PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum has been prepared by counsel in anticipation of litigation and is protected by the attorney work product doctrine. This document also contains information subject to the attorney-client privilege. Do not disclose, copy, or distribute without the express written consent of Calderwood & Harkness LLP.
CALDERWOOD & HARKNESS LLP 200 South Wacker Drive, Suite 4400 Chicago, Illinois 60606 Telephone: (312) 555-8200 Facsimile: (312) 555-8201
January 30, 2023
MEMORANDUM
TO: Priya Anand, Responsible Partner
FROM: Simone Laroche, Lead Associate
RE: Deposition Preparation — Russell Okonkwo, VP Procurement, Nexford Industrial Holdings Inc.
MATTER: Cardinal Peak Industries v. Nexford Industrial Holdings Inc., Case No. 2022-L-008471, Circuit Court of Cook County, Illinois, County Department, Law Division
C&H MATTER NO.: 1005-00005
DEPOSITION DATE: February 7, 2023
DEPOSITION LOCATION: Calderwood & Harkness LLP offices, 200 South Wacker Drive, Suite 4400, Chicago, Illinois 60606 (or as noticed by Blackwood Stein & Associates LLP)
EXAMINING COUNSEL (ADVERSE): Garrett Blackwood and/or Megan Hsu, Blackwood Stein & Associates LLP, 717 Seventeenth Street, Suite 2200, Denver, Colorado 80202
DEFENDING COUNSEL: Priya Anand and Simone Laroche, Calderwood & Harkness LLP
I. PURPOSE AND OVERVIEW
This memorandum outlines the preparation strategy for the deposition of Russell Okonkwo, Vice President of Procurement at Nexford Industrial Holdings Inc. ("Nexford"), scheduled for February 7, 2023. The purpose of this memorandum is to provide a comprehensive framework for preparing Mr. Okonkwo so that he can testify clearly, accurately, and consistently with the documentary record while avoiding unnecessary concessions or inadvertent waivers of privilege.
Mr. Okonkwo is a key fact witness for Nexford in this dispute. He was the primary Nexford executive responsible for overseeing the commercial relationship with Cardinal Peak Industries ("Cardinal Peak") under the Master Supply Agreement (MSA-NIH-CPI-2020-001) dated January 15, 2020 (the "MSA"). As the executive who both negotiated the MSA's surcharge provisions and administered them on a month-to-month basis, Mr. Okonkwo possesses firsthand knowledge of Nexford's procurement practices, the contractual framework governing surcharge pass-throughs, and the specific factual basis for each surcharge dispute at issue in this case.
Mr. Okonkwo directly managed the surcharge review and approval process for Cardinal Peak's invoices during the disputed period running from March 2021 through May 2022. He is the person most knowledgeable about Nexford's basis for rejecting or partially paying surcharge invoices totaling the disputed amount of $4.73 million. His testimony will be central to establishing that Nexford acted in good faith and in strict compliance with its contractual obligations, and that Cardinal Peak's claimed surcharges were procedurally and substantively deficient under the terms of the MSA.
The deposition is being taken by plaintiff's counsel at Blackwood Stein & Associates LLP as part of written discovery that commenced in December 2022. For context, the procedural posture of the case is as follows: Cardinal Peak filed its Complaint on August 1, 2022, alleging breach of contract and seeking $4.73 million in unpaid surcharges plus interest. Nexford's Answer and Affirmative Defenses were filed on September 19, 2022, and Nexford's Counterclaim — seeking declaratory relief and the return of $0.21 million in overpayments — was filed on October 3, 2022. Initial written discovery was served in November–December 2022, and both parties' responses to the first round of interrogatories and document requests were served on January 9, 2023. We are now in the deposition phase.
It should be noted that the deposition of Natalie Gunderson, Cardinal Peak's Vice President of Sales & Commercial, took place on January 18, 2023. Key admissions from that deposition are documented in the Deposition Summary Memorandum dated January 25, 2023 and should materially inform our preparation of Mr. Okonkwo. In particular, Ms. Gunderson's concessions regarding late Surcharge Notices, Cardinal Peak's use of a non-contractual "blended cost" metric, and her inability to identify any written consent from Nexford to exceed the 12% surcharge cap provide powerful corroboration of Nexford's defenses and should be leveraged in anticipating adverse lines of questioning. A detailed analysis of Ms. Gunderson's testimony and its implications for Mr. Okonkwo's deposition is set forth in Section VI below.
II. WITNESS BACKGROUND AND ROLE
A. Professional Background
Russell Okonkwo holds the title of Vice President of Procurement at Nexford Industrial Holdings Inc. He is based at Nexford's headquarters located at 4200 West Lakeshore Industrial Parkway, Suite 300, Waukegan, Illinois 60085. Mr. Okonkwo reports directly to Nexford's Chief Executive Officer, Martin Schaeffer, and works closely with Chief Financial Officer Lydia Tran on procurement spending, budgetary oversight, and vendor management across the organization.
In his capacity as VP of Procurement, Mr. Okonkwo oversees raw material procurement — principally steel and aluminum — across Nexford's three Midwest manufacturing facilities. Nexford is a precision-engineered components manufacturer serving the automotive, heavy equipment, and infrastructure sectors, with an approximate annual revenue of $287 million as of fiscal year 2022. The procurement function that Mr. Okonkwo leads is therefore a critical operational element of the business, as raw material costs represent a substantial portion of Nexford's cost of goods sold and directly affect the company's margins and competitiveness.
