1022-00001 · Northgate Networks America Inc · Correspondence

quarterly-client-report-q1-2024.docx DOCUMENT Antitrust

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CALDERWOOD & HARKNESS LLP Attorneys at Law

1200 K Street NW, Suite 900 Washington, D.C. 20005

Telephone: (202) 555-7400 Facsimile: (202) 555-7401 www.calderwoodharkness.com

March 29, 2024

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT NOT FOR DISTRIBUTION WITHOUT PRIOR AUTHORIZATION OF OUTSIDE COUNSEL

Mr. James Whitford Group General Counsel Northgate Telecommunications PLC 14 Broadwall Lane London SE1 9PQ United Kingdom

Copies to:

Catherine Ng, U.S. Deputy General Counsel Northgate Networks America Inc. 8200 Dulles Corner Boulevard, Suite 1100 Tysons Corner, VA 22182

Diane Okoro, U.S. President Northgate Networks America Inc. 8200 Dulles Corner Boulevard, Suite 1100 Tysons Corner, VA 22182

Patrick Salazar, Chief Regulatory Officer Northgate Telecommunications PLC 14 Broadwall Lane London SE1 9PQ United Kingdom

Re: Quarterly Status Report — Q1 2024: Ridgepoint Communications Inc. v. Northgate Telecommunications PLC and Northgate Networks America Inc., Case No. 1:22-cv-01487-CMW (E.D. Va.) and FCC Docket No. WC-23-0042

Engagement Reference No.: C&H-2022-ATR-00419

From: Elaine Forsythe, Responsible Partner, Antitrust & Competition, Calderwood & Harkness LLP

Dear James:

This letter constitutes Calderwood & Harkness LLP's quarterly status report to Northgate Telecommunications PLC and Northgate Networks America Inc. (collectively, "Northgate" or the "Company") for the first quarter of 2024 (the "Reporting Period"), covering the period from January 1, 2024 through March 29, 2024. This communication is intended to be protected from disclosure by the attorney-client privilege, the work product doctrine, and any other applicable protections. We respectfully request that this letter be treated as strictly confidential and that distribution be limited to the recipients identified above and to those individuals within the Northgate organization who have a need to know in connection with the pending litigation and regulatory proceedings discussed herein.

I. Executive Summary

The overall posture of the two related proceedings remains largely unchanged from our Q4 2023 report, with one significant development: the Federal Communications Commission ("FCC") evidentiary hearing took place during this quarter, marking the most consequential event in these matters since the district court's entry of the stay order in March 2023.

District Court Litigation. The federal antitrust action, Ridgepoint Communications Inc. v. Northgate Telecommunications PLC and Northgate Networks America Inc., Case No. 1:22-cv-01487-CMW, pending before the Honorable Claudia M. Wentworth in the United States District Court for the Eastern District of Virginia, Alexandria Division, remains stayed pursuant to the Court's March 14, 2023 order invoking the primary jurisdiction doctrine. The stay defers all proceedings pending resolution of the FCC complaint docket. There has been no substantive activity in the district court case since the stay was entered, apart from the filing of periodic joint status reports as required by the stay order. Northgate's previously filed Motion to Dismiss was denied without prejudice, and all arguments remain preserved for renewal when the case reactivates.

FCC Proceeding. The FCC complaint proceeding, Docket No. WC-23-0042, captioned In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251, is the active front and the primary focus of our current efforts. The key development this quarter was the three-day evidentiary hearing held January 22–24, 2024 before Administrative Law Judge Robert Fenwick at FCC headquarters in Washington, D.C. Northgate presented three witnesses — Diane Okoro, Patrick Salazar, and Dr. Anton Berger of the Torrence Policy Group LLC — each of whom performed strongly. Ridgepoint presented three witnesses of its own, whose testimony on cross-examination revealed significant weaknesses in Ridgepoint's factual and economic positions.

Post-Hearing Briefing. Simultaneous post-hearing briefs were filed on March 15, 2024. Reply briefs are due April 12, 2024; our reply brief is in final preparation and will be filed on or before that deadline.

ALJ Decision. ALJ Fenwick has not indicated a specific timeline for the issuance of his initial decision. Based on historical FCC practice and the complexity of the record, we anticipate that the initial decision could issue as early as late Q3 2024 or as late as Q4 2024.

Overall Assessment. We continue to assess Northgate's overall position as strong on both the regulatory and antitrust fronts. The evidentiary hearing reinforced several key elements of our defense — in particular, the commercial reasonableness of the Wholesale Access Policy ("WAP"), the legitimacy of Northgate's capacity-based access limitations, and the significant methodological vulnerabilities in Ridgepoint's economic expert's market definition and damages analysis.

Legal Spend. Total combined legal spend through the end of Q1 2024 is approximately $2,824,500, encompassing Calderwood & Harkness fees, expert fees, and e-discovery vendor costs. This figure remains well within the $10 million self-insured retention under Northgate's D&O/Entity Liability policy and is consistent with the budget parameters discussed and approved by Catherine Ng at the outset of the engagement.

The remainder of this letter provides a detailed discussion of each of these topics.

II. District Court Litigation — Status Update

A. Case Posture

The district court action remains captioned Ridgepoint Communications Inc. v. Northgate Telecommunications PLC and Northgate Networks America Inc., Case No. 1:22-cv-01487-CMW, and is pending in the United States District Court for the Eastern District of Virginia, Alexandria Division. The presiding judge is the Honorable Claudia M. Wentworth, who has held this matter on her docket since the case was originally filed on September 19, 2022.

Ridgepoint's complaint asserts a single count under Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, alleging monopolization through a refusal to deal. Specifically, Ridgepoint contends that Northgate unlawfully denied Ridgepoint interconnection and colocation access at fourteen Northgate facilities located within the Philadelphia–Baltimore–Washington, D.C. corridor. The complaint characterizes these denials as exclusionary conduct designed to foreclose Ridgepoint from competing in what Ridgepoint defines as the "last-mile enterprise fiber-optic transport services market."

Ridgepoint's market definition and market power allegations rest on the preliminary opinions of its retained economic expert, Dr. Leonard Kuo, a Professor of Economics at Cavendish University, who has opined that Northgate holds approximately 68% of the relevant market as he defines it. Based on this market share figure and Dr. Kuo's demand projections, Ridgepoint claims $127 million in lost profits over a five-year projected period (2022–2027). Under Section 4 of the Clayton Act, 15 U.S.C. § 15, Ridgepoint seeks automatic trebling of this figure to $381 million, in addition to a request for permanent injunctive relief compelling Northgate to provide interconnection and colocation access at the fourteen disputed facilities.

Ridgepoint is represented by counsel of record at Hargrove, Winslow & Burke LLP, with offices in Washington, D.C. and Philadelphia. The lead partner on the matter is Victoria Hargrove, with Daniel Stoyanov serving as the primary senior associate.

B. Continued Stay

The case remains stayed pursuant to the Court's order dated March 14, 2023, which granted Northgate's Motion to Stay under the primary jurisdiction doctrine. Judge Wentworth's stay order recognized that the FCC proceeding (Docket No. WC-23-0042) raises threshold regulatory questions — including the scope of Northgate's interconnection obligations under Sections 251 and 252 of the Communications Act and the commercial reasonableness of the WAP — that fall within the FCC's primary jurisdiction and are likely to inform, if not substantially resolve, the antitrust claims asserted in the district court action.

Northgate's Motion to Dismiss, which was filed on November 14, 2022, was denied without prejudice to renewal after the stay is lifted. This procedural posture preserves the full range of Northgate's dismissal arguments for assertion at the appropriate time. Specifically, we intend to renew the following arguments upon reactivation of the case:

(a) The complaint fails to satisfy the narrow refusal-to-deal standards articulated in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), and Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004). Under Trinko, firms generally have no duty to assist competitors, and the limited exception recognized in Aspen Skiing requires evidence of a prior voluntary and profitable course of dealing that was terminated for anticompetitive purposes — a showing Ridgepoint cannot make with respect to the fourteen facilities at issue.

(b) The Wholesale Access Policy, adopted by Northgate in January 2020, reflects a legitimate unilateral business decision regarding the terms on which Northgate makes its facilities available to wholesale customers. The WAP's $5 million annual revenue threshold and capacity-based access criteria are commercially reasonable and non-discriminatory.

(c) There was no prior voluntary course of dealing at the fourteen disputed facilities. The Master Interconnection Agreement (June 15, 2015 – June 14, 2020) and the subsequent month-to-month holdover arrangement cover only three existing Northgate facilities in northern Virginia, not the fourteen facilities at issue in this litigation.

(d) Ridgepoint's relevant market definition — "last-mile enterprise fiber-optic transport services, 1 Gbps and above, in the Philadelphia–Baltimore–Washington, D.C. corridor" — is implausibly narrow and fails to account for meaningful competitive alternatives, including cable-based broadband, fixed wireless access, and wholesale ethernet services.

The stay order requires the parties to file joint status reports with the Court every ninety days. The most recent joint status report was filed on March 15, 2024, in coordination with Daniel Stoyanov at Hargrove, Winslow & Burke LLP. The joint status report advised the Court that the FCC evidentiary hearing had been held in January 2024, that post-hearing briefing was underway, and that no party anticipated the FCC proceeding would conclude before Q3 or Q4 2024. No motions or other substantive activity has occurred in the district court since the stay was entered.

C. Anticipated Timeline for Reactivation

The district court case will remain dormant until one of the following occurs: (i) ALJ Fenwick issues his initial decision in the FCC proceeding; (ii) the full Commission issues a final order; or (iii) either party moves to lift the stay. We do not anticipate that Ridgepoint will move to lift the stay while the FCC proceeding is actively pending, as Ridgepoint itself stands to benefit from a favorable FCC ruling. Similarly, Northgate has no reason to seek to lift the stay at this time, given the current strategic posture.

Upon reactivation, Northgate intends to renew the Motion to Dismiss on the grounds preserved above, supplemented as appropriate by any favorable findings from the FCC proceeding. If the Motion to Dismiss is denied, the case will proceed to discovery, and our team has prepared a draft proposed discovery plan and scheduling order that remains on file for prompt deployment when the stay is lifted. We have also maintained all necessary e-discovery infrastructure in a state of readiness, as discussed further in Section V below.

