1005-00004 · Nexford Industrial Holdings · Insurance

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PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law 227 West Monroe Street, Suite 3600 Chicago, Illinois 60606 Telephone: (312) 555-4700 Facsimile: (312) 555-4701 www.calderwoodharkness.com

January 20, 2023

Brianna Choi, Claims Adjuster Verdant Mutual Insurance Company 800 North Plankinton Avenue Milwaukee, WI 53203

Re: Quarterly Litigation Status Report — Maciejewski v. Nexford Industrial Holdings Inc. Case No. 2022-L-002847, Circuit Court of Cook County, Illinois, County Department, Law Division EPLI Policy No. EPLI-VM-2021-04782 Insured: Nexford Industrial Holdings Inc. Reporting Period: Q4 2022 / Q1 2023

Dear Ms. Choi:

I. INTRODUCTION AND PURPOSE

This letter serves as the quarterly litigation status report submitted by Calderwood & Harkness LLP in its capacity as panel counsel approved by Verdant Mutual Insurance Company ("Verdant") for the defense of the above-captioned matter. This report covers the period from approximately October 1, 2022, through mid-January 2023. It is intended to provide Verdant with a comprehensive update on all material litigation developments, an assessment of the current posture and outlook of the case, a summary of fees and costs incurred to date, and certain requests for authorization and guidance.

As Verdant is aware, Verdant acknowledged coverage for the Maciejewski matter under Employment Practices Liability Insurance Policy No. EPLI-VM-2021-04782 (the "Policy"), subject to a reservation of rights communicated by letter dated April 8, 2022. The Policy provides a per-occurrence limit of $2,000,000 and an aggregate limit of $5,000,000, with a self-insured retention ("SIR") of $50,000, which is the obligation of the insured, Nexford Industrial Holdings Inc. ("Nexford" or the "Company").

Calderwood & Harkness represents Nexford, a Delaware-incorporated, Illinois-headquartered industrial manufacturing company with its principal place of business at 500 Commerce Drive, Suite 400, Schaumburg, Illinois 60173. The present matter involves a single-plaintiff retaliation claim brought by former Senior Quality Assurance Supervisor Darren K. Maciejewski, age 47 at the time of his termination, who was employed at Nexford's manufacturing facility located at 2700 Industrial Parkway, Elgin, Illinois 60123 (the "Elgin Facility") from June 12, 2017, through his termination on September 24, 2021.

This report is organized into the following sections: (1) Summary of Claims; (2) Damages Claimed and Exposure Assessment; (3) OSHA Complaint Resolution; (4) Procedural History and Litigation Activity; (5) Defense Assessment and Case Outlook; (6) Fee Summary and Budget Status; (7) Litigation Hold and Document Preservation; (8) Requests to Verdant; and (9) Conclusion.

II. SUMMARY OF CLAIMS

The complaint in this matter was filed on March 15, 2022, by Gerald P. Hess of Hess & Loughlin, P.C., located at 3412 Harlem Avenue, Suite 205, Berwyn, Illinois 60402. Mr. Hess remains plaintiff's counsel of record. The complaint asserts three counts against Nexford, each of which arises out of the same core set of allegations—namely, that Mr. Maciejewski's termination on September 24, 2021, was motivated by retaliation for his reporting of purported safety violations at the Elgin Facility.

The three counts are as follows:

Count I — Retaliatory Discharge (Illinois Common Law). Plaintiff alleges that his termination constituted a retaliatory discharge in violation of the well-established Illinois common law cause of action, on the basis that his internal complaints regarding chemical storage conditions and his filing of a complaint with the Occupational Safety and Health Administration ("OSHA") constituted protected activity, and that his termination was causally related to, and motivated by, such protected activity.

Count II — Retaliation Under Section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. § 660(c). Plaintiff alleges that Nexford violated Section 11(c) of the OSH Act by discharging him in retaliation for filing OSHA Complaint No. 1734892 on June 8, 2021. We note, as discussed further below, that this count is subject to a significant procedural defense regarding exhaustion of administrative remedies.

Count III — Violation of the Illinois Whistleblower Act, 740 ILCS 174/1 *et seq.*: Plaintiff alleges that his termination constituted an act of retaliation in violation of the Illinois Whistleblower Act ("IWA"), which prohibits an employer from retaliating against an employee who discloses information to a government or law enforcement agency where the employee has reasonable cause to believe that the information disclosed reveals a violation of a state or federal law, rule, or regulation.

A. Plaintiff's Factual Allegations

The complaint alleges that Mr. Maciejewski, in his capacity as Senior Quality Assurance Supervisor at the Elgin Facility, observed and became concerned about what he characterized as unsafe chemical storage conditions in Building C of that facility. Specifically, the complaint alleges that beginning on or about April 5, 2021, Mr. Maciejewski reported his concerns internally to his direct supervisor, Plant Manager Frank Bosch. Mr. Maciejewski further alleges that on April 19, 2021, he reported these concerns to the Nexford Environmental Health and Safety ("EHS") Department, specifically to EHS Director Liam Gallagher.

Having received what he characterizes as an inadequate response to his internal complaints, Mr. Maciejewski alleges that he filed OSHA Complaint No. 1734892 on June 8, 2021, with the OSHA Area Office located at 701 Lee Street, Suite 950, Des Plaines, Illinois 60016. The complaint further alleges that following his OSHA filing, Nexford initiated a course of progressive disciplinary action against him that was pretextual and designed to manufacture a basis for his termination.

B. Nexford's Position

Nexford vigorously denies plaintiff's claims and maintains that Mr. Maciejewski's termination on September 24, 2021, was the result of his documented, repeated violations of the Company's attendance and tardiness policy, as set forth in Employee Handbook § 4.3 ("Attendance, Punctuality, and Reporting Requirements"). The Company's position is supported by a well-documented progressive discipline record, which includes the following:

1. First Written Warning — May 24, 2021. Mr. Maciejewski received a first written warning for four documented tardiness incidents occurring between approximately late April and mid-May 2021, in accordance with the progressive discipline procedures outlined in Employee Handbook § 4.3.

2. Final Written Warning — August 2, 2021. Mr. Maciejewski received a final written warning for three additional tardiness incidents occurring between approximately late June and late July 2021, again in accordance with Employee Handbook § 4.3.

3. Unexcused Absence — September 20, 2021. Mr. Maciejewski failed to report for his scheduled shift on September 20, 2021, and did not provide timely notification to his supervisor or the Human Resources Department, resulting in the absence being classified as unexcused.

The termination meeting was conducted on September 24, 2021, by Plant Manager Frank Bosch and Vice President of Human Resources Catherine Donnelly, following the Company's established procedures for termination. Nexford's position is that the termination was a natural and foreseeable consequence of Mr. Maciejewski's persistent attendance failures, and that it would have occurred irrespective of any safety complaints he may have made.

At the time of his termination, Mr. Maciejewski's final annual salary was $78,400.

III. DAMAGES CLAIMED AND EXPOSURE ASSESSMENT

A. Damages Claimed

Plaintiff's complaint seeks the following categories of damages:

(a) Back pay from the date of termination (September 24, 2021) through the date of judgment, representing lost wages and benefits;

(b) Front pay, representing future lost wages and benefits to the extent reinstatement is impracticable;

(d) Punitive damages in the amount of $500,000; and

(e) Reasonable attorneys' fees and costs of suit, to the extent recoverable under applicable statute.