Mr. Okonkwo's procurement responsibilities include negotiating and managing supply agreements with key vendors, monitoring commodity market conditions (particularly steel scrap pricing, alloy surcharges, and energy costs), and ensuring that procurement operations are aligned with Nexford's overall financial planning and budgetary targets. He has significant experience with the pricing mechanisms commonly used in the steel supply industry, including pass-through surcharges tied to commodity indices.
B. Role in the Disputed Transaction
Mr. Okonkwo's role in the disputed transaction is central and multifaceted:
Negotiation of the MSA. Mr. Okonkwo was the lead Nexford executive who negotiated the MSA with Cardinal Peak, including the surcharge provisions set forth in Section 7.4 and the Surcharge Methodology described in Exhibit C. He was directly involved in the selection of the published-index methodology (the Ferrous Scrap Index as reported by Platts/SPI and the Industrial Energy Cost Index) as the basis for surcharge calculations, as opposed to an internal-cost-based approach. His understanding of why this methodology was chosen — and what it was intended to accomplish — will be a significant topic of examination.
Designated Recipient of Surcharge Notices. Under Section 7.4(a) of the MSA, Mr. Okonkwo was the designated recipient of Surcharge Notices from Cardinal Peak. He was responsible for monitoring whether such notices were delivered within the 15-business-day deadline specified in the contract, and for reviewing the surcharge calculations accompanying each notice against the Exhibit C methodology.
Surcharge Review and Approval. Mr. Okonkwo was the person principally responsible for determining whether each monthly Surcharge Notice complied with the MSA's requirements — including timeliness, methodological accuracy, and adherence to the 12% surcharge cap under Section 7.4(c). When he identified deficiencies in Cardinal Peak's surcharge invoices, he made the determination — in consultation with CFO Lydia Tran and General Counsel Deborah Whitfield — to reject or partially pay those invoices.
Dispute Notices. Mr. Okonkwo sent written dispute notices to Cardinal Peak under Section 7.4(d) of the MSA within the required 30-calendar-day window for each month in which Nexford contested a surcharge invoice. These dispute notices form a critical part of the documentary record and demonstrate that Nexford preserved its contractual rights with respect to disputed surcharges.
Communications with Cardinal Peak. Throughout the disputed period, Mr. Okonkwo communicated regularly with Natalie Gunderson (Cardinal Peak VP, Sales & Commercial) regarding pricing and surcharge issues. He also had occasional communications with Harold Briggs (Cardinal Peak Controller) regarding invoice details and supporting documentation.
C. Prior Statements and discovery Responses
Mr. Okonkwo was identified in Nexford's Responses to Cardinal Peak's First Set of Interrogatories, served January 9, 2023, as a person with knowledge regarding the factual basis for Nexford's surcharge rejections, the Exhibit C methodology, and the circumstances surrounding each disputed invoice. Lydia Tran was also identified as a person with knowledge, primarily regarding the financial analysis of surcharge payments and their impact on Nexford's cost structure. However, Mr. Okonkwo is the primary witness on procurement operations and the surcharge review process itself.
Mr. Okonkwo's name appears on numerous emails and internal procurement records produced in Nexford's Responses to Cardinal Peak's First Request for Production, also served January 9, 2023. These include his surcharge review logs, internal memoranda to Ms. Tran, dispute notices sent to Cardinal Peak, and correspondence with Ms. Gunderson. Counsel should be thoroughly familiar with the universe of documents bearing Mr. Okonkwo's name prior to the preparation sessions, as opposing counsel will likely use these documents as the foundation for the examination.
III. ANTICIPATED TOPICS OF EXAMINATION
Based on the pleadings, discovery to date, and the nature of the claims and defenses at issue, we anticipate that Garrett Blackwood and/or Megan Hsu will cover the following major topic areas in their examination of Mr. Okonkwo. This section is organized by anticipated topic, and each topic is discussed with sufficient detail to guide preparation.
A. Background and Qualifications
Opposing counsel will almost certainly begin with background questioning to establish Mr. Okonkwo's credentials, experience, and scope of responsibilities. Specific areas of inquiry are likely to include:
• Mr. Okonkwo's employment history at Nexford, including his length of tenure, prior positions held, and the scope of his current responsibilities as VP of Procurement.
• His prior experience in the steel and metals procurement industry, including any experience with commodity pricing, surcharge mechanisms, and supply agreement negotiation.
• His familiarity with commodity indices relevant to this case, particularly the Ferrous Scrap Index as reported by Platts/SPI and the Industrial Energy Cost Index. Opposing counsel may probe the depth of his understanding of how these indices are compiled, published, and used in commercial practice.
• His educational background and any professional certifications or training relevant to procurement or commodity markets.
This line of questioning is likely intended to establish Mr. Okonkwo as a knowledgeable and experienced procurement executive — which will cut in our favor to the extent it supports Nexford's position that its surcharge review was informed and careful, but which opposing counsel may attempt to use to suggest that Mr. Okonkwo "should have known" that Cardinal Peak's surcharges were reasonable given market conditions. We should prepare Mr. Okonkwo to testify confidently about his qualifications without overstating his expertise in ways that could be exploited later.
B. Negotiation and Execution of the MSA
This will likely be a significant area of examination, as opposing counsel will attempt to establish the parties' intent regarding the surcharge provisions. Anticipated lines of questioning include:
• Mr. Okonkwo's role in negotiating the MSA (MSA-NIH-CPI-2020-001), executed on January 15, 2020, including the identities of Cardinal Peak's negotiating counterparts.
• His understanding of the MSA's base pricing terms, specifically the pricing for Hot Rolled Coil ("HRC") at $620 per ton and Cold Rolled Coil ("CRC") at $740 per ton, as set forth in Section 7.2.
