frustration with VTS's declining service levels, which were already evident in Q3 2021, and did not reflect a decision to terminate the contract. She further testified that the phrase "pull the plug" was colloquial and referred to exploring alternative carrier options for Secondary Lanes — which is consistent with the Cascade Freight and Briarwood arrangements that followed — rather than to terminating the TSA itself. Kirkwood categorically denied that the rate adjustment influenced the termination decision, testifying that she "wasn't even aware of the specific rate adjustment numbers until after the termination notice was sent." While a fact-finder could choose to credit or discredit this testimony, it was delivered in a credible and consistent manner.
C. Damages Exposure Assessment
Even assuming arguendo that a fact-finder were to reject the for-cause defense and find the termination wrongful, Stonefield's damages exposure is significantly more limited than Vantor claims.
1. Stonefield's Expert — Dr. Evelyn Rosser. Dr. Evelyn Rosser of Kensington Analytics Group LLC served her rebuttal expert report on August 25, 2023. Dr. Rosser's opinions are as follows:
• If termination was valid for Cause: $0 in damages. No payment is owed because Stonefield exercised a valid contractual right.
• Under alternative lost-profits theory (assuming arguendo wrongful termination): Maximum damages of $8.2 million, after adjusting for (a) VTS's own breaches, which reduced the value of the TSA to VTS; (b) VTS's failure to mitigate damages by seeking replacement business (the record reflects no meaningful mitigation efforts until approximately July 2022, five months after termination); (c) volume shortfall offsets, reflecting volumes that VTS would not have received even absent the termination; and (d) a proper market-based lost-profits calculation using VTS's actual historical operating margins (approximately 6.4% in FY 2021) rather than the inflated assumptions used by Vantor's expert.
• Liquidated damages clause unenforceability: The liquidated damages clause in Section 14.2, which produces a calculated figure of $67.23 million based on the remaining contract term, is grossly disproportionate to any reasonable estimate of actual harm and is therefore unenforceable as a penalty under New York law. Dr. Rosser's report demonstrates that the liquidated damages formula fails the Truck Rent-A-Center proportionality test, as the formula does not account for VTS's ability to mitigate, does not adjust for VTS's own breaches, and produces results that exceed the maximum possible lost profits by a factor of approximately eight.
2. Vantor's Expert — Dr. Philip Trask. Dr. Philip Trask of Trask Greystone & Associates served his expert report on May 15, 2023, opining that Vantor's total damages are $95.4 million. Dr. Trask's report suffers from significant methodological weaknesses that will be the subject of a Daubert motion:
• Assumes enforceability of liquidated damages without legal analysis. Dr. Trask simply applies the contractual formula without conducting any analysis of whether the liquidated damages clause is enforceable as a reasonable pre-estimate of harm. This is a legal conclusion, not an economic one, and is outside the scope of Dr. Trask's expertise.
• Uses inflated operating margin assumptions. For his lost-profits calculation, Dr. Trask assumes a 12% operating margin for VTS, which is nearly double VTS's actual historical operating margin of approximately 6.4%. Dr. Trask justifies this by reference to "industry benchmarks" for dedicated fleet services, but fails to account for VTS's actual cost structure, which includes above-market driver compensation and high equipment lease obligations.
• Fails to account for VTS's own breaches. Dr. Trask's lost-profits model assumes that VTS would have performed the full remaining contract term at full volume, with no adjustment for VTS's own Material Performance Failures, which would have entitled Stonefield to withhold performance credits, volume adjustments, or further termination rights.
• Contains no meaningful mitigation analysis. Dr. Trask acknowledges that VTS "pursued alternative business opportunities" after the termination but does not quantify the revenue VTS obtained from alternative engagements or assess whether VTS's mitigation efforts were commercially reasonable. Under New York law, a non-breaching party has a duty to mitigate damages, and failure to do so reduces the recoverable amount. Dr. Trask's omission of mitigation analysis renders his damages figure unreliable.
3. Settlement Authority. The settlement authority previously approved by the Stonefield Board of Directors (upon the recommendation of General Counsel and Calderwood & Harkness) is $0 to $4.5 million, reflecting a nuisance value / litigation cost avoidance range. This authority was established in the November 8, 2022 Settlement Authority Memorandum and confirmed by Ridgeline Capital Partners on November 15, 2022, through Alison Trang's written concurrence. The authority was reviewed and reaffirmed in the August 30, 2023 Updated Settlement Authority Analysis, which concluded that the discovery developments described above — particularly the Milescu email and deposition testimony, the Hess confirmation of VTS's performance data, and the third-party subpoena responses on the exclusivity issue — have materially strengthened Stonefield's position and that the existing authority range remains appropriate. Calderwood & Harkness does not recommend increasing the authority at this time and, indeed, believes that the circumstances described in Section III above may create an opportunity for resolution at or near $0 if the CRS–Vantor relationship collapses.
