1005-00004 · Nexford Industrial Holdings · Correspondence

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

FROM: Nadia Petrov, Associate, Calderwood & Harkness LLP, 227 West Monroe Street, Suite 3600, Chicago, Illinois 60606

TO: Tara Svendsen, General Counsel, Nexford Industrial Holdings Inc., 500 Commerce Drive, Suite 400, Schaumburg, Illinois 60173

Catherine "Cat" Donnelly, Vice President, Human Resources, Nexford Industrial Holdings Inc., 500 Commerce Drive, Suite 400, Schaumburg, Illinois 60173

CC: Bernard Crawford, Responsible Partner, Calderwood & Harkness LLP

DATE: February 6, 2023

RE: Litigation Status Update — Maciejewski v. Nexford Industrial Holdings Inc., Case No. 2022-L-002847, Circuit Court of Cook County, Illinois, County Department, Law Division

I. Purpose and Executive Summary

The purpose of this memorandum is to provide Nexford Industrial Holdings Inc. ("Nexford" or the "Company") with a comprehensive update on the current status of the above-captioned litigation matter following the status conference held on January 12, 2023 before the Honorable Judge Helena R. Vasquez-Torres in the Circuit Court of Cook County, Illinois, County Department, Law Division.

Key Takeaways. The most significant development from the January 12, 2023 status conference is that Plaintiff's counsel, Gerald P. Hess of Hess & Loughlin, P.C., failed to appear before the Court. Attorney Hess provided no advance communication to the Court or to Calderwood & Harkness explaining his absence, nor did he request a continuance of the hearing. Plaintiff Darren K. Maciejewski also did not appear. In light of this non-appearance, the Court entered an order noting Plaintiff's counsel's failure to appear, set a further status date for March 16, 2023, and directed Mr. Hess to appear on that date or show cause for his failure to prosecute the case and for his non-appearance at the January 12 hearing.

This development continues a pattern of inactivity and non-responsiveness by Plaintiff's counsel that dates back to mid-October 2022. Mr. Hess has been entirely unresponsive to Calderwood & Harkness's communications since October 14, 2022. Of equal significance, Plaintiff has never served responses to Nexford's outstanding First Set of Interrogatories and First Request for Production of Documents, which were originally due on August 1, 2022 — now more than six months overdue. Fact discovery closed on December 15, 2022 pursuant to the Court's Case Management Order, and the January 15, 2023 expert disclosure deadline has likewise passed without any activity from Plaintiff.

Based on the current trajectory of this matter, the case appears to be trending toward potential dismissal for want of prosecution. However, a number of procedural steps must occur before that result is achieved, and we do not recommend that Nexford take any premature action that might disturb this favorable trajectory.

Recommended Action. In the interim, Nexford should continue to maintain its existing litigation hold over all documents and electronically stored information identified in the April 1, 2022 litigation hold notice. Calderwood & Harkness will continue to monitor the Cook County docket, attend all scheduled court dates, and provide periodic updates to Nexford, to Verdant Mutual Insurance Company (Nexford's EPLI carrier), and in connection with the Company's quarterly litigation exposure reporting obligations.

Each of these topics is addressed in greater detail below.

II. Background and Case Posture

For context and to ensure a complete record in this status memorandum, we provide below a summary of the background of this litigation and the current posture of the case.

A. The Complaint and Plaintiff's Allegations

Darren K. Maciejewski ("Maciejewski" or "Plaintiff"), a former Senior Quality Assurance Supervisor at Nexford's manufacturing facility located at 2700 Industrial Parkway, Elgin, Illinois 60123 (the "Elgin Facility"), filed a three-count Complaint in the Circuit Court of Cook County on March 15, 2022. The Complaint was assigned Case No. 2022-L-002847 and was assigned to Judge Helena R. Vasquez-Torres in the Law Division. The three counts asserted in the Complaint are as follows:

Count I — Retaliatory Discharge (Illinois Common Law). Maciejewski alleges that he was discharged from employment in retaliation for engaging in activities that implicate a clear mandate of public policy — specifically, reporting workplace safety violations. Under Illinois common law, an at-will employee may bring a tort claim for retaliatory discharge where the termination violates a clearly mandated public policy.

Count II — Retaliation in Violation of Section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. § 660(c). Maciejewski alleges that his termination constituted unlawful retaliation for filing an occupational safety and health complaint with the United States Department of Labor, Occupational Safety and Health Administration ("OSHA"). Section 11(c) of the OSH Act prohibits an employer from discharging or otherwise discriminating against an employee because the employee has filed a complaint, instituted a proceeding, or exercised any right afforded under the Act.

Count III — Violation of the Illinois Whistleblower Act, 740 ILCS 174/1 *et seq.* Maciejewski alleges that his termination violated the Illinois Whistleblower Act, which prohibits employers from retaliating against employees who disclose information to a government or law enforcement agency where the employee has reasonable cause to believe the information discloses a violation of a state or federal law, rule, or regulation.

According to the allegations in the Complaint, Maciejewski reported what he characterized as workplace safety violations at the Elgin Facility's Building C on two occasions through internal channels — first on April 5, 2021, and again on April 19, 2021. The Complaint alleges that these internal reports were directed to Maciejewski's supervisor, Frank Bosch, Plant Manager of the Elgin Facility. Maciejewski further alleges that, following what he perceived as an inadequate internal response, he filed OSHA Complaint No. 1734892 on June 8, 2021. OSHA conducted an inspection of Building C on July 12, 2021. The Complaint alleges that Maciejewski's termination on September 24, 2021 was causally connected to his protected safety reporting activity.

B. The OSHA Investigation and Its Outcome

It is important to note — and this fact will be central to any substantive defense of this matter — that OSHA closed Complaint No. 1734892 on August 18, 2021 with no citations issued and no findings of violation. The OSHA inspection of Building C on July 12, 2021 did not substantiate the concerns raised in Maciejewski's complaint. This outcome significantly undermines the factual premise of Plaintiff's allegations, although we acknowledge that Plaintiff may argue that the filing of the complaint itself, regardless of its outcome, constituted protected activity under the relevant statutes — a position that has some support in the case law.

C. Nexford's Position

Nexford's position, which is fully supported by the documentary record produced in discovery, is that Maciejewski was terminated for documented, repeated violations of the Company's attendance and tardiness policy, codified at Section 4.3 of the Nexford Employee Handbook (the "Handbook"). The progressive discipline that preceded Maciejewski's termination is well-documented and followed the standard disciplinary procedures set forth in the Handbook:

• May 24, 2021: First Written Warning issued to Maciejewski for attendance policy violations, including three instances of unexcused tardiness and one instance of unexcused absence during the preceding sixty-day period.

• August 2, 2021: Final Written Warning issued to Maciejewski for continued attendance policy violations, including two additional instances of unexcused tardiness subsequent to the First Written Warning.

• September 20, 2021: Maciejewski incurred an unexcused absence from his scheduled shift, in contravention of the terms set forth in the Final Written Warning, which expressly stated that any further attendance policy violations would result in termination of employment.

• September 24, 2021: Maciejewski's employment was terminated by written notice issued by Frank Bosch, Plant Manager, with concurrence from Cat Donnelly, Vice President of Human Resources, consistent with the progressive discipline framework and the terms of the Final Written Warning.

The progressive discipline documentation, Maciejewski's complete personnel file, attendance records, and the relevant portions of the Handbook were all included in Nexford's document production in this matter (Bates NIH-000001 through NIH-000847), as discussed in Section III below.

D. Nexford's Answer and Affirmative Defenses

Calderwood & Harkness filed an Answer and Affirmative Defenses on behalf of Nexford on April 18, 2022. The Answer denied the material allegations of the Complaint and asserted the following affirmative defenses:

1. Legitimate Non-Retaliatory Business Reason. Nexford's termination of Maciejewski was motivated by a legitimate, non-retaliatory business reason — namely, Maciejewski's repeated violations of the Company's attendance and tardiness policy — and was not in any way motivated by, or causally connected to, any protected activity.

