PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Counselors at Law
1200 K Street NW, Suite 900 Washington, D.C. 20005
Telephone: (202) 555-8400 Facsimile: (202) 555-8401 www.calderwoodharkness.com
October 12, 2022
VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED AND VIA EMAIL
Claims Department Clarendon Mutual Insurance Ltd. Victoria Place, 31 Victoria Street Hamilton HM 10, Bermuda
Re: Notice of Claim and Tender of Defense — *Ridgepoint Communications Inc. v. Northgate Networks America Inc. and Northgate Telecommunications PLC*, Case No. 1:22-cv-01487-CMW, U.S. District Court for the Eastern District of Virginia, Alexandria Division
Policy: Directors & Officers / Entity Liability Policy — Northgate Telecommunications PLC and Subsidiaries (the "Policy")
Dear Claims Department:
We write on behalf of our clients, Northgate Telecommunications PLC (Company No. 07824561, England and Wales), a public limited company headquartered at 14 Broadwall Lane, London SE1 9PQ, United Kingdom, and its wholly-owned subsidiary Northgate Networks America Inc. (EIN: 54-3298176), a Delaware corporation headquartered at 8200 Dulles Corner Boulevard, Suite 1100, Tysons Corner, Virginia 22182 (collectively, the "Insureds" or "Northgate"), to provide formal notice of the above-captioned Claim under the Directors & Officers / Entity Liability Policy (the "Policy") issued by Clarendon Mutual Insurance Ltd. ("Clarendon Mutual") and to tender the defense and indemnity of the Insureds to Clarendon Mutual in connection with that Claim.
Calderwood & Harkness LLP serves as litigation defense counsel for the Insureds in the referenced action. In preparing and submitting this notice and tender, we have coordinated with Whitmore & Crane LLP, located at 380 Madison Avenue, 22nd Floor, New York, New York 10017, which serves as insurance coverage counsel for Northgate. Any substantive coverage correspondence should be directed to Whitmore & Crane LLP as coverage counsel for the Insureds, in addition to the undersigned.
The Policy provides per-occurrence coverage of $50,000,000, subject to a $10,000,000 self-insured retention ("SIR"). We understand that the Policy sits as the primary layer of a Directors & Officers excess liability tower providing $150,000,000 in total coverage, structured as follows:
The Insureds reserve the right to provide notice to the excess carriers under separate cover and will do so in due course. This letter is addressed solely to Clarendon Mutual in its capacity as the primary insurer under the Policy.
1. Description of the Claim
1.1 Filing and Case Information
On September 19, 2022, Ridgepoint Communications Inc. ("Ridgepoint" or "Plaintiff") filed a Complaint for Monopolization and Injunctive Relief (the "Complaint") against Northgate Networks America Inc. and Northgate Telecommunications PLC in the United States District Court for the Eastern District of Virginia, Alexandria Division, docketed as Case No. 1:22-cv-01487-CMW (the "Action"). The case has been assigned to the Honorable Claudia M. Wentworth, United States District Judge.
Plaintiff is represented by Hargrove, Winslow & Burke LLP, through its Washington, D.C. and Philadelphia offices. The lead counsel for Plaintiff is Victoria Hargrove, Partner.
Calderwood & Harkness LLP entered its appearance on behalf of both Northgate Telecommunications PLC and Northgate Networks America Inc. on October 3, 2022. The Calderwood & Harkness engagement team for this matter consists of the following attorneys:
•  Elaine Forsythe, Partner — Responsible Partner
•  Howard Bellamy, Partner — Billing Partner
•  Aaron Liu, Senior Associate — Lead Associate
•  Monica Reyes, Associate — Working Associate
A copy of the Complaint and the Notice of Appearance are enclosed with this letter as Enclosures 1 and 2, respectively.