• The estimated annual purchase volumes contemplated under the MSA: approximately 18,000 tons of HRC and 6,500 tons of CRC, for a total of approximately 24,500 tons per year and an estimated annual spend of approximately $15.97 million.
• His specific involvement in drafting or negotiating the surcharge clause (Section 7.4), including the 15-business-day notice requirement in Section 7.4(a), the Exhibit C Surcharge Methodology, and the 12% surcharge cap in Section 7.4(c).
• The intent of the parties regarding the surcharge provisions — in particular, why the published-index methodology (using the Ferrous Scrap Index and Industrial Energy Cost Index) was selected as opposed to a methodology based on the supplier's internal costs.
• The establishment of the baseline scrap cost of $340 per ton and baseline energy cost of $48 per ton as set forth in Exhibit C, including how those baselines were determined and what they were intended to represent.
Opposing counsel may attempt to elicit testimony suggesting that the parties understood the surcharge provisions to be flexible or that the published-index requirement was merely a guideline rather than a binding methodology. Mr. Okonkwo should be prepared to testify clearly that the Exhibit C methodology was intentionally selected, specifically negotiated, and understood by both parties to be the exclusive basis for calculating surcharges.
C. Surcharge Review and Payment Process
Opposing counsel will likely explore in detail the internal process by which Nexford received, reviewed, and approved or disputed Surcharge Notices from Cardinal Peak. This area of examination is central to both Cardinal Peak's claim (that Nexford improperly rejected valid invoices) and Nexford's defense (that it carefully reviewed each invoice against the contractual requirements and disputed those that were deficient). Anticipated questions include:
• A detailed description of Nexford's internal process for receiving and logging Surcharge Notices from Cardinal Peak.
• How Mr. Okonkwo tracked whether Surcharge Notices were delivered within the 15-business-day deadline specified in Section 7.4(a), including what records he maintained and how he calculated business days.
• How Mr. Okonkwo verified that surcharge calculations conformed to the Exhibit C methodology — that is, whether the calculations used the published Ferrous Scrap Index and Industrial Energy Cost Index, applied to the contractual baseline costs of $340 per ton (scrap) and $48 per ton (energy).
• How Mr. Okonkwo monitored whether monthly surcharges exceeded the 12% cap under Section 7.4(c), and what steps he took when he identified a potential exceedance.
• Whether Nexford ever provided prior written consent to Cardinal Peak to exceed the 12% surcharge cap for any month during the disputed period. The anticipated answer is no, and Mr. Okonkwo should be prepared to confirm this clearly.
• Mr. Okonkwo's involvement in authorizing the $1.68 million in surcharge payments that Nexford did make during the disputed period — specifically, which invoices were paid, why they were paid, and how the payment amounts were determined.
D. Specific Disputed Invoices (March 2021 – May 2022)
This will likely be the most detailed and time-consuming portion of the examination. Opposing counsel will almost certainly walk through each of the 14 disputed surcharge invoices on a month-by-month basis. The disputed period encompasses 15 months (March 2021 through May 2022), with the April 2021 invoice having been paid in full and therefore not at issue.
For each disputed month, opposing counsel is likely to ask:
• When the Surcharge Notice was received by Nexford.
• Whether the notice was timely — that is, whether it was delivered within the 15-business-day deadline under Section 7.4(a).
• What documentation accompanied the Surcharge Notice.
• What calculation methodology Cardinal Peak used to determine the surcharge amount.
• What amount was invoiced.
• Whether and how much Nexford paid on the invoice.
• If Nexford disputed the invoice, when and how it communicated the dispute to Cardinal Peak.
The aggregate figures that Mr. Okonkwo should be prepared to address are as follows:
Nexford's defenses to the $4.73 million claim fall into three principal categories, and Mr. Okonkwo should be prepared to explain the factual basis for each:
1. Late Notices. Seven of the 14 disputed months involved Surcharge Notices that were delivered after the 15-business-day deadline required by Section 7.4(a). The surcharges associated with these late notices total approximately $2.18 million. Mr. Okonkwo should be prepared to identify the specific months, describe how he determined the notices were late, and explain the basis for Nexford's position that late notices do not give rise to a valid surcharge obligation.
2. Methodology Deviation. In multiple months, Cardinal Peak calculated surcharges using an internal "blended cost" metric rather than the published Ferrous Scrap Index and Industrial Energy Cost Index specified in Exhibit C. This methodology deviation resulted in overstated charges totaling approximately $1.47 million. Mr. Okonkwo should be prepared to explain the difference between the contractual methodology and the "blended cost" approach, and to identify the specific months in which the deviation occurred.
3. Cap Exceedances. In four months, Cardinal Peak's invoiced surcharges exceeded the 12% cap set forth in Section 7.4(c) without Nexford's prior written consent. The excess surcharges associated with these cap violations total approximately $1.08 million. Mr. Okonkwo should be prepared to identify the specific months, describe how he determined that the cap had been exceeded, and confirm that Nexford never provided written consent to exceed the cap.
There is some overlap among these categories — certain months may involve both a late notice and a methodology deviation, for example. Nexford's position is that, after properly applying the contractual requirements to the invoiced surcharges across all 14 disputed months, the total amount owed beyond the $1.68 million already paid is at most an additional $0.21 million. This figure is the subject of Nexford's counterclaim.
E. Communications with Cardinal Peak
Opposing counsel will likely probe Mr. Okonkwo's direct communications with Cardinal Peak personnel, particularly:
• Direct communications between Mr. Okonkwo and Natalie Gunderson regarding surcharge disputes, including the substance and timing of those communications. Counsel should also anticipate questions about communications with Harold Briggs, Cardinal Peak's Controller, regarding invoice details and supporting documentation.