2. Failure to Exhaust Administrative Remedies (Count II). With respect to Count II of the Complaint (Section 11(c) of the OSH Act), Maciejewski failed to file a complaint with the Secretary of Labor within the thirty-day period prescribed by 29 U.S.C. § 660(c)(2), and the claim is therefore procedurally barred. Section 11(c) provides that an employee who believes he has been discharged in violation of the provision must file a complaint with the Secretary of Labor within thirty days of the alleged violation. The administrative exhaustion requirement is a prerequisite to maintaining a civil action under this section.

3. After-Acquired Evidence. In the course of preparing its defense, Nexford has identified evidence of Maciejewski's misconduct during his employment that would have independently justified termination, and which limits or eliminates Plaintiff's entitlement to certain categories of damages under the after-acquired evidence doctrine. The specific nature of this evidence has been preserved for further development through discovery; however, as discussed below, Plaintiff's failure to participate in discovery has prevented this defense from being fully briefed to date.

E. Case Management Schedule

The Initial Case Management Conference was held on April 28, 2022 before Judge Vasquez-Torres. The Court entered a Case Management Order establishing the following schedule:

• Fact discovery Close: December 15, 2022

• Expert Disclosures: January 15, 2023

• Expert discovery Close: March 1, 2023

As discussed in detail below, all of these deadlines have now passed or are approaching, and Plaintiff has taken no action to comply with any of them. Nexford, by contrast, has fully complied with all of its discovery obligations.

III. Summary of discovery Activity and Opposing Counsel's Inactivity

A recurring and central theme of this memorandum is the stark asymmetry between the parties' respective levels of engagement in this litigation. Nexford has diligently participated in discovery, while Plaintiff's counsel has effectively abandoned the case. The following summary details the discovery activity to date.

A. Discovery Completed by Nexford

Following the entry of the Case Management Order, both sides engaged in initial written discovery:

Plaintiff's discovery to Nexford. Plaintiff served his First Set of Interrogatories (consisting of fifteen interrogatories) and First Request for Production of Documents (consisting of thirty-two requests) on Nexford on May 10, 2022. The requests covered a broad range of topics, including Maciejewski's employment history, performance evaluations, disciplinary records, the circumstances of his termination, the OSHA complaint and inspection, Building C safety conditions, comparative discipline of other employees, and Nexford's policies and procedures on retaliation and whistleblower protection.

Nexford's Responses. Calderwood & Harkness served Nexford's timely Responses and Objections to Plaintiff's First Set of Interrogatories and First Request for Production of Documents on June 24, 2022, within the time prescribed by the Illinois Supreme Court Rules. In connection with those responses, Nexford produced a total of 847 pages of documents, bearing Bates numbers NIH-000001 through NIH-000847. The production included, among other materials:

• Maciejewski's complete personnel file, including employment application, offer letter, performance evaluations, and all disciplinary documentation;

• Attendance records for Maciejewski for the period January 2020 through September 2021;

• The First Written Warning dated May 24, 2021, the Final Written Warning dated August 2, 2021, and the termination notice dated September 24, 2021;

• The Environmental Health & Safety ("EHS") Department report on Building C, including the internal investigation file responsive to Maciejewski's April 5 and April 19, 2021 internal complaints;

• Relevant portions of the Nexford Employee Handbook, including Section 4.3 (Attendance and Tardiness Policy), Section 6.1 (Progressive Discipline), and Section 9.2 (Whistleblower and Anti-Retaliation Policy);

• Correspondence between Frank Bosch, Cat Donnelly, and Liam Gallagher (Director, Environmental Health & Safety) concerning the internal handling of Maciejewski's safety complaints and the OSHA inspection.

Nexford's Affirmative discovery to Plaintiff. Nexford served its own First Set of Interrogatories (consisting of ten interrogatories) and First Request for Production of Documents (consisting of eighteen requests) on Plaintiff on July 1, 2022. These requests sought, among other things, information regarding the factual basis for Maciejewski's claims, the specific safety violations he purportedly reported, communications with OSHA, his post-termination employment and mitigation efforts, and the damages he claims to have suffered.

B. Plaintiff's Motion to Compel — Denied

On July 22, 2022, Plaintiff's counsel Gerald Hess filed a Motion to Compel seeking production of the personnel files of other employees within Maciejewski's department who had incurred attendance violations but were not terminated. Hess argued that this comparative discipline evidence was relevant to demonstrating that Nexford's stated reason for Maciejewski's termination was pretextual, as other similarly situated employees with comparable attendance records were allegedly treated more favorably.

Calderwood & Harkness filed a Response in Opposition to the Motion to Compel on August 12, 2022. Our response argued that the request, as formulated, was overbroad and disproportionate to the needs of the case. The request sought the complete personnel files of an undefined number of employees across an undefined time period, implicating significant privacy concerns and imposing an unreasonable burden on Nexford. We further argued that Plaintiff had failed to identify specific comparator employees or articulate a basis for believing that similarly situated employees existed, and that the request amounted to a fishing expedition.

Judge Vasquez-Torres heard argument on the motion and denied the Motion to Compel on September 9, 2022. The Court agreed that the request was overbroad and not proportional to the needs of the case as framed. However, Judge Vasquez-Torres noted in her ruling that Plaintiff could re-file a narrower, more targeted request identifying specific employees or a defined scope that would be proportional to the issues in the case.

Significantly, no narrower request was ever filed. Hess took no further action on this issue following the Court's ruling, and this was the last substantive motion filed by Plaintiff's counsel in this matter.

C. Plaintiff's Outstanding discovery Defaults

Plaintiff's responses to Nexford's First Set of Interrogatories and First Request for Production of Documents were due on August 1, 2022 — thirty days after service in accordance with Illinois Supreme Court Rule 213(d) and Rule 214(b).

As of the date of this memorandum, no responses of any kind have ever been served by Plaintiff. There has been no objection, no motion for extension of time, and no communication from Plaintiff's counsel regarding these outstanding discovery obligations. The responses are now more than six months overdue.

In addition, fact discovery formally closed on December 15, 2022 pursuant to the Court's Case Management Order. Plaintiff did not serve any additional written discovery, did not notice any depositions, and did not take any other discovery action during the entire discovery period. The expert disclosure deadline of January 15, 2023 has likewise passed without any expert disclosures from Plaintiff.

To summarize the current discovery posture: Plaintiff has failed to respond to Nexford's written discovery, failed to engage in any affirmative fact discovery beyond the initial written requests served in May 2022, failed to follow up on the Court's invitation to serve a narrower comparative-discipline request, failed to serve expert disclosures, and has allowed all discovery deadlines to expire without action.

D. Communications Breakdown with Plaintiff's Counsel

Calderwood & Harkness has made multiple good-faith efforts to communicate with Plaintiff's counsel regarding his discovery defaults and the status of this case, without success. The chronology is as follows:

October 14, 2022 — Last substantive communication. The last communication of any kind received from Gerald Hess was an email dated October 14, 2022 addressed to Nadia Petrov. In that email, Hess acknowledged receipt of certain of Nexford's discovery responses but did not address Plaintiff's overdue discovery obligations, did not propose a plan for compliance, and did not raise any other substantive issue. This brief email is the last communication Calderwood & Harkness has received from Hess or anyone at Hess & Loughlin, P.C.

November 3, 2022 — Formal meet-and-confer letter. Calderwood & Harkness sent a formal meet-and-confer letter to Hess via U.S. Mail and email, detailing Plaintiff's failure to respond to Nexford's First Set of Interrogatories and First Request for Production of Documents, identifying the specific discovery obligations at issue, and requesting that Hess make himself available for a meet-and-confer conference within fourteen days to resolve the discovery dispute, as required by Cook County Circuit Court Rule 2.1 and Illinois Supreme Court Rule 201(k) prior to the filing of any discovery motion. The letter was sent to Hess's address of record and his email address on file with the Court.

November 28, 2022 — Follow-up letter. Having received no response to the November 3 letter, Calderwood & Harkness sent a second letter to Hess on November 28, 2022, again via U.S. Mail and email. This letter reiterated the outstanding discovery defaults, noted the absence of any response to the prior meet-and-confer letter, and warned that Nexford intended to seek a motion to compel and/or sanctions if Plaintiff did not promptly comply with his outstanding discovery obligations. The letter further noted that fact discovery was scheduled to close on December 15, 2022 and that Plaintiff's failure to respond was prejudicing Nexford's ability to prepare its defense.