At the time of the complaint's filing on March 15, 2022, back pay had accrued for a period of approximately 5.7 months (from September 24, 2021 through March 15, 2022), representing approximately $37,240 in lost wages (calculated as $78,400 per year, or $6,533.33 per month, multiplied by 5.7 months). Back pay continues to accrue, though plaintiff's duty to mitigate may limit recovery in this category. As of the date of this report, the theoretical back pay period has extended to approximately 15.8 months, though any actual recovery would depend on plaintiff's mitigation efforts, which remain unknown due to the absence of any discovery responses from plaintiff.

B. Calderwood & Harkness Exposure Assessment

Calderwood & Harkness prepared an internal worst-case total exposure estimate in April 2022, shortly after the engagement commenced. That estimate, which remains our current assessment, places worst-case exposure at approximately $285,000, broken down as follows:

This estimate was developed based on comparable verdicts and settlements in single-plaintiff retaliation matters in Cook County and the greater Chicagoland area, as well as an assessment of the relative strengths and weaknesses of the case as known at the time. We note that the emotional distress estimate of $50,000 reflects a realistic jury award in the event of an adverse verdict on liability, rather than the $150,000 amount pled in the complaint, which we view as inflated. Similarly, we assessed the punitive damages risk at $77,400 (approximately one year's salary), well below the $500,000 demand, reflecting the absence of any evidence of egregious or intentional misconduct by Nexford.

Overall, our exposure assessment remains well within the EPLI per-occurrence limit of $2,000,000. The SIR of $50,000 was expected to be exceeded only if the matter proceeded to active litigation, as indeed has occurred (see Section VII below regarding fees incurred to date).

We note for Verdant's information that Nexford is a portfolio company of Harborview Partners, which holds a 72% controlling interest in Nexford. Veltrano acquired Nexford in October 2019 for approximately $310 million. Nexford's annual revenues are approximately $185 million. While this background is not directly relevant to exposure analysis, it provides context for Nexford's organizational profile.

IV. OSHA COMPLAINT RESOLUTION

As noted above, OSHA Complaint No. 1734892 was filed by Mr. Maciejewski on June 8, 2021, with the OSHA Area Office located at 701 Lee Street, Suite 950, Des Plaines, Illinois 60016. The complaint alleged improper storage of Class 3 flammable liquids—specifically, acetone and isopropanol—in quantities that purportedly exceeded approved storage cabinet capacity limits in Building C of the Elgin Facility.

The chronology of the OSHA complaint is as follows:

• June 8, 2021: Mr. Maciejewski filed OSHA Complaint No. 1734892.

• June 14, 2021: Nexford received formal notification from OSHA regarding the complaint.

• July 12, 2021: OSHA conducted an on-site inspection of Building C at the Elgin Facility.

• August 18, 2021: OSHA closed the complaint with no citations issued and no findings of violation.

It is also notable that Nexford's EHS Department, under the direction of Director Liam Gallagher, had independently reviewed the substance of Mr. Maciejewski's internal complaints prior to the OSHA inspection. That internal review was conducted on May 3, 2021, approximately five weeks after Mr. Maciejewski's initial internal complaint on April 5, 2021. The EHS Department's review concluded that chemical storage practices in Building C were in compliance with applicable OSHA regulations and National Fire Protection Association (NFPA) standards, though the EHS Department recommended certain minor labeling improvements as a best-practices measure. Those labeling improvements were implemented promptly.

The OSHA no-citation closure is a significant and favorable development for the defense. OSHA's independent determination that no violations existed at the Elgin Facility substantially undermines plaintiff's claim that the conditions he reported were genuine safety violations warranting protection. While the legal standard for protection under Section 11(c) and the IWA does not require that the underlying complaint be meritorious—only that the employee have had a reasonable, good-faith belief that a violation existed—OSHA's no-citation closure provides powerful evidence that the chemical storage conditions at the Elgin Facility were not, in fact, non-compliant, which in turn bears on the credibility and reasonableness of plaintiff's asserted belief.

V. PROCEDURAL HISTORY AND LITIGATION ACTIVITY

A. Pleading Stage

The complaint was filed on March 15, 2022, in the Circuit Court of Cook County, Illinois, County Department, Law Division, and was assigned Case No. 2022-L-002847. Service of process was effectuated on March 22, 2022, upon CT Agents Inc., Nexford's registered agent in Illinois.

Nexford's General Counsel, Tara Svendsen, promptly forwarded the summons and complaint to Verdant on March 28, 2022, and contacted Calderwood & Harkness to engage defense counsel. Following Verdant's acknowledgment of coverage subject to reservation of rights, Calderwood & Harkness filed its appearance on behalf of Nexford on April 4, 2022.

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

(1) Legitimate, Non-Retaliatory Business Reason. Nexford asserted that Mr. Maciejewski was terminated for documented, repeated violations of the Company's attendance and tardiness policy, constituting a legitimate, non-retaliatory business reason for the adverse employment action.

(2) Failure to Exhaust Administrative Remedies (Count II). With respect to plaintiff's claim under Section 11(c) of the OSH Act, 29 U.S.C. § 660(c), Nexford asserted that the plaintiff failed to exhaust the required administrative remedies prior to filing suit, as Section 11(c) claims must be filed with the Secretary of Labor within 30 days of the alleged violation, and the Secretary retains exclusive authority to bring suit.

(3) After-Acquired Evidence Doctrine. Nexford reserved and asserted the after-acquired evidence doctrine as a potential limitation on the scope of any damages, to the extent discovery reveals evidence of plaintiff misconduct that would have independently warranted termination.

B. Case Management Conference

An initial Case Management Conference was held on April 28, 2022, before the Honorable Helena R. Vasquez-Torres. At that conference, the Court entered a case management order establishing the following discovery schedule:

• Fact discovery close: December 15, 2022

• Expert disclosures due: January 15, 2023

• Expert discovery close: March 1, 2023

The case management order contemplated a trial setting to be discussed at a subsequent status conference following the close of expert discovery.

C. Discovery Phase

Discovery activity proceeded as follows during the spring and summer of 2022:

Plaintiff's Written discovery to Nexford. On May 10, 2022, plaintiff served his First Set of Interrogatories (containing 15 interrogatories) and First Request for Production of Documents (containing 32 individually numbered requests) on Nexford. These discovery requests sought, among other things, all documentation related to Mr. Maciejewski's employment, the circumstances of his termination, the OSHA complaint and Nexford's response, the identity of decision-makers involved in the termination, and communications among Nexford personnel regarding Mr. Maciejewski.

Nexford's discovery Responses and Document Production. On June 24, 2022, Nexford served its responses and objections to plaintiff's discovery. In connection with these responses, Nexford produced 847 pages of documents, bearing Bates numbers NIH-000001 through NIH-000847. The production included the following categories of documents:

• Mr. Maciejewski's complete personnel file;

• Attendance and timekeeping records for Mr. Maciejewski;

• All progressive discipline documentation, including the first written warning (May 24, 2021), the final written warning (August 2, 2021), and the documentation of the unexcused absence (September 20, 2021);

• The EHS Department's internal review report regarding the Building C chemical storage conditions;

• Relevant sections of the Employee Handbook, including § 4.3; and

• Communications between Plant Manager Frank Bosch, VP Human Resources Catherine Donnelly, and EHS Director Liam Gallagher relating to Mr. Maciejewski's internal complaints and the OSHA inspection.