III. FCC Proceeding — Detailed Update

A. Background. The FCC proceeding was initiated by Ridgepoint's filing of a formal complaint on February 7, 2023, docketed as WC-23-0042 and captioned In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251. Ridgepoint's FCC complaint alleges that Northgate violated its interconnection obligations under Sections 251 and 252 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, by refusing to provide colocation and interconnection access at the same fourteen Mid-Atlantic facilities that are the subject of the district court action.

Northgate filed its Answer and Affirmative Defenses in approximately March 2023, denying the alleged violations and asserting several affirmative defenses. Northgate's principal defenses are: (i) that the fourteen facilities at issue are not subject to the unbundling requirements of Section 251(c)(3) because they do not constitute incumbent local exchange carrier ("ILEC") facilities within the meaning of the statute; (ii) that the WAP is commercially reasonable and has been applied on a non-discriminatory basis; and (iii) that capacity utilization at the fourteen facilities is at or above 85%, which provides a legitimate technical and operational basis for denying additional colocation requests under both the WAP and applicable FCC guidelines.

Administrative Law Judge Robert Fenwick was assigned to the matter, and a scheduling order was issued on June 12, 2023. The evidentiary hearing was originally scheduled for September 2023 but was postponed to January 2024 due to FCC staffing constraints, pursuant to a postponement order entered on August 28, 2023.

B. Evidentiary Hearing (January 22–24, 2024)

The evidentiary hearing was held over three days — January 22, 23, and 24, 2024 — at FCC headquarters in Washington, D.C. ALJ Fenwick presided over the hearing, which included live testimony and cross-examination of witnesses presented by both parties.

Northgate's Witnesses. Northgate presented the following three witnesses, each of whom was thoroughly prepared by our team in multiple preparation sessions conducted in advance of the hearing:

Diane Okoro, U.S. President, Northgate Networks America Inc. — Ms. Okoro provided testimony regarding Northgate's network operations in the United States, including the architecture and capacity of the fourteen disputed facilities. She testified in detail regarding the business rationale underlying the Wholesale Access Policy, explaining that the WAP was adopted in January 2020 following an extensive internal review of Northgate's wholesale business and was designed to optimize the allocation of limited facility capacity across Northgate's customer base. Ms. Okoro described the capacity constraints at each of the fourteen facilities, presenting facility-specific utilization data demonstrating that capacity utilization at each facility was at or above 85% at the time Ridgepoint's colocation requests were denied. She also addressed Northgate's broader wholesale strategy, including the fact that Northgate continues to provide interconnection and colocation services to numerous qualified wholesale customers under the WAP and under individually negotiated arrangements.

Patrick Salazar, Chief Regulatory Officer, Northgate Telecommunications PLC — Mr. Salazar testified regarding Northgate's regulatory compliance and its approach to interconnection obligations under Sections 251 and 252 of the Communications Act. He provided testimony on Northgate's history of providing interconnection access in the United States, including its track record of compliance with FCC interconnection rules and state public utility commission requirements across multiple jurisdictions. Mr. Salazar addressed the commercial reasonableness of the WAP's $5 million annual revenue threshold, explaining that the threshold was established through a benchmarking analysis of industry practices and is consistent with the commercially reasonable terms permitted under applicable FCC precedent. His testimony was well-organized, credible, and responsive to ALJ Fenwick's questions.

Dr. Anton Berger, Senior Advisor, Torrence Policy Group LLC — Dr. Berger testified as Northgate's regulatory expert. Dr. Berger is a former Deputy Bureau Chief of the FCC's Wireline Competition Bureau and brings substantial expertise in the regulatory framework governing interconnection, colocation, and unbundling. His testimony addressed FCC precedent regarding colocation and interconnection obligations, including the critical distinction between Section 251 unbundling duties (which apply to incumbent LECs with respect to network elements) and voluntary wholesale arrangements (which are subject to different regulatory standards). Dr. Berger opined that the WAP is consistent with FCC precedent and that capacity-based access limitations of the type employed by Northgate are a recognized and permissible basis for managing facility access. His expertise and former FCC service lent significant weight and credibility to Northgate's regulatory position.

Ridgepoint's Witnesses. Ridgepoint presented three witnesses: Gregory Trent, Ridgepoint's CEO and Founder; Samira Hashemi, Ridgepoint's Chief Operating Officer; and Dr. Leonard Kuo, Ridgepoint's economic expert from Cavendish University.

Assessment of Hearing Performance. We assess that Northgate's witnesses performed well and that the overall trajectory of the hearing was favorable to Northgate's position. Ms. Okoro was particularly effective in her articulation of the capacity constraints at the fourteen facilities and the legitimate business rationale underlying the WAP. She presented as a knowledgeable and authoritative executive whose testimony was grounded in detailed operational data. Mr. Salazar provided credible and thorough regulatory testimony that was well-received by ALJ Fenwick, who appeared to engage constructively with Mr. Salazar's discussion of the regulatory framework. Dr. Berger's testimony was authoritative and scholarly, and his former service at the FCC Wireline Competition Bureau lent significant institutional credibility to Northgate's position.

Cross-examination of Ridgepoint's witnesses by our team revealed important weaknesses in Ridgepoint's factual narrative. In particular, cross-examination of Mr. Trent and Ms. Hashemi exposed significant vulnerabilities in Ridgepoint's characterization of the prior Master Interconnection Agreement ("MIA"), which was in effect from June 15, 2015 through June 14, 2020, and the subsequent month-to-month holdover arrangement that followed the MIA's expiration. Under cross-examination, Ridgepoint's witnesses acknowledged that the MIA holdover arrangement covers only three existing Northgate facilities located in northern Virginia — not the fourteen facilities that are the subject of this dispute. This acknowledgment is significant because it substantially undermines Ridgepoint's argument that a prior course of dealing between the parties obligated Northgate to extend interconnection and colocation access to the fourteen additional facilities.

Cross-examination of Dr. Kuo challenged his testimony on market definition and damages on several methodological grounds. Dr. Kuo's narrow product market definition — limited to "last-mile enterprise fiber-optic transport services, 1 Gbps and above" — was questioned for its exclusion of cable-based broadband services, fixed wireless access services, and wholesale ethernet services, each of which constitutes a competitive alternative available to the customer segment that Ridgepoint claims to serve. His geographic market definition — the Philadelphia–Baltimore–Washington, D.C. corridor — was similarly challenged as artificially constrained. These methodological weaknesses will form the basis of our Daubert challenge when the district court case resumes, and the hearing record now provides additional evidence to support that challenge.

C. Post-Hearing Briefing

Following the close of the evidentiary hearing, ALJ Fenwick issued an order directing the parties to file simultaneous post-hearing briefs by March 15, 2024, with reply briefs due April 12, 2024.

Northgate's Post-Hearing Brief. Northgate's post-hearing brief, filed on March 15, 2024 by our team, provides a comprehensive summary of the hearing record and advances the following principal arguments:

(i) The WAP is commercially reasonable and was adopted as a legitimate business decision to manage capacity allocation at Northgate's facilities, consistent with applicable FCC precedent and industry practice.

(ii) Capacity utilization data for each of the fourteen facilities demonstrates utilization rates at or above 85%, providing a well-documented operational basis for Northgate's denial of Ridgepoint's colocation requests.

(iii) The Section 251 unbundling obligations upon which Ridgepoint relies are distinct from — and do not extend to — voluntary wholesale arrangements of the type governed by the WAP. The fourteen facilities at issue are not subject to Section 251(c)(3) unbundling requirements, and Ridgepoint's complaint improperly conflates the ILEC unbundling framework with Northgate's wholesale access obligations.

(iv) The evidentiary record demonstrates Northgate's full compliance with its obligations under the Communications Act, both with respect to the three northern Virginia facilities covered by the MIA holdover arrangement and more broadly.

Ridgepoint's Post-Hearing Brief. Based on our review of Ridgepoint's simultaneously filed post-hearing brief, Ridgepoint advances arguments that largely track the themes of its pre-hearing filings, though with certain adjustments that appear designed to address weaknesses exposed during the hearing. Ridgepoint re-characterizes the WAP as pretextual — asserting that the $5 million annual revenue threshold and the capacity-based access limitations were designed specifically to exclude Ridgepoint and similarly situated competitive carriers. Ridgepoint argues that the prior MIA and the month-to-month holdover arrangement establish a "course of dealing" that creates a continuing obligation to provide access at additional facilities beyond the three covered by the holdover. Ridgepoint relies heavily on Dr. Kuo's market analysis and damage estimates, which it characterizes as demonstrating the anticompetitive effects of Northgate's conduct.

Reply Briefs. Reply briefs are due on April 12, 2024. Our reply brief is in final preparation and will be filed on or before that deadline. The reply brief will rebut Ridgepoint's characterization of the hearing evidence, address in detail Ridgepoint's arguments regarding the WAP's alleged pretextual nature and the purported course of dealing, and highlight the acknowledged limitations of Dr. Kuo's market definition and damages methodology as exposed during cross-examination.

D. Expected Timeline for ALJ Initial Decision

ALJ Fenwick has not indicated a specific timeline for the issuance of his initial decision. Based on historical practice at the FCC, initial decisions by administrative law judges in contested complaint proceedings of this complexity typically issue within three to nine months following the completion of post-hearing briefing. Accordingly, assuming reply briefs are filed on April 12, 2024, we anticipate that the initial decision could issue as early as late Q3 2024 (July–September) or possibly in Q4 2024 (October–December).

Either party will have the right to appeal the ALJ's initial decision to the full Commission. An appeal to the full Commission could add an additional six to twelve months to the resolution timeline, depending on the complexity of the issues and the Commission's docket.

The ALJ's initial decision will be a pivotal event for both the FCC proceeding and the district court litigation. The initial decision's findings regarding Northgate's interconnection obligations under Sections 251 and 252 may be dispositive of, or substantially inform, the antitrust claims pending in the district court. A ruling in Northgate's favor on the regulatory issues would significantly strengthen the basis for renewal of Northgate's Motion to Dismiss, as it would demonstrate that Northgate had no obligation to provide the requested access and that the WAP constitutes a commercially reasonable exercise of business judgment rather than exclusionary conduct. Conversely, an adverse ruling would require careful assessment of the implications for the antitrust defense, though we note that a finding of a Section 251/252 violation would not, by itself, establish an antitrust violation under Section 2 of the Sherman Act. The legal standards governing the two proceedings are distinct.

