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ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT NOT FOR DISTRIBUTION BEYOND AUTHORIZED RECIPIENTS

QUARTERLY LITIGATION EXPOSURE REPORT — CONFIDENTIAL

Report Period: Q1 2023 (January 1, 2023 – March 31, 2023)

Report Date: March 31, 2023

Prepared by:

Calderwood & Harkness LLP 227 West Monroe Street, Suite 3600 Chicago, IL 60606

Prepared for distribution by:

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

Distributed to:

Malcolm Driscoll, Operating Partner Harborview Partners 401 South Tryon Street, Suite 2800 Charlotte, NC 28202

Reporting Threshold: Per Veltrano Capital Partners portfolio company reporting requirement — all litigation matters with potential exposure exceeding $50,000.

Privilege Designation: This report is prepared at the direction of counsel and is protected by the attorney-client privilege and the attorney work product doctrine. Distribution is strictly limited to authorized personnel of Nexford Industrial Holdings Inc. and Harborview Partners, as identified above. Receipt of this report by any other individual or entity does not constitute a waiver of any applicable privilege or protection.

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1. Executive Summary

This report provides the quarterly litigation exposure update for the matter styled Maciejewski v. Nexford Industrial Holdings Inc., Case No. 2022-L-002847, pending in the Circuit Court of Cook County, Illinois, County Department, Law Division. This report is submitted for the period covering Q1 2023 (January 1, 2023 through March 31, 2023) in accordance with the portfolio company reporting requirements established by Harborview Partners.

Nature of the Action. This matter involves a single-plaintiff retaliation claim brought by Darren K. Maciejewski, a former Senior Quality Assurance Supervisor at Nexford's Elgin, Illinois manufacturing facility. Mr. Maciejewski alleges that Nexford terminated his employment on September 24, 2021 in reprisal for his reporting of workplace safety violations to the Occupational Safety and Health Administration ("OSHA"). The complaint asserts three counts: (1) retaliatory discharge under Illinois common law; (2) retaliation under Section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. § 660(c); and (3) violation of the Illinois Whistleblower Act, 740 ILCS 174/1 et seq. Nexford maintains that Mr. Maciejewski was terminated for documented, repeated attendance violations pursuant to the company's progressive discipline policy, and that the termination was wholly unrelated to any safety reporting activity.

Current Status. The case is effectively dormant. Plaintiff's counsel, Gerald P. Hess of Hess & Loughlin, P.C., has ceased all communications with defense counsel since October 14, 2022 and has failed to appear at two consecutive scheduled status conferences — the January 12, 2023 conference and the March 16, 2023 conference — before the Honorable Helena R. Vasquez-Torres. At the March 16 conference, the Court entered a rule to show cause order directed at Mr. Hess, returnable April 20, 2023. Plaintiff has failed to respond to Nexford's outstanding discovery requests, has not served any expert disclosures, and has missed all discovery deadlines established in the case management order. The case is trending toward dismissal for want of prosecution.

Exposure Assessment. Calderwood & Harkness's internal worst-case exposure estimate for this matter is $285,000, which includes back pay, front pay, potential emotional distress damages, statutory attorneys' fees, and a nominal allocation for punitive damages risk. However, given the complete inactivity of Plaintiff's counsel and the trajectory of the case toward dismissal, the current assessed risk level is LOW, and the probability-weighted exposure is considered de minimis — effectively limited to remaining monitoring and court appearance costs.

Insurance. The matter is covered under Nexford's employment practices liability insurance policy with Verdant Mutual Insurance Company, Policy No. EPLI-VM-2021-04782, which provides a $2,000,000 per-occurrence limit and a $5,000,000 aggregate limit, subject to a $50,000 self-insured retention. Verdant Mutual has acknowledged coverage subject to a reservation of rights. Legal fees incurred to date (approximately $62,300) have exceeded the self-insured retention, and Verdant's coverage obligation for fees above the retention has been triggered.

Legal Fees. Approximately $62,300 in legal fees have been incurred to date against a $175,000 agreed pre-trial litigation budget cap, representing approximately 35.6% of the approved budget. Given the dormancy of the case, additional fee accrual is expected to be minimal for the foreseeable future.

Recommendation. Calderwood & Harkness recommends that Nexford and Veltrano continue the current monitoring posture. No settlement discussions are warranted at this time given Plaintiff's counsel's complete inactivity. The case is on a trajectory toward dismissal for want of prosecution, and the next critical event will be the April 20, 2023 show cause hearing.

2. Parties

2.1 Defendant (Client)

Nexford Industrial Holdings Inc. is a Delaware corporation headquartered in Schaumburg, Illinois. Nexford is an industrial manufacturing company specializing in the design and production of precision-machined components for heavy equipment and infrastructure applications. The company serves customers in the construction, mining, transportation, and energy sectors, and is a significant supplier within its niche market.

Nexford operates three manufacturing facilities in the greater Chicago metropolitan area, located in Elgin, Rockford, and Joliet, Illinois, and employs approximately 1,400 individuals across these facilities and its corporate headquarters. The company generates annual revenues of approximately $185 million.

Nexford is a portfolio company of Harborview Partners, which acquired a 72% controlling interest in October 2019 for approximately $310 million. The remaining equity is held by members of management and certain legacy shareholders. Since the Veltrano acquisition, the company has undertaken significant operational improvements and capital expenditure programs, and Nexford represents a material holding within the Veltrano portfolio.

The relevant members of Nexford's senior management for purposes of this matter are:

• Richard Yoon, Chief Executive Officer

• Tara Svendsen, General Counsel

• Catherine "Cat" Donnelly, Vice President, Human Resources

2.2 Plaintiff. Darren K. Maciejewski, age 47, is a former Senior Quality Assurance Supervisor at Nexford's Elgin manufacturing facility, located at 2700 Industrial Parkway, Elgin, IL 60123. Mr. Maciejewski was employed by Nexford from June 12, 2017 through September 24, 2021, a period of approximately four years and three months. His final annual salary at the time of termination was $78,400.

Mr. Maciejewski is represented in this matter by Gerald P. Hess of Hess & Loughlin, P.C., located at 3412 Harlem Avenue, Suite 205, Berwyn, IL 60402. As discussed in detail in Section 6 of this report, Mr. Hess has been entirely non-responsive to defense counsel communications and has failed to appear at multiple court proceedings since October 2022. A review of Attorney Registration and Disciplinary Commission ("ARDC") records confirms that Mr. Hess's law license remains in active status as of the date of this report.

2.3 Defense Counsel

Calderwood & Harkness LLP represents Nexford Industrial Holdings Inc. in this matter. The firm was engaged following notification of the lawsuit and has been approved as panel counsel by Verdant Mutual Insurance Company, the EPLI carrier providing coverage for this matter. Calderwood & Harkness's offices are located at 227 West Monroe Street, Suite 3600, Chicago, IL 60606.

The engagement team assigned to this matter consists of the following attorneys:

• Bernard Crawford, Responsible Partner — Mr. Crawford oversees the strategic direction of the defense and serves as the primary contact for the insurer and senior client contacts.

• Renata Vasquez, Billing Partner — Ms. Vasquez manages billing, budgetary compliance, and reporting coordination with Verdant Mutual.

• Nadia Petrov, Lead Associate — Ms. Petrov serves as the day-to-day lead on the matter, handles all court appearances, manages discovery, and is the primary point of contact for Nexford's in-house legal department.

• James Underwood, Working Associate — Mr. Underwood provides research, document review, and drafting support on the matter.

3. Claims and Legal Theories

The complaint, filed on March 15, 2022, asserts three counts against Nexford. Each count is summarized below, along with the principal legal standards and Nexford's primary defenses.

3.1 Count I — Retaliatory Discharge (Illinois Common Law)

Count I of the complaint alleges that Nexford terminated Mr. Maciejewski's employment in retaliation for his reporting of workplace safety violations, and that such termination constitutes the tort of retaliatory discharge under Illinois common law. Specifically, Mr. Maciejewski alleges that he was discharged in reprisal for making internal safety reports regarding chemical storage conditions at Nexford's Elgin facility and, thereafter, for filing a complaint with OSHA. He contends that this discharge violated a clearly mandated public policy of the State of Illinois, namely the policy favoring the protection of employee health and safety in the workplace.

Illinois courts recognize a narrow cause of action for retaliatory discharge where an at-will employee is terminated for engaging in conduct that is protected by a clearly mandated public policy. See Palmateer v. Int'l Harvester Co., 85 Ill. 2d 124 (1981); Kelsay v. Motorola, Inc., 74 Ill. 2d 172 (1978). To prevail on this claim, the plaintiff must establish that (1) he was an employee of the defendant, (2) the defendant discharged him, (3) the discharge was in retaliation for the employee's activities, and (4) the discharge violates a clearly mandated public policy. Illinois courts have recognized that reporting workplace safety violations to external regulatory bodies, including OSHA, constitutes conduct protected by a clearly mandated public policy. See Wheeler v. Granite Harbor Group Tractor Co., 108 Ill. 2d 502 (1985).

Nexford's principal defense to Count I is that the termination was motivated by legitimate, non-retaliatory business reasons — specifically, Mr. Maciejewski's documented and repeated violations of the company's attendance policy, which were addressed through progressive discipline culminating in termination. The temporal proximity between the protected activity and the termination, while acknowledged, is substantially undermined by the fact that the first written warning for attendance violations predated the OSHA complaint, and by OSHA's own conclusion that no safety violations existed at the Elgin facility.

3.2 Count II — Retaliation Under Section 11(c) of the Occupational Safety and Health Act (29 U.S.C. § 660(c))

Count II of the complaint alleges that Nexford retaliated against Mr. Maciejewski in violation of Section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. § 660(c), which prohibits an employer from discharging or in any manner discriminating against any employee because the employee has filed a complaint or instituted any proceeding under the Act.

Nexford has asserted a threshold affirmative defense to Count II based on the plaintiff's failure to exhaust administrative remedies. Section 11(c) provides that an employee who believes he has been discharged or otherwise discriminated against in violation of the statute must file a complaint with the Secretary of Labor within thirty (30) days of the alleged violation. 29 U.S.C. § 660(c)(2). The administrative filing requirement is a jurisdictional prerequisite to the assertion of any claim under Section 11(c). To date, there is no evidence in the record that Mr. Maciejewski timely filed a complaint with the Secretary of Labor regarding his September 24, 2021 termination, and Mr. Maciejewski's discovery responses — which were never served — would have been the vehicle through which such evidence, if it existed, would be disclosed. We believe this defense is dispositive of Count II if it is raised on a motion for summary judgment or otherwise tested in later proceedings.

It is important to distinguish between the OSHA safety complaint (Complaint No. 1734892, filed June 8, 2021) and a hypothetical Section 11(c) retaliation complaint that would need to have been filed within 30 days of the September 24, 2021 termination. The former relates to the underlying safety conditions; the latter would relate to the alleged retaliatory discharge itself. No evidence of the latter filing has been identified.