Nexford's Written discovery to Plaintiff. On July 1, 2022, Nexford served its First Set of Interrogatories (containing 10 interrogatories) and First Request for Production of Documents (containing 18 individually numbered requests) on plaintiff. These discovery requests sought, among other things, information and documents relating to plaintiff's claimed damages, mitigation efforts, employment history since termination, emotional distress claims, medical treatment (if any), and the factual basis for each count of the complaint.

Plaintiff's Failure to Respond. Plaintiff's responses to Nexford's discovery were due on or about August 1, 2022. As of the date of this report, plaintiff has never served any responses to Nexford's interrogatories or document requests, and these responses remain outstanding. The significance of this failure is discussed further below.

D. Plaintiff's Motion to Compel

On July 22, 2022, plaintiff, through Mr. Hess, filed a Motion to Compel seeking production of personnel files and discipline records of other employees in Mr. Maciejewski's department who had attendance violations but were not terminated. The motion characterized this comparative discipline evidence as essential to plaintiff's case, arguing that it would demonstrate disparate treatment and pretext.

On August 12, 2022, Calderwood & Harkness filed a Response in Opposition to the Motion to Compel. Our response argued that the request was overbroad in its scope, unduly burdensome given the volume of records that would be implicated, not proportional to the needs of the case in light of the marginal relevance of non-party employee records to a single-plaintiff retaliation action, and that production of the personnel files of non-party employees raised significant privacy concerns.

On September 9, 2022, Judge Vasquez-Torres denied the Motion to Compel, finding that the request as framed was overbroad and not proportional to the needs of the case under Illinois Supreme Court Rule 201(c)(3). The Court noted, however, that plaintiff would be permitted to re-file a more narrowly tailored request if he could demonstrate the relevance and proportionality of a more targeted set of records. To date, plaintiff has not re-filed any such request.

E. Cessation of Plaintiff's Counsel Activity

Beginning in mid-October 2022, plaintiff's counsel, Gerald Hess, effectively ceased all activity in the case. The chronology of this cessation is as follows:

• October 14, 2022: Last substantive communication from Mr. Hess — an email to Nadia Petrov (Calderwood & Harkness lead associate) acknowledging receipt of Nexford's discovery responses but not addressing plaintiff's overdue discovery responses or providing any indication of when such responses might be forthcoming.

• November 3, 2022: Calderwood & Harkness sent a first meet-and-confer letter to Mr. Hess via certified mail and email, formally noting plaintiff's failure to respond to Nexford's First Set of Interrogatories and First Request for Production of Documents, which had been due since August 1, 2022. The letter requested that Mr. Hess contact our office within 14 days to arrange a meet-and-confer conference regarding the outstanding discovery.

• November 28, 2022: Having received no response to the November 3, 2022 letter, Calderwood & Harkness sent a second meet-and-confer letter, again via certified mail and email, reiterating the demand for plaintiff's discovery responses and advising that Nexford would seek appropriate relief from the Court, including a motion to compel and a potential motion for sanctions, if responses were not forthcoming.

• December 15, 2022: The original fact discovery close date passed without plaintiff having served any discovery responses to Nexford's outstanding interrogatories and document requests.

In total, Mr. Hess has failed to respond to three letters and two emails from Calderwood & Harkness. A review of the Attorney Registration and Disciplinary Commission ("ARDC") records confirms that Mr. Hess's law license remains in active status. We are not aware of any disciplinary proceedings, health issues, or other circumstances that might explain the cessation of activity, and Mr. Hess has made no filings or appearances in the case since October 2022.

F. January 12, 2023 Status Conference

A regularly scheduled status conference was held on January 12, 2023, before Judge Vasquez-Torres. Nadia Petrov appeared on behalf of Nexford. Gerald Hess did not appear, and no other attorney appeared on behalf of plaintiff.

The Court took note of plaintiff's counsel's non-appearance and entered an order reflecting the same. The Court set a further status date for March 16, 2023, and directed that plaintiff's counsel appear at the March 16 status conference or show cause why the case should not be dismissed for want of prosecution. A copy of the Court's January 12, 2023 Order is enclosed with this report.

This development is significant. The case now appears to be on a trajectory toward a potential dismissal for want of prosecution ("DWP") if plaintiff's counsel fails to appear on March 16, 2023, or otherwise fails to show cause for his non-participation.

VI. DEFENSE ASSESSMENT AND CASE OUTLOOK

A. Merits Assessment

Calderwood & Harkness continues to assess the defense position as strong on the merits. The principal bases for this assessment are as follows:

1. OSHA No-Citation Closure. OSHA closed Complaint No. 1734892 on August 18, 2021, with no citations issued and no findings of violation. This determination by the federal agency charged with enforcement of workplace safety standards substantially undermines the premise of plaintiff's safety complaints and, by extension, weakens his claim that his termination was retaliatory. While plaintiff's claims do not require proof of an actual safety violation, OSHA's determination that no violation existed is probative of both the merits of the underlying safety complaint and the reasonableness of plaintiff's asserted belief.

2. Well-Documented Progressive Discipline. Nexford maintained contemporaneous, well-documented progressive discipline records regarding Mr. Maciejewski's attendance deficiencies. The first written warning (May 24, 2021, for four tardiness incidents), the final written warning (August 2, 2021, for three additional tardiness incidents), and the documentation of the unexcused absence (September 20, 2021) provide a clear and consistent record of the legitimate, non-retaliatory business reason for the termination. The progressive discipline was administered in accordance with the procedures set forth in Employee Handbook § 4.3.

3. Termination Procedures. The termination meeting on September 24, 2021, was conducted by Plant Manager Frank Bosch and VP Human Resources Catherine Donnelly following Nexford's established termination procedures. The involvement of multiple decision-makers and the adherence to established procedures further support the defense position that the termination was a routine consequence of progressive discipline, not retaliation.

4. Exhaustion of Administrative Remedies Defense (Count II). Plaintiff's Count II, asserted under Section 11(c) of the OSH Act, 29 U.S.C. § 660(c), is subject to a significant procedural defense. Under Section 11(c), complaints of retaliation must be filed with the Secretary of Labor within 30 days of the alleged adverse action, and the Secretary retains exclusive authority to bring suit in federal district court. There is no private right of action under Section 11(c). This defense provides a strong basis for dismissal of Count II, either on motion or at summary judgment.

5. After-Acquired Evidence Doctrine. Nexford has asserted the after-acquired evidence doctrine as an affirmative defense, which, if applicable, may operate to limit the scope of damages even in the event of an adverse finding on liability. The potential applicability of this doctrine remains to be developed through discovery, which has been impeded by plaintiff's failure to provide discovery responses.

B. Current Trajectory

Given plaintiff's counsel's complete cessation of activity—no discovery responses served, no appearances made, no communications exchanged for a period now exceeding three months—the case is trending strongly toward dismissal for want of prosecution. The critical next date is the March 16, 2023 status conference, at which Judge Vasquez-Torres has directed Mr. Hess to appear or show cause why the case should not be dismissed.

We note that the expert disclosure deadline of January 15, 2023, has passed without any expert disclosures having been served by plaintiff. This failure further compounds plaintiff's discovery defaults and strengthens the procedural basis for dismissal or other adverse consequences.

C. Risks and Contingencies

While the case trajectory is favorable to the defense, we note the following residual risks:

• Risk of Plaintiff Retaining New Counsel. There remains a possibility, though diminishing with each passing week, that Mr. Maciejewski could retain new counsel who may seek to revive the case, potentially by filing a motion to vacate any dismissal order or by negotiating an extension of discovery deadlines. Calderwood & Harkness is prepared to oppose any such efforts vigorously.