IV. Expert and Consultant Engagement Status

A. Ellsworth Economic Consulting LLC (Dr. Priya Narasimhan)

Dr. Priya Narasimhan, Managing Director of Ellsworth Economic Consulting LLC and a former Chief Economist of the FCC's Wireline Competition Bureau, continues to serve as Northgate's economic expert for purposes of market definition analysis, competitive effects assessment, and damages rebuttal. Dr. Narasimhan's engagement encompasses both the FCC proceeding and the anticipated district court litigation.

Dr. Narasimhan has completed her preliminary rebuttal analysis, which addresses the fundamental flaws in Dr. Kuo's market definition and damages estimates. Her principal findings to date are as follows:

Market Definition and Market Share. Under a properly defined relevant market — one that includes cable-based broadband services, fixed wireless access, and wholesale ethernet services as reasonable substitutes for last-mile enterprise fiber-optic transport services — Northgate's corrected market share is estimated at approximately 31%, compared to the 68% figure asserted by Ridgepoint based on Dr. Kuo's artificially narrow market definition. A 31% market share is well below the threshold at which courts have found monopoly power in Section 2 cases, and substantially undermines Ridgepoint's claim that Northgate possesses the market power necessary to sustain a monopolization theory.

Damages Rebuttal. Dr. Narasimhan's preliminary damages analysis concludes that Ridgepoint's provable lost profits, even assuming liability, are no more than $18–$24 million on a pre-trebling basis ($54–$72 million when trebled under the Clayton Act), compared to Ridgepoint's asserted $127 million in lost profits ($381 million trebled). The principal drivers of this reduction are: (i) Dr. Kuo's flawed demand projections, which assume unrealistic market penetration rates that are inconsistent with Ridgepoint's historical performance; and (ii) Dr. Kuo's failure to account for the availability of alternative infrastructure through which Ridgepoint could have achieved interconnection, including competitive access points outside of Northgate's fourteen facilities.

Dr. Narasimhan's formal expert report will be prepared when discovery commences upon the lifting of the stay in the district court case. In the interim, her preliminary analysis has been instrumental in informing our advocacy at the FCC and in providing the litigation team with a quantified assessment of Northgate's damages exposure.

Total fees billed by Ellsworth Economic Consulting LLC through the end of Q1 2024 are $412,000.

B. Torrence Policy Group LLC (Dr. Anton Berger)

Dr. Anton Berger, Senior Advisor at the Torrence Policy Group LLC and a former Deputy Bureau Chief of the FCC's Wireline Competition Bureau, serves as Northgate's regulatory expert for the FCC proceeding and is also available for potential testimony in the district court action. As noted above, Dr. Berger testified at the January 22–24, 2024 FCC evidentiary hearing and performed effectively, providing authoritative testimony on the regulatory framework governing interconnection and colocation obligations and on the distinction between Section 251 unbundling duties and voluntary wholesale arrangements.

Dr. Berger continues to advise the Calderwood & Harkness team on FCC regulatory strategy and has been closely involved in the preparation of Northgate's post-hearing brief and the forthcoming reply brief. He also provides guidance on our interface with FCC Staff on matters of procedure and regulatory interpretation.

Total fees billed by the Torrence Policy Group LLC through the end of Q1 2024 are $187,500.

C. Plaintiff's Expert (Dr. Leonard Kuo)

Dr. Leonard Kuo, a Professor of Economics at Cavendish University, has been retained by Hargrove, Winslow & Burke LLP as Ridgepoint's economic expert. Dr. Kuo's preliminary opinions — including his narrow market definition, his 68% market share estimate, and his $127 million lost profits figure — form the foundation of Ridgepoint's damages case. As discussed in detail in Section III.B above, Dr. Kuo's testimony at the FCC evidentiary hearing revealed significant methodological vulnerabilities that were effectively exposed on cross-examination by our team.

We anticipate that Dr. Kuo's opinions will be the subject of a Daubert challenge under Federal Rule of Evidence 702 when the district court case resumes. The hearing record provides additional evidence to support such a challenge, particularly with respect to his exclusion of competitive alternatives from the relevant market definition and his reliance on unrealistic demand projections.

V. E-discovery and Document Preservation Status

The litigation hold originally implemented on September 21, 2022 — two days after the complaint was filed in the district court — remains in full force and effect. A total of twenty-three (23) custodians have been identified across Northgate Networks America Inc. and Northgate Telecommunications PLC, encompassing key personnel in the areas of network operations, wholesale sales, regulatory affairs, corporate strategy, and executive management.

Candela discovery Solutions Inc., under the direction of project manager Kenji Takahashi, has collected and processed approximately 1.2 million documents from the twenty-three custodians and relevant network and file storage systems using the Concordia Review™ platform. Of this collected universe, approximately 87,000 documents have been identified through preliminary search term application and technology-assisted review protocols as potentially responsive to the discovery requests we anticipate receiving when the stay is lifted. These documents have been staged within the Concordia Review™ platform for efficient review and production once discovery commences.

Discovery has not yet commenced due to the stay, and accordingly no documents have been produced to Ridgepoint or its counsel to date. However, we have maintained the e-discovery infrastructure in a state of readiness to ensure that Northgate is able to respond promptly and efficiently to discovery requests upon reactivation of the case.

The most recent litigation hold compliance audit was completed in August 2023. All twenty-three custodians were confirmed in compliance with their preservation obligations at that time. Any custodian departures or role changes occurring since the implementation of the litigation hold have been identified and addressed through established remediation protocols, including the preservation and collection of documents from the accounts and devices of departing custodians prior to the decommissioning of such accounts and devices.

Total fees billed by Candela discovery Solutions Inc. through the end of Q1 2024 are $294,000.

The next litigation hold compliance audit is scheduled for Q2 2024. We will coordinate with Catherine Ng and the appropriate Northgate personnel to ensure timely completion of the audit and will report the results in our next quarterly status letter.

VI. Insurance Coverage Update

Northgate tendered the Ridgepoint claims to Clarendon Mutual Insurance Ltd. (Bermuda) on October 12, 2022 under Northgate's Directors & Officers / Entity Liability Policy (the "D&O Policy"). The D&O Policy provides a primary per-occurrence limit of $50 million, subject to a $10 million self-insured retention ("SIR").

In addition to the primary layer, Northgate maintains an excess D&O tower with an aggregate of $100 million in excess coverage across three layers, structured as follows:

Clarendon Mutual issued a reservation of rights letter dated November 3, 2022, in which it acknowledged receipt of the tender and agreed to evaluate the claim, while reserving its rights with respect to the applicability of the antitrust exclusion set forth in Exclusion 4(j) of the D&O Policy. Exclusion 4(j) provides that the policy does not cover "Loss arising out of, based upon, or attributable to any actual or alleged violation of any federal or state antitrust or unfair competition statute, regulation, or law." The scope and applicability of this exclusion to the specific facts of the Ridgepoint claims remains an open question that is being monitored by coverage counsel.

Whitmore & Crane LLP (380 Madison Avenue, 22nd Floor, New York, NY 10017), which serves as Northgate's coverage counsel in this matter, continues to monitor the coverage posture and has maintained an active dialogue with the Clarendon Mutual claims team. There have been no material developments in the coverage posture during this quarter. Whitmore & Crane's assessment remains that Northgate has reasonable arguments for coverage notwithstanding Exclusion 4(j), particularly to the extent that the underlying claims are characterized as regulatory violations rather than antitrust violations per se, and to the extent that defense costs may be covered even if indemnity coverage is ultimately excluded.

Current total legal spend of $2,824,500 remains well within the $10 million SIR, and accordingly, coverage under the D&O Policy has not yet been triggered. We do not anticipate that the SIR will be exhausted during the stay period. The coverage position will be reassessed in detail if and when the district court case reactivates and Northgate's exposure materializes further through discovery and motion practice.

VII. Litigation Budget and Legal Spend Summary

A. Calderwood & Harkness LLP Fees

The following table summarizes Calderwood & Harkness LLP's fees billed to date, broken down by period:

All invoices rendered during the Reporting Period and throughout the engagement have complied with the billing guidelines agreed upon at the outset of the representation. Specifically, all invoices have been rendered at or below the blended rate cap of $925 per hour, and monthly fees have not exceeded the $275,000 monthly cap absent prior written approval from Catherine Ng. For reference, the standard billing rates for the primary timekeepers on this matter are as follows:

As reflected in the blended rate cap, the effective billing rates applied to Northgate's invoices are substantially below the standard rates for the senior timekeepers on the team, consistent with the billing arrangement negotiated at engagement.

During the dormancy period (April 2023 through present), monthly billings have been substantially below the $275,000 monthly cap, reflecting the reduced activity levels associated with a stayed case. Work during this period has been focused on the FCC proceeding (including hearing preparation, witness preparation, and post-hearing briefing), the preparation and filing of quarterly joint status reports in the district court, litigation hold compliance monitoring, and periodic client updates and strategy discussions.

B. Expert and Vendor Fees

The following table summarizes expert and vendor fees billed to date:

C. Aggregate Legal Spend

Note: Fees incurred by Whitmore & Crane LLP (insurance coverage counsel) and Vantage Strategic Communications LLC (litigation public relations) are billed separately to Northgate and are not included in the totals reflected above. Those engagements are managed under separate engagement letters and billing arrangements.

Budget Projection for Q2 2024. We anticipate modest legal spend in Q2 2024, consistent with dormancy-level activity, in the range of $30,000–$50,000 per month for Calderwood & Harkness LLP fees. This projection assumes that the FCC proceeding remains in a post-briefing posture and that the district court case remains stayed. If ALJ Fenwick issues his initial decision during Q2 2024 — which we consider unlikely but possible — it would trigger reactivation-related work, and the spend level would increase accordingly. We will consult with Catherine Ng in advance of any anticipated increase in activity or spend.

VIII. Communications and Public Relations

Vantage Strategic Communications LLC continues to serve as Northgate's litigation public relations consultant for these proceedings. The engagement is led by Allison Draper, Senior Managing Director, who maintains regular contact with our team and with Northgate's corporate communications function.