• Written dispute notices sent by Mr. Okonkwo to Cardinal Peak under Section 7.4(d), including their content, timing, and the method by which they were delivered. Under Section 7.4(d), the Buyer is required to notify the Seller within 30 calendar days of receipt of a disputed Surcharge Notice.
• Escalation efforts to senior officers under Section 7.4(d) that occurred before litigation was commenced, including whether the parties attempted the mandatory escalation procedure and, if so, with what result.
• Any informal discussions, telephone calls, or oral agreements between Mr. Okonkwo and Cardinal Peak personnel regarding surcharge methodology, cap waivers, or modifications to the MSA's surcharge provisions. This is a particularly sensitive area, as opposing counsel will likely seek to establish the existence of informal understandings that might contradict Nexford's position that the MSA's written terms governed exclusively. Mr. Okonkwo should be prepared to confirm that there were no oral agreements to modify the surcharge provisions and that the MSA's amendment clause required written modifications.
F. The Demand Letter and Pre-Litigation Communications
Opposing counsel may inquire about the events leading up to the commencement of litigation, including:
• Mr. Okonkwo's awareness of the formal demand letter sent by Blackwood Stein & Associates LLP on behalf of Cardinal Peak, dated June 10, 2022, demanding payment of $4.73 million in unpaid surcharges.
• Nexford's formal response to the demand letter, prepared by Deborah Whitfield (General Counsel) and dated July 5, 2022, which rejected Cardinal Peak's demand in its entirety. Opposing counsel may ask about Mr. Okonkwo's involvement in preparing that response, including what information or analysis he provided to Ms. Whitfield.
• Any direct communications between Mr. Okonkwo and Cardinal Peak personnel (whether at the executive level or otherwise) after the demand letter was sent. Mr. Okonkwo should be prepared to answer these questions carefully, distinguishing between ordinary business communications and any communications that may implicate privilege or settlement discussions.
G. Nexford's Counterclaim
Opposing counsel may also explore the basis for Nexford's counterclaim, filed on October 3, 2022, which seeks declaratory relief affirming that Nexford properly applied the MSA's surcharge provisions and requests the return of approximately $0.21 million in overpayments made to Cardinal Peak during the disputed period. Anticipated questions include:
• Mr. Okonkwo's understanding of why Nexford believes it has overpaid Cardinal Peak by $0.21 million.
• His understanding of the basis for Nexford's counterclaim allegation that Cardinal Peak breached the MSA by failing to comply with the Exhibit C methodology and the Section 7.4 notice requirements.
• Whether Mr. Okonkwo was involved in the decision to assert the counterclaim or provided factual input to counsel in connection with its preparation.
H. Involvement of Other Nexford Personnel
Opposing counsel will likely ask about the roles of other Nexford personnel in the surcharge review and dispute process:
• Lydia Tran (CFO). Mr. Okonkwo's coordination with Ms. Tran on the financial analysis of surcharge payments, including whether Ms. Tran reviewed or approved Mr. Okonkwo's surcharge determinations.
• Deborah Whitfield (General Counsel). Mr. Okonkwo's coordination with Ms. Whitfield on legal matters related to the surcharge disputes. This area must be handled with extreme care, as communications with Ms. Whitfield in her capacity as legal counsel are subject to the attorney-client privilege. Mr. Okonkwo should be instructed to assert privilege as appropriate, and defending counsel should be prepared to make objections on the record.
• Martin Schaeffer (CEO). Any involvement of the CEO in procurement decisions or surcharge disputes. Mr. Okonkwo should testify accurately about the extent of Mr. Schaeffer's involvement without volunteering unnecessary detail.
• Marlowe Asset Management Bluff Capital Partners (PE Sponsor). Opposing counsel may ask about the role of Nexford's private equity sponsor, Marlowe Asset Management Bluff Capital Partners, and specifically whether Diana Calloway or Conrad Yeung (representatives of the sponsor) were involved in any procurement or surcharge decisions. The anticipated answer is that Marlowe Asset Management Bluff had no direct involvement in day-to-day procurement operations, and Mr. Okonkwo should be prepared to confirm this.
I. Document Retention and Record-Keeping
Finally, opposing counsel may explore Nexford's document retention and record-keeping practices, including:
• How Nexford maintained procurement records, surcharge review logs, and payment records during the relevant period.
• Electronic record-keeping practices, including the use of email, shared network drives, and Nexford's enterprise resource planning (ERP) system.
• Compliance with the litigation hold notice issued on August 23, 2022, including whether Mr. Okonkwo received the hold notice, understood its requirements, and took steps to preserve responsive documents.
IV. KEY DOCUMENTS FOR WITNESS REVIEW
The following documents should be assembled into a preparation binder for Mr. Okonkwo's review prior to and during the preparation sessions. The binder should be organized by category as set forth below. Jeffrey Park will be responsible for assembling the binder by January 31, 2023.
A. Contract Documents
• Master Supply Agreement (MSA-NIH-CPI-2020-001) dated January 15, 2020 — the complete agreement with all exhibits and schedules.
• MSA Section 7.2 (Base Pricing and Quarterly Adjustments) — establishes the HRC price at $620 per ton and CRC price at $740 per ton, along with the mechanism for quarterly price adjustments.
• MSA Section 7.4 (Surcharge Pass-Through Provisions) — the central contractual provision at issue, with particular attention to:
(a) Section 7.4(a): the 15-business-day notice requirement for Surcharge Notices.
(b) Section 7.4(b): the requirement that Surcharge Notices be accompanied by documentation supporting the surcharge calculation.