1.2 Identity of the Plaintiff
Ridgepoint Communications Inc. is a competitive local exchange carrier ("CLEC") and enterprise broadband provider organized under the laws of Delaware, with its principal place of business at 3500 Market Street, Suite 700, Philadelphia, Pennsylvania 19104. Ridgepoint operates in Pennsylvania, New Jersey, Delaware, Maryland, and Virginia, maintaining approximately 6,200 route-miles of owned and leased fiber-optic network infrastructure and employing approximately 1,450 individuals. For fiscal year 2022, Ridgepoint reported revenue of approximately $387 million.
Ridgepoint is privately held. Approximately 78% of its equity is held by Caravel Capital Partners LP, a mid-market private equity fund based in Philadelphia and managed by Richard Cavanaugh, which acquired its stake through a leveraged buyout completed in November 2018 at an enterprise valuation of approximately $510 million. The remaining 22% equity is retained by Ridgepoint's founder, Gregory Trent, and members of the Trent family. Based on the information available to us, we believe that Caravel Capital Partners LP is funding the prosecution of this litigation.
1.3 Nature of the Allegations
The Complaint asserts a single cause of action under Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, for monopolization. The core theory of the Complaint is that Northgate's refusal to grant Ridgepoint interconnection access and physical colocation space at fourteen specific Northgate central-office and meet-me-room facilities in the Mid-Atlantic region constitutes unlawful monopolization of what Ridgepoint defines as the "last-mile enterprise fiber-optic transport services market."
The alleged relevant product market, as defined in the Complaint, is "last-mile enterprise fiber-optic transport services (lit and dark fiber) with speeds of 1 Gbps and above, sold to enterprise and government customers." The alleged relevant geographic market is the "Philadelphia–Baltimore–Washington, D.C. metropolitan corridor," which Plaintiff defines as covering portions of the states of Pennsylvania, New Jersey, Delaware, Maryland, and Virginia, as well as the District of Columbia.
Central to Ridgepoint's market-power theory, the Complaint alleges that Northgate holds a 68% share of enterprise fiber-optic last-mile connections within the alleged relevant geographic market. This market-share figure is attributed to the work of Plaintiff's retained economic expert, Dr. Leonard Kuo, Professor of Economics at Cavendish University. The Complaint relies on Dr. Kuo's analysis to assert that Northgate possesses monopoly power within the allegedly relevant market and that the refusal-to-deal conduct constitutes the willful acquisition or maintenance of that monopoly power through exclusionary means.
1.4 The Alleged Refusal-to-Deal Conduct
The Complaint alleges the following course of conduct: between approximately March 2021 and August 2022, Ridgepoint submitted requests for interconnection and physical colocation access at fourteen Northgate-operated facilities across the Philadelphia–Baltimore–Washington, D.C. corridor (each such facility identified by address in Section 1.6 below). According to the Complaint, Northgate declined each such request.
Northgate's stated reasons for declining the requests were threefold:
(a) Capacity constraints at the specific facilities in question, each of which was at or above 85% capacity utilization at the time the relevant request was received;
(b) The absence of any prior course of dealing between Northgate and Ridgepoint at the fourteen specific facilities at issue, distinguishing them from the legacy colocation arrangements described in Section 1.5 below; and
(c) Northgate's Wholesale Access Policy ("WAP"), adopted in January 2020, which restricts the granting of third-party physical colocation access to existing wholesale partners that maintain minimum annual revenue commitments of $5,000,000 with Northgate.
The Complaint alleges that Ridgepoint's aggregate annual spend with Northgate was approximately $1,800,000 in fiscal year 2021, a figure substantially below the WAP's $5,000,000 threshold. The Complaint further alleges that the WAP was "pretextual and adopted specifically to exclude competitive carriers from the Mid-Atlantic market," contending that the threshold was set at a level calculated to exclude Ridgepoint and other smaller CLECs while preserving access for Northgate's favored wholesale partners.