3.3 Count III — Violation of the Illinois Whistleblower Act (740 ILCS 174/1 *et seq.*)

Count III of the complaint alleges that Nexford violated the Illinois Whistleblower Act ("IWA"), 740 ILCS 174/1 et seq., by terminating Mr. Maciejewski for disclosing information to a government body — specifically, OSHA — that he reasonably believed evidenced a violation of a law, rule, or regulation. The IWA provides that an employer shall not retaliate against an employee for disclosing information to a government or law enforcement agency where the employee has reasonable cause to believe that the information discloses a violation of a state or federal law, rule, or regulation. 740 ILCS 174/15(a).

The IWA claim overlaps significantly with the retaliatory discharge claim asserted in Count I but provides a separate statutory basis for recovery, including the potential availability of attorneys' fees. Nexford's defenses to Count III mirror those asserted against Count I — principally, that the termination was motivated by legitimate attendance-related performance issues and was not causally connected to any disclosure made to a government body. Additionally, Nexford contends that the reasonableness of Mr. Maciejewski's belief that the chemical storage conditions violated applicable law is undermined by OSHA's independent inspection, which resulted in no citations or findings of violation, as well as by Nexford's own internal EHS review, which concluded the facility was in compliance.

3.4 Damages Sought

The complaint seeks the following categories of damages:

• Back pay from the date of termination (September 24, 2021) through the date of judgment, calculated at an annual salary of $78,400, or approximately $6,533.33 per month;

• Front pay in an unspecified amount, representing the present value of future lost earnings;

• Compensatory damages for emotional distress in the amount of $150,000;

• Punitive damages in the amount of $500,000; and

• Attorneys' fees and costs pursuant to statute.

We note that the punitive damages demand of $500,000 is, in our assessment, significantly overstated. Punitive damages in retaliatory discharge cases in Illinois are disfavored and require proof of conduct that is outrageous, willful, or demonstrates a reckless disregard for the plaintiff's rights. The factual record in this matter does not support such an award, and we would expect a substantial reduction or elimination of this element at trial or on pre-trial motion. Our exposure analysis in Section 7 reflects a conservative allocation for this risk factor.

4. Factual Background

4.1 Employment History

Mr. Maciejewski was hired by Nexford on June 12, 2017 as a Quality Assurance Supervisor at the company's Elgin manufacturing facility. His starting annual salary was $64,000. In that role, Mr. Maciejewski was responsible for overseeing quality assurance protocols on the production floor, managing a team of quality inspectors, and ensuring that manufactured components met customer specifications and applicable industry standards.

In March 2019, Mr. Maciejewski was promoted to the position of Senior Quality Assurance Supervisor, reflecting his satisfactory performance and increased responsibilities. His annual salary was increased in connection with this promotion to $72,500. In January 2021, he received a merit-based salary increase to $78,400 per year, which was his final annual salary at the time of his termination.

Throughout his employment, Mr. Maciejewski's personnel file reflects generally satisfactory performance reviews through the end of calendar year 2020. The attendance issues that formed the basis for progressive discipline did not emerge until the spring of 2021.

4.2 Safety Reporting Activity (Alleged Protected Conduct)

The complaint centers on Mr. Maciejewski's safety reporting activity in the spring and summer of 2021, which he characterizes as the protected conduct that motivated his termination. The relevant timeline of this reporting activity is as follows:

April 5, 2021: Mr. Maciejewski made his first internal safety report to Plant Manager Frank Bosch regarding chemical storage conditions in Building C at the Elgin facility. Specifically, Mr. Maciejewski alleged that Class 3 flammable liquids — including acetone and isopropanol used in cleaning and degreasing operations — were being stored in quantities exceeding the capacity limits of the approved flammable storage cabinets. He reported this concern verbally and followed up with a written memorandum to Mr. Bosch on the same date.

April 19, 2021: Mr. Maciejewski sent a follow-up email to Nexford's Environmental Health and Safety ("EHS") Department, directed to EHS Director Liam Gallagher, reiterating his concerns about Building C chemical storage and requesting a formal review.

May 3, 2021: The EHS Department completed its review of the Building C chemical storage conditions and issued a written response concluding that the storage configuration was compliant with applicable OSHA regulations and National Fire Protection Association ("NFPA") standards. The EHS review did recommend minor labeling improvements to certain storage cabinets to ensure consistency with updated internal procedures, but found no substantive compliance deficiencies. This response was communicated to Mr. Maciejewski.

June 8, 2021: Approximately five weeks after the EHS Department's compliance finding, Mr. Maciejewski filed OSHA Complaint No. 1734892 with the OSHA Area Office located in Des Plaines, Illinois. The complaint alleged unsafe chemical storage conditions at the Elgin facility's Building C.

June 14, 2021: Nexford received notification from OSHA of the complaint. The notification was received by Liam Gallagher and forwarded to Tara Svendsen and Frank Bosch.

July 12, 2021: OSHA conducted an on-site inspection of Building C at the Elgin facility in response to the complaint. The inspection was conducted by OSHA Compliance Safety and Health Officer Angela Martinez. Nexford cooperated fully with the inspection and made all requested areas and documentation available.

August 18, 2021: OSHA closed Complaint No. 1734892 with no citations issued and no findings of violation. The closure letter stated that the conditions observed during the inspection did not constitute a violation of applicable OSHA standards. This outcome was consistent with the May 3, 2021 internal EHS review.

We note that OSHA's independent inspection and its finding of no violations is a significant fact in Nexford's favor. While a plaintiff's subjective belief that a safety violation existed is arguably relevant under the whistleblower statutes, the absence of any objective confirmation of the alleged violation — coupled with the company's own internal finding of compliance — substantially weakens the plaintiff's narrative and undermines any inference that Nexford's management had a motive to retaliate.

4.3 Progressive Discipline and Termination (Nexford's Legitimate Business Reason)

Independently of Mr. Maciejewski's safety reporting activity, Nexford initiated progressive discipline against him in the spring of 2021 based on documented attendance violations. The timeline of this discipline is as follows:

May 24, 2021: Mr. Maciejewski received his first written warning for tardiness. Nexford's attendance records documented four instances within a 30-day period in which Mr. Maciejewski arrived more than 15 minutes late for his scheduled shift, in violation of the attendance standards set forth in the Nexford Employee Handbook at Section 4.3. The written warning was issued by Plant Manager Frank Bosch and countersigned by Catherine Donnelly, VP Human Resources. Mr. Maciejewski signed the warning, acknowledging receipt.

August 2, 2021: Mr. Maciejewski received a final written warning for continued attendance violations. Between June 1 and July 31, 2021, three additional instances of unexcused tardiness were documented, notwithstanding the prior written warning. The final written warning expressly advised Mr. Maciejewski that any further attendance violations could result in termination of employment, up to and including immediate discharge.

September 20, 2021: Mr. Maciejewski failed to report for his scheduled shift and did not call in to notify his supervisor of his absence. Under the Nexford Employee Handbook at Section 4.3, a failure to report for a scheduled shift without prior notification is classified as an unexcused absence and constitutes a serious attendance violation, particularly following a final written warning.

September 24, 2021: A termination meeting was conducted by Plant Manager Frank Bosch and VP Human Resources Catherine Donnelly. Mr. Maciejewski was informed that his employment was being terminated for violation of Nexford's attendance policy, following the progressive discipline process set forth in the Employee Handbook at Section 4.3. The termination was effective immediately. Mr. Maciejewski was provided a final paycheck and information regarding COBRA continuation coverage.

Nexford's progressive discipline records are well-documented, contemporaneous, and consistent with the company's standard procedures. The documentation was generated in the ordinary course of business and was not created in anticipation of litigation. Copies of all relevant discipline records, attendance logs, the applicable Employee Handbook provisions, and the personnel file were produced in discovery and bear Bates numbers NIH-000001 through NIH-000847.

4.4 Key Observations on Timing

Several aspects of the factual timeline are particularly significant for the defense:

(a) The first written warning for attendance violations was issued on May 24, 2021, which is two weeks before Mr. Maciejewski filed OSHA Complaint No. 1734892 on June 8, 2021. This sequencing directly supports Nexford's position that progressive discipline was initiated for legitimate attendance reasons independent of, and prior to, any protected external reporting activity. This fact substantially undermines any temporal proximity argument the plaintiff might advance.

(b) OSHA's independent on-site inspection found no violations of applicable safety standards and resulted in no citations. This objective finding undermines the plaintiff's claim that the underlying safety concerns were well-founded and reduces any inference that Nexford's management would have had a motive to suppress safety reporting.

(c) Nexford's own internal EHS Department conducted an independent review and concluded that Building C chemical storage was compliant with applicable regulations on May 3, 2021, more than a month before the OSHA complaint. This further demonstrates that the company took Mr. Maciejewski's concerns seriously, investigated them, and found them to be unsubstantiated.

(d) The progressive discipline was conducted by Plant Manager Bosch and VP Human Resources Donnelly, both of whom are prepared to testify that the discipline was based solely on attendance records and was consistent with how similarly situated employees have been treated under the same attendance policy.

5. Affirmative Defenses

Nexford has asserted the following affirmative defenses in its Answer and Affirmative Defenses, filed April 18, 2022:

Legitimate Non-Retaliatory Business Reason. Nexford's principal affirmative defense is that Mr. Maciejewski's termination resulted from documented, repeated attendance violations that were addressed through the company's progressive discipline procedures as set forth in the Nexford Employee Handbook at Section 4.3. The termination followed a first written warning (May 24, 2021), a final written warning (August 2, 2021), and a subsequent unexcused absence (September 20, 2021). The decision to terminate was made by Plant Manager Frank Bosch and VP Human Resources Catherine Donnelly based on attendance records, and was consistent with the company's established policies and past practices for attendance-related separations. This defense directly rebuts any inference of retaliatory motive.

Failure to Exhaust Administrative Remedies (Count II). With respect to Count II, alleging retaliation under Section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. § 660(c), Nexford has asserted that the plaintiff failed to exhaust the mandatory administrative remedy prescribed by the statute. Section 11(c)(2) requires that an employee who believes he has been discharged in violation of the statute file a complaint with the Secretary of Labor within thirty (30) days of the alleged violation. This filing is a prerequisite to any judicial relief under Section 11(c). There is no evidence in the record that Mr. Maciejewski filed such a complaint with the Secretary of Labor within 30 days of his September 24, 2021 termination, and the plaintiff's failure to respond to Nexford's discovery requests — which specifically sought documents and information related to any such filing — further reinforces the absence of such evidence.

After-Acquired Evidence Doctrine. Nexford has reserved the after-acquired evidence doctrine as an affirmative defense. Under this doctrine, evidence of employee misconduct discovered after the termination may limit or bar recovery, even if the misconduct was not a basis for the original termination decision. See McKennon v. Nashville Banner Publ'g Co., 513 U.S. 352 (1995). This defense has been preserved but has not been developed to date, as the case has not progressed to summary judgment or trial.