V. Analysis: Why Deferral Is the Recommended Course
A. Futility of Mediation Under Current Circumstances
The most compelling reason to defer is that any mediation conducted under the current circumstances would be unlikely to produce a meaningful result. If the CRS–Vantor relationship is indeed fracturing — as the circumstantial indicators strongly suggest — then any mediation would be conducted with counsel who may lack functional settlement authority, a viable working relationship with the client, or the professional incentive to negotiate in Vantor's best interests as opposed to CRS's own fee-recovery interests.
Effective mediation requires both parties to participate in good faith with the genuine authority and intention to negotiate a resolution. If Vantor's counsel is distracted by a fee dispute, if Vantor itself is unresponsive or disengaged from the litigation, or if the settlement overture is being driven primarily by CRS's desire to generate a settlement fund from which its outstanding fees could be satisfied, then the mediation process would be fundamentally compromised. Stonefield would invest time, attention, and resources in preparing for a mediation that cannot succeed because the counterparty is not functioning as a coherent litigation participant.
There is a further, more specific risk: if CRS withdraws as counsel shortly after a mediation is scheduled — or, worse, shortly after a mediation is conducted — the process would have been entirely wasted. Mediation preparation costs for a case of this size and complexity are not trivial, typically involving preparation of a mediation statement, a confidential mediator submission, client preparation sessions, and the mediator's fees. Calderwood & Harkness estimates that Stonefield's costs for a one-day mediation would be approximately $75,000 to $100,000, including mediator fees, attorney time, and travel costs. Incurring these costs for a mediation that is unlikely to succeed — and that may be overtaken by events within weeks — would be an imprudent expenditure.
B. No Obligation to Mediate
There is no contractual, procedural, or legal obligation that requires Stonefield to accept Vantor's mediation proposal or to engage in settlement discussions at this time.
The TSA's dispute resolution provision, set forth in Section 16, requires only that the parties participate in a 30-day executive negotiation period before either party may initiate litigation. This requirement was satisfied in full through the May 16 and June 3, 2022 executive negotiation sessions. Section 16 does not impose any mediation requirement, and the parties did not enter into a separate mediation agreement at any point during the pre-suit or post-suit phases of this dispute.
The Case Management Order entered by Judge Calloway on February 17, 2023 likewise does not impose a mediation requirement. While the Case Management Order includes a standard provision noting that "the parties are encouraged to explore settlement at appropriate stages of the litigation," this is precatory language that creates no enforceable obligation. The order does not mandate mediation, does not require the parties to participate in a settlement conference, and does not set a deadline for settlement discussions.
Accordingly, Stonefield is free to decline the overture or to defer substantive engagement without consequence.
C. Preserving Strategic Position
Engaging in settlement discussions at this juncture would carry significant strategic risks that outweigh any potential benefits.
1. Signal of Weakness. Accepting a mediation invitation — particularly one that comes unsolicited from the plaintiff's side — could be interpreted by Vantor and its counsel as a signal that Stonefield is concerned about the outcome of the case and eager to resolve it. This interpretation would be contrary to the facts: Stonefield's litigation position is strong and has only grown stronger during discovery. An affirmative acceptance of the overture, or even an enthusiastic response, could embolden Vantor to adopt a more aggressive settlement posture and could undermine Stonefield's credibility in future negotiations by suggesting that Stonefield's prior confidence in its position was overstated.
2. Increased Leverage Through Patience. If Vantor's counsel withdraws and the case stalls, Stonefield's negotiating leverage increases dramatically. A Vantor that is unrepresented, facing a looming dismissal deadline, and unable to afford competent replacement counsel would be far more amenable to settlement on terms favorable to Stonefield — potentially including a walk-away or a nominal nuisance payment — than a Vantor that is fully represented and actively litigating. Engaging in a mediation now, before this dynamic has had an opportunity to develop, would sacrifice this potential upside for no corresponding gain.
3. Consistency with Ridgeline's Posture. Ridgeline Capital Partners, LP, as the majority equity holder in Stonefield, has consistently expressed a preference for an aggressive defense posture in this litigation. Alison Trang confirmed this preference in the November 15, 2022 settlement authority concurrence and reiterated it in discussions with the undersigned on August 30, 2023, in connection with the Updated Settlement Authority Analysis. Entering into a mediation at this juncture — particularly one proposed by the plaintiff's counsel under circumstances suggesting that the overture is driven by counsel's own interests rather than a genuine reassessment of the merits — would be inconsistent with Ridgeline's expressed preference and should not be undertaken without Ridgeline's affirmative concurrence. For the reasons stated in this memorandum, Calderwood & Harkness does not recommend seeking such concurrence at this time.
D. Costs of Continued Litigation vs. Settlement Now
A practical comparison of the costs of continued litigation versus the costs of settlement at this stage further supports the deferral recommendation.