1.5 Prior Course of Dealing
The Complaint acknowledges — and Northgate confirms — that a limited prior course of dealing existed between the parties. Specifically, during the period from 2015 to 2019, Northgate granted Ridgepoint physical colocation access at three facilities in northern Virginia pursuant to a Master Interconnection Agreement ("MIA") dated June 15, 2015. The MIA had a five-year term and expired by its own terms on June 14, 2020. Northgate declined to renew the MIA, citing the requirements of the WAP that had been adopted in January 2020.
Notwithstanding the expiration of the MIA, Ridgepoint has continued to occupy the three existing colocation spaces under a month-to-month holdover arrangement. Under the holdover arrangement, Ridgepoint pays a monthly rate of $14,400 per facility, which represents a 120% premium over the prior contractual rate of $12,000 per month per facility. The holdover premium thus amounts to $2,400 per month per facility, or $7,200 per month in the aggregate across the three legacy facilities, yielding an annualized holdover premium of $86,400.
It is important to note for Clarendon Mutual's consideration that the fourteen facilities at issue in the Complaint are entirely separate from and in addition to these three legacy holdover locations. Northgate has not sought to terminate the holdover arrangement at the three legacy facilities.
1.6 List of Fourteen Disputed Facilities
The Complaint identifies the following fourteen Northgate-operated facilities at which Ridgepoint's interconnection and colocation requests were denied:
1.  401 N. Broad Street, Philadelphia, PA 19108
2.  1500 Spring Garden Street, Philadelphia, PA 19130
3.  100 Delancey Place, Cherry Hill, NJ 08034
4.  220 S. Warren Street, Trenton, NJ 08608
5.  700 E. Pratt Street, Baltimore, MD 21202
6.  1 W. Fayette Street, Baltimore, MD 21201
7.  33 S. Gay Street, Baltimore, MD 21202
8.  9221 Corporate Boulevard, Rockville, MD 20850
9.  1200 New Hampshire Avenue NW, Washington, D.C. 20036
10.  600 New Jersey Avenue NW, Washington, D.C. 20001
11.  44755 Prentice Drive, Ashburn, VA 20147
12.  21571 Beaumeade Circle, Ashburn, VA 20147
13.  1807 Michael Faraday Court, Reston, VA 20190
14.  8100 Boone Boulevard, Tysons Corner, VA 22182
Each of these facilities is a Northgate-operated central-office or meet-me-room location serving enterprise and wholesale customers within the alleged relevant geographic market.
1.7 Claimed Damages
The Complaint asserts that Ridgepoint has suffered and will continue to suffer lost profits as a direct and proximate result of Northgate's alleged exclusionary conduct. Ridgepoint claims $127,000,000 in lost profits over a five-year projected period from 2022 through 2027. Under Section 4 of the Clayton Act, 15 U.S.C. § 15, which provides for treble damages in private antitrust actions, the claimed damages would be trebled to $381,000,000.
In addition to monetary damages, Ridgepoint seeks permanent injunctive relief compelling Northgate to grant interconnection and physical colocation access at each of the fourteen facilities identified in Section 1.6 above, on terms that the court determines to be reasonable and nondiscriminatory.
The Complaint also seeks pre-judgment and post-judgment interest, costs of suit, and reasonable attorneys' fees.
2. Background on the Insureds
To assist Clarendon Mutual in evaluating this Claim, we provide the following background information regarding the Insureds.
Northgate Telecommunications PLC is a United Kingdom-headquartered public telecommunications and software-as-a-service ("SaaS") company organized under the laws of England and Wales (Company No. 07824561), with its registered office at 14 Broadwall Lane, London SE1 9PQ, United Kingdom. Northgate's American Depositary Receipts ("ADRs") are listed on the Nasdaq Stock Market under the ticker symbol "NTP." As of September 2022, Northgate's market capitalization was approximately $11.3 billion. The company's Chief Executive Officer is Sir Malcolm Prentice, KBE, and its Group General Counsel is James Whitford.