6. Litigation History and Current Procedural Posture

6.1 Pre-Dormancy Activity (March 2022 – October 2022)

The litigation commenced and progressed through initial pleading, case management, and early discovery phases between March and October 2022, as detailed in the following chronology:

March 15, 2022: Plaintiff Darren K. Maciejewski, through counsel Gerald P. Hess of Hess & Loughlin, P.C., filed a three-count complaint against Nexford Industrial Holdings Inc. in the Circuit Court of Cook County, Illinois, County Department, Law Division. The case was assigned Case No. 2022-L-002847.

March 22, 2022: Service of the summons and complaint was effected on CT Agents Inc., Nexford's registered agent in the State of Illinois, at its Springfield, Illinois address.

March 28, 2022: Nexford General Counsel Tara Svendsen forwarded the complaint to Verdant Mutual Insurance Company to initiate the claims process under the EPLI policy and simultaneously contacted Calderwood & Harkness LLP to engage the firm for the defense.

April 4, 2022: Calderwood & Harkness filed its appearance on behalf of Nexford in the Circuit Court of Cook County.

April 18, 2022: Nexford's Answer and Affirmative Defenses were filed, denying all material allegations and asserting the affirmative defenses described in Section 5 above.

April 28, 2022: An Initial Case Management Conference was held before Judge Helena R. Vasquez-Torres. Both parties appeared through counsel. 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

May 10, 2022: Plaintiff served his First Set of Interrogatories (15 interrogatories) and First Request for Production of Documents (32 requests) on Nexford. The discovery requests sought, among other things, Mr. Maciejewski's complete personnel file, attendance and discipline records, communications regarding the OSHA complaint, documents related to the EHS review of Building C, and information concerning the termination decision-making process.

June 24, 2022: Nexford, through Calderwood & Harkness, served its responses and objections to Plaintiff's First Set of Interrogatories and First Request for Production. In connection with these responses, Nexford produced 847 pages of documents, bearing Bates numbers NIH-000001 through NIH-000847. The production included Mr. Maciejewski's complete personnel file, all attendance records, progressive discipline documentation (written warnings, signed acknowledgments), the EHS Department's Building C compliance report dated May 3, 2021, relevant provisions of the Nexford Employee Handbook (including Section 4.3 on attendance), correspondence and memoranda related to the OSHA complaint, and the OSHA closure letter dated August 18, 2021.

July 1, 2022: Nexford served its First Set of Interrogatories (10 interrogatories) and First Request for Production of Documents (18 requests) on Plaintiff. The discovery requests sought, among other things, information and documents concerning Mr. Maciejewski's efforts to mitigate damages (including post-termination employment), the basis for his claimed emotional distress damages, any administrative filings with OSHA or the Department of Labor related to the termination (relevant to the exhaustion defense on Count II), and the factual bases for the specific allegations in the complaint.

July 22, 2022: Plaintiff filed a Motion to Compel production of personnel files of other employees in Mr. Maciejewski's department who received attendance-related discipline but were not terminated. The motion argued that comparator evidence was necessary to demonstrate that Nexford selectively enforced its attendance policy against Mr. Maciejewski in retaliation for his safety reporting.

August 1, 2022: Plaintiff's responses to Nexford's First Set of Interrogatories and First Request for Production were due pursuant to the applicable response deadline. These responses were never served. As of the date of this report, no discovery responses from Plaintiff have been received.

August 12, 2022: Calderwood & Harkness filed a Response in Opposition to Plaintiff's Motion to Compel, arguing that the request for comparator personnel files was overbroad, unduly burdensome, and not proportional to the needs of the case, particularly given the breadth of the request (which encompassed all employees in the department regardless of time period, role, or circumstances) and the privacy interests of non-party employees.

September 9, 2022: Judge Vasquez-Torres denied Plaintiff's 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(b)(1). However, the Court noted in its order that Plaintiff could re-file a narrower, more targeted request identifying a specific comparator group and time period. No such narrowed request has ever been filed.

October 14, 2022: Calderwood & Harkness received the last substantive communication from Hess & Loughlin. This communication was an email from Gerald Hess acknowledging receipt of certain of Nexford's discovery responses but not addressing Plaintiff's own overdue discovery responses to Nexford's outstanding interrogatories and document requests. No further communication from Plaintiff's counsel has been received since this date.

6.2 Dormancy Period (November 2022 – Present)

Since October 14, 2022, the case has been effectively dormant due to the complete inactivity of Plaintiff's counsel. The following events have occurred during the dormancy period:

November 3, 2022: Calderwood & Harkness sent a formal meet-and-confer letter to Gerald Hess at Hess & Loughlin, P.C., regarding Plaintiff's failure to respond to Nexford's First Set of Interrogatories and First Request for Production of Documents, which had been due on August 1, 2022. The letter requested that Mr. Hess contact defense counsel within fourteen (14) days to discuss the outstanding discovery and proposed a schedule for Plaintiff's responses. No response was received.

November 28, 2022: Calderwood & Harkness sent a second follow-up letter to Mr. Hess, noting the absence of any response to the November 3 letter and warning that Nexford would consider filing a motion to compel or a motion for sanctions if Plaintiff's discovery responses were not served or if defense counsel did not hear from Mr. Hess by December 9, 2022. No response was received.

December 15, 2022: The original fact discovery close date, as established in the April 28, 2022 case management order, passed. As of this date, Plaintiff had not served any discovery responses whatsoever to Nexford's outstanding interrogatories and document requests. No motion to extend the discovery schedule was filed by Plaintiff.

January 12, 2023: A scheduled status conference was held before Judge Vasquez-Torres. Gerald Hess did not appear on behalf of Plaintiff. Nadia Petrov appeared on behalf of Nexford and informed the Court of the complete cessation of activity by Plaintiff's counsel, including the failure to respond to discovery, the failure to respond to meet-and-confer correspondence, and the passage of the fact discovery deadline without any discovery responses from Plaintiff. The Court entered an order noting Plaintiff's counsel's non-appearance and setting a further status date for March 16, 2023. The order directed Plaintiff's counsel to appear at the March 16 conference or show cause for the failure to appear.

January 15, 2023: The expert disclosure deadline, as established in the case management order, passed. Neither party served expert disclosures. Nexford did not serve expert disclosures because the case posture did not warrant the expense, given Plaintiff's complete inactivity and the absence of any plaintiff expert disclosures.

March 1, 2023: The expert discovery close date passed without any expert-related activity by either party.

March 16, 2023: A further status conference was held before Judge Vasquez-Torres. Gerald Hess again did not appear on behalf of Plaintiff. Nadia Petrov appeared on behalf of Nexford. The Court entered a rule to show cause order directed at Mr. Hess, ordering him to appear before the Court on April 20, 2023 and show cause why the case should not be dismissed for want of prosecution and why sanctions should not be imposed for his repeated failure to appear. The order was directed to be served on Mr. Hess by the Clerk of the Court via certified mail to his address of record.

ARDC Status: Calderwood & Harkness has confirmed, as of March 29, 2023, that Gerald P. Hess's law license remains in active status with the Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois. There are no pending disciplinary proceedings reflected in publicly available ARDC records. Calderwood & Harkness will continue to monitor ARDC records for any changes to Mr. Hess's license status.

6.3 Anticipated Trajectory

Based on the current procedural posture, the case is on a trajectory toward dismissal for want of prosecution ("DWP") under Cook County Circuit Court General Order 2.1, which provides for the dismissal of cases in which a plaintiff has failed to prosecute with reasonable diligence.

The April 20, 2023 show cause hearing will be the next critical date in this matter. If Mr. Hess again fails to appear or fails to demonstrate good cause for his prior non-appearances and the absence of prosecution activity, the Court may take one or more of the following actions:

• Strike the case from the trial call;

• Enter a DWP order dismissing the case, either with or without prejudice;

• Impose sanctions on Mr. Hess personally; or

• Grant a brief continuance with a final warning.

If the case is dismissed without prejudice, the plaintiff would theoretically have the ability to refile within the applicable statute of limitations. However, given the passage of time since the underlying events and the difficulty of reestablishing any discovery position, a refiling would face significant practical obstacles. If the case is dismissed with prejudice, the matter would be concluded.

Alternatively, there is a possibility — which we assess as unlikely but cannot exclude — that Mr. Maciejewski may retain new counsel, who could potentially enter an appearance, move to vacate any adverse orders, and seek to reactivate the case. In that event, a substantial reassessment of the case posture, exposure, and budget would be warranted.

Calderwood & Harkness will continue to attend all scheduled court dates and monitor the docket for any new filings by the plaintiff, any new attorney appearances, or any other developments that could affect the trajectory of the matter.

7. Exposure Assessment

7.1 Worst-Case Exposure Estimate

Calderwood & Harkness has prepared an internal worst-case exposure estimate for this matter, representing the maximum reasonably foreseeable adverse outcome if the case were to proceed to trial and the plaintiff were to prevail on all claims. This estimate is intended for internal risk management and reserve-setting purposes and does not represent a prediction of likely outcome. The total internal worst-case estimate is $285,000, broken down as follows:

We note that the back pay accrued as of the date of the complaint filing (March 15, 2022) was approximately $37,240, calculated as $6,533.33 per month multiplied by approximately 5.7 months from the date of termination. Back pay continues to accrue theoretically, although the plaintiff's duty to mitigate damages and the likelihood of dismissal substantially reduce this exposure.

The plaintiff's complaint demands significantly larger damages, including $150,000 in emotional distress and $500,000 in punitive damages. We consider these demands to be inflated and not reflective of likely outcomes in the Cook County Law Division for a case with this fact pattern. Our worst-case estimate reflects a more realistic assessment based on comparable verdicts and settlements in single-plaintiff retaliation cases in the Northern District of Illinois and Cook County.

7.2 Current Risk Assessment

The current risk level for this matter is assessed as LOW. This assessment is based on the following factors:

1. Plaintiff's counsel inactivity. Gerald Hess has been completely inactive since October 14, 2022 — a period of more than five months as of the date of this report. He has failed to respond to meet-and-confer correspondence, failed to appear at two consecutive status conferences, and failed to serve any discovery responses or expert disclosures.

2. discovery failures. Plaintiff failed to respond to Nexford's First Set of Interrogatories and First Request for Production, which were due on August 1, 2022. These responses were never served, and the fact discovery period has closed. Plaintiff has no expert disclosures on file.

3. Motion to Compel denied. Plaintiff's only substantive discovery motion — the Motion to Compel comparator personnel files — was denied on September 9, 2022. No narrowed request was ever filed.

4. OSHA findings support Nexford. OSHA conducted an independent on-site inspection in response to Mr. Maciejewski's complaint and found no violations. This objective finding directly undermines the factual premise of the plaintiff's claims.

5. Strong documentation of legitimate discipline. Nexford possesses contemporaneous, well-documented records of progressive discipline for attendance violations, including a first written warning that predates the OSHA complaint. Plant Manager Bosch and VP Human Resources Donnelly are available to testify regarding the discipline and termination process.

6. DWP trajectory. The case is on a trajectory toward dismissal for want of prosecution following the March 16, 2023 show cause order. The April 20 hearing represents a significant milestone in this process.