Additional email follow-up. A further email follow-up was sent to Hess in early December 2022. No response was received.

No response received to any communication. As of the date of this memorandum, Hess has not responded to any of the foregoing communications. His office telephone number rings without being answered, and no voicemail system appears to be operational.

We note that Calderwood & Harkness conducted a search of the Illinois Attorney Registration and Disciplinary Commission ("ARDC") records as of the most recent check and confirmed that Gerald P. Hess's license to practice law in the State of Illinois remains active. There is no indication of any pending disciplinary proceedings, suspension, or other status change that would explain his absence. We are not aware of any health or personal emergency affecting Mr. Hess, though we have no visibility into his personal circumstances.

IV. January 12, 2023 Status Conference

The scheduled status conference in this matter was held on January 12, 2023 before Judge Helena R. Vasquez-Torres.

Nadia Petrov of Calderwood & Harkness appeared on behalf of Defendant Nexford Industrial Holdings Inc. I was prepared to address the Court regarding the status of discovery, the outstanding discovery defaults by Plaintiff, and the communications breakdown with Plaintiff's counsel.

Gerald P. Hess did not appear at the status conference. No communication was received from Hess or from anyone at Hess & Loughlin, P.C. in advance of the hearing to explain his absence, to request a continuance, or to make any other arrangement regarding the scheduled court date. Plaintiff Darren K. Maciejewski also did not appear at the hearing.

At the status conference, I informed the Court of the following:

• Plaintiff's counsel had been entirely unresponsive since October 14, 2022;

• Plaintiff had never served responses to Nexford's outstanding written discovery, which had been due on August 1, 2022;

• Calderwood & Harkness had sent two formal meet-and-confer letters and an email follow-up, none of which had received a response;

• Fact discovery had closed on December 15, 2022 with no discovery activity by Plaintiff;

• The expert disclosure deadline of January 15, 2023 was imminent and no expert disclosures had been received from Plaintiff; and

• The overall pattern suggested that Plaintiff's counsel may have effectively abandoned the prosecution of this case.

The Court acknowledged each of these issues and took the following actions:

1. The Court entered an order noting Plaintiff's counsel's non-appearance at the January 12, 2023 status conference.

2. The Court set a further status date of March 16, 2023.

3. The Court directed that Plaintiff's counsel, Gerald P. Hess, appear at the March 16, 2023 status date or show cause for his failure to prosecute the case and for his non-appearance at the January 12, 2023 hearing.

The Court's order was entered on the record and will be reflected on the Cook County docket. A copy of the January 12, 2023 order will be forwarded to Nexford upon receipt from the Clerk's office.

The show-cause directive is a significant procedural development. It signals that the Court is aware of the pattern of inactivity and non-appearance by Plaintiff's counsel, and it places the case on a track that could lead to dismissal for want of prosecution if the pattern continues, as discussed in Section V below.

V. Assessment and Outlook

A. Potential for Dismissal for Want of Prosecution

Based on the current trajectory of this matter, we believe there is a meaningful probability that this case will be dismissed for want of prosecution ("DWP") if Plaintiff's counsel continues his pattern of non-appearance and inactivity.

If Mr. Hess fails to appear at the March 16, 2023 status conference, the Court may enter a formal Rule to Show Cause order. If the show cause is not satisfactorily answered — for example, if Hess fails to appear and fails to provide an adequate explanation for his non-appearance and his failure to prosecute the case — the Court has the authority to dismiss the case for want of prosecution.

Under Cook County Circuit Court General Order 2.1 and the inherent authority of the Court, cases may be dismissed for want of prosecution where plaintiff's counsel fails to appear at scheduled court dates and fails to prosecute the case with reasonable diligence. A DWP may also be entered where a plaintiff fails to comply with discovery obligations and court orders.

We note, however, that a dismissal for want of prosecution is typically entered without prejudice. This means that Plaintiff could potentially re-file the action, subject to the applicable statutes of limitations. The relevant limitations periods are as follows:

• Count I (Retaliatory Discharge — Illinois Common Law): Five-year statute of limitations under 735 ILCS 5/13-205, running from the date of termination (September 24, 2021). The limitations period would expire on or about September 24, 2026. A re-filing would therefore be timely for a substantial period.

• Count II (Section 11(c) of the OSH Act): Thirty-day filing deadline with the Secretary of Labor under 29 U.S.C. § 660(c)(2). This deadline would appear to have long since passed, and our affirmative defense of failure to exhaust administrative remedies would apply with equal force to any re-filed action. This count is therefore unlikely to be successfully re-filed.

• Count III (Illinois Whistleblower Act): The Illinois Whistleblower Act does not contain a specific statute of limitations; courts have generally applied the five-year residual limitations period under 735 ILCS 5/13-205. The limitations period would expire on or about September 24, 2026.

Accordingly, a DWP without prejudice would not fully eliminate Nexford's litigation risk on Counts I and III, as Maciejewski could theoretically re-file those claims with new counsel. However, the passage of time, the absence of completed discovery by Plaintiff, and the practical difficulties of reviving a stale case would significantly diminish the viability of any re-filed action. Furthermore, the record of Plaintiff's counsel's misconduct and abandonment may support an argument for dismissal with prejudice under appropriate circumstances, though that outcome is less common and typically requires a more egregious record.

Calderwood & Harkness will continue to attend all scheduled court dates and will be prepared to request dismissal if the pattern of non-appearance and non-prosecution continues at the March 16, 2023 status conference and any subsequent hearings.

B. Risk Assessment

Turning to the substantive merits, Nexford's defense posture remains strong. The key facts supporting the defense include:

• OSHA found no violations. OSHA closed Complaint No. 1734892 on August 18, 2021 with no citations and no findings of violation. While the filing of the complaint itself may constitute protected activity regardless of outcome, the absence of any substantiated safety violations weakens Plaintiff's narrative that Nexford was motivated to retaliate.

• Progressive discipline was thoroughly documented. The First Written Warning (May 24, 2021), Final Written Warning (August 2, 2021), and the termination notice (September 24, 2021) are all in the record. Each step followed the progressive discipline framework set forth in the Employee Handbook, and each was signed by both the supervisor and the employee (or, in the case of the termination notice, acknowledged by the employee's refusal to sign, as noted by the witness signature of Cat Donnelly).

• The termination was consistent with Handbook Section 4.3. The attendance and tardiness policy provides clear standards and consequences. Maciejewski's attendance record demonstrates a pattern of violations that independently justified termination under the policy, without any reference to his safety reporting activities.

• Temporal proximity is the primary basis for an inference of retaliation. Plaintiff's strongest argument on causation is the temporal proximity between his protected activity (the internal reports in April 2021 and the OSHA complaint in June 2021) and his termination in September 2021. While temporal proximity can support an inference of retaliation, Nexford's documented, legitimate, non-retaliatory reason for the termination — the progressive discipline for attendance violations — provides a strong basis for rebutting that inference.

Exposure Estimate. Our internal worst-case exposure estimate for this matter remains at approximately $285,000, broken down as follows:

We emphasize that this is a worst-case estimate that assumes Plaintiff prevails on all counts and obtains favorable rulings on damages. Given the strength of Nexford's defense and the current trajectory of the case, we believe the actual risk-adjusted exposure is substantially lower.

Current Trajectory. The current trajectory of this matter significantly reduces the likelihood of any adverse outcome. The case appears to be heading toward abandonment by Plaintiff's counsel. If the case is dismissed for want of prosecution, Nexford will avoid any liability on the merits. Even if the case is re-filed by new counsel at a future date, the passage of time, the loss of discovery momentum, and the absence of any developed evidentiary record by Plaintiff would place any re-filed action at a significant disadvantage.