During Q1 2024, the FCC evidentiary hearing did not generate significant media attention. The proceeding has received limited coverage in telecommunications trade press, and no mainstream media outlets reported on the hearing. Accordingly, no material public disclosures were required and no proactive media outreach was undertaken during the Reporting Period.

We continue to coordinate messaging with Northgate's corporate communications team, particularly with respect to Northgate's obligations as the issuer of Nasdaq-listed American Depositary Receipts (ticker: NTP). We are mindful of Northgate's potential obligations for disclosure under applicable U.S. securities laws, including the Securities Exchange Act of 1934 and the rules and regulations of the Securities and Exchange Commission, to the extent that developments in the litigation or the FCC proceeding rise to the level of materiality requiring disclosure in periodic reports or otherwise. To date, we do not believe that any development has triggered such an obligation beyond the disclosures previously made in Northgate's public filings, but we continue to monitor this issue in coordination with Northgate's securities counsel.

IX. Strategic Outlook and Anticipated Next Steps

A. FCC Proceeding

The immediate priority is the filing of Northgate's reply brief at the FCC, which is due on April 12, 2024. The reply brief is in final preparation and will address Ridgepoint's post-hearing arguments regarding the alleged pretextual nature of the WAP, the purported course of dealing arising from the MIA and the holdover arrangement, and the methodological deficiencies in Dr. Kuo's economic analysis.

Following the filing of the reply brief, the FCC proceeding will enter a period of waiting for ALJ Fenwick's initial decision, which we estimate could issue in Q3–Q4 2024 based on historical timelines for FCC ALJ decisions in contested complaint proceedings of comparable complexity. During this waiting period, Calderwood & Harkness's FCC-related activity will be minimal, limited to monitoring the docket and responding to any orders or inquiries from ALJ Fenwick or FCC Staff.

The range of potential outcomes, and their strategic implications, is as follows:

Favorable Outcome (ALJ Rules for Northgate). An initial decision in Northgate's favor — finding that Northgate did not violate its interconnection obligations under Sections 251 and 252 and that the WAP is commercially reasonable — would provide powerful support for Northgate's antitrust defense in the district court. We would argue that the FCC's findings demonstrate that Northgate had no obligation to provide the requested interconnection and colocation access, that the WAP reflects a legitimate business judgment, and that Ridgepoint's refusal-to-deal theory fails because there was no duty to deal in the first instance. We would seek to renew the Motion to Dismiss in the district court on significantly strengthened grounds, and we would assess whether the FCC's findings may support collateral estoppel or issue preclusion arguments in the antitrust case.

Adverse Outcome (ALJ Rules for Ridgepoint). An initial decision in Ridgepoint's favor — finding that Northgate violated its Section 251/252 obligations — would present strategic challenges but would not be dispositive of the antitrust case. We would consider an appeal to the full Commission, which would extend the timeline but would also keep the stay in place in the district court pending the Commission's resolution. We would assess the impact of an adverse FCC ruling on the district court proceedings, recognizing that a finding of a regulatory violation under the Communications Act does not necessarily establish an antitrust violation under Section 2 of the Sherman Act. The legal standards and elements of proof are distinct. However, an adverse FCC ruling could complicate Northgate's position by undermining the argument that the WAP was commercially reasonable, and it would likely be cited by Ridgepoint in opposing the renewed Motion to Dismiss. We would adjust our defense strategy accordingly and would recommend a detailed strategy discussion with the client team before making any decisions regarding appeal or next steps in the district court.

Mixed Outcome. It is also possible that ALJ Fenwick could issue an initial decision with mixed findings — for example, finding that Northgate's Section 251 obligations were satisfied with respect to some or all of the fourteen facilities but that the WAP's application was unreasonable in certain respects. A mixed outcome would require nuanced analysis of the specific findings and their implications for both the regulatory appeal process and the antitrust case. We would provide a detailed assessment and recommended course of action promptly upon issuance of any such decision.

B. District Court

During the pendency of the FCC proceeding, the following actions will be taken with respect to the district court case:

• Continue filing joint status reports with the Court every ninety days, as required by the stay order, in coordination with opposing counsel at Hargrove, Winslow & Burke LLP.

• Maintain litigation hold compliance across all twenty-three identified custodians, including conducting the next scheduled compliance audit in Q2 2024.

• Preserve readiness to renew the Motion to Dismiss upon reactivation of the case, and if necessary, to proceed promptly to discovery using the draft discovery plan and scheduling order already prepared and on file.

• Monitor for any motion by Ridgepoint to lift the stay. We do not anticipate such a motion at present, given that the FCC proceeding is actively pending and Ridgepoint has shown no indication of seeking to proceed on a parallel track in the district court.

C. Damages Exposure Assessment

We continue to assess Northgate's potential damages exposure on a regular basis. The current assessment is summarized as follows:

Upper Bound. Ridgepoint's claimed damages of $381 million (trebled) represent the theoretical upper bound of Northgate's exposure in the district court case. This figure is based on Dr. Kuo's preliminary opinions, which we believe contain significant methodological flaws and which will be subject to vigorous challenge through both cross-examination and Daubert motions.

Realistic Range. Dr. Narasimhan's preliminary rebuttal analysis reduces provable lost profits to no more than $18–$24 million on a pre-trebling basis, or $54–$72 million when trebled under the Clayton Act. This range reflects a properly defined relevant market (including competitive alternatives), corrected market share estimates, realistic demand projections, and appropriate accounting for available alternative infrastructure.

Insurance Coverage. Northgate's D&O insurance tower of $150 million provides potential coverage across the realistic range of damages exposure, subject to resolution of the Exclusion 4(j) reservation of rights. Even if the antitrust exclusion is found to apply to preclude indemnity coverage, there may be separate coverage for defense costs, which would offset a substantial portion of the legal spend.

We will continue to refine the damages analysis as additional information becomes available through the FCC proceeding and eventual district court discovery, and we will report any material changes in the exposure assessment in future quarterly reports.

X. Recommended Actions for Client

Based on the current posture of both proceedings and our assessment of the strategic landscape, we recommend the following actions:

1. Approve the continued defense strategy as outlined in this report, including the current approach to the FCC proceeding and the preservation of Northgate's position in the district court.

2. Ensure ongoing litigation hold compliance across all twenty-three identified custodians. We will coordinate with Catherine Ng and the appropriate Northgate personnel to conduct the Q2 2024 compliance audit.

3. Continue to defer major expenditures — including the preparation of formal expert reports, comprehensive discovery preparation, and deposition-related work — until the stay is lifted in the district court case. This approach is consistent with prudent cost management during the dormancy period.

4. Authorize Calderwood & Harkness to file the reply brief at the FCC on April 12, 2024. The reply brief is substantially complete and will be finalized for filing upon receipt of your authorization.

5. Schedule a call or meeting to discuss strategic implications once ALJ Fenwick's initial decision is issued. Given the significance of the initial decision to both the FCC proceeding and the district court case, we recommend that the full client team — including yourself, Catherine Ng, Diane Okoro, and Patrick Salazar — participate in a strategy discussion promptly following the issuance of the decision.

6. Consider whether a board-level briefing is warranted in advance of the anticipated initial decision. Depending on the timing and the board's schedule, it may be advisable for the legal team to provide a pre-decision briefing to the board or to the relevant committee of the board to ensure that the directors are apprised of the potential outcomes and their strategic implications. We are happy to prepare a board presentation or summary memorandum at your direction.

XI. Closing

We are available at your convenience to discuss any aspect of this report or to address any questions you may have regarding the current posture, strategy, or budget for these proceedings. We are prepared to arrange a call or meeting with the full Calderwood & Harkness team — including myself, Marcus Bellamy, Jennifer Liu, and David Reyes — as well as our experts, Dr. Priya Narasimhan and Dr. Anton Berger, at a time that is convenient for the client team.

A copy of this letter will be maintained in the Calderwood & Harkness privileged matter file under Engagement Reference No. C&H-2022-ATR-00419. This letter, and all communications related to the matters discussed herein, are subject to the attorney-client privilege and the work product doctrine, and should be treated as strictly confidential.

We appreciate Northgate's continued confidence in Calderwood & Harkness, and we look forward to continuing to work closely with you and your team as these matters progress.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Elaine Forsythe Partner, Antitrust & Competition

1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7400 Direct: (202) 555-7438

Email: eforsythe@calderwoodharkness.com

Enclosures: None enclosed with this letter. Referenced documents — including Northgate's post-hearing brief filed March 15, 2024, prior quarterly status reports, and other case filings — are available upon request from the Calderwood & Harkness matter file.

Next Report: The next quarterly status report is anticipated in late June or early July 2024, covering Q2 2024.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT This document and the information contained herein are protected by the attorney-client privilege and the work product doctrine. Unauthorized disclosure, copying, or distribution of this document or its contents is strictly prohibited.

Layer	Carrier	Limit
Primary	Clarendon Mutual Insurance Ltd. (Bermuda)	$50,000,000
First Excess	Avalon Specialty Underwriters Inc.	$30,000,000
Second Excess	Pinnacle Re Ltd.	$20,000,000
Total Tower	$150,000,000
Period	Description	Fees Billed
Pre-Stay (Sept. 2022 – Mar. 2023)	Complaint response, Motion to Dismiss, Motion to Stay, FCC Answer, discovery preparation	$1,247,600
During Dormancy (Apr. 2023 – present)	Primarily FCC-related work, joint status reports, hearing preparation, post-hearing briefing, litigation hold compliance, periodic client updates	$683,400
Total C&H Fees to Date	$1,931,000
Timekeeper	Role	Standard Rate
Elaine Forsythe	Responsible Partner	$1,650/hour
Marcus Bellamy	Partner	$1,575/hour
Jennifer Liu	Senior Associate	$985/hour
David Reyes	Associate	$795/hour
Vendor / Expert	Description	Fees to Date
Ellsworth Economic Consulting LLC (Dr. Priya Narasimhan)	Economic expert — market definition, competitive effects, damages rebuttal	$412,000
Torrence Policy Group LLC (Dr. Anton Berger)	Regulatory expert — FCC proceeding, hearing testimony	$187,500
Candela discovery Solutions Inc. (Kenji Takahashi)	E-discovery — document collection, processing, hosting, review platform	$294,000
Total Expert / Vendor Fees	$893,500
Category	Amount
Calderwood & Harkness LLP	$1,931,000
Expert and Vendor Fees	$893,500
Total Legal Spend to Date	$2,824,500