7.3 Probability-Weighted Exposure

Given the current dormancy of the case and the trajectory toward dismissal for want of prosecution, the probability-weighted exposure for this matter is estimated as de minimis. The weighted exposure is effectively limited to the remaining monitoring costs — principally, attorney time for periodic docket checks and attendance at court appearances through resolution. We estimate these monitoring costs at approximately $5,000 to $10,000, depending on the number of court appearances required before dismissal is entered.

In the unlikely event that the case is reactivated — through the appearance of new counsel, a motion to vacate, or a refiling — the probability-weighted exposure would need to be reassessed. However, even in a reactivation scenario, the strength of Nexford's defenses would substantially reduce the expected value of the claim.

8. Insurance Coverage

The following summarizes the insurance coverage applicable to this matter:

Verdant Mutual acknowledged coverage for this matter by letter dated April 11, 2022, subject to a reservation of rights. The reservation of rights letter reserves Verdant's right to deny coverage with respect to certain categories of damages and certain policy exclusions, consistent with standard EPLI reservation of rights practice. To date, no coverage dispute has arisen, and Verdant has cooperated fully in the defense of this matter.

As noted, the legal fees incurred to date (approximately $62,300) have exceeded the $50,000 self-insured retention. Accordingly, Verdant Mutual's coverage obligation has been triggered for fees and costs above the SIR, subject to the terms of the reservation of rights. Nexford has satisfied its SIR obligation, and all fees incurred above the $50,000 threshold are being submitted to Verdant Mutual for reimbursement. To date, all invoices submitted to Verdant have been processed and paid without incident.

Calderwood & Harkness provides quarterly reporting to Verdant Mutual, consistent with the insurer's reporting requirements. The next report to Verdant Mutual is expected to be submitted concurrently with this report.

9. Legal Fees and Budget

9.1 Billing Rates

The following billing rates apply to the Calderwood & Harkness engagement team assigned to this matter:

These rates were approved by Verdant Mutual Insurance Company in connection with the panel counsel engagement and are consistent with Verdant's billing guidelines for matters of this nature and complexity.

9.2 Fees Incurred Through Active Period

The following table summarizes the legal fees incurred by Calderwood & Harkness through the active period of the case (April 2022 through approximately October 2022), as well as minimal monitoring activity during the dormancy period through March 31, 2023:

The rounded figure of approximately $62,300 in total fees incurred represents approximately 35.6% of the $175,000 pre-trial litigation budget cap that has been established for this matter. The remaining budget is approximately $112,700.

The majority of the fees incurred to date were associated with the active phase of the litigation, including preparation and filing of the Answer and Affirmative Defenses, attendance at the initial case management conference, preparation and service of discovery responses and document production (847 pages), preparation and service of Nexford's affirmative discovery requests, research and briefing of the opposition to Plaintiff's Motion to Compel, and meet-and-confer correspondence with Plaintiff's counsel. Fees incurred during the dormancy period (November 2022 – March 2023) have been minimal and limited to docket monitoring, preparation for and attendance at the January 12 and March 16 status conferences, correspondence with the client and insurer, and ARDC monitoring.

9.3 Projected Additional Costs

Calderwood & Harkness projects the following ranges of additional costs depending on the trajectory of the case:

Scenario 1 — Case Proceeds to DWP Dismissal (Most Likely). If the case continues on its current trajectory toward dismissal for want of prosecution, estimated additional costs are approximately $5,000 to $10,000, consisting primarily of attorney time for attending the April 20 show cause hearing and any subsequent court appearances through entry of the DWP order, as well as ongoing docket monitoring and client and insurer reporting.

Scenario 2 — Case Reactivates (Unlikely). If the plaintiff obtains new counsel and the case is reactivated — whether through a motion to vacate or a refiling — significant additional legal spend would be required. In this scenario, the case would likely require the reopening of discovery, the preparation of dispositive motions, and potentially trial preparation. Budget sufficiency would need to be reassessed, and consultation with Verdant Mutual regarding additional reserves would be warranted. It is possible in this scenario that the full $175,000 pre-trial budget could be required.

Scenario 3 — Case Reaches Pre-Trial / Trial (Very Unlikely in Current Posture). If the case were to proceed through full discovery and trial preparation — a scenario that is very unlikely given the current dormancy — the full pre-trial litigation budget of $175,000 would likely be consumed, and a supplemental budget request for trial would need to be prepared in consultation with the client and the insurer.

Given the current posture, Calderwood & Harkness's expectation is that Scenario 1 is the most likely outcome, and that total fees for this matter will remain well within the approved budget.

10. Next Steps and Recommended Actions

Based on the current posture of the matter, Calderwood & Harkness recommends the following actions for the next reporting period:

1. Attend April 20, 2023 show cause hearing. Nadia Petrov will appear on behalf of Nexford at the April 20, 2023 show cause hearing before Judge Vasquez-Torres. This hearing is the next critical event in the case and may result in dismissal of the action if Plaintiff's counsel again fails to appear or is unable to show good cause for the prior non-appearances and absence of prosecution activity. Calderwood & Harkness will promptly report the outcome of this hearing to Nexford and Veltrano.

2. Continue periodic docket monitoring. Calderwood & Harkness will continue to conduct regular docket checks in Case No. 2022-L-002847 for any new filings by Plaintiff, any new attorney appearances, or any court orders affecting the status of the case.

3. Monitor ARDC for Hess license status. Calderwood & Harkness will continue to periodically review ARDC records for any changes to Gerald P. Hess's license status, including any suspension, inactive status, or disciplinary proceedings that may affect his ability to represent the plaintiff.

4. Maintain litigation hold. Nexford should continue to maintain the litigation hold that was implemented across all Nexford facilities and key custodians upon receipt of the complaint. The litigation hold applies to all documents and electronically stored information potentially relevant to this matter and is directed to the following key custodians: Frank Bosch (Plant Manager, Elgin), Catherine Donnelly (VP Human Resources), Liam Gallagher (EHS Director), and Tara Svendsen (General Counsel). The litigation hold should remain in place until the matter is formally resolved by court order or settlement.

5. No settlement discussions. No settlement discussions or overtures are warranted at this time given Plaintiff's counsel's complete inactivity and the trajectory toward dismissal. Initiating settlement discussions in the current posture could inadvertently revive a dormant case and would not be in Nexford's interest.

6. Quarterly reporting to Verdant Mutual. Calderwood & Harkness will provide an updated quarterly report to Verdant Mutual Insurance Company, consistent with the insurer's reporting requirements and the terms of the panel counsel engagement.

7. Next quarterly report to Veltrano. The next Quarterly Litigation Exposure Report to Veltrano Capital Partners will be prepared for the Q2 2023 reporting period, with an estimated delivery date of June 30, 2023.

11. Contact Information

For questions regarding this report or the status of this matter, please contact the following individuals:

Defense Counsel:

Bernard Crawford, Responsible Partner Calderwood & Harkness LLP 227 West Monroe Street, Suite 3600 Chicago, IL 60606 Telephone: (312) 555-7200

Email: bcrawford@calderwoodharkness.com

Nadia Petrov, Lead Associate (Day-to-Day Contact) Calderwood & Harkness LLP 227 West Monroe Street, Suite 3600 Chicago, IL 60606 Telephone: (312) 555-7248

Email: npetrov@calderwoodharkness.com

In-House Counsel:

Tara Svendsen, General Counsel Nexford Industrial Holdings Inc. 500 Commerce Drive, Suite 400 Schaumburg, IL 60173 Telephone: (847) 555-4100

Email: tsvendsen@nexford.com

Certification

This Quarterly Litigation Exposure Report has been prepared by Calderwood & Harkness LLP at the direction of counsel for Nexford Industrial Holdings Inc. and is intended for the exclusive use of authorized personnel of Nexford Industrial Holdings Inc. and Harborview Partners, as identified herein. This report is protected by the attorney-client privilege and the attorney work product doctrine. Unauthorized disclosure, distribution, or reproduction of this report, in whole or in part, is strictly prohibited and may constitute a waiver of applicable privileges and protections.

The information and assessments contained in this report are based on facts and circumstances known to Calderwood & Harkness as of the report date and are subject to change as the matter progresses. This report does not constitute a guarantee of any particular outcome and should not be construed as legal advice to any person or entity other than the identified recipients.

CALDERWOOD & HARKNESS LLP

Reviewed and Approved by:

By: ________

Name: Bernard Crawford

Title: Responsible Partner

Date: March 31, 2023

CONFIDENTIALITY NOTICE: This report is prepared at the direction of counsel and is protected by the attorney-client privilege and the attorney work product doctrine. Distribution is strictly limited to authorized personnel of Nexford Industrial Holdings Inc. and Harborview Partners. If you have received this report in error, please immediately notify Calderwood & Harkness LLP at (312) 555-7200 and destroy all copies. Unauthorized disclosure may result in a waiver of applicable privileges.

Damages Category	Estimated Amount	Basis
Back pay (one year)	$78,400	Annual salary; assumes one year of back pay from termination to hypothetical reinstatement or mitigation, with offsets for mitigation
Front pay (six months)	$39,200	Assumes six-month front pay award in lieu of reinstatement, reflecting the plaintiff's employability and the availability of comparable positions
Emotional distress (estimated jury award)	$50,000	Conservative estimate of a jury award for emotional distress in a single-plaintiff retaliation case without evidence of severe psychological injury or ongoing treatment
Statutory attorneys' fees and costs	$40,000	Estimated fee recovery by plaintiff's counsel under applicable fee-shifting provisions
Punitive damages risk (nominal)	$77,400	Nominal allocation reflecting the low probability but non-zero risk of a punitive damages award; assessed as unlikely given the absence of egregious or willful conduct
Total	$285,000
Item	Detail
Carrier	Verdant Mutual Insurance Company, 800 North Plankinton Avenue, Milwaukee, WI 53203
Policy	Employment Practices Liability Insurance
Policy Number	EPLI-VM-2021-04782
Per-Occurrence Limit	$2,000,000
Aggregate Limit	$5,000,000
Self-Insured Retention (SIR)	$50,000
Coverage Status	Acknowledged, subject to reservation of rights
Claims Adjuster	Brianna Choi
Panel Counsel	Calderwood & Harkness LLP (approved by Verdant Mutual)
Attorney	Role	Hourly Rate
Bernard Crawford	Responsible Partner	$895/hr
Renata Vasquez	Billing Partner	$825/hr
Nadia Petrov	Lead Associate	$545/hr
James Underwood	Working Associate	$395/hr
Attorney	Hours	Rate	Amount
Bernard Crawford	12.5 hrs	$895/hr	$11,187.50
Renata Vasquez	8.0 hrs	$825/hr	$6,600.00

Nadia Petrov	52.0 hrs	$545/hr	$28,340.00
James Underwood	41.0 hrs	$395/hr	$16,195.00
Total	113.5 hrs	$62,322.50

ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT NOT FOR DISTRIBUTION BEYOND AUTHORIZED RECIPIENTS
QUARTERLY LITIGATION EXPOSURE REPORT — CONFIDENTIAL
Report Period: Q1 2023 (January 1, 2023 – March 31, 2023)
Report Date: March 31, 2023
Prepared by:
Calderwood & Harkness LLP 227 West Monroe Street, Suite 3600 Chicago, IL 60606
Prepared for distribution by:
Tara Svendsen, General Counsel Nexford Industrial Holdings Inc. 500 Commerce Drive, Suite 400 Schaumburg, IL 60173
Distributed to:
Malcolm Driscoll, Operating Partner Harborview Partners 401 South Tryon Street, Suite 2800 Charlotte, NC 28202
Reporting Threshold: Per Veltrano Capital Partners portfolio company reporting requirement — all litigation matters with potential exposure exceeding $50,000.
Privilege Designation: This report is prepared at the direction of counsel and is protected by the attorney-client privilege and the attorney work product doctrine. Distribution is strictly limited to authorized personnel of Nexford Industrial Holdings Inc. and Harborview Partners, as identified above. Receipt of this report by any other individual or entity does not constitute a waiver of any applicable privilege or protection.
Right-click to update Table of Contents
1. Executive Summary
This report provides the quarterly litigation exposure update for the matter styled Maciejewski v. Nexford Industrial Holdings Inc., Case No. 2022-L-002847, pending in the Circuit Court of Cook County, Illinois, County Department, Law Division. This report is submitted for the period covering Q1 2023 (January 1, 2023 through March 31, 2023) in accordance with the portfolio company reporting requirements established by Harborview Partners.
Nature of the Action. This matter involves a single-plaintiff retaliation claim brought by Darren K. Maciejewski, a former Senior Quality Assurance Supervisor at Nexford's Elgin, Illinois manufacturing facility. Mr. Maciejewski alleges that Nexford terminated his employment on September 24, 2021 in reprisal for his reporting of workplace safety violations to the Occupational Safety and Health Administration ("OSHA"). The complaint asserts three counts: (1) retaliatory discharge under Illinois common law; (2) retaliation under Section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. § 660(c); and (3) violation of the Illinois Whistleblower Act, 740 ILCS 174/1 et seq. Nexford maintains that Mr. Maciejewski was terminated for documented, repeated attendance violations pursuant to the company's progressive discipline policy, and that the termination was wholly unrelated to any safety reporting activity.
Current Status. The case is effectively dormant. Plaintiff's counsel, Gerald P. Hess of Hess & Loughlin, P.C., has ceased all communications with defense counsel since October 14, 2022 and has failed to appear at two consecutive scheduled status conferences — the January 12, 2023 conference and the March 16, 2023 conference — before the Honorable Helena R. Vasquez-Torres. At the March 16 conference, the Court entered a rule to show cause order directed at Mr. Hess, returnable April 20, 2023. Plaintiff has failed to respond to Nexford's outstanding discovery requests, has not served any expert disclosures, and has missed all discovery deadlines established in the case management order. The case is trending toward dismissal for want of prosecution.
Exposure Assessment. Calderwood & Harkness's internal worst-case exposure estimate for this matter is $285,000, which includes back pay, front pay, potential emotional distress damages, statutory attorneys' fees, and a nominal allocation for punitive damages risk. However, given the complete inactivity of Plaintiff's counsel and the trajectory of the case toward dismissal, the current assessed risk level is LOW, and the probability-weighted exposure is considered de minimis — effectively limited to remaining monitoring and court appearance costs.
Insurance. The matter is covered under Nexford's employment practices liability insurance policy with Verdant Mutual Insurance Company, Policy No. EPLI-VM-2021-04782, which provides a $2,000,000 per-occurrence limit and a $5,000,000 aggregate limit, subject to a $50,000 self-insured retention. Verdant Mutual has acknowledged coverage subject to a reservation of rights. Legal fees incurred to date (approximately $62,300) have exceeded the self-insured retention, and Verdant's coverage obligation for fees above the retention has been triggered.
Legal Fees. Approximately $62,300 in legal fees have been incurred to date against a $175,000 agreed pre-trial litigation budget cap, representing approximately 35.6% of the approved budget. Given the dormancy of the case, additional fee accrual is expected to be minimal for the foreseeable future.
Recommendation. Calderwood & Harkness recommends that Nexford and Veltrano continue the current monitoring posture. No settlement discussions are warranted at this time given Plaintiff's counsel's complete inactivity. The case is on a trajectory toward dismissal for want of prosecution, and the next critical event will be the April 20, 2023 show cause hearing.
2. Parties
2.1 Defendant (Client)
Nexford Industrial Holdings Inc. is a Delaware corporation headquartered in Schaumburg, Illinois. Nexford is an industrial manufacturing company specializing in the design and production of precision-machined components for heavy equipment and infrastructure applications. The company serves customers in the construction, mining, transportation, and energy sectors, and is a significant supplier within its niche market.
Nexford operates three manufacturing facilities in the greater Chicago metropolitan area, located in Elgin, Rockford, and Joliet, Illinois, and employs approximately 1,400 individuals across these facilities and its corporate headquarters. The company generates annual revenues of approximately $185 million.
Nexford is a portfolio company of Harborview Partners, which acquired a 72% controlling interest in October 2019 for approximately $310 million. The remaining equity is held by members of management and certain legacy shareholders. Since the Veltrano acquisition, the company has undertaken significant operational improvements and capital expenditure programs, and Nexford represents a material holding within the Veltrano portfolio.
The relevant members of Nexford's senior management for purposes of this matter are:
•  Richard Yoon, Chief Executive Officer
•  Tara Svendsen, General Counsel
•  Catherine "Cat" Donnelly, Vice President, Human Resources
2.2 Plaintiff.  Darren K. Maciejewski, age 47, is a former Senior Quality Assurance Supervisor at Nexford's Elgin manufacturing facility, located at 2700 Industrial Parkway, Elgin, IL 60123. Mr. Maciejewski was employed by Nexford from June 12, 2017 through September 24, 2021, a period of approximately four years and three months. His final annual salary at the time of termination was $78,400.
Mr. Maciejewski is represented in this matter by Gerald P. Hess of Hess & Loughlin, P.C., located at 3412 Harlem Avenue, Suite 205, Berwyn, IL 60402. As discussed in detail in Section 6 of this report, Mr. Hess has been entirely non-responsive to defense counsel communications and has failed to appear at multiple court proceedings since October 2022. A review of Attorney Registration and Disciplinary Commission ("ARDC") records confirms that Mr. Hess's law license remains in active status as of the date of this report.
2.3 Defense Counsel
Calderwood & Harkness LLP represents Nexford Industrial Holdings Inc. in this matter. The firm was engaged following notification of the lawsuit and has been approved as panel counsel by Verdant Mutual Insurance Company, the EPLI carrier providing coverage for this matter. Calderwood & Harkness's offices are located at 227 West Monroe Street, Suite 3600, Chicago, IL 60606.
The engagement team assigned to this matter consists of the following attorneys:
•  Bernard Crawford, Responsible Partner — Mr. Crawford oversees the strategic direction of the defense and serves as the primary contact for the insurer and senior client contacts.
•  Renata Vasquez, Billing Partner — Ms. Vasquez manages billing, budgetary compliance, and reporting coordination with Verdant Mutual.
•  Nadia Petrov, Lead Associate — Ms. Petrov serves as the day-to-day lead on the matter, handles all court appearances, manages discovery, and is the primary point of contact for Nexford's in-house legal department.
•  James Underwood, Working Associate — Mr. Underwood provides research, document review, and drafting support on the matter.
3. Claims and Legal Theories
The complaint, filed on March 15, 2022, asserts three counts against Nexford. Each count is summarized below, along with the principal legal standards and Nexford's primary defenses.
3.1 Count I — Retaliatory Discharge (Illinois Common Law)
Count I of the complaint alleges that Nexford terminated Mr. Maciejewski's employment in retaliation for his reporting of workplace safety violations, and that such termination constitutes the tort of retaliatory discharge under Illinois common law. Specifically, Mr. Maciejewski alleges that he was discharged in reprisal for making internal safety reports regarding chemical storage conditions at Nexford's Elgin facility and, thereafter, for filing a complaint with OSHA. He contends that this discharge violated a clearly mandated public policy of the State of Illinois, namely the policy favoring the protection of employee health and safety in the workplace.
Illinois courts recognize a narrow cause of action for retaliatory discharge where an at-will employee is terminated for engaging in conduct that is protected by a clearly mandated public policy. See Palmateer v. Int'l Harvester Co., 85 Ill. 2d 124 (1981); Kelsay v. Motorola, Inc., 74 Ill. 2d 172 (1978). To prevail on this claim, the plaintiff must establish that (1) he was an employee of the defendant, (2) the defendant discharged him, (3) the discharge was in retaliation for the employee's activities, and (4) the discharge violates a clearly mandated public policy. Illinois courts have recognized that reporting workplace safety violations to external regulatory bodies, including OSHA, constitutes conduct protected by a clearly mandated public policy. See Wheeler v. Granite Harbor Group Tractor Co., 108 Ill. 2d 502 (1985).
Nexford's principal defense to Count I is that the termination was motivated by legitimate, non-retaliatory business reasons — specifically, Mr. Maciejewski's documented and repeated violations of the company's attendance policy, which were addressed through progressive discipline culminating in termination. The temporal proximity between the protected activity and the termination, while acknowledged, is substantially undermined by the fact that the first written warning for attendance violations predated the OSHA complaint, and by OSHA's own conclusion that no safety violations existed at the Elgin facility.
3.2 Count II — Retaliation Under Section 11(c) of the Occupational Safety and Health Act (29 U.S.C. § 660(c))
Count II of the complaint alleges that Nexford retaliated against Mr. Maciejewski in violation of Section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. § 660(c), which prohibits an employer from discharging or in any manner discriminating against any employee because the employee has filed a complaint or instituted any proceeding under the Act.
Nexford has asserted a threshold affirmative defense to Count II based on the plaintiff's failure to exhaust administrative remedies. Section 11(c) provides that an employee who believes he has been discharged or otherwise discriminated against in violation of the statute must file a complaint with the Secretary of Labor within thirty (30) days of the alleged violation. 29 U.S.C. § 660(c)(2). The administrative filing requirement is a jurisdictional prerequisite to the assertion of any claim under Section 11(c). To date, there is no evidence in the record that Mr. Maciejewski timely filed a complaint with the Secretary of Labor regarding his September 24, 2021 termination, and Mr. Maciejewski's discovery responses — which were never served — would have been the vehicle through which such evidence, if it existed, would be disclosed. We believe this defense is dispositive of Count II if it is raised on a motion for summary judgment or otherwise tested in later proceedings.
It is important to distinguish between the OSHA safety complaint (Complaint No. 1734892, filed June 8, 2021) and a hypothetical Section 11(c) retaliation complaint that would need to have been filed within 30 days of the September 24, 2021 termination. The former relates to the underlying safety conditions; the latter would relate to the alleged retaliatory discharge itself. No evidence of the latter filing has been identified.
3.3 Count III — Violation of the Illinois Whistleblower Act (740 ILCS 174/1 *et seq.*)