EPLI Coverage. We confirm that the employment practices liability insurance coverage under Verdant Mutual Insurance Company Policy No. EPLI-VM-2021-04782 remains in place and applicable to this matter. The relevant policy terms are:

• Per-Occurrence Limit: $2,000,000

• Aggregate Limit: $5,000,000

• Self-Insured Retention: $50,000

Coverage was acknowledged by Verdant Mutual subject to a reservation of rights, which is standard for claims of this nature. The reservation of rights letter, dated April 22, 2022, reserved Verdant's rights with respect to certain coverage defenses but did not deny coverage. Calderwood & Harkness has been approved as panel counsel for the defense of this matter. Defense costs incurred above Nexford's self-insured retention are covered under the policy, as discussed further in Section VI below.

VI. Fees and Budget Status

As discussed with Tara Svendsen at the outset of this engagement, Calderwood & Harkness and Nexford agreed to a pre-trial litigation budget cap of $175,000 for the defense of this matter through the completion of pretrial proceedings, exclusive of any trial preparation or trial costs, which would be budgeted separately if the case were to proceed to that stage.

The following is a summary of total fees incurred through the active litigation period:

The total fees incurred to date are approximately $62,300, which represents approximately 35.6% of the agreed pre-trial budget cap of $175,000. The remaining budget is approximately $112,700.

Going forward, we anticipate that fees will be minimal, assuming the case continues on its current trajectory toward potential dismissal. Ongoing costs will consist primarily of:

• Routine docket monitoring;

• Attendance at status conferences (the next of which is scheduled for March 16, 2023);

• Periodic client reporting (including this memorandum and similar updates);

• Coordination with Verdant Mutual on insurer reporting obligations; and

• Preparation of any motions that may become necessary (e.g., a motion to dismiss for want of prosecution, if the Court does not dismiss sua sponte).

We estimate that fees through the resolution of this matter, assuming the case is dismissed for want of prosecution within the next three to six months, will total approximately $70,000 to $80,000. This would leave a substantial portion of the budget unused.

EPLI Cost Allocation. Nexford's self-insured retention of $50,000 under the Verdant Mutual EPLI policy has been exceeded by fees incurred to date. Accordingly, further defense costs should be covered by the EPLI policy, subject to the terms and conditions of Verdant Mutual's reservation of rights and the policy's panel counsel provisions. As noted above, Calderwood & Harkness has been approved by Verdant Mutual as panel counsel for the defense of this matter. We will continue to submit invoices to Verdant Mutual's claims adjuster, Brianna Choi, in accordance with the insurer's billing guidelines and will coordinate with Tara Svendsen on any issues that arise regarding coverage or cost allocation.

VII. Recommended Next Steps

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

1. Maintain Litigation Hold. Nexford should continue to preserve all documents and electronically stored information ("ESI") identified in the litigation hold notice dated April 1, 2022 related to Maciejewski's employment, the OSHA complaint and inspection, Building C safety conditions and the EHS Department's internal investigation, and all communications among the key custodians identified in the hold notice, including Frank Bosch (Plant Manager, Elgin Facility), Cat Donnelly (Vice President, Human Resources), Liam Gallagher (Director, Environmental Health & Safety), and Tara Svendsen (General Counsel). Although the case appears to be trending toward dismissal, it remains nominally pending before the Court, and it would be premature and potentially prejudicial to release the litigation hold at this time. We will advise Nexford when it is appropriate to release the hold.

2. Calderwood & Harkness to Attend March 16, 2023 Status Conference. Nadia Petrov will appear on behalf of Nexford at the next scheduled status conference on March 16, 2023 before Judge Vasquez-Torres. I will be prepared to address the Court regarding the full record of Plaintiff's counsel's non-appearances, discovery defaults, and failure to prosecute the case. If the Court entertains a motion for dismissal or enters a Rule to Show Cause, I will be prepared to respond accordingly and to advocate for the most favorable disposition available to Nexford under the circumstances.

3. Continue Monitoring Docket. Calderwood & Harkness will continue to monitor the Cook County Circuit Court docket for any filings by Hess, any substitution of counsel on behalf of Plaintiff, or any other activity in the case. We will promptly notify Nexford of any developments.

4. No Affirmative Motions at This Time. After careful consideration, Calderwood & Harkness does not recommend filing a motion to dismiss for want of prosecution or a motion for sanctions at this juncture. The Court's show-cause mechanism is already in motion and is likely to achieve the same result — dismissal — without the cost and potential complications of affirmative motion practice. Filing an affirmative motion could, in certain circumstances, have the unintended effect of "waking up" opposing counsel or prompting the Court to grant Plaintiff additional time to respond and remedy the defaults. We believe the more prudent course is to allow the Court's own procedures to take their course. If circumstances change — for example, if Hess or substitute counsel appears at the March 16 hearing and seeks to revive the case — we will promptly revisit this recommendation and advise Nexford accordingly.

5. Periodic Reporting. Calderwood & Harkness will continue to provide periodic status updates to Nexford. In addition, we will continue to coordinate with Verdant Mutual Insurance Company through its designated claims adjuster, Brianna Choi, regarding insurer reporting obligations. We will also coordinate with Tara Svendsen on the preparation of the quarterly litigation exposure report to Harborview Partners, through its Operating Partner, Malcolm Driscoll, as required under the Company's reporting obligations for litigation matters with potential exposure exceeding $50,000. We anticipate that the next substantive update will follow the March 16, 2023 status conference, unless intervening developments warrant earlier communication.

6. Contact Information for Questions. Tara Svendsen and Cat Donnelly should not hesitate to contact us with any questions or concerns regarding this matter or any developments that may come to their attention. We can be reached as follows:

Nadia Petrov, Lead Associate Calderwood & Harkness LLP 227 West Monroe Street, Suite 3600 Chicago, Illinois 60606 Direct: (312) 555-1847

Email: npetrov@calderwoodharkness.com

Bernard Crawford, Responsible Partner Calderwood & Harkness LLP 227 West Monroe Street, Suite 3600 Chicago, Illinois 60606 Direct: (312) 555-1290

Email: bcrawford@calderwoodharkness.com

VIII. Closing

Calderwood & Harkness appreciates Nexford's continued confidence in the firm's handling of this matter. We remain committed to achieving the most favorable resolution possible for the Company, and we believe the current trajectory of this case is a positive one from Nexford's perspective. We will continue to monitor the case closely and will keep you informed of all significant developments.

Please be reminded that this memorandum constitutes a privileged and confidential attorney-client communication. It is prepared for the sole use of Nexford Industrial Holdings Inc. and its authorized representatives in connection with the above-captioned litigation. The contents of this memorandum are protected from disclosure by the attorney-client privilege, the work product doctrine, and any other applicable privilege or protection. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP, except as may be necessary for communications with Nexford's EPLI carrier, Verdant Mutual Insurance Company, pursuant to the common interest doctrine.

We look forward to discussing this memorandum with you at your convenience.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Nadia Petrov Lead Associate Direct: (312) 555-1847

Email: npetrov@calderwoodharkness.com

227 West Monroe Street, Suite 3600 Chicago, Illinois 60606

This memorandum is a privileged and confidential attorney-client communication. It is intended solely for the use of the addressees and should not be disseminated, distributed, or copied to any third party without the prior written consent of Calderwood & Harkness LLP. If you have received this memorandum in error, please notify the sender immediately and destroy all copies.