CALDERWOOD & HARKNESS LLP Attorneys at Law
1200 K Street NW, Suite 900 Washington, D.C. 20005
Telephone: (202) 555-7400 Facsimile: (202) 555-7401 www.calderwoodharkness.com
March 29, 2024
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT NOT FOR DISTRIBUTION WITHOUT PRIOR AUTHORIZATION OF OUTSIDE COUNSEL
Mr. James Whitford Group General Counsel Northgate Telecommunications PLC 14 Broadwall Lane London SE1 9PQ United Kingdom
Copies to:
Catherine Ng, U.S. Deputy General Counsel Northgate Networks America Inc. 8200 Dulles Corner Boulevard, Suite 1100 Tysons Corner, VA 22182
Diane Okoro, U.S. President Northgate Networks America Inc. 8200 Dulles Corner Boulevard, Suite 1100 Tysons Corner, VA 22182
Patrick Salazar, Chief Regulatory Officer Northgate Telecommunications PLC 14 Broadwall Lane London SE1 9PQ United Kingdom
Re: Quarterly Status Report — Q1 2024: Ridgepoint Communications Inc. v. Northgate Telecommunications PLC and Northgate Networks America Inc., Case No. 1:22-cv-01487-CMW (E.D. Va.) and FCC Docket No. WC-23-0042
Engagement Reference No.: C&H-2022-ATR-00419
From: Elaine Forsythe, Responsible Partner, Antitrust & Competition, Calderwood & Harkness LLP
Dear James:
This letter constitutes Calderwood & Harkness LLP's quarterly status report to Northgate Telecommunications PLC and Northgate Networks America Inc. (collectively, "Northgate" or the "Company") for the first quarter of 2024 (the "Reporting Period"), covering the period from January 1, 2024 through March 29, 2024. This communication is intended to be protected from disclosure by the attorney-client privilege, the work product doctrine, and any other applicable protections. We respectfully request that this letter be treated as strictly confidential and that distribution be limited to the recipients identified above and to those individuals within the Northgate organization who have a need to know in connection with the pending litigation and regulatory proceedings discussed herein.
I. Executive Summary
The overall posture of the two related proceedings remains largely unchanged from our Q4 2023 report, with one significant development: the Federal Communications Commission ("FCC") evidentiary hearing took place during this quarter, marking the most consequential event in these matters since the district court's entry of the stay order in March 2023.
District Court Litigation. The federal antitrust action, Ridgepoint Communications Inc. v. Northgate Telecommunications PLC and Northgate Networks America Inc., Case No. 1:22-cv-01487-CMW, pending before the Honorable Claudia M. Wentworth in the United States District Court for the Eastern District of Virginia, Alexandria Division, remains stayed pursuant to the Court's March 14, 2023 order invoking the primary jurisdiction doctrine. The stay defers all proceedings pending resolution of the FCC complaint docket. There has been no substantive activity in the district court case since the stay was entered, apart from the filing of periodic joint status reports as required by the stay order. Northgate's previously filed Motion to Dismiss was denied without prejudice, and all arguments remain preserved for renewal when the case reactivates.
FCC Proceeding. The FCC complaint proceeding, Docket No. WC-23-0042, captioned In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251, is the active front and the primary focus of our current efforts. The key development this quarter was the three-day evidentiary hearing held January 22–24, 2024 before Administrative Law Judge Robert Fenwick at FCC headquarters in Washington, D.C. Northgate presented three witnesses — Diane Okoro, Patrick Salazar, and Dr. Anton Berger of the Torrence Policy Group LLC — each of whom performed strongly. Ridgepoint presented three witnesses of its own, whose testimony on cross-examination revealed significant weaknesses in Ridgepoint's factual and economic positions.
Post-Hearing Briefing. Simultaneous post-hearing briefs were filed on March 15, 2024. Reply briefs are due April 12, 2024; our reply brief is in final preparation and will be filed on or before that deadline.
ALJ Decision. ALJ Fenwick has not indicated a specific timeline for the issuance of his initial decision. Based on historical FCC practice and the complexity of the record, we anticipate that the initial decision could issue as early as late Q3 2024 or as late as Q4 2024.
Overall Assessment. We continue to assess Northgate's overall position as strong on both the regulatory and antitrust fronts. The evidentiary hearing reinforced several key elements of our defense — in particular, the commercial reasonableness of the Wholesale Access Policy ("WAP"), the legitimacy of Northgate's capacity-based access limitations, and the significant methodological vulnerabilities in Ridgepoint's economic expert's market definition and damages analysis.
Legal Spend. Total combined legal spend through the end of Q1 2024 is approximately $2,824,500, encompassing Calderwood & Harkness fees, expert fees, and e-discovery vendor costs. This figure remains well within the $10 million self-insured retention under Northgate's D&O/Entity Liability policy and is consistent with the budget parameters discussed and approved by Catherine Ng at the outset of the engagement.
The remainder of this letter provides a detailed discussion of each of these topics.
II. District Court Litigation — Status Update
A. Case Posture
The district court action remains captioned Ridgepoint Communications Inc. v. Northgate Telecommunications PLC and Northgate Networks America Inc., Case No. 1:22-cv-01487-CMW, and is pending in the United States District Court for the Eastern District of Virginia, Alexandria Division. The presiding judge is the Honorable Claudia M. Wentworth, who has held this matter on her docket since the case was originally filed on September 19, 2022.
Ridgepoint's complaint asserts a single count under Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, alleging monopolization through a refusal to deal. Specifically, Ridgepoint contends that Northgate unlawfully denied Ridgepoint interconnection and colocation access at fourteen Northgate facilities located within the Philadelphia–Baltimore–Washington, D.C. corridor. The complaint characterizes these denials as exclusionary conduct designed to foreclose Ridgepoint from competing in what Ridgepoint defines as the "last-mile enterprise fiber-optic transport services market."
Ridgepoint's market definition and market power allegations rest on the preliminary opinions of its retained economic expert, Dr. Leonard Kuo, a Professor of Economics at Cavendish University, who has opined that Northgate holds approximately 68% of the relevant market as he defines it. Based on this market share figure and Dr. Kuo's demand projections, Ridgepoint claims $127 million in lost profits over a five-year projected period (2022–2027). Under Section 4 of the Clayton Act, 15 U.S.C. § 15, Ridgepoint seeks automatic trebling of this figure to $381 million, in addition to a request for permanent injunctive relief compelling Northgate to provide interconnection and colocation access at the fourteen disputed facilities.
Ridgepoint is represented by counsel of record at Hargrove, Winslow & Burke LLP, with offices in Washington, D.C. and Philadelphia. The lead partner on the matter is Victoria Hargrove, with Daniel Stoyanov serving as the primary senior associate.
B. Continued Stay
The case remains stayed pursuant to the Court's order dated March 14, 2023, which granted Northgate's Motion to Stay under the primary jurisdiction doctrine. Judge Wentworth's stay order recognized that the FCC proceeding (Docket No. WC-23-0042) raises threshold regulatory questions — including the scope of Northgate's interconnection obligations under Sections 251 and 252 of the Communications Act and the commercial reasonableness of the WAP — that fall within the FCC's primary jurisdiction and are likely to inform, if not substantially resolve, the antitrust claims asserted in the district court action.
Northgate's Motion to Dismiss, which was filed on November 14, 2022, was denied without prejudice to renewal after the stay is lifted. This procedural posture preserves the full range of Northgate's dismissal arguments for assertion at the appropriate time. Specifically, we intend to renew the following arguments upon reactivation of the case:
(a) The complaint fails to satisfy the narrow refusal-to-deal standards articulated in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), and Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004). Under Trinko, firms generally have no duty to assist competitors, and the limited exception recognized in Aspen Skiing requires evidence of a prior voluntary and profitable course of dealing that was terminated for anticompetitive purposes — a showing Ridgepoint cannot make with respect to the fourteen facilities at issue.
(b) The Wholesale Access Policy, adopted by Northgate in January 2020, reflects a legitimate unilateral business decision regarding the terms on which Northgate makes its facilities available to wholesale customers. The WAP's $5 million annual revenue threshold and capacity-based access criteria are commercially reasonable and non-discriminatory.
(c) There was no prior voluntary course of dealing at the fourteen disputed facilities. The Master Interconnection Agreement (June 15, 2015 – June 14, 2020) and the subsequent month-to-month holdover arrangement cover only three existing Northgate facilities in northern Virginia, not the fourteen facilities at issue in this litigation.
(d) Ridgepoint's relevant market definition — "last-mile enterprise fiber-optic transport services, 1 Gbps and above, in the Philadelphia–Baltimore–Washington, D.C. corridor" — is implausibly narrow and fails to account for meaningful competitive alternatives, including cable-based broadband, fixed wireless access, and wholesale ethernet services.
The stay order requires the parties to file joint status reports with the Court every ninety days. The most recent joint status report was filed on March 15, 2024, in coordination with Daniel Stoyanov at Hargrove, Winslow & Burke LLP. The joint status report advised the Court that the FCC evidentiary hearing had been held in January 2024, that post-hearing briefing was underway, and that no party anticipated the FCC proceeding would conclude before Q3 or Q4 2024. No motions or other substantive activity has occurred in the district court since the stay was entered.
C. Anticipated Timeline for Reactivation
The district court case will remain dormant until one of the following occurs: (i) ALJ Fenwick issues his initial decision in the FCC proceeding; (ii) the full Commission issues a final order; or (iii) either party moves to lift the stay. We do not anticipate that Ridgepoint will move to lift the stay while the FCC proceeding is actively pending, as Ridgepoint itself stands to benefit from a favorable FCC ruling. Similarly, Northgate has no reason to seek to lift the stay at this time, given the current strategic posture.
Upon reactivation, Northgate intends to renew the Motion to Dismiss on the grounds preserved above, supplemented as appropriate by any favorable findings from the FCC proceeding. If the Motion to Dismiss is denied, the case will proceed to discovery, and our team has prepared a draft proposed discovery plan and scheduling order that remains on file for prompt deployment when the stay is lifted. We have also maintained all necessary e-discovery infrastructure in a state of readiness, as discussed further in Section V below.
III. FCC Proceeding — Detailed Update
A. Background.  The FCC proceeding was initiated by Ridgepoint's filing of a formal complaint on February 7, 2023, docketed as WC-23-0042 and captioned In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251. Ridgepoint's FCC complaint alleges that Northgate violated its interconnection obligations under Sections 251 and 252 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, by refusing to provide colocation and interconnection access at the same fourteen Mid-Atlantic facilities that are the subject of the district court action.