• Risk of Hess Re-engaging. It is also possible that Mr. Hess may re-emerge and resume active participation in the case. However, even in that scenario, plaintiff would face significant challenges in obtaining extensions of the expired discovery deadlines and in overcoming the prejudice caused by his prolonged inactivity.

• Finality of DWP. If the case is dismissed for want of prosecution, plaintiff may have a limited period of time within which to move to vacate the dismissal. Calderwood & Harkness will monitor any such motion and seek authorization to oppose it if filed.

VII. FEE SUMMARY AND BUDGET STATUS

A. Budget

The agreed pre-trial litigation budget cap for this matter, as approved by Verdant, is $175,000.

B. Fees Incurred

The following table summarizes fees incurred by Calderwood & Harkness through the active litigation period (through approximately the end of Q4 2022):

Total fees incurred through the current reporting period are approximately $62,300 (rounded). The remaining budget under the agreed pre-trial litigation cap is approximately $112,700.

C. Self-Insured Retention Status

We draw Verdant's attention to the fact that the $50,000 self-insured retention under the Policy has been exceeded by the fees incurred to date. Specifically, total fees of $62,322.50 exceed the SIR of $50,000 by $12,322.50. Accordingly, Verdant's coverage obligation has been triggered for amounts above the SIR, and fees in excess of $50,000 are within Verdant's coverage responsibility, subject to the terms and conditions of the Policy and the reservation of rights previously communicated.

D. Anticipated Near-Term Costs

Given the current dormancy of the case, minimal additional fees are anticipated in the near term. Anticipated costs are limited to the following:

• Attendance at the March 16, 2023 status conference (estimated at 2-4 hours of associate time);

• Periodic docket monitoring and case management (estimated at 1-2 hours per month); and

• Preparation and submission of the next quarterly status report.

We do not anticipate any significant fee expenditures unless the case resumes an active posture, at which point we would promptly advise Verdant and seek any necessary authorizations.

VIII. LITIGATION HOLD AND DOCUMENT PRESERVATION

A litigation hold remains in effect at Nexford with respect to all documents and electronically stored information potentially relevant to the Maciejewski matter. The litigation hold was issued by Nexford's General Counsel, Tara Svendsen, and directed to the following key custodians:

• Frank Bosch, Plant Manager, Elgin Facility

• Catherine Donnelly, Vice President, Human Resources

• Liam Gallagher, Director, Environmental Health and Safety

• Tara Svendsen, General Counsel

Calderwood & Harkness recommends that the litigation hold be maintained in full force and effect until the matter is formally and finally resolved, whether through a dismissal for want of prosecution becoming final and non-appealable, a voluntary dismissal, or other disposition. Premature release of the litigation hold could expose Nexford to claims of spoliation in the event the matter is revived.

The document production of 847 pages (Bates NIH-000001 through NIH-000847) was completed on June 24, 2022. No further document requests have been served by plaintiff, and no further production is anticipated at this time.

IX. REQUESTS TO VERDANT MUTUAL INSURANCE COMPANY

Calderwood & Harkness respectfully requests the following from Verdant:

1. Confirmation of Continued Coverage. We request Verdant's confirmation that coverage under EPLI Policy No. EPLI-VM-2021-04782 remains in effect for ongoing defense costs and any potential indemnity obligations arising from the Maciejewski matter, subject to the terms and conditions of the Policy and Verdant's reservation of rights.

2. Authority to Continue Monitoring. We request authority for Calderwood & Harkness to continue to attend scheduled status conferences and monitor the docket on an ongoing basis. The next scheduled status conference is March 16, 2023, and Nadia Petrov plans to appear on behalf of Nexford.

3. Authorization to File Compulsory discovery Motions. In the event that plaintiff's counsel re-engages and the case resumes an active posture, we request authorization to file a motion to compel plaintiff's outstanding discovery responses and, if warranted, a motion for sanctions under Illinois Supreme Court Rule 219(c).

4. Authorization to Oppose Vacation of Dismissal. In the event the case proceeds to dismissal for want of prosecution and plaintiff subsequently moves to vacate the dismissal, we request authorization to oppose any such motion.

5. Updated Coverage Position. We invite Verdant to provide any updated coverage position or guidance regarding the reservation of rights previously issued, particularly in light of the current dormancy of the case and the favorable case trajectory.

We would appreciate Verdant's response to these requests at its earliest convenience, and in any event prior to the March 16, 2023 status conference.

X. CONCLUSION

In summary, the Maciejewski v. Nexford Industrial Holdings Inc. matter is largely dormant as of the date of this report. Plaintiff's counsel, Gerald Hess, has been non-responsive since his last communication on October 14, 2022, and failed to appear at the January 12, 2023 status conference before Judge Vasquez-Torres. The Court has directed plaintiff's counsel to appear at the next status conference on March 16, 2023, or show cause why the case should not be dismissed for want of prosecution. Plaintiff has also failed to serve any responses to Nexford's outstanding discovery, and the expert disclosure deadline of January 15, 2023, has passed without any disclosures from plaintiff.

The defense position remains strong on the merits, supported by OSHA's no-citation closure, Nexford's well-documented progressive discipline record, and the procedural defense to Count II. Worst-case exposure remains at our April 2022 estimate of approximately $285,000, but the actual risk is assessed as low and declining given the current trajectory of the case.

Total fees incurred to date are approximately $62,300, well within the agreed pre-trial litigation budget cap of $175,000. The $50,000 self-insured retention has been exceeded, and Verdant's coverage obligation has been triggered for amounts above the SIR.

Calderwood & Harkness will continue to monitor the matter diligently and will provide the next quarterly status report in due course. We will promptly advise Verdant of any material developments, particularly regarding the outcome of the March 16, 2023 status conference. Should the matter be dismissed for want of prosecution, we will notify Verdant immediately and provide guidance on the finality of any such dismissal.

We remain available to discuss any aspect of this report at your convenience. Please do not hesitate to contact me directly at (312) 555-4718 or bcrawford@calderwoodharkness.com, or Nadia Petrov at (312) 555-4733 or npetrov@calderwoodharkness.com.

Thank you for your continued confidence in Calderwood & Harkness.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Bernard Crawford Partner 227 West Monroe Street, Suite 3600 Chicago, Illinois 60606 Tel: (312) 555-4718

Email: bcrawford@calderwoodharkness.com

cc:

Tara Svendsen, General Counsel, Nexford Industrial Holdings Inc. Renata Vasquez, Calderwood & Harkness LLP Nadia Petrov, Calderwood & Harkness LLP

Encl.:

Copy of Court's January 12, 2023 Order (noting non-appearance of Plaintiff's counsel and setting March 16, 2023 status date with show-cause directive)

Category	Estimated Worst-Case Amount
Back pay (one year)	$78,400
Front pay (six months)	$39,200
Emotional distress (estimated jury award)	$50,000
Statutory attorneys' fees and costs	$40,000
Nominal punitive damages risk	$77,400
Total Estimated Worst-Case Exposure	$285,000
Timekeeper	Role	Hourly Rate	Hours Worked	Fees Incurred
Bernard Crawford	Responsible Partner	$895/hr	12.5	$11,187.50
Renata Vasquez	Billing Partner	$825/hr	8.0	$6,600.00
Nadia Petrov	Lead Associate	$545/hr	52.0	$28,340.00
James Underwood	Working Associate	$395/hr	41.0	$16,195.00
Totals	113.5	$62,322.50