(c) Section 7.4(c): the 12% surcharge cap provision, including the requirement that the cap may only be exceeded with the "prior written consent of Buyer."
(d) Section 7.4(d): the dispute procedure, including the 30-calendar-day notice requirement for Buyer disputes, escalation to senior officers, and mandatory mediation under Section 14.3.
• MSA Exhibit C (Surcharge Methodology) — the detailed methodology specifying the use of the Ferrous Scrap Index (Platts/SPI) and the Industrial Energy Cost Index, together with the baseline scrap cost of $340 per ton and baseline energy cost of $48 per ton.
• MSA Section 14.3 (Dispute Resolution) — mandatory mediation in Chicago, Illinois; Illinois governing law.
• MSA amendment clause — to the extent it specifies that modifications to the agreement must be in writing and signed by both parties.
B. Surcharge Invoices and Notices
• All 14 disputed Surcharge Notices issued by Cardinal Peak for the months of March 2021 through May 2022, excluding April 2021 (which was paid in full and is not in dispute).
• Supporting documentation accompanying each Surcharge Notice, including any index data, calculation worksheets, or cost backup provided by Cardinal Peak.
• Cardinal Peak's internal surcharge calculation worksheets produced in discovery, which reveal the use of the "blended cost" metric in certain months.
C. Nexford Internal Records
• Mr. Okonkwo's surcharge review logs, produced in Nexford's Responses to Cardinal Peak's First Request for Production, served January 9, 2023. These logs document Mr. Okonkwo's review of each Surcharge Notice, including receipt dates, identified deficiencies, and approval or rejection determinations.
• Internal emails between Mr. Okonkwo and Lydia Tran, Deborah Whitfield, and other procurement team members regarding surcharge review and disputes. These should be organized chronologically and flagged for any communications that may implicate the attorney-client privilege (particularly communications with Ms. Whitfield in her capacity as legal counsel).
• Payment records showing the $1.68 million in surcharge payments made by Nexford during the disputed period, broken down by month and invoice.
• Written dispute notices sent by Mr. Okonkwo to Cardinal Peak under Section 7.4(d) for each contested month, including proof of delivery or transmission.
D. Correspondence
• Emails between Mr. Okonkwo and Natalie Gunderson (and Harold Briggs, Cardinal Peak Controller) regarding surcharges and pricing during the disputed period.
• The Blackwood Stein & Associates LLP formal demand letter dated June 10, 2022, demanding payment of $4.73 million.
• Nexford's rejection letter drafted by Deborah Whitfield (General Counsel), dated July 5, 2022, rejecting the demand in its entirety.
E. Expert Materials
Dr. Anita Rosenthal of Meridian Bridge Consulting LLC has been retained (as of December 12, 2022) to prepare a damages rebuttal report. Her report is due for exchange on March 15, 2023. Critically, as of the date of Mr. Okonkwo's deposition (February 7, 2023), the expert report has not yet been prepared or exchanged. Mr. Okonkwo must not discuss the retention of any expert, the substance of any expert analysis, or any communications with expert consultants at his deposition. These matters are protected by the work product doctrine. Defending counsel should be prepared to instruct the witness not to answer any questions that implicate expert retention or analysis, and to assert the appropriate privilege on the record.
F. Gunderson Deposition Transcript
The deposition transcript of Natalie Gunderson, taken on January 18, 2023, should be included in the preparation binder. Key excerpts containing the admissions discussed below in Section VI should be tabbed and highlighted for Mr. Okonkwo's review. These admissions are central to preparing Mr. Okonkwo for anticipated lines of cross-examination and ensuring that his testimony is consistent with — and corroborated by — Ms. Gunderson's sworn testimony.
V. RECOMMENDED WITNESS PREPARATION POINTS
A. General Deposition Conduct
The following general deposition conduct guidelines should be reviewed with Mr. Okonkwo at the outset of the first preparation session:
1. Listen carefully to each question and answer only the question asked. Mr. Okonkwo should not volunteer information, offer narrative responses, or attempt to explain Nexford's position beyond what the question requires. Short, factual answers are preferable to lengthy explanations, which can open up new avenues of inquiry for opposing counsel.
2. If unsure, say "I don't recall" or "I'm not sure" rather than speculating. It is far better to acknowledge a lack of memory than to guess about dates, amounts, document contents, or the substance of conversations. If Mr. Okonkwo has a partial recollection, he should say so and describe only what he actually remembers.
3. Do not guess about dates, amounts, or document contents. If opposing counsel asks about the amount of a particular surcharge invoice or the date of a particular communication, Mr. Okonkwo should not attempt to recite figures from memory unless he is confident in the accuracy of his recollection. He should feel free to request that a document be placed in front of him before answering questions about its contents.
4. Pause before answering. Mr. Okonkwo should pause briefly before responding to each question to allow defending counsel the opportunity to make objections on the record. If defending counsel instructs the witness not to answer, Mr. Okonkwo should comply with the instruction.
5. Maintain a calm, professional demeanor. Mr. Okonkwo should not become argumentative, defensive, or confrontational with Garrett Blackwood or Megan Hsu. Opposing counsel may attempt to provoke a reaction through aggressive or repetitive questioning. Mr. Okonkwo should remain composed and respond to each question in a straightforward, professional manner.
6. Avoid characterizing legal conclusions. Mr. Okonkwo should describe facts, not legal positions. For example, rather than stating "we had a right to reject" a surcharge invoice, he should describe the factual basis for the rejection: "I reviewed the Surcharge Notice against the methodology in Exhibit C and determined there were discrepancies between the calculation methodology used by Cardinal Peak and the methodology prescribed by the contract." Characterizations such as "breach," "right," "obligation," or "liability" should be avoided.