Count III of the complaint alleges that Nexford violated the Illinois Whistleblower Act ("IWA"), 740 ILCS 174/1 et seq., by terminating Mr. Maciejewski for disclosing information to a government body — specifically, OSHA — that he reasonably believed evidenced a violation of a law, rule, or regulation. The IWA provides that an employer shall not retaliate against an employee for disclosing information to a government or law enforcement agency where the employee has reasonable cause to believe that the information discloses a violation of a state or federal law, rule, or regulation. 740 ILCS 174/15(a).
The IWA claim overlaps significantly with the retaliatory discharge claim asserted in Count I but provides a separate statutory basis for recovery, including the potential availability of attorneys' fees. Nexford's defenses to Count III mirror those asserted against Count I — principally, that the termination was motivated by legitimate attendance-related performance issues and was not causally connected to any disclosure made to a government body. Additionally, Nexford contends that the reasonableness of Mr. Maciejewski's belief that the chemical storage conditions violated applicable law is undermined by OSHA's independent inspection, which resulted in no citations or findings of violation, as well as by Nexford's own internal EHS review, which concluded the facility was in compliance.
3.4 Damages Sought
The complaint seeks the following categories of damages:
•  Back pay from the date of termination (September 24, 2021) through the date of judgment, calculated at an annual salary of $78,400, or approximately $6,533.33 per month;
•  Front pay in an unspecified amount, representing the present value of future lost earnings;
•  Compensatory damages for emotional distress in the amount of $150,000;
•  Punitive damages in the amount of $500,000; and
•  Attorneys' fees and costs pursuant to statute.
We note that the punitive damages demand of $500,000 is, in our assessment, significantly overstated. Punitive damages in retaliatory discharge cases in Illinois are disfavored and require proof of conduct that is outrageous, willful, or demonstrates a reckless disregard for the plaintiff's rights. The factual record in this matter does not support such an award, and we would expect a substantial reduction or elimination of this element at trial or on pre-trial motion. Our exposure analysis in Section 7 reflects a conservative allocation for this risk factor.
4. Factual Background
4.1 Employment History
Mr. Maciejewski was hired by Nexford on June 12, 2017 as a Quality Assurance Supervisor at the company's Elgin manufacturing facility. His starting annual salary was $64,000. In that role, Mr. Maciejewski was responsible for overseeing quality assurance protocols on the production floor, managing a team of quality inspectors, and ensuring that manufactured components met customer specifications and applicable industry standards.
In March 2019, Mr. Maciejewski was promoted to the position of Senior Quality Assurance Supervisor, reflecting his satisfactory performance and increased responsibilities. His annual salary was increased in connection with this promotion to $72,500. In January 2021, he received a merit-based salary increase to $78,400 per year, which was his final annual salary at the time of his termination.
Throughout his employment, Mr. Maciejewski's personnel file reflects generally satisfactory performance reviews through the end of calendar year 2020. The attendance issues that formed the basis for progressive discipline did not emerge until the spring of 2021.
4.2 Safety Reporting Activity (Alleged Protected Conduct)
The complaint centers on Mr. Maciejewski's safety reporting activity in the spring and summer of 2021, which he characterizes as the protected conduct that motivated his termination. The relevant timeline of this reporting activity is as follows:
April 5, 2021: Mr. Maciejewski made his first internal safety report to Plant Manager Frank Bosch regarding chemical storage conditions in Building C at the Elgin facility. Specifically, Mr. Maciejewski alleged that Class 3 flammable liquids — including acetone and isopropanol used in cleaning and degreasing operations — were being stored in quantities exceeding the capacity limits of the approved flammable storage cabinets. He reported this concern verbally and followed up with a written memorandum to Mr. Bosch on the same date.
April 19, 2021: Mr. Maciejewski sent a follow-up email to Nexford's Environmental Health and Safety ("EHS") Department, directed to EHS Director Liam Gallagher, reiterating his concerns about Building C chemical storage and requesting a formal review.
May 3, 2021: The EHS Department completed its review of the Building C chemical storage conditions and issued a written response concluding that the storage configuration was compliant with applicable OSHA regulations and National Fire Protection Association ("NFPA") standards. The EHS review did recommend minor labeling improvements to certain storage cabinets to ensure consistency with updated internal procedures, but found no substantive compliance deficiencies. This response was communicated to Mr. Maciejewski.
June 8, 2021: Approximately five weeks after the EHS Department's compliance finding, Mr. Maciejewski filed OSHA Complaint No. 1734892 with the OSHA Area Office located in Des Plaines, Illinois. The complaint alleged unsafe chemical storage conditions at the Elgin facility's Building C.
June 14, 2021: Nexford received notification from OSHA of the complaint. The notification was received by Liam Gallagher and forwarded to Tara Svendsen and Frank Bosch.
July 12, 2021: OSHA conducted an on-site inspection of Building C at the Elgin facility in response to the complaint. The inspection was conducted by OSHA Compliance Safety and Health Officer Angela Martinez. Nexford cooperated fully with the inspection and made all requested areas and documentation available.
August 18, 2021: OSHA closed Complaint No. 1734892 with no citations issued and no findings of violation. The closure letter stated that the conditions observed during the inspection did not constitute a violation of applicable OSHA standards. This outcome was consistent with the May 3, 2021 internal EHS review.
We note that OSHA's independent inspection and its finding of no violations is a significant fact in Nexford's favor. While a plaintiff's subjective belief that a safety violation existed is arguably relevant under the whistleblower statutes, the absence of any objective confirmation of the alleged violation — coupled with the company's own internal finding of compliance — substantially weakens the plaintiff's narrative and undermines any inference that Nexford's management had a motive to retaliate.
4.3 Progressive Discipline and Termination (Nexford's Legitimate Business Reason)
Independently of Mr. Maciejewski's safety reporting activity, Nexford initiated progressive discipline against him in the spring of 2021 based on documented attendance violations. The timeline of this discipline is as follows:
May 24, 2021: Mr. Maciejewski received his first written warning for tardiness. Nexford's attendance records documented four instances within a 30-day period in which Mr. Maciejewski arrived more than 15 minutes late for his scheduled shift, in violation of the attendance standards set forth in the Nexford Employee Handbook at Section 4.3. The written warning was issued by Plant Manager Frank Bosch and countersigned by Catherine Donnelly, VP Human Resources. Mr. Maciejewski signed the warning, acknowledging receipt.
August 2, 2021: Mr. Maciejewski received a final written warning for continued attendance violations. Between June 1 and July 31, 2021, three additional instances of unexcused tardiness were documented, notwithstanding the prior written warning. The final written warning expressly advised Mr. Maciejewski that any further attendance violations could result in termination of employment, up to and including immediate discharge.
September 20, 2021: Mr. Maciejewski failed to report for his scheduled shift and did not call in to notify his supervisor of his absence. Under the Nexford Employee Handbook at Section 4.3, a failure to report for a scheduled shift without prior notification is classified as an unexcused absence and constitutes a serious attendance violation, particularly following a final written warning.
September 24, 2021: A termination meeting was conducted by Plant Manager Frank Bosch and VP Human Resources Catherine Donnelly. Mr. Maciejewski was informed that his employment was being terminated for violation of Nexford's attendance policy, following the progressive discipline process set forth in the Employee Handbook at Section 4.3. The termination was effective immediately. Mr. Maciejewski was provided a final paycheck and information regarding COBRA continuation coverage.
Nexford's progressive discipline records are well-documented, contemporaneous, and consistent with the company's standard procedures. The documentation was generated in the ordinary course of business and was not created in anticipation of litigation. Copies of all relevant discipline records, attendance logs, the applicable Employee Handbook provisions, and the personnel file were produced in discovery and bear Bates numbers NIH-000001 through NIH-000847.
4.4 Key Observations on Timing
Several aspects of the factual timeline are particularly significant for the defense:
(a) The first written warning for attendance violations was issued on May 24, 2021, which is two weeks before Mr. Maciejewski filed OSHA Complaint No. 1734892 on June 8, 2021. This sequencing directly supports Nexford's position that progressive discipline was initiated for legitimate attendance reasons independent of, and prior to, any protected external reporting activity. This fact substantially undermines any temporal proximity argument the plaintiff might advance.
(b) OSHA's independent on-site inspection found no violations of applicable safety standards and resulted in no citations. This objective finding undermines the plaintiff's claim that the underlying safety concerns were well-founded and reduces any inference that Nexford's management would have had a motive to suppress safety reporting.
(c) Nexford's own internal EHS Department conducted an independent review and concluded that Building C chemical storage was compliant with applicable regulations on May 3, 2021, more than a month before the OSHA complaint. This further demonstrates that the company took Mr. Maciejewski's concerns seriously, investigated them, and found them to be unsubstantiated.
(d) The progressive discipline was conducted by Plant Manager Bosch and VP Human Resources Donnelly, both of whom are prepared to testify that the discipline was based solely on attendance records and was consistent with how similarly situated employees have been treated under the same attendance policy.
5. Affirmative Defenses
Nexford has asserted the following affirmative defenses in its Answer and Affirmative Defenses, filed April 18, 2022:
Legitimate Non-Retaliatory Business Reason. Nexford's principal affirmative defense is that Mr. Maciejewski's termination resulted from documented, repeated attendance violations that were addressed through the company's progressive discipline procedures as set forth in the Nexford Employee Handbook at Section 4.3. The termination followed a first written warning (May 24, 2021), a final written warning (August 2, 2021), and a subsequent unexcused absence (September 20, 2021). The decision to terminate was made by Plant Manager Frank Bosch and VP Human Resources Catherine Donnelly based on attendance records, and was consistent with the company's established policies and past practices for attendance-related separations. This defense directly rebuts any inference of retaliatory motive.
Failure to Exhaust Administrative Remedies (Count II). With respect to Count II, alleging retaliation under Section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. § 660(c), Nexford has asserted that the plaintiff failed to exhaust the mandatory administrative remedy prescribed by the statute. Section 11(c)(2) requires that an employee who believes he has been discharged in violation of the statute file a complaint with the Secretary of Labor within thirty (30) days of the alleged violation. This filing is a prerequisite to any judicial relief under Section 11(c). There is no evidence in the record that Mr. Maciejewski filed such a complaint with the Secretary of Labor within 30 days of his September 24, 2021 termination, and the plaintiff's failure to respond to Nexford's discovery requests — which specifically sought documents and information related to any such filing — further reinforces the absence of such evidence.
After-Acquired Evidence Doctrine. Nexford has reserved the after-acquired evidence doctrine as an affirmative defense. Under this doctrine, evidence of employee misconduct discovered after the termination may limit or bar recovery, even if the misconduct was not a basis for the original termination decision. See McKennon v. Nashville Banner Publ'g Co., 513 U.S. 352 (1995). This defense has been preserved but has not been developed to date, as the case has not progressed to summary judgment or trial.