Northgate filed its Answer and Affirmative Defenses in approximately March 2023, denying the alleged violations and asserting several affirmative defenses. Northgate's principal defenses are: (i) that the fourteen facilities at issue are not subject to the unbundling requirements of Section 251(c)(3) because they do not constitute incumbent local exchange carrier ("ILEC") facilities within the meaning of the statute; (ii) that the WAP is commercially reasonable and has been applied on a non-discriminatory basis; and (iii) that capacity utilization at the fourteen facilities is at or above 85%, which provides a legitimate technical and operational basis for denying additional colocation requests under both the WAP and applicable FCC guidelines.
Administrative Law Judge Robert Fenwick was assigned to the matter, and a scheduling order was issued on June 12, 2023. The evidentiary hearing was originally scheduled for September 2023 but was postponed to January 2024 due to FCC staffing constraints, pursuant to a postponement order entered on August 28, 2023.
B. Evidentiary Hearing (January 22–24, 2024)
The evidentiary hearing was held over three days — January 22, 23, and 24, 2024 — at FCC headquarters in Washington, D.C. ALJ Fenwick presided over the hearing, which included live testimony and cross-examination of witnesses presented by both parties.
Northgate's Witnesses. Northgate presented the following three witnesses, each of whom was thoroughly prepared by our team in multiple preparation sessions conducted in advance of the hearing:
Diane Okoro, U.S. President, Northgate Networks America Inc. — Ms. Okoro provided testimony regarding Northgate's network operations in the United States, including the architecture and capacity of the fourteen disputed facilities. She testified in detail regarding the business rationale underlying the Wholesale Access Policy, explaining that the WAP was adopted in January 2020 following an extensive internal review of Northgate's wholesale business and was designed to optimize the allocation of limited facility capacity across Northgate's customer base. Ms. Okoro described the capacity constraints at each of the fourteen facilities, presenting facility-specific utilization data demonstrating that capacity utilization at each facility was at or above 85% at the time Ridgepoint's colocation requests were denied. She also addressed Northgate's broader wholesale strategy, including the fact that Northgate continues to provide interconnection and colocation services to numerous qualified wholesale customers under the WAP and under individually negotiated arrangements.
Patrick Salazar, Chief Regulatory Officer, Northgate Telecommunications PLC — Mr. Salazar testified regarding Northgate's regulatory compliance and its approach to interconnection obligations under Sections 251 and 252 of the Communications Act. He provided testimony on Northgate's history of providing interconnection access in the United States, including its track record of compliance with FCC interconnection rules and state public utility commission requirements across multiple jurisdictions. Mr. Salazar addressed the commercial reasonableness of the WAP's $5 million annual revenue threshold, explaining that the threshold was established through a benchmarking analysis of industry practices and is consistent with the commercially reasonable terms permitted under applicable FCC precedent. His testimony was well-organized, credible, and responsive to ALJ Fenwick's questions.
Dr. Anton Berger, Senior Advisor, Torrence Policy Group LLC — Dr. Berger testified as Northgate's regulatory expert. Dr. Berger is a former Deputy Bureau Chief of the FCC's Wireline Competition Bureau and brings substantial expertise in the regulatory framework governing interconnection, colocation, and unbundling. His testimony addressed FCC precedent regarding colocation and interconnection obligations, including the critical distinction between Section 251 unbundling duties (which apply to incumbent LECs with respect to network elements) and voluntary wholesale arrangements (which are subject to different regulatory standards). Dr. Berger opined that the WAP is consistent with FCC precedent and that capacity-based access limitations of the type employed by Northgate are a recognized and permissible basis for managing facility access. His expertise and former FCC service lent significant weight and credibility to Northgate's regulatory position.
Ridgepoint's Witnesses. Ridgepoint presented three witnesses: Gregory Trent, Ridgepoint's CEO and Founder; Samira Hashemi, Ridgepoint's Chief Operating Officer; and Dr. Leonard Kuo, Ridgepoint's economic expert from Cavendish University.
Assessment of Hearing Performance. We assess that Northgate's witnesses performed well and that the overall trajectory of the hearing was favorable to Northgate's position. Ms. Okoro was particularly effective in her articulation of the capacity constraints at the fourteen facilities and the legitimate business rationale underlying the WAP. She presented as a knowledgeable and authoritative executive whose testimony was grounded in detailed operational data. Mr. Salazar provided credible and thorough regulatory testimony that was well-received by ALJ Fenwick, who appeared to engage constructively with Mr. Salazar's discussion of the regulatory framework. Dr. Berger's testimony was authoritative and scholarly, and his former service at the FCC Wireline Competition Bureau lent significant institutional credibility to Northgate's position.
Cross-examination of Ridgepoint's witnesses by our team revealed important weaknesses in Ridgepoint's factual narrative. In particular, cross-examination of Mr. Trent and Ms. Hashemi exposed significant vulnerabilities in Ridgepoint's characterization of the prior Master Interconnection Agreement ("MIA"), which was in effect from June 15, 2015 through June 14, 2020, and the subsequent month-to-month holdover arrangement that followed the MIA's expiration. Under cross-examination, Ridgepoint's witnesses acknowledged that the MIA holdover arrangement covers only three existing Northgate facilities located in northern Virginia — not the fourteen facilities that are the subject of this dispute. This acknowledgment is significant because it substantially undermines Ridgepoint's argument that a prior course of dealing between the parties obligated Northgate to extend interconnection and colocation access to the fourteen additional facilities.
Cross-examination of Dr. Kuo challenged his testimony on market definition and damages on several methodological grounds. Dr. Kuo's narrow product market definition — limited to "last-mile enterprise fiber-optic transport services, 1 Gbps and above" — was questioned for its exclusion of cable-based broadband services, fixed wireless access services, and wholesale ethernet services, each of which constitutes a competitive alternative available to the customer segment that Ridgepoint claims to serve. His geographic market definition — the Philadelphia–Baltimore–Washington, D.C. corridor — was similarly challenged as artificially constrained. These methodological weaknesses will form the basis of our Daubert challenge when the district court case resumes, and the hearing record now provides additional evidence to support that challenge.
C. Post-Hearing Briefing
Following the close of the evidentiary hearing, ALJ Fenwick issued an order directing the parties to file simultaneous post-hearing briefs by March 15, 2024, with reply briefs due April 12, 2024.
Northgate's Post-Hearing Brief. Northgate's post-hearing brief, filed on March 15, 2024 by our team, provides a comprehensive summary of the hearing record and advances the following principal arguments:
(i) The WAP is commercially reasonable and was adopted as a legitimate business decision to manage capacity allocation at Northgate's facilities, consistent with applicable FCC precedent and industry practice.
(ii) Capacity utilization data for each of the fourteen facilities demonstrates utilization rates at or above 85%, providing a well-documented operational basis for Northgate's denial of Ridgepoint's colocation requests.
(iii) The Section 251 unbundling obligations upon which Ridgepoint relies are distinct from — and do not extend to — voluntary wholesale arrangements of the type governed by the WAP. The fourteen facilities at issue are not subject to Section 251(c)(3) unbundling requirements, and Ridgepoint's complaint improperly conflates the ILEC unbundling framework with Northgate's wholesale access obligations.
(iv) The evidentiary record demonstrates Northgate's full compliance with its obligations under the Communications Act, both with respect to the three northern Virginia facilities covered by the MIA holdover arrangement and more broadly.
Ridgepoint's Post-Hearing Brief. Based on our review of Ridgepoint's simultaneously filed post-hearing brief, Ridgepoint advances arguments that largely track the themes of its pre-hearing filings, though with certain adjustments that appear designed to address weaknesses exposed during the hearing. Ridgepoint re-characterizes the WAP as pretextual — asserting that the $5 million annual revenue threshold and the capacity-based access limitations were designed specifically to exclude Ridgepoint and similarly situated competitive carriers. Ridgepoint argues that the prior MIA and the month-to-month holdover arrangement establish a "course of dealing" that creates a continuing obligation to provide access at additional facilities beyond the three covered by the holdover. Ridgepoint relies heavily on Dr. Kuo's market analysis and damage estimates, which it characterizes as demonstrating the anticompetitive effects of Northgate's conduct.
Reply Briefs. Reply briefs are due on April 12, 2024. Our reply brief is in final preparation and will be filed on or before that deadline. The reply brief will rebut Ridgepoint's characterization of the hearing evidence, address in detail Ridgepoint's arguments regarding the WAP's alleged pretextual nature and the purported course of dealing, and highlight the acknowledged limitations of Dr. Kuo's market definition and damages methodology as exposed during cross-examination.
D. Expected Timeline for ALJ Initial Decision
ALJ Fenwick has not indicated a specific timeline for the issuance of his initial decision. Based on historical practice at the FCC, initial decisions by administrative law judges in contested complaint proceedings of this complexity typically issue within three to nine months following the completion of post-hearing briefing. Accordingly, assuming reply briefs are filed on April 12, 2024, we anticipate that the initial decision could issue as early as late Q3 2024 (July–September) or possibly in Q4 2024 (October–December).
Either party will have the right to appeal the ALJ's initial decision to the full Commission. An appeal to the full Commission could add an additional six to twelve months to the resolution timeline, depending on the complexity of the issues and the Commission's docket.
The ALJ's initial decision will be a pivotal event for both the FCC proceeding and the district court litigation. The initial decision's findings regarding Northgate's interconnection obligations under Sections 251 and 252 may be dispositive of, or substantially inform, the antitrust claims pending in the district court. A ruling in Northgate's favor on the regulatory issues would significantly strengthen the basis for renewal of Northgate's Motion to Dismiss, as it would demonstrate that Northgate had no obligation to provide the requested access and that the WAP constitutes a commercially reasonable exercise of business judgment rather than exclusionary conduct. Conversely, an adverse ruling would require careful assessment of the implications for the antitrust defense, though we note that a finding of a Section 251/252 violation would not, by itself, establish an antitrust violation under Section 2 of the Sherman Act. The legal standards governing the two proceedings are distinct.
IV. Expert and Consultant Engagement Status
A. Ellsworth Economic Consulting LLC (Dr. Priya Narasimhan)