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Attorneys at Law 227 West Monroe Street, Suite 3600 Chicago, Illinois 60606 Telephone: (312) 555-4700 Facsimile: (312) 555-4701 www.calderwoodharkness.com
January 20, 2023
Brianna Choi, Claims Adjuster Verdant Mutual Insurance Company 800 North Plankinton Avenue Milwaukee, WI 53203
Re: Quarterly Litigation Status Report — Maciejewski v. Nexford Industrial Holdings Inc. Case No. 2022-L-002847, Circuit Court of Cook County, Illinois, County Department, Law Division EPLI Policy No. EPLI-VM-2021-04782 Insured: Nexford Industrial Holdings Inc. Reporting Period: Q4 2022 / Q1 2023
Dear Ms. Choi:
I. INTRODUCTION AND PURPOSE
This letter serves as the quarterly litigation status report submitted by Calderwood & Harkness LLP in its capacity as panel counsel approved by Verdant Mutual Insurance Company ("Verdant") for the defense of the above-captioned matter. This report covers the period from approximately October 1, 2022, through mid-January 2023. It is intended to provide Verdant with a comprehensive update on all material litigation developments, an assessment of the current posture and outlook of the case, a summary of fees and costs incurred to date, and certain requests for authorization and guidance.
As Verdant is aware, Verdant acknowledged coverage for the Maciejewski matter under Employment Practices Liability Insurance Policy No. EPLI-VM-2021-04782 (the "Policy"), subject to a reservation of rights communicated by letter dated April 8, 2022. The Policy provides a per-occurrence limit of $2,000,000 and an aggregate limit of $5,000,000, with a self-insured retention ("SIR") of $50,000, which is the obligation of the insured, Nexford Industrial Holdings Inc. ("Nexford" or the "Company").
Calderwood & Harkness represents Nexford, a Delaware-incorporated, Illinois-headquartered industrial manufacturing company with its principal place of business at 500 Commerce Drive, Suite 400, Schaumburg, Illinois 60173. The present matter involves a single-plaintiff retaliation claim brought by former Senior Quality Assurance Supervisor Darren K. Maciejewski, age 47 at the time of his termination, who was employed at Nexford's manufacturing facility located at 2700 Industrial Parkway, Elgin, Illinois 60123 (the "Elgin Facility") from June 12, 2017, through his termination on September 24, 2021.
This report is organized into the following sections: (1) Summary of Claims; (2) Damages Claimed and Exposure Assessment; (3) OSHA Complaint Resolution; (4) Procedural History and Litigation Activity; (5) Defense Assessment and Case Outlook; (6) Fee Summary and Budget Status; (7) Litigation Hold and Document Preservation; (8) Requests to Verdant; and (9) Conclusion.
II. SUMMARY OF CLAIMS
The complaint in this matter was filed on March 15, 2022, by Gerald P. Hess of Hess & Loughlin, P.C., located at 3412 Harlem Avenue, Suite 205, Berwyn, Illinois 60402. Mr. Hess remains plaintiff's counsel of record. The complaint asserts three counts against Nexford, each of which arises out of the same core set of allegations—namely, that Mr. Maciejewski's termination on September 24, 2021, was motivated by retaliation for his reporting of purported safety violations at the Elgin Facility.
The three counts are as follows:
Count I — Retaliatory Discharge (Illinois Common Law). Plaintiff alleges that his termination constituted a retaliatory discharge in violation of the well-established Illinois common law cause of action, on the basis that his internal complaints regarding chemical storage conditions and his filing of a complaint with the Occupational Safety and Health Administration ("OSHA") constituted protected activity, and that his termination was causally related to, and motivated by, such protected activity.
Count II — Retaliation Under Section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. § 660(c). Plaintiff alleges that Nexford violated Section 11(c) of the OSH Act by discharging him in retaliation for filing OSHA Complaint No. 1734892 on June 8, 2021. We note, as discussed further below, that this count is subject to a significant procedural defense regarding exhaustion of administrative remedies.
Count III — Violation of the Illinois Whistleblower Act, 740 ILCS 174/1 *et seq.*: Plaintiff alleges that his termination constituted an act of retaliation in violation of the Illinois Whistleblower Act ("IWA"), which prohibits an employer from retaliating against an employee who discloses information to a government or law enforcement agency where the employee has reasonable cause to believe that the information disclosed reveals a violation of a state or federal law, rule, or regulation.
A. Plaintiff's Factual Allegations
The complaint alleges that Mr. Maciejewski, in his capacity as Senior Quality Assurance Supervisor at the Elgin Facility, observed and became concerned about what he characterized as unsafe chemical storage conditions in Building C of that facility. Specifically, the complaint alleges that beginning on or about April 5, 2021, Mr. Maciejewski reported his concerns internally to his direct supervisor, Plant Manager Frank Bosch. Mr. Maciejewski further alleges that on April 19, 2021, he reported these concerns to the Nexford Environmental Health and Safety ("EHS") Department, specifically to EHS Director Liam Gallagher.
Having received what he characterizes as an inadequate response to his internal complaints, Mr. Maciejewski alleges that he filed OSHA Complaint No. 1734892 on June 8, 2021, with the OSHA Area Office located at 701 Lee Street, Suite 950, Des Plaines, Illinois 60016. The complaint further alleges that following his OSHA filing, Nexford initiated a course of progressive disciplinary action against him that was pretextual and designed to manufacture a basis for his termination.
B. Nexford's Position
Nexford vigorously denies plaintiff's claims and maintains that Mr. Maciejewski's termination on September 24, 2021, was the result of his documented, repeated violations of the Company's attendance and tardiness policy, as set forth in Employee Handbook § 4.3 ("Attendance, Punctuality, and Reporting Requirements"). The Company's position is supported by a well-documented progressive discipline record, which includes the following:
1. First Written Warning — May 24, 2021. Mr. Maciejewski received a first written warning for four documented tardiness incidents occurring between approximately late April and mid-May 2021, in accordance with the progressive discipline procedures outlined in Employee Handbook § 4.3.
2. Final Written Warning — August 2, 2021. Mr. Maciejewski received a final written warning for three additional tardiness incidents occurring between approximately late June and late July 2021, again in accordance with Employee Handbook § 4.3.
3. Unexcused Absence — September 20, 2021. Mr. Maciejewski failed to report for his scheduled shift on September 20, 2021, and did not provide timely notification to his supervisor or the Human Resources Department, resulting in the absence being classified as unexcused.
The termination meeting was conducted on September 24, 2021, by Plant Manager Frank Bosch and Vice President of Human Resources Catherine Donnelly, following the Company's established procedures for termination. Nexford's position is that the termination was a natural and foreseeable consequence of Mr. Maciejewski's persistent attendance failures, and that it would have occurred irrespective of any safety complaints he may have made.
At the time of his termination, Mr. Maciejewski's final annual salary was $78,400.
III. DAMAGES CLAIMED AND EXPOSURE ASSESSMENT
A. Damages Claimed
Plaintiff's complaint seeks the following categories of damages:
(a) Back pay from the date of termination (September 24, 2021) through the date of judgment, representing lost wages and benefits;
(b) Front pay, representing future lost wages and benefits to the extent reinstatement is impracticable;
(c) Compensatory damages for emotional distress in the amount of $150,000;
(d) Punitive damages in the amount of $500,000; and
(e) Reasonable attorneys' fees and costs of suit, to the extent recoverable under applicable statute.
At the time of the complaint's filing on March 15, 2022, back pay had accrued for a period of approximately 5.7 months (from September 24, 2021 through March 15, 2022), representing approximately $37,240 in lost wages (calculated as $78,400 per year, or $6,533.33 per month, multiplied by 5.7 months). Back pay continues to accrue, though plaintiff's duty to mitigate may limit recovery in this category. As of the date of this report, the theoretical back pay period has extended to approximately 15.8 months, though any actual recovery would depend on plaintiff's mitigation efforts, which remain unknown due to the absence of any discovery responses from plaintiff.