Damages Category	Estimated Range
Back Pay (approximately 18 months at $52,267/year)	$78,400
Front Pay (approximately 9 months)	$39,200
Emotional Distress Damages	$50,000
Statutory Attorneys' Fees and Costs (Plaintiff's)	$40,000
Punitive Damages Risk	$77,400
Total Estimated Worst-Case Exposure	$285,000
Timekeeper	Role	Hours	Rate	Total
Bernard Crawford	Responsible Partner	12.5	$895/hr	$11,187.50
Renata Vasquez	Billing Partner	8.0	$825/hr	$6,600.00
Nadia Petrov	Lead Associate	52.0	$545/hr	$28,340.00
James Underwood	Working Associate	41.0	$395/hr	$16,195.00
Total	113.5	$62,322.50

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
FROM: Nadia Petrov, Associate, Calderwood & Harkness LLP, 227 West Monroe Street, Suite 3600, Chicago, Illinois 60606
TO: Tara Svendsen, General Counsel, Nexford Industrial Holdings Inc., 500 Commerce Drive, Suite 400, Schaumburg, Illinois 60173
Catherine "Cat" Donnelly, Vice President, Human Resources, Nexford Industrial Holdings Inc., 500 Commerce Drive, Suite 400, Schaumburg, Illinois 60173
CC: Bernard Crawford, Responsible Partner, Calderwood & Harkness LLP
DATE: February 6, 2023
RE: Litigation Status Update — Maciejewski v. Nexford Industrial Holdings Inc., Case No. 2022-L-002847, Circuit Court of Cook County, Illinois, County Department, Law Division
I. Purpose and Executive Summary
The purpose of this memorandum is to provide Nexford Industrial Holdings Inc. ("Nexford" or the "Company") with a comprehensive update on the current status of the above-captioned litigation matter following the status conference held on January 12, 2023 before the Honorable Judge Helena R. Vasquez-Torres in the Circuit Court of Cook County, Illinois, County Department, Law Division.
Key Takeaways. The most significant development from the January 12, 2023 status conference is that Plaintiff's counsel, Gerald P. Hess of Hess & Loughlin, P.C., failed to appear before the Court. Attorney Hess provided no advance communication to the Court or to Calderwood & Harkness explaining his absence, nor did he request a continuance of the hearing. Plaintiff Darren K. Maciejewski also did not appear. In light of this non-appearance, the Court entered an order noting Plaintiff's counsel's failure to appear, set a further status date for March 16, 2023, and directed Mr. Hess to appear on that date or show cause for his failure to prosecute the case and for his non-appearance at the January 12 hearing.
This development continues a pattern of inactivity and non-responsiveness by Plaintiff's counsel that dates back to mid-October 2022. Mr. Hess has been entirely unresponsive to Calderwood & Harkness's communications since October 14, 2022. Of equal significance, Plaintiff has never served responses to Nexford's outstanding First Set of Interrogatories and First Request for Production of Documents, which were originally due on August 1, 2022 — now more than six months overdue. Fact discovery closed on December 15, 2022 pursuant to the Court's Case Management Order, and the January 15, 2023 expert disclosure deadline has likewise passed without any activity from Plaintiff.
Based on the current trajectory of this matter, the case appears to be trending toward potential dismissal for want of prosecution. However, a number of procedural steps must occur before that result is achieved, and we do not recommend that Nexford take any premature action that might disturb this favorable trajectory.
Recommended Action. In the interim, Nexford should continue to maintain its existing litigation hold over all documents and electronically stored information identified in the April 1, 2022 litigation hold notice. Calderwood & Harkness will continue to monitor the Cook County docket, attend all scheduled court dates, and provide periodic updates to Nexford, to Verdant Mutual Insurance Company (Nexford's EPLI carrier), and in connection with the Company's quarterly litigation exposure reporting obligations.
Each of these topics is addressed in greater detail below.
II. Background and Case Posture
For context and to ensure a complete record in this status memorandum, we provide below a summary of the background of this litigation and the current posture of the case.
A. The Complaint and Plaintiff's Allegations
Darren K. Maciejewski ("Maciejewski" or "Plaintiff"), a former Senior Quality Assurance Supervisor at Nexford's manufacturing facility located at 2700 Industrial Parkway, Elgin, Illinois 60123 (the "Elgin Facility"), filed a three-count Complaint in the Circuit Court of Cook County on March 15, 2022. The Complaint was assigned Case No. 2022-L-002847 and was assigned to Judge Helena R. Vasquez-Torres in the Law Division. The three counts asserted in the Complaint are as follows:
Count I — Retaliatory Discharge (Illinois Common Law). Maciejewski alleges that he was discharged from employment in retaliation for engaging in activities that implicate a clear mandate of public policy — specifically, reporting workplace safety violations. Under Illinois common law, an at-will employee may bring a tort claim for retaliatory discharge where the termination violates a clearly mandated public policy.
Count II — Retaliation in Violation of Section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. § 660(c). Maciejewski alleges that his termination constituted unlawful retaliation for filing an occupational safety and health complaint with the United States Department of Labor, Occupational Safety and Health Administration ("OSHA"). Section 11(c) of the OSH Act prohibits an employer from discharging or otherwise discriminating against an employee because the employee has filed a complaint, instituted a proceeding, or exercised any right afforded under the Act.
Count III — Violation of the Illinois Whistleblower Act, 740 ILCS 174/1 *et seq.* Maciejewski alleges that his termination violated the Illinois Whistleblower Act, which prohibits employers from retaliating against employees who disclose information to a government or law enforcement agency where the employee has reasonable cause to believe the information discloses a violation of a state or federal law, rule, or regulation.
According to the allegations in the Complaint, Maciejewski reported what he characterized as workplace safety violations at the Elgin Facility's Building C on two occasions through internal channels — first on April 5, 2021, and again on April 19, 2021. The Complaint alleges that these internal reports were directed to Maciejewski's supervisor, Frank Bosch, Plant Manager of the Elgin Facility. Maciejewski further alleges that, following what he perceived as an inadequate internal response, he filed OSHA Complaint No. 1734892 on June 8, 2021. OSHA conducted an inspection of Building C on July 12, 2021. The Complaint alleges that Maciejewski's termination on September 24, 2021 was causally connected to his protected safety reporting activity.
B. The OSHA Investigation and Its Outcome
It is important to note — and this fact will be central to any substantive defense of this matter — that OSHA closed Complaint No. 1734892 on August 18, 2021 with no citations issued and no findings of violation. The OSHA inspection of Building C on July 12, 2021 did not substantiate the concerns raised in Maciejewski's complaint. This outcome significantly undermines the factual premise of Plaintiff's allegations, although we acknowledge that Plaintiff may argue that the filing of the complaint itself, regardless of its outcome, constituted protected activity under the relevant statutes — a position that has some support in the case law.
C. Nexford's Position
Nexford's position, which is fully supported by the documentary record produced in discovery, is that Maciejewski was terminated for documented, repeated violations of the Company's attendance and tardiness policy, codified at Section 4.3 of the Nexford Employee Handbook (the "Handbook"). The progressive discipline that preceded Maciejewski's termination is well-documented and followed the standard disciplinary procedures set forth in the Handbook:
• May 24, 2021: First Written Warning issued to Maciejewski for attendance policy violations, including three instances of unexcused tardiness and one instance of unexcused absence during the preceding sixty-day period.
• August 2, 2021: Final Written Warning issued to Maciejewski for continued attendance policy violations, including two additional instances of unexcused tardiness subsequent to the First Written Warning.
• September 20, 2021: Maciejewski incurred an unexcused absence from his scheduled shift, in contravention of the terms set forth in the Final Written Warning, which expressly stated that any further attendance policy violations would result in termination of employment.
• September 24, 2021: Maciejewski's employment was terminated by written notice issued by Frank Bosch, Plant Manager, with concurrence from Cat Donnelly, Vice President of Human Resources, consistent with the progressive discipline framework and the terms of the Final Written Warning.
The progressive discipline documentation, Maciejewski's complete personnel file, attendance records, and the relevant portions of the Handbook were all included in Nexford's document production in this matter (Bates NIH-000001 through NIH-000847), as discussed in Section III below.
D. Nexford's Answer and Affirmative Defenses
Calderwood & Harkness filed an Answer and Affirmative Defenses on behalf of Nexford on April 18, 2022. The Answer denied the material allegations of the Complaint and asserted the following affirmative defenses:
1. Legitimate Non-Retaliatory Business Reason. Nexford's termination of Maciejewski was motivated by a legitimate, non-retaliatory business reason — namely, Maciejewski's repeated violations of the Company's attendance and tardiness policy — and was not in any way motivated by, or causally connected to, any protected activity.