Northgate owns and operates approximately 42,000 route-miles of fiber-optic backbone and metro-ring infrastructure across eighteen states in the United States, with its network concentrated primarily along the eastern seaboard. In addition to its infrastructure business, Northgate offers enterprise cloud-connectivity services and SaaS-based network management platforms marketed under the NorthgateOS™ brand. For fiscal year 2022, Northgate reported consolidated revenue of £4.87 billion, equivalent to approximately $5.96 billion at the prevailing exchange rate of $1.2236 per £1. Of that amount, U.S.-derived revenue accounted for approximately $2.41 billion, or roughly 40.4% of consolidated revenue.
Northgate Networks America Inc. is a Delaware corporation and the principal U.S. operating subsidiary of Northgate Telecommunications PLC, headquartered at 8200 Dulles Corner Boulevard, Suite 1100, Tysons Corner, Virginia 22182. The President of Northgate Networks America Inc. is Diane Okoro. The U.S. Deputy General Counsel is Catherine Ng, and the Chief Regulatory Officer is Patrick Salazar.
Northgate's consolidated financial statements are audited by Pemberton Kaye LLP, with offices in London and New York.
Both the parent entity and the U.S. subsidiary are named as defendants in the Action and are Insureds under the Policy.
3. Identification of the Applicable Policy and Coverage Provisions
The Insureds are covered under the Directors & Officers / Entity Liability Policy issued by Clarendon Mutual Insurance Ltd. to Northgate Telecommunications PLC and its subsidiaries (the "Policy"). The key financial parameters of the Policy relevant to this tender are as follows:
•  Per-Occurrence Limit: $50,000,000
•  Self-Insured Retention ("SIR"): $10,000,000
•  Named Insured: Northgate Telecommunications PLC and Subsidiaries
The Complaint in the Action names both Northgate Telecommunications PLC and Northgate Networks America Inc. as defendants. As such, both individual director/officer coverage and entity liability coverage under the Policy are implicated by this Claim. The entity liability coverage applies to claims alleging wrongful acts by the insured entity itself. In this instance, the monopolization claim under Section 2 of the Sherman Act is directed at corporate conduct allegedly undertaken by Northgate through its U.S. operating subsidiary — specifically, the adoption and implementation of the Wholesale Access Policy and the denial of interconnection and colocation access to Ridgepoint at the fourteen identified facilities. Accordingly, the entity liability coverage provisions of the Policy are squarely triggered.
The defense cost provisions of the Policy entitle the Insureds to reimbursement of defense costs — including attorneys' fees, expert witness fees, and other costs of defense — incurred in excess of the $10,000,000 SIR. We anticipate that defense costs in this matter will be substantial, given the complexity of the antitrust claims, the scope of discovery (discussed further in Section 4.2 below), the anticipated expert proceedings, and the likelihood of extensive motion practice.
As noted in the introduction of this letter, the Policy constitutes the primary layer of a three-layer D&O excess liability tower providing aggregate coverage of $150,000,000. The excess layers are structured as follows: Avalon Specialty Underwriters Inc. provides $30,000,000 in first excess coverage, and Pinnacle Re Ltd. provides $20,000,000 in second excess coverage. Notice is being provided to the excess carriers under separate cover, or will be provided in due course, consistent with the notice provisions of each applicable excess policy.
4. Basis for Coverage / Tender of Defense and Indemnity
4.1 The Ridgepoint Complaint Constitutes a Covered "Claim" Under the Policy
The Complaint filed by Ridgepoint Communications Inc. in the Action constitutes a "Claim" as that term is defined in the Policy. Specifically, the Complaint is a civil proceeding commenced by the filing and service of a complaint in a court of competent jurisdiction, seeking monetary damages (including treble damages under the Clayton Act) and permanent injunctive relief against the Insureds. The Claim was first made on September 19, 2022, the date on which the Complaint was filed, which falls within the applicable Policy period. Accordingly, the Claim is timely and properly noticed to Clarendon Mutual under the Policy's notice provisions.