B. Calderwood & Harkness Exposure Assessment
Calderwood & Harkness prepared an internal worst-case total exposure estimate in April 2022, shortly after the engagement commenced. That estimate, which remains our current assessment, places worst-case exposure at approximately $285,000, broken down as follows:
This estimate was developed based on comparable verdicts and settlements in single-plaintiff retaliation matters in Cook County and the greater Chicagoland area, as well as an assessment of the relative strengths and weaknesses of the case as known at the time. We note that the emotional distress estimate of $50,000 reflects a realistic jury award in the event of an adverse verdict on liability, rather than the $150,000 amount pled in the complaint, which we view as inflated. Similarly, we assessed the punitive damages risk at $77,400 (approximately one year's salary), well below the $500,000 demand, reflecting the absence of any evidence of egregious or intentional misconduct by Nexford.
Overall, our exposure assessment remains well within the EPLI per-occurrence limit of $2,000,000. The SIR of $50,000 was expected to be exceeded only if the matter proceeded to active litigation, as indeed has occurred (see Section VII below regarding fees incurred to date).
We note for Verdant's information that Nexford is a portfolio company of Harborview Partners, which holds a 72% controlling interest in Nexford. Veltrano acquired Nexford in October 2019 for approximately $310 million. Nexford's annual revenues are approximately $185 million. While this background is not directly relevant to exposure analysis, it provides context for Nexford's organizational profile.
IV. OSHA COMPLAINT RESOLUTION
As noted above, OSHA Complaint No. 1734892 was filed by Mr. Maciejewski on June 8, 2021, with the OSHA Area Office located at 701 Lee Street, Suite 950, Des Plaines, Illinois 60016. The complaint alleged improper storage of Class 3 flammable liquids—specifically, acetone and isopropanol—in quantities that purportedly exceeded approved storage cabinet capacity limits in Building C of the Elgin Facility.
The chronology of the OSHA complaint is as follows:
• June 8, 2021: Mr. Maciejewski filed OSHA Complaint No. 1734892.
• June 14, 2021: Nexford received formal notification from OSHA regarding the complaint.
• July 12, 2021: OSHA conducted an on-site inspection of Building C at the Elgin Facility.
• August 18, 2021: OSHA closed the complaint with no citations issued and no findings of violation.
It is also notable that Nexford's EHS Department, under the direction of Director Liam Gallagher, had independently reviewed the substance of Mr. Maciejewski's internal complaints prior to the OSHA inspection. That internal review was conducted on May 3, 2021, approximately five weeks after Mr. Maciejewski's initial internal complaint on April 5, 2021. The EHS Department's review concluded that chemical storage practices in Building C were in compliance with applicable OSHA regulations and National Fire Protection Association (NFPA) standards, though the EHS Department recommended certain minor labeling improvements as a best-practices measure. Those labeling improvements were implemented promptly.
The OSHA no-citation closure is a significant and favorable development for the defense. OSHA's independent determination that no violations existed at the Elgin Facility substantially undermines plaintiff's claim that the conditions he reported were genuine safety violations warranting protection. While the legal standard for protection under Section 11(c) and the IWA does not require that the underlying complaint be meritorious—only that the employee have had a reasonable, good-faith belief that a violation existed—OSHA's no-citation closure provides powerful evidence that the chemical storage conditions at the Elgin Facility were not, in fact, non-compliant, which in turn bears on the credibility and reasonableness of plaintiff's asserted belief.
V. PROCEDURAL HISTORY AND LITIGATION ACTIVITY
A. Pleading Stage
The complaint was filed on March 15, 2022, in the Circuit Court of Cook County, Illinois, County Department, Law Division, and was assigned Case No. 2022-L-002847. Service of process was effectuated on March 22, 2022, upon CT Agents Inc., Nexford's registered agent in Illinois.
Nexford's General Counsel, Tara Svendsen, promptly forwarded the summons and complaint to Verdant on March 28, 2022, and contacted Calderwood & Harkness to engage defense counsel. Following Verdant's acknowledgment of coverage subject to reservation of rights, Calderwood & Harkness filed its appearance on behalf of Nexford on April 4, 2022.
On April 18, 2022, Calderwood & Harkness filed an Answer and Affirmative Defenses on behalf of Nexford. The Answer denied the material allegations of the complaint and asserted, among others, the following affirmative defenses:
(1) Legitimate, Non-Retaliatory Business Reason. Nexford asserted that Mr. Maciejewski was terminated for documented, repeated violations of the Company's attendance and tardiness policy, constituting a legitimate, non-retaliatory business reason for the adverse employment action.
(2) Failure to Exhaust Administrative Remedies (Count II). With respect to plaintiff's claim under Section 11(c) of the OSH Act, 29 U.S.C. § 660(c), Nexford asserted that the plaintiff failed to exhaust the required administrative remedies prior to filing suit, as Section 11(c) claims must be filed with the Secretary of Labor within 30 days of the alleged violation, and the Secretary retains exclusive authority to bring suit.
(3) After-Acquired Evidence Doctrine. Nexford reserved and asserted the after-acquired evidence doctrine as a potential limitation on the scope of any damages, to the extent discovery reveals evidence of plaintiff misconduct that would have independently warranted termination.
B. Case Management Conference
An initial Case Management Conference was held on April 28, 2022, before the Honorable Helena R. Vasquez-Torres. At that conference, the Court entered a case management order establishing the following discovery schedule:
• Fact discovery close: December 15, 2022
• Expert disclosures due: January 15, 2023
• Expert discovery close: March 1, 2023
The case management order contemplated a trial setting to be discussed at a subsequent status conference following the close of expert discovery.
C. Discovery Phase
Discovery activity proceeded as follows during the spring and summer of 2022:
Plaintiff's Written discovery to Nexford. On May 10, 2022, plaintiff served his First Set of Interrogatories (containing 15 interrogatories) and First Request for Production of Documents (containing 32 individually numbered requests) on Nexford. These discovery requests sought, among other things, all documentation related to Mr. Maciejewski's employment, the circumstances of his termination, the OSHA complaint and Nexford's response, the identity of decision-makers involved in the termination, and communications among Nexford personnel regarding Mr. Maciejewski.
Nexford's discovery Responses and Document Production. On June 24, 2022, Nexford served its responses and objections to plaintiff's discovery. In connection with these responses, Nexford produced 847 pages of documents, bearing Bates numbers NIH-000001 through NIH-000847. The production included the following categories of documents:
• Mr. Maciejewski's complete personnel file;
• Attendance and timekeeping records for Mr. Maciejewski;
• All progressive discipline documentation, including the first written warning (May 24, 2021), the final written warning (August 2, 2021), and the documentation of the unexcused absence (September 20, 2021);
• The EHS Department's internal review report regarding the Building C chemical storage conditions;
• Relevant sections of the Employee Handbook, including § 4.3; and
• Communications between Plant Manager Frank Bosch, VP Human Resources Catherine Donnelly, and EHS Director Liam Gallagher relating to Mr. Maciejewski's internal complaints and the OSHA inspection.
Nexford's Written discovery to Plaintiff. On July 1, 2022, Nexford served its First Set of Interrogatories (containing 10 interrogatories) and First Request for Production of Documents (containing 18 individually numbered requests) on plaintiff. These discovery requests sought, among other things, information and documents relating to plaintiff's claimed damages, mitigation efforts, employment history since termination, emotional distress claims, medical treatment (if any), and the factual basis for each count of the complaint.