2. Failure to Exhaust Administrative Remedies (Count II). With respect to Count II of the Complaint (Section 11(c) of the OSH Act), Maciejewski failed to file a complaint with the Secretary of Labor within the thirty-day period prescribed by 29 U.S.C. § 660(c)(2), and the claim is therefore procedurally barred. Section 11(c) provides that an employee who believes he has been discharged in violation of the provision must file a complaint with the Secretary of Labor within thirty days of the alleged violation. The administrative exhaustion requirement is a prerequisite to maintaining a civil action under this section.
3. After-Acquired Evidence. In the course of preparing its defense, Nexford has identified evidence of Maciejewski's misconduct during his employment that would have independently justified termination, and which limits or eliminates Plaintiff's entitlement to certain categories of damages under the after-acquired evidence doctrine. The specific nature of this evidence has been preserved for further development through discovery; however, as discussed below, Plaintiff's failure to participate in discovery has prevented this defense from being fully briefed to date.
E. Case Management Schedule
The Initial Case Management Conference was held on April 28, 2022 before Judge Vasquez-Torres. The Court entered a Case Management Order establishing the following schedule:
• Fact discovery Close: December 15, 2022
• Expert Disclosures: January 15, 2023
• Expert discovery Close: March 1, 2023
As discussed in detail below, all of these deadlines have now passed or are approaching, and Plaintiff has taken no action to comply with any of them. Nexford, by contrast, has fully complied with all of its discovery obligations.
III. Summary of discovery Activity and Opposing Counsel's Inactivity
A recurring and central theme of this memorandum is the stark asymmetry between the parties' respective levels of engagement in this litigation. Nexford has diligently participated in discovery, while Plaintiff's counsel has effectively abandoned the case. The following summary details the discovery activity to date.
A. Discovery Completed by Nexford
Following the entry of the Case Management Order, both sides engaged in initial written discovery:
Plaintiff's discovery to Nexford. Plaintiff served his First Set of Interrogatories (consisting of fifteen interrogatories) and First Request for Production of Documents (consisting of thirty-two requests) on Nexford on May 10, 2022. The requests covered a broad range of topics, including Maciejewski's employment history, performance evaluations, disciplinary records, the circumstances of his termination, the OSHA complaint and inspection, Building C safety conditions, comparative discipline of other employees, and Nexford's policies and procedures on retaliation and whistleblower protection.
Nexford's Responses. Calderwood & Harkness served Nexford's timely Responses and Objections to Plaintiff's First Set of Interrogatories and First Request for Production of Documents on June 24, 2022, within the time prescribed by the Illinois Supreme Court Rules. In connection with those responses, Nexford produced a total of 847 pages of documents, bearing Bates numbers NIH-000001 through NIH-000847. The production included, among other materials:
• Maciejewski's complete personnel file, including employment application, offer letter, performance evaluations, and all disciplinary documentation;
• Attendance records for Maciejewski for the period January 2020 through September 2021;
• The First Written Warning dated May 24, 2021, the Final Written Warning dated August 2, 2021, and the termination notice dated September 24, 2021;
• The Environmental Health & Safety ("EHS") Department report on Building C, including the internal investigation file responsive to Maciejewski's April 5 and April 19, 2021 internal complaints;
• Relevant portions of the Nexford Employee Handbook, including Section 4.3 (Attendance and Tardiness Policy), Section 6.1 (Progressive Discipline), and Section 9.2 (Whistleblower and Anti-Retaliation Policy);
• Correspondence between Frank Bosch, Cat Donnelly, and Liam Gallagher (Director, Environmental Health & Safety) concerning the internal handling of Maciejewski's safety complaints and the OSHA inspection.
Nexford's Affirmative discovery to Plaintiff. Nexford served its own First Set of Interrogatories (consisting of ten interrogatories) and First Request for Production of Documents (consisting of eighteen requests) on Plaintiff on July 1, 2022. These requests sought, among other things, information regarding the factual basis for Maciejewski's claims, the specific safety violations he purportedly reported, communications with OSHA, his post-termination employment and mitigation efforts, and the damages he claims to have suffered.
B. Plaintiff's Motion to Compel — Denied
On July 22, 2022, Plaintiff's counsel Gerald Hess filed a Motion to Compel seeking production of the personnel files of other employees within Maciejewski's department who had incurred attendance violations but were not terminated. Hess argued that this comparative discipline evidence was relevant to demonstrating that Nexford's stated reason for Maciejewski's termination was pretextual, as other similarly situated employees with comparable attendance records were allegedly treated more favorably.
Calderwood & Harkness filed a Response in Opposition to the Motion to Compel on August 12, 2022. Our response argued that the request, as formulated, was overbroad and disproportionate to the needs of the case. The request sought the complete personnel files of an undefined number of employees across an undefined time period, implicating significant privacy concerns and imposing an unreasonable burden on Nexford. We further argued that Plaintiff had failed to identify specific comparator employees or articulate a basis for believing that similarly situated employees existed, and that the request amounted to a fishing expedition.
Judge Vasquez-Torres heard argument on the motion and denied the Motion to Compel on September 9, 2022. The Court agreed that the request was overbroad and not proportional to the needs of the case as framed. However, Judge Vasquez-Torres noted in her ruling that Plaintiff could re-file a narrower, more targeted request identifying specific employees or a defined scope that would be proportional to the issues in the case.
Significantly, no narrower request was ever filed. Hess took no further action on this issue following the Court's ruling, and this was the last substantive motion filed by Plaintiff's counsel in this matter.
C. Plaintiff's Outstanding discovery Defaults
Plaintiff's responses to Nexford's First Set of Interrogatories and First Request for Production of Documents were due on August 1, 2022 — thirty days after service in accordance with Illinois Supreme Court Rule 213(d) and Rule 214(b).
As of the date of this memorandum, no responses of any kind have ever been served by Plaintiff. There has been no objection, no motion for extension of time, and no communication from Plaintiff's counsel regarding these outstanding discovery obligations. The responses are now more than six months overdue.
In addition, fact discovery formally closed on December 15, 2022 pursuant to the Court's Case Management Order. Plaintiff did not serve any additional written discovery, did not notice any depositions, and did not take any other discovery action during the entire discovery period. The expert disclosure deadline of January 15, 2023 has likewise passed without any expert disclosures from Plaintiff.
To summarize the current discovery posture: Plaintiff has failed to respond to Nexford's written discovery, failed to engage in any affirmative fact discovery beyond the initial written requests served in May 2022, failed to follow up on the Court's invitation to serve a narrower comparative-discipline request, failed to serve expert disclosures, and has allowed all discovery deadlines to expire without action.
D. Communications Breakdown with Plaintiff's Counsel
Calderwood & Harkness has made multiple good-faith efforts to communicate with Plaintiff's counsel regarding his discovery defaults and the status of this case, without success. The chronology is as follows:
October 14, 2022 — Last substantive communication. The last communication of any kind received from Gerald Hess was an email dated October 14, 2022 addressed to Nadia Petrov. In that email, Hess acknowledged receipt of certain of Nexford's discovery responses but did not address Plaintiff's overdue discovery obligations, did not propose a plan for compliance, and did not raise any other substantive issue. This brief email is the last communication Calderwood & Harkness has received from Hess or anyone at Hess & Loughlin, P.C.
November 3, 2022 — Formal meet-and-confer letter. Calderwood & Harkness sent a formal meet-and-confer letter to Hess via U.S. Mail and email, detailing Plaintiff's failure to respond to Nexford's First Set of Interrogatories and First Request for Production of Documents, identifying the specific discovery obligations at issue, and requesting that Hess make himself available for a meet-and-confer conference within fourteen days to resolve the discovery dispute, as required by Cook County Circuit Court Rule 2.1 and Illinois Supreme Court Rule 201(k) prior to the filing of any discovery motion. The letter was sent to Hess's address of record and his email address on file with the Court.