6. Litigation History and Current Procedural Posture
6.1 Pre-Dormancy Activity (March 2022 – October 2022)
The litigation commenced and progressed through initial pleading, case management, and early discovery phases between March and October 2022, as detailed in the following chronology:
March 15, 2022: Plaintiff Darren K. Maciejewski, through counsel Gerald P. Hess of Hess & Loughlin, P.C., filed a three-count complaint against Nexford Industrial Holdings Inc. in the Circuit Court of Cook County, Illinois, County Department, Law Division. The case was assigned Case No. 2022-L-002847.
March 22, 2022: Service of the summons and complaint was effected on CT Agents Inc., Nexford's registered agent in the State of Illinois, at its Springfield, Illinois address.
March 28, 2022: Nexford General Counsel Tara Svendsen forwarded the complaint to Verdant Mutual Insurance Company to initiate the claims process under the EPLI policy and simultaneously contacted Calderwood & Harkness LLP to engage the firm for the defense.
April 4, 2022: Calderwood & Harkness filed its appearance on behalf of Nexford in the Circuit Court of Cook County.
April 18, 2022: Nexford's Answer and Affirmative Defenses were filed, denying all material allegations and asserting the affirmative defenses described in Section 5 above.
April 28, 2022: An Initial Case Management Conference was held before Judge Helena R. Vasquez-Torres. Both parties appeared through counsel. 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
May 10, 2022: Plaintiff served his First Set of Interrogatories (15 interrogatories) and First Request for Production of Documents (32 requests) on Nexford. The discovery requests sought, among other things, Mr. Maciejewski's complete personnel file, attendance and discipline records, communications regarding the OSHA complaint, documents related to the EHS review of Building C, and information concerning the termination decision-making process.
June 24, 2022: Nexford, through Calderwood & Harkness, served its responses and objections to Plaintiff's First Set of Interrogatories and First Request for Production. In connection with these responses, Nexford produced 847 pages of documents, bearing Bates numbers NIH-000001 through NIH-000847. The production included Mr. Maciejewski's complete personnel file, all attendance records, progressive discipline documentation (written warnings, signed acknowledgments), the EHS Department's Building C compliance report dated May 3, 2021, relevant provisions of the Nexford Employee Handbook (including Section 4.3 on attendance), correspondence and memoranda related to the OSHA complaint, and the OSHA closure letter dated August 18, 2021.
July 1, 2022: Nexford served its First Set of Interrogatories (10 interrogatories) and First Request for Production of Documents (18 requests) on Plaintiff. The discovery requests sought, among other things, information and documents concerning Mr. Maciejewski's efforts to mitigate damages (including post-termination employment), the basis for his claimed emotional distress damages, any administrative filings with OSHA or the Department of Labor related to the termination (relevant to the exhaustion defense on Count II), and the factual bases for the specific allegations in the complaint.
July 22, 2022: Plaintiff filed a Motion to Compel production of personnel files of other employees in Mr. Maciejewski's department who received attendance-related discipline but were not terminated. The motion argued that comparator evidence was necessary to demonstrate that Nexford selectively enforced its attendance policy against Mr. Maciejewski in retaliation for his safety reporting.
August 1, 2022: Plaintiff's responses to Nexford's First Set of Interrogatories and First Request for Production were due pursuant to the applicable response deadline. These responses were never served. As of the date of this report, no discovery responses from Plaintiff have been received.
August 12, 2022: Calderwood & Harkness filed a Response in Opposition to Plaintiff's Motion to Compel, arguing that the request for comparator personnel files was overbroad, unduly burdensome, and not proportional to the needs of the case, particularly given the breadth of the request (which encompassed all employees in the department regardless of time period, role, or circumstances) and the privacy interests of non-party employees.
September 9, 2022: Judge Vasquez-Torres denied Plaintiff's 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(b)(1). However, the Court noted in its order that Plaintiff could re-file a narrower, more targeted request identifying a specific comparator group and time period. No such narrowed request has ever been filed.
October 14, 2022: Calderwood & Harkness received the last substantive communication from Hess & Loughlin. This communication was an email from Gerald Hess acknowledging receipt of certain of Nexford's discovery responses but not addressing Plaintiff's own overdue discovery responses to Nexford's outstanding interrogatories and document requests. No further communication from Plaintiff's counsel has been received since this date.
6.2 Dormancy Period (November 2022 – Present)
Since October 14, 2022, the case has been effectively dormant due to the complete inactivity of Plaintiff's counsel. The following events have occurred during the dormancy period:
November 3, 2022: Calderwood & Harkness sent a formal meet-and-confer letter to Gerald Hess at Hess & Loughlin, P.C., regarding Plaintiff's failure to respond to Nexford's First Set of Interrogatories and First Request for Production of Documents, which had been due on August 1, 2022. The letter requested that Mr. Hess contact defense counsel within fourteen (14) days to discuss the outstanding discovery and proposed a schedule for Plaintiff's responses. No response was received.
November 28, 2022: Calderwood & Harkness sent a second follow-up letter to Mr. Hess, noting the absence of any response to the November 3 letter and warning that Nexford would consider filing a motion to compel or a motion for sanctions if Plaintiff's discovery responses were not served or if defense counsel did not hear from Mr. Hess by December 9, 2022. No response was received.
December 15, 2022: The original fact discovery close date, as established in the April 28, 2022 case management order, passed. As of this date, Plaintiff had not served any discovery responses whatsoever to Nexford's outstanding interrogatories and document requests. No motion to extend the discovery schedule was filed by Plaintiff.
January 12, 2023: A scheduled status conference was held before Judge Vasquez-Torres. Gerald Hess did not appear on behalf of Plaintiff. Nadia Petrov appeared on behalf of Nexford and informed the Court of the complete cessation of activity by Plaintiff's counsel, including the failure to respond to discovery, the failure to respond to meet-and-confer correspondence, and the passage of the fact discovery deadline without any discovery responses from Plaintiff. The Court entered an order noting Plaintiff's counsel's non-appearance and setting a further status date for March 16, 2023. The order directed Plaintiff's counsel to appear at the March 16 conference or show cause for the failure to appear.
January 15, 2023: The expert disclosure deadline, as established in the case management order, passed. Neither party served expert disclosures. Nexford did not serve expert disclosures because the case posture did not warrant the expense, given Plaintiff's complete inactivity and the absence of any plaintiff expert disclosures.
March 1, 2023: The expert discovery close date passed without any expert-related activity by either party.
March 16, 2023: A further status conference was held before Judge Vasquez-Torres. Gerald Hess again did not appear on behalf of Plaintiff. Nadia Petrov appeared on behalf of Nexford. The Court entered a rule to show cause order directed at Mr. Hess, ordering him to appear before the Court on April 20, 2023 and show cause why the case should not be dismissed for want of prosecution and why sanctions should not be imposed for his repeated failure to appear. The order was directed to be served on Mr. Hess by the Clerk of the Court via certified mail to his address of record.
ARDC Status: Calderwood & Harkness has confirmed, as of March 29, 2023, that Gerald P. Hess's law license remains in active status with the Attorney Registration and Disciplinary Commission of the Supreme Court of Illinois. There are no pending disciplinary proceedings reflected in publicly available ARDC records. Calderwood & Harkness will continue to monitor ARDC records for any changes to Mr. Hess's license status.
6.3 Anticipated Trajectory
Based on the current procedural posture, the case is on a trajectory toward dismissal for want of prosecution ("DWP") under Cook County Circuit Court General Order 2.1, which provides for the dismissal of cases in which a plaintiff has failed to prosecute with reasonable diligence.
The April 20, 2023 show cause hearing will be the next critical date in this matter. If Mr. Hess again fails to appear or fails to demonstrate good cause for his prior non-appearances and the absence of prosecution activity, the Court may take one or more of the following actions:
•  Strike the case from the trial call;
•  Enter a DWP order dismissing the case, either with or without prejudice;
•  Impose sanctions on Mr. Hess personally; or
•  Grant a brief continuance with a final warning.
If the case is dismissed without prejudice, the plaintiff would theoretically have the ability to refile within the applicable statute of limitations. However, given the passage of time since the underlying events and the difficulty of reestablishing any discovery position, a refiling would face significant practical obstacles. If the case is dismissed with prejudice, the matter would be concluded.
Alternatively, there is a possibility — which we assess as unlikely but cannot exclude — that Mr. Maciejewski may retain new counsel, who could potentially enter an appearance, move to vacate any adverse orders, and seek to reactivate the case. In that event, a substantial reassessment of the case posture, exposure, and budget would be warranted.
Calderwood & Harkness will continue to attend all scheduled court dates and monitor the docket for any new filings by the plaintiff, any new attorney appearances, or any other developments that could affect the trajectory of the matter.
7. Exposure Assessment
7.1 Worst-Case Exposure Estimate
Calderwood & Harkness has prepared an internal worst-case exposure estimate for this matter, representing the maximum reasonably foreseeable adverse outcome if the case were to proceed to trial and the plaintiff were to prevail on all claims. This estimate is intended for internal risk management and reserve-setting purposes and does not represent a prediction of likely outcome. The total internal worst-case estimate is $285,000, broken down as follows:
We note that the back pay accrued as of the date of the complaint filing (March 15, 2022) was approximately $37,240, calculated as $6,533.33 per month multiplied by approximately 5.7 months from the date of termination. Back pay continues to accrue theoretically, although the plaintiff's duty to mitigate damages and the likelihood of dismissal substantially reduce this exposure.
The plaintiff's complaint demands significantly larger damages, including $150,000 in emotional distress and $500,000 in punitive damages. We consider these demands to be inflated and not reflective of likely outcomes in the Cook County Law Division for a case with this fact pattern. Our worst-case estimate reflects a more realistic assessment based on comparable verdicts and settlements in single-plaintiff retaliation cases in the Northern District of Illinois and Cook County.
7.2 Current Risk Assessment
The current risk level for this matter is assessed as LOW. This assessment is based on the following factors:
1.  Plaintiff's counsel inactivity. Gerald Hess has been completely inactive since October 14, 2022 — a period of more than five months as of the date of this report. He has failed to respond to meet-and-confer correspondence, failed to appear at two consecutive status conferences, and failed to serve any discovery responses or expert disclosures.
2.  discovery failures. Plaintiff failed to respond to Nexford's First Set of Interrogatories and First Request for Production, which were due on August 1, 2022. These responses were never served, and the fact discovery period has closed. Plaintiff has no expert disclosures on file.
3.  Motion to Compel denied. Plaintiff's only substantive discovery motion — the Motion to Compel comparator personnel files — was denied on September 9, 2022. No narrowed request was ever filed.
4.  OSHA findings support Nexford. OSHA conducted an independent on-site inspection in response to Mr. Maciejewski's complaint and found no violations. This objective finding directly undermines the factual premise of the plaintiff's claims.