B. Core Themes to Reinforce
Throughout the deposition, Mr. Okonkwo's testimony should consistently reinforce the following core themes, which are central to Nexford's defense:
1. Nexford's good faith compliance with the MSA. Mr. Okonkwo carefully and diligently reviewed each Surcharge Notice received from Cardinal Peak against the requirements of Section 7.4 and Exhibit C. He paid amounts that were properly documented and calculated in accordance with the contractual methodology. When he identified deficiencies — including late notices, methodology deviations, and cap exceedances — he timely notified Cardinal Peak of Nexford's disputes under Section 7.4(d), in writing and within the 30-calendar-day window prescribed by the contract. Nexford did not simply refuse to pay; it engaged in a careful, documented review process and disputed invoices through the contractual channels.
2. Cardinal Peak's non-compliance. Cardinal Peak's Surcharge Notices were frequently late — seven of the 14 disputed months involved notices delivered after the 15-business-day deadline in Section 7.4(a). In multiple months, Cardinal Peak calculated surcharges using an internal "blended cost" metric that is not referenced anywhere in Exhibit C and that deviated from the published-index methodology that the parties specifically negotiated. In four months, Cardinal Peak's invoiced surcharges exceeded the 12% cap in Section 7.4(c) without obtaining Nexford's prior written consent. These are not minor procedural irregularities; they represent fundamental departures from the contractual framework that governs Cardinal Peak's right to collect surcharges.
3. The MSA was negotiated at arm's length. Both Nexford and Cardinal Peak are sophisticated commercial entities with significant experience in the steel supply industry. The surcharge provisions of the MSA were specifically negotiated by experienced business professionals — including Mr. Okonkwo and Ms. Gunderson — to provide transparency and predictability in the pricing relationship. The decision to use published commodity indices (rather than the supplier's internal costs) as the basis for surcharge calculations was an intentional, arms-length commercial decision designed to ensure that surcharges were tethered to objective, verifiable benchmarks.
4. Nexford's dispute notices were timely and in writing. For each contested surcharge invoice, Mr. Okonkwo sent a written dispute notice to Cardinal Peak within the 30-calendar-day window required by Section 7.4(d). These notices clearly identified the basis for Nexford's dispute and preserved Nexford's contractual rights. Nexford did not sit on its rights or fail to communicate its objections.
C. Specific Factual Points to Emphasize
In addition to the core themes above, the following specific factual points should be emphasized during Mr. Okonkwo's testimony wherever the questioning provides an opportunity:
• The 15-business-day deadline in Section 7.4(a) was a condition precedent to Cardinal Peak's right to collect surcharges. Mr. Okonkwo should describe how he tracked the receipt dates of Surcharge Notices — including maintaining a log of receipt dates and calculating business days against the contractual deadline. He should be prepared to testify that for seven of the 14 disputed months, Cardinal Peak's Surcharge Notices were received after the 15-business-day deadline had passed.
• The Exhibit C methodology requires the use of published indices, not internal costs. Mr. Okonkwo should be prepared to explain that the Exhibit C methodology specifically references the Ferrous Scrap Index as reported by Platts/SPI and the Industrial Energy Cost Index as the data sources for surcharge calculations, applied against the contractual baseline costs of $340 per ton (scrap) and $48 per ton (energy). He should describe the point at which he discovered that Cardinal Peak was using an internal "blended cost" metric that was not referenced anywhere in Exhibit C, and how that discovery led him to dispute the affected invoices.
• The 12% cap under Section 7.4(c) requires "prior written consent of Buyer" to exceed. Mr. Okonkwo should confirm clearly and unequivocally that Nexford never provided such consent — not orally, not in writing, not through any course of conduct. The contractual language is unambiguous: prior written consent is required, and it was not given.
• Nexford paid $1.68 million in surcharges during the disputed period. This fact demonstrates that Nexford was not simply refusing to pay surcharges wholesale. It paid amounts for months where invoices complied — or substantially complied — with the MSA requirements. The fact that Nexford paid a significant sum undermines any suggestion that Nexford was acting in bad faith or attempting to avoid its contractual obligations.
D. Topics to Avoid or Handle Carefully
The following topics require particular caution during the deposition:
• Communications with counsel. Mr. Okonkwo must not discuss the substance of any communications with Deborah Whitfield (in her capacity as legal counsel), Priya Anand, Simone Laroche, or any other attorney representing Nexford. These communications are protected by the attorney-client privilege. If opposing counsel asks about communications with counsel, defending counsel should object and instruct the witness not to answer. Mr. Okonkwo should be comfortable asserting, "That's a communication with my attorney, and I've been instructed not to answer."
• Expert analysis and retention. Mr. Okonkwo must not discuss the retention of Dr. Anita Rosenthal or Meridian Bridge Consulting LLC, the substance of any expert analysis, or any communications with experts or consultants. These matters are protected by the work product doctrine. Mr. Okonkwo should be instructed that if he is asked about any expert or consulting engagement, he should not provide any information and should defer to defending counsel.
• Settlement negotiations. Mr. Okonkwo must not discuss any settlement negotiations, settlement offers, mediation discussions, or any communications made in the context of settlement. These are protected under applicable rules of evidence and discovery.
• Legal positions vs. factual basis. Mr. Okonkwo should be careful with questions phrased as "what is Nexford's position" regarding a particular issue. Rather than articulating legal positions, he should describe the factual basis for his actions. For example, if asked "what is Nexford's position on the late notices," he should respond by describing the facts: "I maintained a log of when we received each Surcharge Notice, and for certain months, the notices were received after the 15-business-day deadline in Section 7.4(a) of the MSA."