The allegations in the Complaint relate to corporate conduct undertaken by the Insureds in the ordinary course of their telecommunications business operations — namely, decisions concerning the granting or denial of physical colocation and interconnection access at Northgate-operated facilities. Such conduct constitutes a "Wrongful Act" within the meaning of the Policy's entity liability coverage grant. The Insureds therefore submit that the Claim is covered under the Policy and that Clarendon Mutual's coverage obligations have been triggered.
4.2 Request for Defense Coverage
By this letter, the Insureds formally tender the defense of Northgate Telecommunications PLC and Northgate Networks America Inc. in the Action to Clarendon Mutual Insurance Ltd. The Insureds respectfully request that Clarendon Mutual acknowledge its obligation under the Policy to reimburse defense costs — including, without limitation, attorneys' fees, expert witness and consultant fees, e-discovery vendor costs, and other reasonable and necessary costs of defense — incurred in excess of the $10,000,000 SIR.
Defense Counsel. The Insureds have selected Calderwood & Harkness LLP as defense counsel in the Action. Calderwood & Harkness LLP entered its appearance on behalf of both Insureds on October 3, 2022. The engagement terms are set forth in an engagement letter bearing Reference No. C&H-2022-ATR-00419. The standard hourly billing rates for the principal members of the engagement team are as follows:
The engagement letter provides for a blended rate cap of $925 per hour and a monthly fee cap of $275,000, each applicable to the fees billed in connection with the Action. We note these rate arrangements for Clarendon Mutual's reference in connection with its evaluation of the reasonableness of defense costs.
The Insureds respectfully request that Clarendon Mutual consent to the continued retention of Calderwood & Harkness LLP as panel or approved defense counsel under the Policy. Calderwood & Harkness LLP has extensive experience in complex antitrust litigation, including Section 2 monopolization and refusal-to-deal claims in the telecommunications sector, and is well-positioned to provide an effective and efficient defense of the Insureds in this matter.
Expert Consultants. The Insureds have engaged the following expert consultants in connection with the defense of the Action:
•  Ellsworth Economic Consulting LLC — Dr. Priya Narasimhan, Managing Director. Dr. Narasimhan has been engaged as the Insureds' economic expert for purposes of market definition analysis, competitive effects analysis, and damages rebuttal. Dr. Narasimhan holds a Ph.D. in Economics from the University of Pennsylvania and has extensive experience providing expert testimony in antitrust matters before federal courts and regulatory agencies.
•  Torrence Policy Group LLC — Dr. Anton Berger, Senior Advisor. Dr. Berger has been engaged as a regulatory expert to advise on matters relating to the Federal Communications Commission and the regulatory framework governing interconnection obligations under the Communications Act of 1934, as amended. Dr. Berger's engagement anticipates the possibility that Ridgepoint may initiate a parallel regulatory proceeding at the FCC, and Dr. Berger's analysis will also inform the defense's primary jurisdiction arguments.
E-discovery Vendor. The Insureds have engaged Candela discovery Solutions Inc. as the e-discovery vendor for the Action. The project manager assigned by Candela is Kenji Takahashi. To date, approximately 1,200,000 documents have been collected from twenty-three custodians identified as likely possessing documents relevant to the claims and defenses in the Action. Document processing, hosting, and review costs are expected to be substantial given the scope of the collection and the complexity of the underlying factual record.
The Insureds respectfully request that Clarendon Mutual acknowledge that fees and costs incurred in connection with the engagement of expert consultants and e-discovery vendors constitute covered defense costs under the Policy, subject to the Policy's terms and the SIR.