November 28, 2022 — Follow-up letter. Having received no response to the November 3 letter, Calderwood & Harkness sent a second letter to Hess on November 28, 2022, again via U.S. Mail and email. This letter reiterated the outstanding discovery defaults, noted the absence of any response to the prior meet-and-confer letter, and warned that Nexford intended to seek a motion to compel and/or sanctions if Plaintiff did not promptly comply with his outstanding discovery obligations. The letter further noted that fact discovery was scheduled to close on December 15, 2022 and that Plaintiff's failure to respond was prejudicing Nexford's ability to prepare its defense.
Additional email follow-up. A further email follow-up was sent to Hess in early December 2022. No response was received.
No response received to any communication. As of the date of this memorandum, Hess has not responded to any of the foregoing communications. His office telephone number rings without being answered, and no voicemail system appears to be operational.
We note that Calderwood & Harkness conducted a search of the Illinois Attorney Registration and Disciplinary Commission ("ARDC") records as of the most recent check and confirmed that Gerald P. Hess's license to practice law in the State of Illinois remains active. There is no indication of any pending disciplinary proceedings, suspension, or other status change that would explain his absence. We are not aware of any health or personal emergency affecting Mr. Hess, though we have no visibility into his personal circumstances.
IV. January 12, 2023 Status Conference
The scheduled status conference in this matter was held on January 12, 2023 before Judge Helena R. Vasquez-Torres.
Nadia Petrov of Calderwood & Harkness appeared on behalf of Defendant Nexford Industrial Holdings Inc. I was prepared to address the Court regarding the status of discovery, the outstanding discovery defaults by Plaintiff, and the communications breakdown with Plaintiff's counsel.
Gerald P. Hess did not appear at the status conference. No communication was received from Hess or from anyone at Hess & Loughlin, P.C. in advance of the hearing to explain his absence, to request a continuance, or to make any other arrangement regarding the scheduled court date. Plaintiff Darren K. Maciejewski also did not appear at the hearing.
At the status conference, I informed the Court of the following:
• Plaintiff's counsel had been entirely unresponsive since October 14, 2022;
• Plaintiff had never served responses to Nexford's outstanding written discovery, which had been due on August 1, 2022;
• Calderwood & Harkness had sent two formal meet-and-confer letters and an email follow-up, none of which had received a response;
• Fact discovery had closed on December 15, 2022 with no discovery activity by Plaintiff;
• The expert disclosure deadline of January 15, 2023 was imminent and no expert disclosures had been received from Plaintiff; and
• The overall pattern suggested that Plaintiff's counsel may have effectively abandoned the prosecution of this case.
The Court acknowledged each of these issues and took the following actions:
1. The Court entered an order noting Plaintiff's counsel's non-appearance at the January 12, 2023 status conference.
2. The Court set a further status date of March 16, 2023.
3. The Court directed that Plaintiff's counsel, Gerald P. Hess, appear at the March 16, 2023 status date or show cause for his failure to prosecute the case and for his non-appearance at the January 12, 2023 hearing.
The Court's order was entered on the record and will be reflected on the Cook County docket. A copy of the January 12, 2023 order will be forwarded to Nexford upon receipt from the Clerk's office.
The show-cause directive is a significant procedural development. It signals that the Court is aware of the pattern of inactivity and non-appearance by Plaintiff's counsel, and it places the case on a track that could lead to dismissal for want of prosecution if the pattern continues, as discussed in Section V below.
V. Assessment and Outlook
A. Potential for Dismissal for Want of Prosecution
Based on the current trajectory of this matter, we believe there is a meaningful probability that this case will be dismissed for want of prosecution ("DWP") if Plaintiff's counsel continues his pattern of non-appearance and inactivity.
If Mr. Hess fails to appear at the March 16, 2023 status conference, the Court may enter a formal Rule to Show Cause order. If the show cause is not satisfactorily answered — for example, if Hess fails to appear and fails to provide an adequate explanation for his non-appearance and his failure to prosecute the case — the Court has the authority to dismiss the case for want of prosecution.
Under Cook County Circuit Court General Order 2.1 and the inherent authority of the Court, cases may be dismissed for want of prosecution where plaintiff's counsel fails to appear at scheduled court dates and fails to prosecute the case with reasonable diligence. A DWP may also be entered where a plaintiff fails to comply with discovery obligations and court orders.
We note, however, that a dismissal for want of prosecution is typically entered without prejudice. This means that Plaintiff could potentially re-file the action, subject to the applicable statutes of limitations. The relevant limitations periods are as follows:
• Count I (Retaliatory Discharge — Illinois Common Law): Five-year statute of limitations under 735 ILCS 5/13-205, running from the date of termination (September 24, 2021). The limitations period would expire on or about September 24, 2026. A re-filing would therefore be timely for a substantial period.
• Count II (Section 11(c) of the OSH Act): Thirty-day filing deadline with the Secretary of Labor under 29 U.S.C. § 660(c)(2). This deadline would appear to have long since passed, and our affirmative defense of failure to exhaust administrative remedies would apply with equal force to any re-filed action. This count is therefore unlikely to be successfully re-filed.
• Count III (Illinois Whistleblower Act): The Illinois Whistleblower Act does not contain a specific statute of limitations; courts have generally applied the five-year residual limitations period under 735 ILCS 5/13-205. The limitations period would expire on or about September 24, 2026.
Accordingly, a DWP without prejudice would not fully eliminate Nexford's litigation risk on Counts I and III, as Maciejewski could theoretically re-file those claims with new counsel. However, the passage of time, the absence of completed discovery by Plaintiff, and the practical difficulties of reviving a stale case would significantly diminish the viability of any re-filed action. Furthermore, the record of Plaintiff's counsel's misconduct and abandonment may support an argument for dismissal with prejudice under appropriate circumstances, though that outcome is less common and typically requires a more egregious record.
Calderwood & Harkness will continue to attend all scheduled court dates and will be prepared to request dismissal if the pattern of non-appearance and non-prosecution continues at the March 16, 2023 status conference and any subsequent hearings.
B. Risk Assessment
Turning to the substantive merits, Nexford's defense posture remains strong. The key facts supporting the defense include:
• OSHA found no violations. OSHA closed Complaint No. 1734892 on August 18, 2021 with no citations and no findings of violation. While the filing of the complaint itself may constitute protected activity regardless of outcome, the absence of any substantiated safety violations weakens Plaintiff's narrative that Nexford was motivated to retaliate.
• Progressive discipline was thoroughly documented. The First Written Warning (May 24, 2021), Final Written Warning (August 2, 2021), and the termination notice (September 24, 2021) are all in the record. Each step followed the progressive discipline framework set forth in the Employee Handbook, and each was signed by both the supervisor and the employee (or, in the case of the termination notice, acknowledged by the employee's refusal to sign, as noted by the witness signature of Cat Donnelly).
• The termination was consistent with Handbook Section 4.3. The attendance and tardiness policy provides clear standards and consequences. Maciejewski's attendance record demonstrates a pattern of violations that independently justified termination under the policy, without any reference to his safety reporting activities.
• Temporal proximity is the primary basis for an inference of retaliation. Plaintiff's strongest argument on causation is the temporal proximity between his protected activity (the internal reports in April 2021 and the OSHA complaint in June 2021) and his termination in September 2021. While temporal proximity can support an inference of retaliation, Nexford's documented, legitimate, non-retaliatory reason for the termination — the progressive discipline for attendance violations — provides a strong basis for rebutting that inference.
Exposure Estimate. Our internal worst-case exposure estimate for this matter remains at approximately $285,000, broken down as follows:
We emphasize that this is a worst-case estimate that assumes Plaintiff prevails on all counts and obtains favorable rulings on damages. Given the strength of Nexford's defense and the current trajectory of the case, we believe the actual risk-adjusted exposure is substantially lower.
Current Trajectory. The current trajectory of this matter significantly reduces the likelihood of any adverse outcome. The case appears to be heading toward abandonment by Plaintiff's counsel. If the case is dismissed for want of prosecution, Nexford will avoid any liability on the merits. Even if the case is re-filed by new counsel at a future date, the passage of time, the loss of discovery momentum, and the absence of any developed evidentiary record by Plaintiff would place any re-filed action at a significant disadvantage.