• Marlowe Asset Management Bluff Capital Partners. Mr. Okonkwo should not volunteer information about Marlowe Asset Management Bluff's role as Nexford's private equity sponsor, and he should be particularly careful not to discuss any involvement of the sponsor's representatives in litigation or settlement strategy. If asked about Marlowe Asset Management Bluff's involvement in procurement or surcharge decisions, Mr. Okonkwo should confirm that the sponsor was not involved in day-to-day procurement operations and leave it at that.
VI. LEVERAGING GUNDERSON DEPOSITION TESTIMONY
A. Key Admissions from the January 18, 2023 Deposition of Natalie Gunderson
The deposition of Natalie Gunderson, Cardinal Peak's Vice President of Sales & Commercial, conducted on January 18, 2023, yielded several significant admissions that are directly relevant to the preparation of Mr. Okonkwo. These admissions are documented in the Deposition Summary Memorandum dated January 25, 2023 and are summarized as follows:
1. Late Surcharge Notices. Ms. Gunderson acknowledged that Cardinal Peak delivered Surcharge Notices late — that is, after the 15-business-day deadline prescribed by Section 7.4(a) of the MSA — for at least seven of the 14 disputed months. While Ms. Gunderson attempted to minimize the significance of the late notices, she was unable to dispute the factual record establishing that the notices were untimely. This admission is critically important because it corroborates Mr. Okonkwo's receipt logs and eliminates any dispute of fact regarding the timeliness issue for those seven months.
2. Use of "Blended Cost" Metric. Ms. Gunderson acknowledged that Cardinal Peak used a "blended cost" metric for calculating surcharges in certain months, and she conceded that this metric was an internal measure developed by Cardinal Peak's pricing team rather than the published Ferrous Scrap Index and Industrial Energy Cost Index specified in Exhibit C. Her explanation was that Cardinal Peak's internal pricing team found that the published indices "did not reflect actual costs" — an explanation that, while potentially sympathetic, is legally irrelevant in light of the clear contractual requirement to use published indices.
3. No Written Consent to Exceed Cap. Ms. Gunderson could not identify any written consent from Nexford to exceed the 12% surcharge cap for any month during the disputed period. When pressed, she was unable to point to any letter, email, or other written communication from Nexford authorizing surcharges in excess of the cap.
4. Awareness of Methodology Requirements. Ms. Gunderson stated that she was aware of the Exhibit C methodology requirements at the time the MSA was negotiated and executed. This admission undercuts any potential argument by Cardinal Peak that the Exhibit C methodology was ambiguous or that Cardinal Peak was unaware of its obligations.
B. How to Use These Admissions in Okonkwo Preparation
Ms. Gunderson's admissions should be leveraged in the following ways during Mr. Okonkwo's preparation:
Blended Cost Methodology. If Blackwood or Hsu suggests during Mr. Okonkwo's deposition that he was aware of — or acquiesced to — Cardinal Peak's use of the "blended cost" methodology, Mr. Okonkwo should be prepared to confirm that he was not aware that Cardinal Peak was deviating from Exhibit C until he conducted a detailed review of the surcharge calculations in mid-2021. Upon discovering the deviation, he raised the issue with Ms. Gunderson and disputed the affected invoices. This testimony is consistent with Ms. Gunderson's own admission that Cardinal Peak used the blended cost metric, and it negates any argument that Nexford knowingly accepted a non-contractual methodology.
Timeliness Waivers. If opposing counsel questions whether Mr. Okonkwo ever informally agreed to waive the 15-business-day notice deadline — for example, by accepting late notices without objection in earlier months — Mr. Okonkwo should confirm that no such waiver was given, either orally or in writing. He should further note that the MSA required written modifications under its amendment clause, and that acceptance of a late notice for one month does not constitute a waiver of the timeliness requirement for subsequent months. This testimony is supported by Ms. Gunderson's admission that the notices for at least seven months were in fact late — she did not contend that Nexford had waived the deadline.
Consistency and Corroboration. More broadly, Mr. Okonkwo's testimony should be consistent with — and corroborated by — Ms. Gunderson's admissions regarding late notices, methodology deviation, and the absence of written consent to exceed the 12% cap. Where Mr. Okonkwo's recollection aligns with Ms. Gunderson's sworn testimony, he should testify with confidence. Where there may be differences in recollection or characterization, those differences should be anticipated and addressed during the preparation sessions so that Mr. Okonkwo is not caught off guard at the deposition.
VII. POTENTIAL PITFALLS AND DIFFICULT AREAS
The following areas represent the most significant risks for Mr. Okonkwo's deposition and require focused preparation.
A. Course of Dealing / Waiver Arguments
Cardinal Peak may argue that by paying $1.68 million in surcharges during the disputed period — including for some months where minor procedural deficiencies may have existed — Nexford implicitly waived strict compliance with the Section 7.4 requirements. This is perhaps the most dangerous line of attack, as it could potentially undermine Nexford's defenses even if the contractual language supports Nexford's position.
Preparation: Mr. Okonkwo should be prepared to explain that Nexford paid surcharges for months in which the invoices were substantially compliant with the MSA's requirements — that is, where the Surcharge Notices were timely, the calculations used the correct methodology, and the amounts were within the 12% cap. He should emphasize that partial payment of certain invoices does not constitute a waiver of Nexford's rights to dispute other invoices that contained different or more significant deficiencies. Critically, he should note that for each disputed invoice, Nexford sent a timely written dispute notice under Section 7.4(d), which expressly preserved its rights. The act of paying compliant invoices while disputing non-compliant ones is the opposite of waiver — it demonstrates that Nexford was carefully distinguishing between conforming and non-conforming surcharge claims.