4.3 Request for Indemnity Coverage
In addition to the tender of defense, the Insureds hereby tender to Clarendon Mutual their right to indemnification under the Policy for any judgment, settlement, award, or other resolution of the Claim, subject to the Policy's terms, conditions, exclusions, and limits.
The potential exposure in this matter is significant. As noted in Section 1.7 above, Ridgepoint claims $127,000,000 in pre-trebling lost profits, which would yield $381,000,000 if trebled under Section 4 of the Clayton Act. The Insureds believe that these claimed damages are grossly inflated and are not supported by sound economic analysis. The Insureds' economic expert, Dr. Priya Narasimhan of Ellsworth Economic Consulting LLC, has conducted a preliminary analysis estimating that, even under the most generous assumptions in Plaintiff's favor, Ridgepoint's actual damages are in the range of $18,000,000 to $24,000,000 on a pre-trebling basis — a fraction of Plaintiff's claimed figure. The Insureds are confident that the damages claimed by Ridgepoint will be substantially reduced or eliminated through vigorous defense.
Nevertheless, even at the lower end of the damages range, the potential for trebling and the availability of attorneys' fees and costs to a prevailing plaintiff under the antitrust laws mean that the total D&O tower of $150,000,000 may be implicated depending on the ultimate outcome of the Action. The Insureds therefore submit this indemnity tender to Clarendon Mutual as the primary carrier with full awareness that the excess layers may be called upon to respond as well.
5. Current Procedural Status
As of the date of this letter, the procedural status of the Action is as follows:
•  September 19, 2022: Ridgepoint Communications Inc. filed the Complaint in the U.S. District Court for the Eastern District of Virginia, Alexandria Division, initiating the Action.
•  October 3, 2022: Calderwood & Harkness LLP entered its appearance on behalf of both Northgate Telecommunications PLC and Northgate Networks America Inc.
•  November 14, 2022 (anticipated): The Insureds' legal team is currently preparing a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), which is expected to be filed on or about November 14, 2022. The motion will challenge the sufficiency of Ridgepoint's allegations on several grounds, including the failure to plead a cognizable refusal-to-deal claim under applicable antitrust precedent, the overbreadth of the alleged relevant market, and the insufficiency of the monopoly-power allegations.
This is an early-stage matter. Discovery has not yet commenced, and no scheduling order has been entered. The Insureds will keep Clarendon Mutual informed of further procedural developments as they occur, including the outcome of the Motion to Dismiss, the entry of any scheduling order, and any material developments in discovery or motion practice.
6. Northgate's Preliminary Defense Position
While the Insureds reserve the right to develop and refine their defense theories as the litigation progresses, the following is a summary of the principal defense positions that the Insureds intend to advance:
(a) The Refusal-to-Deal Claim Fails Under the *Aspen Skiing* / *Trinko* Framework. Under controlling Supreme Court precedent, a Section 2 refusal-to-deal claim requires, at a minimum, the termination of a prior voluntary and profitable course of dealing with the plaintiff. See Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004); Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985). Here, there was no prior voluntary course of dealing between Northgate and Ridgepoint at any of the fourteen specific facilities at issue in the Complaint. The prior colocation arrangement under the MIA involved only three separate facilities in northern Virginia, and Northgate has not terminated that arrangement. The refusal to initiate a new course of dealing at fourteen additional facilities does not give rise to antitrust liability under the Aspen Skiing / Trinko framework.
(b) The Wholesale Access Policy Is a Legitimate Unilateral Business Decision. The WAP was adopted in January 2020, approximately fourteen months before Ridgepoint submitted the first of its colocation requests in March 2021. The WAP was adopted to optimize the utilization of limited physical space at Northgate's facilities and to ensure that colocation resources are allocated to wholesale partners with meaningful and sustained commercial relationships with Northgate. The WAP applies uniformly to all potential colocation applicants and is not targeted at Ridgepoint or any other specific competitor.