5.  Strong documentation of legitimate discipline. Nexford possesses contemporaneous, well-documented records of progressive discipline for attendance violations, including a first written warning that predates the OSHA complaint. Plant Manager Bosch and VP Human Resources Donnelly are available to testify regarding the discipline and termination process.
6.  DWP trajectory. The case is on a trajectory toward dismissal for want of prosecution following the March 16, 2023 show cause order. The April 20 hearing represents a significant milestone in this process.
7.3 Probability-Weighted Exposure
Given the current dormancy of the case and the trajectory toward dismissal for want of prosecution, the probability-weighted exposure for this matter is estimated as de minimis. The weighted exposure is effectively limited to the remaining monitoring costs — principally, attorney time for periodic docket checks and attendance at court appearances through resolution. We estimate these monitoring costs at approximately $5,000 to $10,000, depending on the number of court appearances required before dismissal is entered.
In the unlikely event that the case is reactivated — through the appearance of new counsel, a motion to vacate, or a refiling — the probability-weighted exposure would need to be reassessed. However, even in a reactivation scenario, the strength of Nexford's defenses would substantially reduce the expected value of the claim.
8. Insurance Coverage
The following summarizes the insurance coverage applicable to this matter:
Verdant Mutual acknowledged coverage for this matter by letter dated April 11, 2022, subject to a reservation of rights. The reservation of rights letter reserves Verdant's right to deny coverage with respect to certain categories of damages and certain policy exclusions, consistent with standard EPLI reservation of rights practice. To date, no coverage dispute has arisen, and Verdant has cooperated fully in the defense of this matter.
As noted, the legal fees incurred to date (approximately $62,300) have exceeded the $50,000 self-insured retention. Accordingly, Verdant Mutual's coverage obligation has been triggered for fees and costs above the SIR, subject to the terms of the reservation of rights. Nexford has satisfied its SIR obligation, and all fees incurred above the $50,000 threshold are being submitted to Verdant Mutual for reimbursement. To date, all invoices submitted to Verdant have been processed and paid without incident.
Calderwood & Harkness provides quarterly reporting to Verdant Mutual, consistent with the insurer's reporting requirements. The next report to Verdant Mutual is expected to be submitted concurrently with this report.
9. Legal Fees and Budget
9.1 Billing Rates
The following billing rates apply to the Calderwood & Harkness engagement team assigned to this matter:
These rates were approved by Verdant Mutual Insurance Company in connection with the panel counsel engagement and are consistent with Verdant's billing guidelines for matters of this nature and complexity.
9.2 Fees Incurred Through Active Period
The following table summarizes the legal fees incurred by Calderwood & Harkness through the active period of the case (April 2022 through approximately October 2022), as well as minimal monitoring activity during the dormancy period through March 31, 2023:
The rounded figure of approximately $62,300 in total fees incurred represents approximately 35.6% of the $175,000 pre-trial litigation budget cap that has been established for this matter. The remaining budget is approximately $112,700.
The majority of the fees incurred to date were associated with the active phase of the litigation, including preparation and filing of the Answer and Affirmative Defenses, attendance at the initial case management conference, preparation and service of discovery responses and document production (847 pages), preparation and service of Nexford's affirmative discovery requests, research and briefing of the opposition to Plaintiff's Motion to Compel, and meet-and-confer correspondence with Plaintiff's counsel. Fees incurred during the dormancy period (November 2022 – March 2023) have been minimal and limited to docket monitoring, preparation for and attendance at the January 12 and March 16 status conferences, correspondence with the client and insurer, and ARDC monitoring.
9.3 Projected Additional Costs
Calderwood & Harkness projects the following ranges of additional costs depending on the trajectory of the case:
Scenario 1 — Case Proceeds to DWP Dismissal (Most Likely). If the case continues on its current trajectory toward dismissal for want of prosecution, estimated additional costs are approximately $5,000 to $10,000, consisting primarily of attorney time for attending the April 20 show cause hearing and any subsequent court appearances through entry of the DWP order, as well as ongoing docket monitoring and client and insurer reporting.
Scenario 2 — Case Reactivates (Unlikely). If the plaintiff obtains new counsel and the case is reactivated — whether through a motion to vacate or a refiling — significant additional legal spend would be required. In this scenario, the case would likely require the reopening of discovery, the preparation of dispositive motions, and potentially trial preparation. Budget sufficiency would need to be reassessed, and consultation with Verdant Mutual regarding additional reserves would be warranted. It is possible in this scenario that the full $175,000 pre-trial budget could be required.
Scenario 3 — Case Reaches Pre-Trial / Trial (Very Unlikely in Current Posture). If the case were to proceed through full discovery and trial preparation — a scenario that is very unlikely given the current dormancy — the full pre-trial litigation budget of $175,000 would likely be consumed, and a supplemental budget request for trial would need to be prepared in consultation with the client and the insurer.
Given the current posture, Calderwood & Harkness's expectation is that Scenario 1 is the most likely outcome, and that total fees for this matter will remain well within the approved budget.
10. Next Steps and Recommended Actions
Based on the current posture of the matter, Calderwood & Harkness recommends the following actions for the next reporting period:
1.  Attend April 20, 2023 show cause hearing. Nadia Petrov will appear on behalf of Nexford at the April 20, 2023 show cause hearing before Judge Vasquez-Torres. This hearing is the next critical event in the case and may result in dismissal of the action if Plaintiff's counsel again fails to appear or is unable to show good cause for the prior non-appearances and absence of prosecution activity. Calderwood & Harkness will promptly report the outcome of this hearing to Nexford and Veltrano.
2.  Continue periodic docket monitoring. Calderwood & Harkness will continue to conduct regular docket checks in Case No. 2022-L-002847 for any new filings by Plaintiff, any new attorney appearances, or any court orders affecting the status of the case.
3.  Monitor ARDC for Hess license status. Calderwood & Harkness will continue to periodically review ARDC records for any changes to Gerald P. Hess's license status, including any suspension, inactive status, or disciplinary proceedings that may affect his ability to represent the plaintiff.
4.  Maintain litigation hold. Nexford should continue to maintain the litigation hold that was implemented across all Nexford facilities and key custodians upon receipt of the complaint. The litigation hold applies to all documents and electronically stored information potentially relevant to this matter and is directed to the following key custodians: Frank Bosch (Plant Manager, Elgin), Catherine Donnelly (VP Human Resources), Liam Gallagher (EHS Director), and Tara Svendsen (General Counsel). The litigation hold should remain in place until the matter is formally resolved by court order or settlement.
5.  No settlement discussions. No settlement discussions or overtures are warranted at this time given Plaintiff's counsel's complete inactivity and the trajectory toward dismissal. Initiating settlement discussions in the current posture could inadvertently revive a dormant case and would not be in Nexford's interest.
6.  Quarterly reporting to Verdant Mutual. Calderwood & Harkness will provide an updated quarterly report to Verdant Mutual Insurance Company, consistent with the insurer's reporting requirements and the terms of the panel counsel engagement.
7.  Next quarterly report to Veltrano. The next Quarterly Litigation Exposure Report to Veltrano Capital Partners will be prepared for the Q2 2023 reporting period, with an estimated delivery date of June 30, 2023.
11. Contact Information
For questions regarding this report or the status of this matter, please contact the following individuals:
Defense Counsel:
Bernard Crawford, Responsible Partner Calderwood & Harkness LLP 227 West Monroe Street, Suite 3600 Chicago, IL 60606 Telephone: (312) 555-7200
Email: bcrawford@calderwoodharkness.com
Nadia Petrov, Lead Associate (Day-to-Day Contact) Calderwood & Harkness LLP 227 West Monroe Street, Suite 3600 Chicago, IL 60606 Telephone: (312) 555-7248
Email: npetrov@calderwoodharkness.com
In-House Counsel:
Tara Svendsen, General Counsel Nexford Industrial Holdings Inc. 500 Commerce Drive, Suite 400 Schaumburg, IL 60173 Telephone: (847) 555-4100
Email: tsvendsen@nexford.com
Certification
This Quarterly Litigation Exposure Report has been prepared by Calderwood & Harkness LLP at the direction of counsel for Nexford Industrial Holdings Inc. and is intended for the exclusive use of authorized personnel of Nexford Industrial Holdings Inc. and Harborview Partners, as identified herein. This report is protected by the attorney-client privilege and the attorney work product doctrine. Unauthorized disclosure, distribution, or reproduction of this report, in whole or in part, is strictly prohibited and may constitute a waiver of applicable privileges and protections.
The information and assessments contained in this report are based on facts and circumstances known to Calderwood & Harkness as of the report date and are subject to change as the matter progresses. This report does not constitute a guarantee of any particular outcome and should not be construed as legal advice to any person or entity other than the identified recipients.
CALDERWOOD & HARKNESS LLP
Reviewed and Approved by:
By: ________
Name: Bernard Crawford
Title: Responsible Partner
Date: March 31, 2023
CONFIDENTIALITY NOTICE: This report is prepared at the direction of counsel and is protected by the attorney-client privilege and the attorney work product doctrine. Distribution is strictly limited to authorized personnel of Nexford Industrial Holdings Inc. and Harborview Partners. If you have received this report in error, please immediately notify Calderwood & Harkness LLP at (312) 555-7200 and destroy all copies. Unauthorized disclosure may result in a waiver of applicable privileges.
Damages Category | Estimated Amount | Basis
Back pay (one year) | $78,400 | Annual salary; assumes one year of back pay from termination to hypothetical reinstatement or mitigation, with offsets for mitigation
Front pay (six months) | $39,200 | Assumes six-month front pay award in lieu of reinstatement, reflecting the plaintiff's employability and the availability of comparable positions
Emotional distress (estimated jury award) | $50,000 | Conservative estimate of a jury award for emotional distress in a single-plaintiff retaliation case without evidence of severe psychological injury or ongoing treatment
Statutory attorneys' fees and costs | $40,000 | Estimated fee recovery by plaintiff's counsel under applicable fee-shifting provisions
Punitive damages risk (nominal) | $77,400 | Nominal allocation reflecting the low probability but non-zero risk of a punitive damages award; assessed as unlikely given the absence of egregious or willful conduct
Total | $285,000
Item | Detail
Carrier | Verdant Mutual Insurance Company, 800 North Plankinton Avenue, Milwaukee, WI 53203
Policy | Employment Practices Liability Insurance
Policy Number | EPLI-VM-2021-04782
Per-Occurrence Limit | $2,000,000
Aggregate Limit | $5,000,000
Self-Insured Retention (SIR) | $50,000
Coverage Status | Acknowledged, subject to reservation of rights
Claims Adjuster | Brianna Choi
Panel Counsel | Calderwood & Harkness LLP (approved by Verdant Mutual)
Attorney | Role | Hourly Rate
Bernard Crawford | Responsible Partner | $895/hr
Renata Vasquez | Billing Partner | $825/hr
Nadia Petrov | Lead Associate | $545/hr
James Underwood | Working Associate | $395/hr
Attorney | Hours | Rate | Amount
Bernard Crawford | 12.5 hrs | $895/hr | $11,187.50
Renata Vasquez | 8.0 hrs | $825/hr | $6,600.00
Nadia Petrov | 52.0 hrs | $545/hr | $28,340.00
James Underwood | 41.0 hrs | $395/hr | $16,195.00
Total | 113.5 hrs | $62,322.50

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