Dr. Priya Narasimhan, Managing Director of Ellsworth Economic Consulting LLC and a former Chief Economist of the FCC's Wireline Competition Bureau, continues to serve as Northgate's economic expert for purposes of market definition analysis, competitive effects assessment, and damages rebuttal. Dr. Narasimhan's engagement encompasses both the FCC proceeding and the anticipated district court litigation.
Dr. Narasimhan has completed her preliminary rebuttal analysis, which addresses the fundamental flaws in Dr. Kuo's market definition and damages estimates. Her principal findings to date are as follows:
Market Definition and Market Share. Under a properly defined relevant market — one that includes cable-based broadband services, fixed wireless access, and wholesale ethernet services as reasonable substitutes for last-mile enterprise fiber-optic transport services — Northgate's corrected market share is estimated at approximately 31%, compared to the 68% figure asserted by Ridgepoint based on Dr. Kuo's artificially narrow market definition. A 31% market share is well below the threshold at which courts have found monopoly power in Section 2 cases, and substantially undermines Ridgepoint's claim that Northgate possesses the market power necessary to sustain a monopolization theory.
Damages Rebuttal. Dr. Narasimhan's preliminary damages analysis concludes that Ridgepoint's provable lost profits, even assuming liability, are no more than $18–$24 million on a pre-trebling basis ($54–$72 million when trebled under the Clayton Act), compared to Ridgepoint's asserted $127 million in lost profits ($381 million trebled). The principal drivers of this reduction are: (i) Dr. Kuo's flawed demand projections, which assume unrealistic market penetration rates that are inconsistent with Ridgepoint's historical performance; and (ii) Dr. Kuo's failure to account for the availability of alternative infrastructure through which Ridgepoint could have achieved interconnection, including competitive access points outside of Northgate's fourteen facilities.
Dr. Narasimhan's formal expert report will be prepared when discovery commences upon the lifting of the stay in the district court case. In the interim, her preliminary analysis has been instrumental in informing our advocacy at the FCC and in providing the litigation team with a quantified assessment of Northgate's damages exposure.
Total fees billed by Ellsworth Economic Consulting LLC through the end of Q1 2024 are $412,000.
B. Torrence Policy Group LLC (Dr. Anton Berger)
Dr. Anton Berger, Senior Advisor at the Torrence Policy Group LLC and a former Deputy Bureau Chief of the FCC's Wireline Competition Bureau, serves as Northgate's regulatory expert for the FCC proceeding and is also available for potential testimony in the district court action. As noted above, Dr. Berger testified at the January 22–24, 2024 FCC evidentiary hearing and performed effectively, providing authoritative testimony on the regulatory framework governing interconnection and colocation obligations and on the distinction between Section 251 unbundling duties and voluntary wholesale arrangements.
Dr. Berger continues to advise the Calderwood & Harkness team on FCC regulatory strategy and has been closely involved in the preparation of Northgate's post-hearing brief and the forthcoming reply brief. He also provides guidance on our interface with FCC Staff on matters of procedure and regulatory interpretation.
Total fees billed by the Torrence Policy Group LLC through the end of Q1 2024 are $187,500.
C. Plaintiff's Expert (Dr. Leonard Kuo)
Dr. Leonard Kuo, a Professor of Economics at Cavendish University, has been retained by Hargrove, Winslow & Burke LLP as Ridgepoint's economic expert. Dr. Kuo's preliminary opinions — including his narrow market definition, his 68% market share estimate, and his $127 million lost profits figure — form the foundation of Ridgepoint's damages case. As discussed in detail in Section III.B above, Dr. Kuo's testimony at the FCC evidentiary hearing revealed significant methodological vulnerabilities that were effectively exposed on cross-examination by our team.
We anticipate that Dr. Kuo's opinions will be the subject of a Daubert challenge under Federal Rule of Evidence 702 when the district court case resumes. The hearing record provides additional evidence to support such a challenge, particularly with respect to his exclusion of competitive alternatives from the relevant market definition and his reliance on unrealistic demand projections.
V. E-discovery and Document Preservation Status
The litigation hold originally implemented on September 21, 2022 — two days after the complaint was filed in the district court — remains in full force and effect. A total of twenty-three (23) custodians have been identified across Northgate Networks America Inc. and Northgate Telecommunications PLC, encompassing key personnel in the areas of network operations, wholesale sales, regulatory affairs, corporate strategy, and executive management.
Candela discovery Solutions Inc., under the direction of project manager Kenji Takahashi, has collected and processed approximately 1.2 million documents from the twenty-three custodians and relevant network and file storage systems using the Concordia Review™ platform. Of this collected universe, approximately 87,000 documents have been identified through preliminary search term application and technology-assisted review protocols as potentially responsive to the discovery requests we anticipate receiving when the stay is lifted. These documents have been staged within the Concordia Review™ platform for efficient review and production once discovery commences.
Discovery has not yet commenced due to the stay, and accordingly no documents have been produced to Ridgepoint or its counsel to date. However, we have maintained the e-discovery infrastructure in a state of readiness to ensure that Northgate is able to respond promptly and efficiently to discovery requests upon reactivation of the case.
The most recent litigation hold compliance audit was completed in August 2023. All twenty-three custodians were confirmed in compliance with their preservation obligations at that time. Any custodian departures or role changes occurring since the implementation of the litigation hold have been identified and addressed through established remediation protocols, including the preservation and collection of documents from the accounts and devices of departing custodians prior to the decommissioning of such accounts and devices.
Total fees billed by Candela discovery Solutions Inc. through the end of Q1 2024 are $294,000.
The next litigation hold compliance audit is scheduled for Q2 2024. We will coordinate with Catherine Ng and the appropriate Northgate personnel to ensure timely completion of the audit and will report the results in our next quarterly status letter.
VI. Insurance Coverage Update
Northgate tendered the Ridgepoint claims to Clarendon Mutual Insurance Ltd. (Bermuda) on October 12, 2022 under Northgate's Directors & Officers / Entity Liability Policy (the "D&O Policy"). The D&O Policy provides a primary per-occurrence limit of $50 million, subject to a $10 million self-insured retention ("SIR").
In addition to the primary layer, Northgate maintains an excess D&O tower with an aggregate of $100 million in excess coverage across three layers, structured as follows:
Clarendon Mutual issued a reservation of rights letter dated November 3, 2022, in which it acknowledged receipt of the tender and agreed to evaluate the claim, while reserving its rights with respect to the applicability of the antitrust exclusion set forth in Exclusion 4(j) of the D&O Policy. Exclusion 4(j) provides that the policy does not cover "Loss arising out of, based upon, or attributable to any actual or alleged violation of any federal or state antitrust or unfair competition statute, regulation, or law." The scope and applicability of this exclusion to the specific facts of the Ridgepoint claims remains an open question that is being monitored by coverage counsel.
Whitmore & Crane LLP (380 Madison Avenue, 22nd Floor, New York, NY 10017), which serves as Northgate's coverage counsel in this matter, continues to monitor the coverage posture and has maintained an active dialogue with the Clarendon Mutual claims team. There have been no material developments in the coverage posture during this quarter. Whitmore & Crane's assessment remains that Northgate has reasonable arguments for coverage notwithstanding Exclusion 4(j), particularly to the extent that the underlying claims are characterized as regulatory violations rather than antitrust violations per se, and to the extent that defense costs may be covered even if indemnity coverage is ultimately excluded.
Current total legal spend of $2,824,500 remains well within the $10 million SIR, and accordingly, coverage under the D&O Policy has not yet been triggered. We do not anticipate that the SIR will be exhausted during the stay period. The coverage position will be reassessed in detail if and when the district court case reactivates and Northgate's exposure materializes further through discovery and motion practice.
VII. Litigation Budget and Legal Spend Summary
A. Calderwood & Harkness LLP Fees
The following table summarizes Calderwood & Harkness LLP's fees billed to date, broken down by period:
All invoices rendered during the Reporting Period and throughout the engagement have complied with the billing guidelines agreed upon at the outset of the representation. Specifically, all invoices have been rendered at or below the blended rate cap of $925 per hour, and monthly fees have not exceeded the $275,000 monthly cap absent prior written approval from Catherine Ng. For reference, the standard billing rates for the primary timekeepers on this matter are as follows:
As reflected in the blended rate cap, the effective billing rates applied to Northgate's invoices are substantially below the standard rates for the senior timekeepers on the team, consistent with the billing arrangement negotiated at engagement.
During the dormancy period (April 2023 through present), monthly billings have been substantially below the $275,000 monthly cap, reflecting the reduced activity levels associated with a stayed case. Work during this period has been focused on the FCC proceeding (including hearing preparation, witness preparation, and post-hearing briefing), the preparation and filing of quarterly joint status reports in the district court, litigation hold compliance monitoring, and periodic client updates and strategy discussions.
B. Expert and Vendor Fees
The following table summarizes expert and vendor fees billed to date:
C. Aggregate Legal Spend
Note: Fees incurred by Whitmore & Crane LLP (insurance coverage counsel) and Vantage Strategic Communications LLC (litigation public relations) are billed separately to Northgate and are not included in the totals reflected above. Those engagements are managed under separate engagement letters and billing arrangements.
Budget Projection for Q2 2024. We anticipate modest legal spend in Q2 2024, consistent with dormancy-level activity, in the range of $30,000–$50,000 per month for Calderwood & Harkness LLP fees. This projection assumes that the FCC proceeding remains in a post-briefing posture and that the district court case remains stayed. If ALJ Fenwick issues his initial decision during Q2 2024 — which we consider unlikely but possible — it would trigger reactivation-related work, and the spend level would increase accordingly. We will consult with Catherine Ng in advance of any anticipated increase in activity or spend.
VIII. Communications and Public Relations
Vantage Strategic Communications LLC continues to serve as Northgate's litigation public relations consultant for these proceedings. The engagement is led by Allison Draper, Senior Managing Director, who maintains regular contact with our team and with Northgate's corporate communications function.
During Q1 2024, the FCC evidentiary hearing did not generate significant media attention. The proceeding has received limited coverage in telecommunications trade press, and no mainstream media outlets reported on the hearing. Accordingly, no material public disclosures were required and no proactive media outreach was undertaken during the Reporting Period.