(c) The Fourteen Facilities Were at or Above 85% Capacity Utilization. Northgate's internal records demonstrate that each of the fourteen facilities identified in the Complaint was at or above 85% capacity utilization at the time the relevant Ridgepoint request was received. Granting colocation access to Ridgepoint at these facilities would have required Northgate to displace existing wholesale customers or invest in costly facility expansions, neither of which is required under the antitrust laws.
(d) The Relevant Market Is Overbroad. Ridgepoint's market definition — limited to "last-mile enterprise fiber-optic transport services (lit and dark fiber) with speeds of 1 Gbps and above" — is unduly narrow and excludes reasonably interchangeable substitutes. When the relevant market is properly defined to include cable-based ethernet services, fixed wireless access, and wholesale ethernet transport services (all of which compete with lit and dark fiber for enterprise customers at the speed tiers at issue), Northgate's market share is approximately 31%, not 68%. A 31% market share is presumptively insufficient to establish monopoly power under prevailing antitrust standards.
In addition to these substantive defenses, the Insureds intend to consider seeking a stay of the Action on primary jurisdiction grounds in the event that Ridgepoint initiates a parallel regulatory proceeding at the Federal Communications Commission. The interconnection and colocation obligations at issue in the Complaint are subject to a comprehensive regulatory framework administered by the FCC under Sections 251 and 252 of the Communications Act of 1934, as amended, and the Insureds believe that the FCC's specialized expertise in this area counsels in favor of deferral to the agency's regulatory processes.
The Insureds emphasize the strength of their defense position not only for the purpose of framing expectations regarding potential exposure, but also to underscore that the Claim arises from Northgate's ordinary and legitimate business conduct in managing its telecommunications infrastructure — conduct that falls squarely within the scope of entity liability coverage under the Policy.
7. Reservation of Rights / Cooperation
The Insureds acknowledge that Clarendon Mutual may elect to issue a reservation of rights letter in response to this tender. Should Clarendon Mutual do so, the Insureds respectfully request that any such reservation be specific, limited, and supported by reference to the particular Policy provisions that Clarendon Mutual contends may limit or preclude coverage.
The Insureds note in particular that, to the extent the Policy contains an antitrust exclusion or any other exclusion that Clarendon Mutual may consider applicable to this Claim, the Insureds' position is that any such exclusion should be construed narrowly under the circumstances of this case. The allegations in the Complaint are defensive in nature — they relate to Northgate's refusal to grant access to its own facilities, not to any affirmative anticompetitive scheme or predatory conduct. The conduct at issue is Northgate's ordinary business decision-making regarding the management and allocation of limited physical infrastructure resources, and the Claim is precisely the type of litigation risk that entity liability coverage is designed to address.
The Insureds pledge full cooperation with Clarendon Mutual's investigation of the Claim. The Insureds and their counsel will provide access to the Complaint, court filings, defense counsel communications, and other materials as reasonably requested by Clarendon Mutual or its designated representatives, subject to applicable privileges, protective orders, and confidentiality obligations. To the extent that Clarendon Mutual requires additional information to evaluate the Claim, the Insureds will use their best efforts to respond promptly and completely.
The Insureds request that Clarendon Mutual identify its designated claims handler for this matter and advise whether it intends to retain coverage counsel or any other advisors in connection with its review of this tender. The Insureds further request that any such claims handler or coverage counsel be identified to Whitmore & Crane LLP, as coverage counsel for the Insureds, at the earliest practicable date.
Finally, the Insureds expressly reserve all of their rights under the Policy, at law, and in equity, including, without limitation, the right to challenge any denial, limitation, or restriction of coverage, the right to seek declaratory relief regarding their coverage rights, and the right to pursue any and all remedies available to them in the event that Clarendon Mutual fails to honor its obligations under the Policy. Nothing in this letter shall be construed as a waiver, release, or modification of any right or remedy of the Insureds.