Plaintiff's Failure to Respond. Plaintiff's responses to Nexford's discovery were due on or about August 1, 2022. As of the date of this report, plaintiff has never served any responses to Nexford's interrogatories or document requests, and these responses remain outstanding. The significance of this failure is discussed further below.
D. Plaintiff's Motion to Compel
On July 22, 2022, plaintiff, through Mr. Hess, filed a Motion to Compel seeking production of personnel files and discipline records of other employees in Mr. Maciejewski's department who had attendance violations but were not terminated. The motion characterized this comparative discipline evidence as essential to plaintiff's case, arguing that it would demonstrate disparate treatment and pretext.
On August 12, 2022, Calderwood & Harkness filed a Response in Opposition to the Motion to Compel. Our response argued that the request was overbroad in its scope, unduly burdensome given the volume of records that would be implicated, not proportional to the needs of the case in light of the marginal relevance of non-party employee records to a single-plaintiff retaliation action, and that production of the personnel files of non-party employees raised significant privacy concerns.
On September 9, 2022, Judge Vasquez-Torres denied the Motion to Compel, finding that the request as framed was overbroad and not proportional to the needs of the case under Illinois Supreme Court Rule 201(c)(3). The Court noted, however, that plaintiff would be permitted to re-file a more narrowly tailored request if he could demonstrate the relevance and proportionality of a more targeted set of records. To date, plaintiff has not re-filed any such request.
E. Cessation of Plaintiff's Counsel Activity
Beginning in mid-October 2022, plaintiff's counsel, Gerald Hess, effectively ceased all activity in the case. The chronology of this cessation is as follows:
• October 14, 2022: Last substantive communication from Mr. Hess — an email to Nadia Petrov (Calderwood & Harkness lead associate) acknowledging receipt of Nexford's discovery responses but not addressing plaintiff's overdue discovery responses or providing any indication of when such responses might be forthcoming.
• November 3, 2022: Calderwood & Harkness sent a first meet-and-confer letter to Mr. Hess via certified mail and email, formally noting plaintiff's failure to respond to Nexford's First Set of Interrogatories and First Request for Production of Documents, which had been due since August 1, 2022. The letter requested that Mr. Hess contact our office within 14 days to arrange a meet-and-confer conference regarding the outstanding discovery.
• November 28, 2022: Having received no response to the November 3, 2022 letter, Calderwood & Harkness sent a second meet-and-confer letter, again via certified mail and email, reiterating the demand for plaintiff's discovery responses and advising that Nexford would seek appropriate relief from the Court, including a motion to compel and a potential motion for sanctions, if responses were not forthcoming.
• December 15, 2022: The original fact discovery close date passed without plaintiff having served any discovery responses to Nexford's outstanding interrogatories and document requests.
In total, Mr. Hess has failed to respond to three letters and two emails from Calderwood & Harkness. A review of the Attorney Registration and Disciplinary Commission ("ARDC") records confirms that Mr. Hess's law license remains in active status. We are not aware of any disciplinary proceedings, health issues, or other circumstances that might explain the cessation of activity, and Mr. Hess has made no filings or appearances in the case since October 2022.
F. January 12, 2023 Status Conference
A regularly scheduled status conference was held on January 12, 2023, before Judge Vasquez-Torres. Nadia Petrov appeared on behalf of Nexford. Gerald Hess did not appear, and no other attorney appeared on behalf of plaintiff.
The Court took note of plaintiff's counsel's non-appearance and entered an order reflecting the same. The Court set a further status date for March 16, 2023, and directed that plaintiff's counsel appear at the March 16 status conference or show cause why the case should not be dismissed for want of prosecution. A copy of the Court's January 12, 2023 Order is enclosed with this report.
This development is significant. The case now appears to be on a trajectory toward a potential dismissal for want of prosecution ("DWP") if plaintiff's counsel fails to appear on March 16, 2023, or otherwise fails to show cause for his non-participation.
VI. DEFENSE ASSESSMENT AND CASE OUTLOOK
A. Merits Assessment
Calderwood & Harkness continues to assess the defense position as strong on the merits. The principal bases for this assessment are as follows:
1. OSHA No-Citation Closure. OSHA closed Complaint No. 1734892 on August 18, 2021, with no citations issued and no findings of violation. This determination by the federal agency charged with enforcement of workplace safety standards substantially undermines the premise of plaintiff's safety complaints and, by extension, weakens his claim that his termination was retaliatory. While plaintiff's claims do not require proof of an actual safety violation, OSHA's determination that no violation existed is probative of both the merits of the underlying safety complaint and the reasonableness of plaintiff's asserted belief.
2. Well-Documented Progressive Discipline. Nexford maintained contemporaneous, well-documented progressive discipline records regarding Mr. Maciejewski's attendance deficiencies. The first written warning (May 24, 2021, for four tardiness incidents), the final written warning (August 2, 2021, for three additional tardiness incidents), and the documentation of the unexcused absence (September 20, 2021) provide a clear and consistent record of the legitimate, non-retaliatory business reason for the termination. The progressive discipline was administered in accordance with the procedures set forth in Employee Handbook § 4.3.
3. Termination Procedures. The termination meeting on September 24, 2021, was conducted by Plant Manager Frank Bosch and VP Human Resources Catherine Donnelly following Nexford's established termination procedures. The involvement of multiple decision-makers and the adherence to established procedures further support the defense position that the termination was a routine consequence of progressive discipline, not retaliation.
4. Exhaustion of Administrative Remedies Defense (Count II). Plaintiff's Count II, asserted under Section 11(c) of the OSH Act, 29 U.S.C. § 660(c), is subject to a significant procedural defense. Under Section 11(c), complaints of retaliation must be filed with the Secretary of Labor within 30 days of the alleged adverse action, and the Secretary retains exclusive authority to bring suit in federal district court. There is no private right of action under Section 11(c). This defense provides a strong basis for dismissal of Count II, either on motion or at summary judgment.
5. After-Acquired Evidence Doctrine. Nexford has asserted the after-acquired evidence doctrine as an affirmative defense, which, if applicable, may operate to limit the scope of damages even in the event of an adverse finding on liability. The potential applicability of this doctrine remains to be developed through discovery, which has been impeded by plaintiff's failure to provide discovery responses.
B. Current Trajectory
Given plaintiff's counsel's complete cessation of activity—no discovery responses served, no appearances made, no communications exchanged for a period now exceeding three months—the case is trending strongly toward dismissal for want of prosecution. The critical next date is the March 16, 2023 status conference, at which Judge Vasquez-Torres has directed Mr. Hess to appear or show cause why the case should not be dismissed.
We note that the expert disclosure deadline of January 15, 2023, has passed without any expert disclosures having been served by plaintiff. This failure further compounds plaintiff's discovery defaults and strengthens the procedural basis for dismissal or other adverse consequences.
C. Risks and Contingencies
While the case trajectory is favorable to the defense, we note the following residual risks:
• Risk of Plaintiff Retaining New Counsel. There remains a possibility, though diminishing with each passing week, that Mr. Maciejewski could retain new counsel who may seek to revive the case, potentially by filing a motion to vacate any dismissal order or by negotiating an extension of discovery deadlines. Calderwood & Harkness is prepared to oppose any such efforts vigorously.
• Risk of Hess Re-engaging. It is also possible that Mr. Hess may re-emerge and resume active participation in the case. However, even in that scenario, plaintiff would face significant challenges in obtaining extensions of the expired discovery deadlines and in overcoming the prejudice caused by his prolonged inactivity.
• Finality of DWP. If the case is dismissed for want of prosecution, plaintiff may have a limited period of time within which to move to vacate the dismissal. Calderwood & Harkness will monitor any such motion and seek authorization to oppose it if filed.
VII. FEE SUMMARY AND BUDGET STATUS
A. Budget
The agreed pre-trial litigation budget cap for this matter, as approved by Verdant, is $175,000.
B. Fees Incurred
The following table summarizes fees incurred by Calderwood & Harkness through the active litigation period (through approximately the end of Q4 2022):
Total fees incurred through the current reporting period are approximately $62,300 (rounded). The remaining budget under the agreed pre-trial litigation cap is approximately $112,700.
C. Self-Insured Retention Status
We draw Verdant's attention to the fact that the $50,000 self-insured retention under the Policy has been exceeded by the fees incurred to date. Specifically, total fees of $62,322.50 exceed the SIR of $50,000 by $12,322.50. Accordingly, Verdant's coverage obligation has been triggered for amounts above the SIR, and fees in excess of $50,000 are within Verdant's coverage responsibility, subject to the terms and conditions of the Policy and the reservation of rights previously communicated.
D. Anticipated Near-Term Costs
Given the current dormancy of the case, minimal additional fees are anticipated in the near term. Anticipated costs are limited to the following:
• Attendance at the March 16, 2023 status conference (estimated at 2-4 hours of associate time);
• Periodic docket monitoring and case management (estimated at 1-2 hours per month); and
• Preparation and submission of the next quarterly status report.
We do not anticipate any significant fee expenditures unless the case resumes an active posture, at which point we would promptly advise Verdant and seek any necessary authorizations.
VIII. LITIGATION HOLD AND DOCUMENT PRESERVATION
A litigation hold remains in effect at Nexford with respect to all documents and electronically stored information potentially relevant to the Maciejewski matter. The litigation hold was issued by Nexford's General Counsel, Tara Svendsen, and directed to the following key custodians:
• Frank Bosch, Plant Manager, Elgin Facility
• Catherine Donnelly, Vice President, Human Resources
• Liam Gallagher, Director, Environmental Health and Safety
• Tara Svendsen, General Counsel
Calderwood & Harkness recommends that the litigation hold be maintained in full force and effect until the matter is formally and finally resolved, whether through a dismissal for want of prosecution becoming final and non-appealable, a voluntary dismissal, or other disposition. Premature release of the litigation hold could expose Nexford to claims of spoliation in the event the matter is revived.
The document production of 847 pages (Bates NIH-000001 through NIH-000847) was completed on June 24, 2022. No further document requests have been served by plaintiff, and no further production is anticipated at this time.
IX. REQUESTS TO VERDANT MUTUAL INSURANCE COMPANY
Calderwood & Harkness respectfully requests the following from Verdant:
1. Confirmation of Continued Coverage. We request Verdant's confirmation that coverage under EPLI Policy No. EPLI-VM-2021-04782 remains in effect for ongoing defense costs and any potential indemnity obligations arising from the Maciejewski matter, subject to the terms and conditions of the Policy and Verdant's reservation of rights.
2. Authority to Continue Monitoring. We request authority for Calderwood & Harkness to continue to attend scheduled status conferences and monitor the docket on an ongoing basis. The next scheduled status conference is March 16, 2023, and Nadia Petrov plans to appear on behalf of Nexford.
3. Authorization to File Compulsory discovery Motions. In the event that plaintiff's counsel re-engages and the case resumes an active posture, we request authorization to file a motion to compel plaintiff's outstanding discovery responses and, if warranted, a motion for sanctions under Illinois Supreme Court Rule 219(c).
4. Authorization to Oppose Vacation of Dismissal. In the event the case proceeds to dismissal for want of prosecution and plaintiff subsequently moves to vacate the dismissal, we request authorization to oppose any such motion.
5. Updated Coverage Position. We invite Verdant to provide any updated coverage position or guidance regarding the reservation of rights previously issued, particularly in light of the current dormancy of the case and the favorable case trajectory.
We would appreciate Verdant's response to these requests at its earliest convenience, and in any event prior to the March 16, 2023 status conference.
X. CONCLUSION
In summary, the Maciejewski v. Nexford Industrial Holdings Inc. matter is largely dormant as of the date of this report. Plaintiff's counsel, Gerald Hess, has been non-responsive since his last communication on October 14, 2022, and failed to appear at the January 12, 2023 status conference before Judge Vasquez-Torres. The Court has directed plaintiff's counsel to appear at the next status conference on March 16, 2023, or show cause why the case should not be dismissed for want of prosecution. Plaintiff has also failed to serve any responses to Nexford's outstanding discovery, and the expert disclosure deadline of January 15, 2023, has passed without any disclosures from plaintiff.
The defense position remains strong on the merits, supported by OSHA's no-citation closure, Nexford's well-documented progressive discipline record, and the procedural defense to Count II. Worst-case exposure remains at our April 2022 estimate of approximately $285,000, but the actual risk is assessed as low and declining given the current trajectory of the case.
Total fees incurred to date are approximately $62,300, well within the agreed pre-trial litigation budget cap of $175,000. The $50,000 self-insured retention has been exceeded, and Verdant's coverage obligation has been triggered for amounts above the SIR.
Calderwood & Harkness will continue to monitor the matter diligently and will provide the next quarterly status report in due course. We will promptly advise Verdant of any material developments, particularly regarding the outcome of the March 16, 2023 status conference. Should the matter be dismissed for want of prosecution, we will notify Verdant immediately and provide guidance on the finality of any such dismissal.
We remain available to discuss any aspect of this report at your convenience. Please do not hesitate to contact me directly at (312) 555-4718 or bcrawford@calderwoodharkness.com, or Nadia Petrov at (312) 555-4733 or npetrov@calderwoodharkness.com.
Thank you for your continued confidence in Calderwood & Harkness.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Bernard Crawford Partner 227 West Monroe Street, Suite 3600 Chicago, Illinois 60606 Tel: (312) 555-4718
Email: bcrawford@calderwoodharkness.com
cc:
Tara Svendsen, General Counsel, Nexford Industrial Holdings Inc. Renata Vasquez, Calderwood & Harkness LLP Nadia Petrov, Calderwood & Harkness LLP
Encl.:
Copy of Court's January 12, 2023 Order (noting non-appearance of Plaintiff's counsel and setting March 16, 2023 status date with show-cause directive)
Category | Estimated Worst-Case Amount
Back pay (one year) | $78,400
Front pay (six months) | $39,200
Emotional distress (estimated jury award) | $50,000
Statutory attorneys' fees and costs | $40,000
Nominal punitive damages risk | $77,400
Total Estimated Worst-Case Exposure | $285,000
Timekeeper | Role | Hourly Rate | Hours Worked | Fees Incurred
Bernard Crawford | Responsible Partner | $895/hr | 12.5 | $11,187.50
Renata Vasquez | Billing Partner | $825/hr | 8.0 | $6,600.00
Nadia Petrov | Lead Associate | $545/hr | 52.0 | $28,340.00
James Underwood | Working Associate | $395/hr | 41.0 | $16,195.00
Totals | 113.5 | $62,322.50