1. Litigation Costs to Date. Total Calderwood & Harkness fees and disbursements incurred in this matter through approximately October 2023 are estimated at $4.42 million, consisting of approximately $3.8 million in attorney and paraprofessional fees and approximately $620,000 in costs and disbursements. The latter category includes expert fees (Dr. Rosser and Kensington Analytics Group), eDiscovery hosting and processing through Pinnacle Forensics LLC, deposition transcript and videography costs, court reporter fees, and travel costs associated with depositions conducted in New York, Chicago, and Houston.
2. Projected Costs Through Disposition. The September 20, 2023 Semi-Annual Risk Assessment projected total spend through disposition — encompassing expert discovery, summary judgment briefing, and trial preparation — at $5.5 to $7.2 million, representing an additional $1.1 to $2.8 million in incremental spend beyond the current run rate. The lower end of this range assumes a successful summary judgment motion that disposes of the case without trial; the upper end assumes denial of summary judgment and a full trial.
3. Cost Scenario if Case Becomes Dormant. If CRS withdraws and the case becomes dormant pending Vantor's retention of substitute counsel — or ultimately dismissed for failure to prosecute — Stonefield's ongoing litigation costs would be minimal. Calderwood & Harkness would maintain quarterly docket monitoring, periodic client updates, and preservation of work product, at an estimated cost of $5,000 to $10,000 per quarter. This represents a dramatic reduction from the current monthly run rate and would result in significant cost savings relative to either continued active litigation or a settlement accompanied by negotiation and documentation costs.
4. Settlement Cost Analysis. Any settlement at this juncture would involve not only a settlement payment (which, given Vantor's stated demand and the current dynamics, would likely start at a figure well in excess of Stonefield's $0–$4.5 million authority), but also the transactional costs of negotiating and documenting the settlement, including mediation fees, settlement agreement drafting and negotiation, mutual release language, and potential confidentiality and non-disparagement provisions. These transactional costs would be incremental to the settlement amount and would not serve Stonefield's interests if the case can be resolved for less — or eliminated entirely — through patience.
VI. Proposed Response to Caldwell Royce
Calderwood & Harkness recommends that Stonefield respond to Harrison Caldwell's September 25, 2023 email with a brief, professionally courteous reply that (1) acknowledges the overture, (2) communicates Stonefield's general openness to reasonable discussions, and (3) declines to commit to a specific process or timeline at this time.
The proposed response should convey the following substantive points:
• Stonefield "remains open to reasonable discussions" regarding the matter, consistent with its obligation of good faith and its general approach to dispute resolution.
• However, Stonefield believes that "current timing is not conducive to productive mediation," in light of the current stage of the litigation and the parties' respective positions.
• Stonefield would be willing to revisit the question of settlement discussions at a later time if circumstances warrant.
The response should be calibrated to avoid several potential pitfalls:
• The response should not close the door entirely. An outright rejection of the overture could be viewed unfavorably by the Court if subsequently disclosed (e.g., in connection with a motion for sanctions or a request for a settlement conference) and could be characterized by Vantor as evidence of Stonefield's bad faith or intransigence. A noncommittal response that leaves the door open preserves Stonefield's flexibility without committing to any action.
• The response should not commit to any specific process, timeline, or dollar range. Any specificity — such as a proposed mediation date, a suggestion of mediator candidates, or an indication of settlement parameters — would be premature and would signal a level of engagement that is inconsistent with the deferral strategy.
• The response should not reference any knowledge or suspicion of the fee dispute or potential withdrawal. Referencing such matters would be inappropriate, as the CRS–Vantor attorney-client relationship is privileged and Stonefield has no basis to comment on it. Moreover, creating a written record of Stonefield's knowledge or suspicion of the fee dispute could complicate future proceedings — for example, if Vantor later argues that Stonefield engaged in bad faith by deliberately timing its response to take advantage of CRS's withdrawal. The response should be drafted as though Stonefield is unaware of any issues in the CRS–Vantor relationship and is declining the overture purely on the basis of timing and case posture.
A draft response email will be prepared by Calderwood & Harkness and circulated to Tobias Wren and Alison Trang for review and comment before transmission. We anticipate that the response can be finalized and sent within two to three business days of receiving approval of the deferral recommendation.
VII. Recommended Next Steps
Based on the foregoing analysis, Calderwood & Harkness recommends the following action items:
1. Approve Deferral. Tobias Wren and Alison Trang should confirm their agreement with the recommendation to defer substantive settlement discussions at this time. This confirmation may be communicated by email, telephone, or in-person meeting, at their convenience. Calderwood & Harkness is available to discuss this memorandum and its recommendations at any time.
2. Send Response. Upon receipt of approval, Samuel Eklund will transmit the noncommittal response email to Harrison Caldwell at Caldwell Royce & Shapiro LLP. The draft response will be circulated to Tobias and Alison for review before transmission, as described in Section VI above.