EPLI Coverage. We confirm that the employment practices liability insurance coverage under Verdant Mutual Insurance Company Policy No. EPLI-VM-2021-04782 remains in place and applicable to this matter. The relevant policy terms are:
• Per-Occurrence Limit: $2,000,000
• Aggregate Limit: $5,000,000
• Self-Insured Retention: $50,000
Coverage was acknowledged by Verdant Mutual subject to a reservation of rights, which is standard for claims of this nature. The reservation of rights letter, dated April 22, 2022, reserved Verdant's rights with respect to certain coverage defenses but did not deny coverage. Calderwood & Harkness has been approved as panel counsel for the defense of this matter. Defense costs incurred above Nexford's self-insured retention are covered under the policy, as discussed further in Section VI below.
VI. Fees and Budget Status
As discussed with Tara Svendsen at the outset of this engagement, Calderwood & Harkness and Nexford agreed to a pre-trial litigation budget cap of $175,000 for the defense of this matter through the completion of pretrial proceedings, exclusive of any trial preparation or trial costs, which would be budgeted separately if the case were to proceed to that stage.
The following is a summary of total fees incurred through the active litigation period:
The total fees incurred to date are approximately $62,300, which represents approximately 35.6% of the agreed pre-trial budget cap of $175,000. The remaining budget is approximately $112,700.
Going forward, we anticipate that fees will be minimal, assuming the case continues on its current trajectory toward potential dismissal. Ongoing costs will consist primarily of:
• Routine docket monitoring;
• Attendance at status conferences (the next of which is scheduled for March 16, 2023);
• Periodic client reporting (including this memorandum and similar updates);
• Coordination with Verdant Mutual on insurer reporting obligations; and
• Preparation of any motions that may become necessary (e.g., a motion to dismiss for want of prosecution, if the Court does not dismiss sua sponte).
We estimate that fees through the resolution of this matter, assuming the case is dismissed for want of prosecution within the next three to six months, will total approximately $70,000 to $80,000. This would leave a substantial portion of the budget unused.
EPLI Cost Allocation. Nexford's self-insured retention of $50,000 under the Verdant Mutual EPLI policy has been exceeded by fees incurred to date. Accordingly, further defense costs should be covered by the EPLI policy, subject to the terms and conditions of Verdant Mutual's reservation of rights and the policy's panel counsel provisions. As noted above, Calderwood & Harkness has been approved by Verdant Mutual as panel counsel for the defense of this matter. We will continue to submit invoices to Verdant Mutual's claims adjuster, Brianna Choi, in accordance with the insurer's billing guidelines and will coordinate with Tara Svendsen on any issues that arise regarding coverage or cost allocation.
VII. Recommended Next Steps
Based on the foregoing analysis, Calderwood & Harkness recommends the following course of action:
1. Maintain Litigation Hold. Nexford should continue to preserve all documents and electronically stored information ("ESI") identified in the litigation hold notice dated April 1, 2022 related to Maciejewski's employment, the OSHA complaint and inspection, Building C safety conditions and the EHS Department's internal investigation, and all communications among the key custodians identified in the hold notice, including Frank Bosch (Plant Manager, Elgin Facility), Cat Donnelly (Vice President, Human Resources), Liam Gallagher (Director, Environmental Health & Safety), and Tara Svendsen (General Counsel). Although the case appears to be trending toward dismissal, it remains nominally pending before the Court, and it would be premature and potentially prejudicial to release the litigation hold at this time. We will advise Nexford when it is appropriate to release the hold.
2. Calderwood & Harkness to Attend March 16, 2023 Status Conference. Nadia Petrov will appear on behalf of Nexford at the next scheduled status conference on March 16, 2023 before Judge Vasquez-Torres. I will be prepared to address the Court regarding the full record of Plaintiff's counsel's non-appearances, discovery defaults, and failure to prosecute the case. If the Court entertains a motion for dismissal or enters a Rule to Show Cause, I will be prepared to respond accordingly and to advocate for the most favorable disposition available to Nexford under the circumstances.
3. Continue Monitoring Docket. Calderwood & Harkness will continue to monitor the Cook County Circuit Court docket for any filings by Hess, any substitution of counsel on behalf of Plaintiff, or any other activity in the case. We will promptly notify Nexford of any developments.
4. No Affirmative Motions at This Time. After careful consideration, Calderwood & Harkness does not recommend filing a motion to dismiss for want of prosecution or a motion for sanctions at this juncture. The Court's show-cause mechanism is already in motion and is likely to achieve the same result — dismissal — without the cost and potential complications of affirmative motion practice. Filing an affirmative motion could, in certain circumstances, have the unintended effect of "waking up" opposing counsel or prompting the Court to grant Plaintiff additional time to respond and remedy the defaults. We believe the more prudent course is to allow the Court's own procedures to take their course. If circumstances change — for example, if Hess or substitute counsel appears at the March 16 hearing and seeks to revive the case — we will promptly revisit this recommendation and advise Nexford accordingly.
5. Periodic Reporting. Calderwood & Harkness will continue to provide periodic status updates to Nexford. In addition, we will continue to coordinate with Verdant Mutual Insurance Company through its designated claims adjuster, Brianna Choi, regarding insurer reporting obligations. We will also coordinate with Tara Svendsen on the preparation of the quarterly litigation exposure report to Harborview Partners, through its Operating Partner, Malcolm Driscoll, as required under the Company's reporting obligations for litigation matters with potential exposure exceeding $50,000. We anticipate that the next substantive update will follow the March 16, 2023 status conference, unless intervening developments warrant earlier communication.
6. Contact Information for Questions. Tara Svendsen and Cat Donnelly should not hesitate to contact us with any questions or concerns regarding this matter or any developments that may come to their attention. We can be reached as follows:
Nadia Petrov, Lead Associate Calderwood & Harkness LLP 227 West Monroe Street, Suite 3600 Chicago, Illinois 60606 Direct: (312) 555-1847
Email: npetrov@calderwoodharkness.com
Bernard Crawford, Responsible Partner Calderwood & Harkness LLP 227 West Monroe Street, Suite 3600 Chicago, Illinois 60606 Direct: (312) 555-1290
Email: bcrawford@calderwoodharkness.com
VIII. Closing
Calderwood & Harkness appreciates Nexford's continued confidence in the firm's handling of this matter. We remain committed to achieving the most favorable resolution possible for the Company, and we believe the current trajectory of this case is a positive one from Nexford's perspective. We will continue to monitor the case closely and will keep you informed of all significant developments.
Please be reminded that this memorandum constitutes a privileged and confidential attorney-client communication. It is prepared for the sole use of Nexford Industrial Holdings Inc. and its authorized representatives in connection with the above-captioned litigation. The contents of this memorandum are protected from disclosure by the attorney-client privilege, the work product doctrine, and any other applicable privilege or protection. This memorandum should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP, except as may be necessary for communications with Nexford's EPLI carrier, Verdant Mutual Insurance Company, pursuant to the common interest doctrine.
We look forward to discussing this memorandum with you at your convenience.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Nadia Petrov Lead Associate Direct: (312) 555-1847
Email: npetrov@calderwoodharkness.com
227 West Monroe Street, Suite 3600 Chicago, Illinois 60606
This memorandum is a privileged and confidential attorney-client communication. It is intended solely for the use of the addressees and should not be disseminated, distributed, or copied to any third party without the prior written consent of Calderwood & Harkness LLP. If you have received this memorandum in error, please notify the sender immediately and destroy all copies.
Damages Category | Estimated Range
Back Pay (approximately 18 months at $52,267/year) | $78,400
Front Pay (approximately 9 months) | $39,200
Emotional Distress Damages | $50,000
Statutory Attorneys' Fees and Costs (Plaintiff's) | $40,000
Punitive Damages Risk | $77,400
Total Estimated Worst-Case Exposure | $285,000
Timekeeper | Role | Hours | Rate | Total
Bernard Crawford | Responsible Partner | 12.5 | $895/hr | $11,187.50
Renata Vasquez | Billing Partner | 8.0 | $825/hr | $6,600.00
Nadia Petrov | Lead Associate | 52.0 | $545/hr | $28,340.00
James Underwood | Working Associate | 41.0 | $395/hr | $16,195.00
Total | 113.5 | $62,322.50

MEMORANDUM

CALDERWOOD & HARKNESS LLP

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