We continue to coordinate messaging with Northgate's corporate communications team, particularly with respect to Northgate's obligations as the issuer of Nasdaq-listed American Depositary Receipts (ticker: NTP). We are mindful of Northgate's potential obligations for disclosure under applicable U.S. securities laws, including the Securities Exchange Act of 1934 and the rules and regulations of the Securities and Exchange Commission, to the extent that developments in the litigation or the FCC proceeding rise to the level of materiality requiring disclosure in periodic reports or otherwise. To date, we do not believe that any development has triggered such an obligation beyond the disclosures previously made in Northgate's public filings, but we continue to monitor this issue in coordination with Northgate's securities counsel.
IX. Strategic Outlook and Anticipated Next Steps
A. FCC Proceeding
The immediate priority is the filing of Northgate's reply brief at the FCC, which is due on April 12, 2024. The reply brief is in final preparation and will address Ridgepoint's post-hearing arguments regarding the alleged pretextual nature of the WAP, the purported course of dealing arising from the MIA and the holdover arrangement, and the methodological deficiencies in Dr. Kuo's economic analysis.
Following the filing of the reply brief, the FCC proceeding will enter a period of waiting for ALJ Fenwick's initial decision, which we estimate could issue in Q3–Q4 2024 based on historical timelines for FCC ALJ decisions in contested complaint proceedings of comparable complexity. During this waiting period, Calderwood & Harkness's FCC-related activity will be minimal, limited to monitoring the docket and responding to any orders or inquiries from ALJ Fenwick or FCC Staff.
The range of potential outcomes, and their strategic implications, is as follows:
Favorable Outcome (ALJ Rules for Northgate). An initial decision in Northgate's favor — finding that Northgate did not violate its interconnection obligations under Sections 251 and 252 and that the WAP is commercially reasonable — would provide powerful support for Northgate's antitrust defense in the district court. We would argue that the FCC's findings demonstrate that Northgate had no obligation to provide the requested interconnection and colocation access, that the WAP reflects a legitimate business judgment, and that Ridgepoint's refusal-to-deal theory fails because there was no duty to deal in the first instance. We would seek to renew the Motion to Dismiss in the district court on significantly strengthened grounds, and we would assess whether the FCC's findings may support collateral estoppel or issue preclusion arguments in the antitrust case.
Adverse Outcome (ALJ Rules for Ridgepoint). An initial decision in Ridgepoint's favor — finding that Northgate violated its Section 251/252 obligations — would present strategic challenges but would not be dispositive of the antitrust case. We would consider an appeal to the full Commission, which would extend the timeline but would also keep the stay in place in the district court pending the Commission's resolution. We would assess the impact of an adverse FCC ruling on the district court proceedings, recognizing that a finding of a regulatory violation under the Communications Act does not necessarily establish an antitrust violation under Section 2 of the Sherman Act. The legal standards and elements of proof are distinct. However, an adverse FCC ruling could complicate Northgate's position by undermining the argument that the WAP was commercially reasonable, and it would likely be cited by Ridgepoint in opposing the renewed Motion to Dismiss. We would adjust our defense strategy accordingly and would recommend a detailed strategy discussion with the client team before making any decisions regarding appeal or next steps in the district court.
Mixed Outcome. It is also possible that ALJ Fenwick could issue an initial decision with mixed findings — for example, finding that Northgate's Section 251 obligations were satisfied with respect to some or all of the fourteen facilities but that the WAP's application was unreasonable in certain respects. A mixed outcome would require nuanced analysis of the specific findings and their implications for both the regulatory appeal process and the antitrust case. We would provide a detailed assessment and recommended course of action promptly upon issuance of any such decision.
B. District Court
During the pendency of the FCC proceeding, the following actions will be taken with respect to the district court case:
•  Continue filing joint status reports with the Court every ninety days, as required by the stay order, in coordination with opposing counsel at Hargrove, Winslow & Burke LLP.
•  Maintain litigation hold compliance across all twenty-three identified custodians, including conducting the next scheduled compliance audit in Q2 2024.
•  Preserve readiness to renew the Motion to Dismiss upon reactivation of the case, and if necessary, to proceed promptly to discovery using the draft discovery plan and scheduling order already prepared and on file.
•  Monitor for any motion by Ridgepoint to lift the stay. We do not anticipate such a motion at present, given that the FCC proceeding is actively pending and Ridgepoint has shown no indication of seeking to proceed on a parallel track in the district court.
C. Damages Exposure Assessment
We continue to assess Northgate's potential damages exposure on a regular basis. The current assessment is summarized as follows:
Upper Bound. Ridgepoint's claimed damages of $381 million (trebled) represent the theoretical upper bound of Northgate's exposure in the district court case. This figure is based on Dr. Kuo's preliminary opinions, which we believe contain significant methodological flaws and which will be subject to vigorous challenge through both cross-examination and Daubert motions.
Realistic Range. Dr. Narasimhan's preliminary rebuttal analysis reduces provable lost profits to no more than $18–$24 million on a pre-trebling basis, or $54–$72 million when trebled under the Clayton Act. This range reflects a properly defined relevant market (including competitive alternatives), corrected market share estimates, realistic demand projections, and appropriate accounting for available alternative infrastructure.
Insurance Coverage. Northgate's D&O insurance tower of $150 million provides potential coverage across the realistic range of damages exposure, subject to resolution of the Exclusion 4(j) reservation of rights. Even if the antitrust exclusion is found to apply to preclude indemnity coverage, there may be separate coverage for defense costs, which would offset a substantial portion of the legal spend.
We will continue to refine the damages analysis as additional information becomes available through the FCC proceeding and eventual district court discovery, and we will report any material changes in the exposure assessment in future quarterly reports.
X. Recommended Actions for Client
Based on the current posture of both proceedings and our assessment of the strategic landscape, we recommend the following actions:
1.  Approve the continued defense strategy as outlined in this report, including the current approach to the FCC proceeding and the preservation of Northgate's position in the district court.
2.  Ensure ongoing litigation hold compliance across all twenty-three identified custodians. We will coordinate with Catherine Ng and the appropriate Northgate personnel to conduct the Q2 2024 compliance audit.
3.  Continue to defer major expenditures — including the preparation of formal expert reports, comprehensive discovery preparation, and deposition-related work — until the stay is lifted in the district court case. This approach is consistent with prudent cost management during the dormancy period.
4.  Authorize Calderwood & Harkness to file the reply brief at the FCC on April 12, 2024. The reply brief is substantially complete and will be finalized for filing upon receipt of your authorization.
5.  Schedule a call or meeting to discuss strategic implications once ALJ Fenwick's initial decision is issued. Given the significance of the initial decision to both the FCC proceeding and the district court case, we recommend that the full client team — including yourself, Catherine Ng, Diane Okoro, and Patrick Salazar — participate in a strategy discussion promptly following the issuance of the decision.
6.  Consider whether a board-level briefing is warranted in advance of the anticipated initial decision. Depending on the timing and the board's schedule, it may be advisable for the legal team to provide a pre-decision briefing to the board or to the relevant committee of the board to ensure that the directors are apprised of the potential outcomes and their strategic implications. We are happy to prepare a board presentation or summary memorandum at your direction.
XI. Closing
We are available at your convenience to discuss any aspect of this report or to address any questions you may have regarding the current posture, strategy, or budget for these proceedings. We are prepared to arrange a call or meeting with the full Calderwood & Harkness team — including myself, Marcus Bellamy, Jennifer Liu, and David Reyes — as well as our experts, Dr. Priya Narasimhan and Dr. Anton Berger, at a time that is convenient for the client team.
A copy of this letter will be maintained in the Calderwood & Harkness privileged matter file under Engagement Reference No. C&H-2022-ATR-00419. This letter, and all communications related to the matters discussed herein, are subject to the attorney-client privilege and the work product doctrine, and should be treated as strictly confidential.
We appreciate Northgate's continued confidence in Calderwood & Harkness, and we look forward to continuing to work closely with you and your team as these matters progress.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Elaine Forsythe Partner, Antitrust & Competition
1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7400 Direct: (202) 555-7438
Email: eforsythe@calderwoodharkness.com
Enclosures: None enclosed with this letter. Referenced documents — including Northgate's post-hearing brief filed March 15, 2024, prior quarterly status reports, and other case filings — are available upon request from the Calderwood & Harkness matter file.
Next Report: The next quarterly status report is anticipated in late June or early July 2024, covering Q2 2024.
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT This document and the information contained herein are protected by the attorney-client privilege and the work product doctrine. Unauthorized disclosure, copying, or distribution of this document or its contents is strictly prohibited.
Layer | Carrier | Limit
Primary | Clarendon Mutual Insurance Ltd. (Bermuda) | $50,000,000
First Excess | Avalon Specialty Underwriters Inc. | $30,000,000
Second Excess | Pinnacle Re Ltd. | $20,000,000
Total Tower | $150,000,000
Period | Description | Fees Billed
Pre-Stay (Sept. 2022 – Mar. 2023) | Complaint response, Motion to Dismiss, Motion to Stay, FCC Answer, discovery preparation | $1,247,600
During Dormancy (Apr. 2023 – present) | Primarily FCC-related work, joint status reports, hearing preparation, post-hearing briefing, litigation hold compliance, periodic client updates | $683,400
Total C&H Fees to Date | $1,931,000
Timekeeper | Role | Standard Rate
Elaine Forsythe | Responsible Partner | $1,650/hour
Marcus Bellamy | Partner | $1,575/hour
Jennifer Liu | Senior Associate | $985/hour
David Reyes | Associate | $795/hour
Vendor / Expert | Description | Fees to Date
Ellsworth Economic Consulting LLC (Dr. Priya Narasimhan) | Economic expert — market definition, competitive effects, damages rebuttal | $412,000
Torrence Policy Group LLC (Dr. Anton Berger) | Regulatory expert — FCC proceeding, hearing testimony | $187,500
Candela discovery Solutions Inc. (Kenji Takahashi) | E-discovery — document collection, processing, hosting, review platform | $294,000
Total Expert / Vendor Fees | $893,500
Category | Amount
Calderwood & Harkness LLP | $1,931,000
Expert and Vendor Fees | $893,500
Total Legal Spend to Date | $2,824,500

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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