3. Monitor for Withdrawal Motion. Calderwood & Harkness will closely monitor the docket in Case No. 22-cv-07841 for any motion by Caldwell Royce & Shapiro to withdraw as counsel for Vantor Holdings Corp. If such a motion is filed, Calderwood & Harkness will promptly notify Tobias and Alison and will prepare a response or statement of position as appropriate, including any request for conditions on withdrawal (such as a deadline for Vantor to retain substitute counsel and consequences for failure to do so).
4. Preserve Summary Judgment Work Product. The Summary Judgment Roadmap Memorandum (dated September 15, 2023) and supporting research memoranda, including the analysis of the enforceability of the liquidated damages clause, the force majeure defense, and the Daubert arguments against Dr. Trask's expert testimony, should be preserved and maintained in a state of readiness for activation. If the case resumes — whether with the same counsel, new plaintiff's counsel, or on an accelerated schedule set by the Court — Calderwood & Harkness must be prepared to move promptly to summary judgment briefing.
5. Contingency for New Counsel. If Vantor does retain new counsel and the case proceeds, Calderwood & Harkness will reassess the settlement posture at that time based on new counsel's approach, any changes in case dynamics resulting from the transition, and any new information that emerges. The reassessment will include an evaluation of whether the existing settlement authority of $0–$4.5 million remains appropriate or should be adjusted, and will be the subject of a supplemental memorandum to Tobias and Alison.
6. Ridgeline Notification. Alison Trang should brief Douglas Whitmore (Managing Partner, Ridgeline Capital Partners, LP) as appropriate regarding the settlement overture, the indicators of the CRS–Vantor relationship strain, and the recommended deferral. The timing and level of detail of this briefing is within Alison's discretion, but Calderwood & Harkness recommends that the briefing occur promptly so that Ridgeline is fully informed of the current posture and can provide input if desired.
VIII. Conclusion
The settlement overture received from Caldwell Royce & Shapiro on September 25, 2023 appears, based on the totality of the circumstances, to be driven by counsel's own interests — most likely an effort to resolve the case before a deteriorating fee relationship renders continued representation untenable — rather than by a genuine reassessment of Vantor's litigation position or a newfound willingness to negotiate in a range that would be acceptable to Stonefield.
Stonefield's defense position is strong. It has been materially reinforced by the discovery record developed over the past fifteen months of litigation, particularly: (i) the Milescu email (VHC-008417), which establishes that VTS deliberately diverted dedicated fleet capacity to another client without notice to Stonefield; (ii) the Milescu and Pruitt deposition testimony, which confirms VTS's failure to maintain committed capacity and its failure to undertake meaningful cure efforts; (iii) the Hess testimony confirming that the Q4 2021 performance data was drawn from VTS's own systems and was not disputed by VTS; and (iv) the third-party subpoena responses from Cascade Freight and Briarwood Trucking, which confirm that Stonefield's use of alternative carriers was limited to Secondary Lanes not subject to exclusivity restrictions.
Deferral carries minimal risk and substantial potential upside. If the CRS–Vantor relationship collapses and Vantor is unable to retain competent substitute counsel, the case may be subject to dismissal for failure to prosecute, or Vantor may be forced to negotiate a resolution on terms dramatically more favorable to Stonefield than anything achievable today. In contrast, engaging in settlement discussions now offers no strategic benefit — the mediation would likely be futile, the costs would be wasted, and Stonefield would project a degree of concern about the case outcome that is unwarranted by the facts.
Accordingly, Calderwood & Harkness recommends that Stonefield defer substantive settlement discussions, respond to Caldwell Royce with a noncommittal but courteous reply, and maintain its current aggressive defense posture while monitoring the docket for developments in the CRS–Vantor relationship.
We stand ready to discuss this memorandum and its recommendations further at Tobias's or Alison's convenience. Please do not hesitate to contact me directly at (212) 555-0184 or by email at seklund@calderwoodharkness.com.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Samuel Eklund Responsible Partner, Litigation (General) 200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 555-0184
Email: seklund@calderwoodharkness.com
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT Matter No. 1012-00005
Service Level Obligation | Contractual Minimum | Actual Q4 2021 Performance | Variance
On-time pickup rate | 95% | 78.2% | -16.8 pp
On-time delivery rate | 93% | 81.6% | -11.4 pp
Tender acceptance rate | 90% | 71.4% | -18.6 pp
Equipment availability (dedicated fleet) | 400 tractors | ~248 tractors (62%) | -38%
Cargo claims ratio | ≤0.5% | 1.07% | +0.57 pp

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP INTERNAL MEMORANDUM

C&H MATTER NO.: 1012-00005

CALDERWOOD & HARKNESS LLP

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