Mr. Okonkwo should also be prepared to reference the MSA's no-waiver clause (if applicable) and to testify that no Nexford representative ever communicated to Cardinal Peak — orally or in writing — that Nexford was waiving its right to enforce the MSA's surcharge requirements.
B. Knowledge of Market Conditions
Blackwood Stein may attempt to establish that Mr. Okonkwo was personally aware of the dramatic rise in scrap, energy, and alloy costs during 2021–2022, and may use this knowledge to argue that surcharges at the invoiced levels were "reasonable" regardless of the methodology used to calculate them. The implicit argument is that Nexford is using technical contractual defenses to avoid paying surcharges that everyone knew were justified by market conditions.
Preparation: Mr. Okonkwo should be prepared to acknowledge, where accurate, that he was generally aware of rising commodity costs during 2021–2022. The steel market experienced significant price volatility during this period, and as a procurement executive, he would be expected to monitor market conditions. However, Mr. Okonkwo should firmly and consistently emphasize that the MSA provides a specific, negotiated methodology for calculating surcharges, and that "reasonableness" under the contract is measured by compliance with that methodology — not by reference to general market conditions. He should point out that the parties intentionally chose to tie surcharges to published indices precisely to avoid disputes about what was "reasonable" — the indices provided an objective, third-party benchmark. Cardinal Peak's unilateral decision to substitute its internal "blended cost" metric for the contractual methodology defeats the entire purpose of the published-index approach.
Mr. Okonkwo should avoid conceding that the invoiced surcharges were "reasonable" or "justified" by market conditions, as such testimony could undermine Nexford's contractual defenses.
C. Internal Communications
Blackwood may probe internal emails between Mr. Okonkwo and Lydia Tran (CFO) or Deborah Whitfield (General Counsel) that discuss the surcharge disputes. This is a sensitive area because some of these communications may be privileged (particularly those with Ms. Whitfield), while others may be non-privileged business communications (particularly those with Ms. Tran about financial matters).
Preparation: Mr. Okonkwo should be instructed as follows:
• For any communication with Deborah Whitfield in her capacity as in-house legal counsel or with Calderwood & Harkness LLP as outside counsel, Mr. Okonkwo should assert the attorney-client privilege and decline to answer. Defending counsel should be prepared to make the privilege objection on the record and instruct the witness not to answer.
• For communications with Lydia Tran about financial matters — such as the financial impact of surcharge payments, budgetary considerations, or payment authorization — these communications are generally non-privileged and Mr. Okonkwo should answer factually and narrowly. He should describe the substance of the communication without embellishment, and he should not attempt to invoke privilege for business communications that do not involve legal advice.
• If there are communications involving both Ms. Tran and Ms. Whitfield (e.g., three-way email chains), the privilege analysis may be more complex. These communications should be identified and reviewed in advance of the deposition so that defending counsel is prepared to address privilege issues in real time.
D. The April 2021 Invoice (Paid in Full)
Opposing counsel may attempt to use the April 2021 surcharge invoice — which Nexford paid in full — as a baseline to argue that Nexford accepted the methodology used in that month's invoice. If the same methodology was applied in subsequent months, the argument would go, Nexford cannot now claim that the methodology was non-compliant.
Preparation: Mr. Okonkwo should be prepared to clarify that the April 2021 invoice was reviewed and found to be compliant with the Exhibit C methodology and within the 12% surcharge cap. That is why it was paid. Subsequent invoices deviated from the methodology and/or were delivered late, which is why they were disputed. Mr. Okonkwo should be prepared to explain the specific differences between the April 2021 invoice and the subsequent disputed invoices — for example, if the April 2021 invoice used the published indices while subsequent invoices used the "blended cost" metric, that distinction should be clearly articulated.
It is important that Mr. Okonkwo not suggest that Nexford paid the April 2021 invoice without review or that it was paid as a matter of course. The payment was the result of a deliberate determination that the invoice was compliant. This fact supports Nexford's position that it was carefully evaluating each invoice on its merits.
E. The $0.21 Million Additional Obligation
Opposing counsel may attempt to get Mr. Okonkwo to concede that Nexford owes at least some additional amount to Cardinal Peak beyond the $1.68 million already paid. This would be a significant admission, even if the amount is modest, because it could be used to argue that Nexford's defenses are not a complete bar to liability.
Preparation: Mr. Okonkwo should not offer a specific dollar figure at his deposition and should not concede any additional obligation. When asked about whether Nexford owes anything beyond what has been paid, he should state that he reviewed each surcharge invoice against the MSA's requirements, identified discrepancies, and disputed the invoices through the proper contractual channels under Section 7.4(d). He should further state that the question of what net amount, if any, may be owed is a matter of detailed calculation that he is not prepared to perform off the cuff at a deposition. Dollar amounts and net calculations are properly the province of financial analysis, and Mr. Okonkwo should not be put in a position of performing arithmetic on the record.
If pressed, Mr. Okonkwo should state: "I identified deficiencies in Cardinal Peak's surcharge invoices and disputed them through the process set forth in the contract. The specific dollar amounts are reflected in the records we've produced." He should not be drawn into a discussion of the $0.21 million figure that forms the basis of the counterclaim, as this figure reflects a calculation that is best addressed through expert testimony and financial analysis rather than lay witness testimony at a deposition.
VIII. PROPOSED PREPARATION SESSION SCHEDULE
We recommend two half-day preparation sessions with Mr. Okonkwo, to be held on February 2 and February 3, 2023, as follows:
Session 1 — February 2, 2023 (Morning)