8. Contact Information and Document Requests
For purposes of all communications relating to coverage matters arising from this Claim, the primary points of contact are as follows:
Coverage Counsel for the Insureds:
Whitmore & Crane LLP 380 Madison Avenue, 22nd Floor New York, New York 10017 Attention: Coverage Counsel for Northgate Telecommunications PLC
Defense Counsel for the Insureds:
Calderwood & Harkness LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005 Attention: Elaine Forsythe, Partner Telephone: (202) 555-8412
Email: eforsythe@calderwoodharkness.com
Client Contacts:
Catherine Ng U.S. Deputy General Counsel Northgate Networks America Inc. 8200 Dulles Corner Boulevard, Suite 1100 Tysons Corner, Virginia 22182 Telephone: (703) 555-2900
Email: catherine.ng@northgatenetworks.com
James Whitford Group General Counsel Northgate Telecommunications PLC 14 Broadwall Lane London SE1 9PQ, United Kingdom Telephone: +44 (0)20 7555 4100
Email: james.whitford@northgatetelecom.co.uk
The Insureds are prepared to provide Clarendon Mutual with copies of the following materials upon request:
•  The Complaint filed by Ridgepoint Communications Inc. on September 19, 2022 (a copy is enclosed herewith as Enclosure 1);
•  The Notice of Appearance filed by Calderwood & Harkness LLP on October 3, 2022 (a copy is enclosed herewith as Enclosure 2); and
•  Any subsequent filings, court orders, or other pleadings entered in the Action.
The Insureds respectfully request that Clarendon Mutual provide prompt written acknowledgment of receipt of this tender letter. In addition, the Insureds request a substantive written coverage response — including Clarendon Mutual's position on the applicability of coverage, the status of the SIR, and any reservation of rights — within thirty (30) days of the date of this letter.
Closing
In summary, by this letter, the Insureds hereby formally tender the defense and indemnity of Northgate Telecommunications PLC and Northgate Networks America Inc. in the matter of Ridgepoint Communications Inc. v. Northgate Networks America Inc. and Northgate Telecommunications PLC, Case No. 1:22-cv-01487-CMW (E.D. Va.), to Clarendon Mutual Insurance Ltd. under the Directors & Officers / Entity Liability Policy.
Time is of the essence. The Action is in active litigation before the United States District Court for the Eastern District of Virginia, and the Insureds' legal team is presently engaged in preparing a Motion to Dismiss for anticipated filing on November 14, 2022. Defense costs are being incurred on a daily basis, and the Insureds require Clarendon Mutual's prompt attention to this tender so that the Insureds may properly coordinate the funding of the defense in a manner consistent with the Policy's terms.
We are available to discuss this matter further at Clarendon Mutual's convenience and welcome the opportunity to provide any additional information that Clarendon Mutual may require. Please do not hesitate to contact the undersigned or Whitmore & Crane LLP with any questions.
This letter is provided without prejudice to any rights or remedies of the Insureds under the Policy, at law, or in equity, all of which are expressly reserved.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Elaine Forsythe
Title: Partner
Telephone: (202) 555-8412
Email: eforsythe@calderwoodharkness.com
1200 K Street NW, Suite 900 Washington, D.C. 20005
cc (via email):
Catherine Ng, U.S. Deputy General Counsel, Northgate Networks America Inc.
James Whitford, Group General Counsel, Northgate Telecommunications PLC
Whitmore & Crane LLP, 380 Madison Avenue, 22nd Floor, New York, NY 10017 (Attn: Coverage Counsel for Northgate)
Howard Bellamy, Partner, Calderwood & Harkness LLP
Enclosures:
1.  Copy of the Complaint, Ridgepoint Communications Inc. v. Northgate Networks America Inc. et al., Case No. 1:22-cv-01487-CMW (E.D. Va.), filed September 19, 2022
2.  Copy of Notice of Appearance of Calderwood & Harkness LLP, filed October 3, 2022
Layer | Carrier | Limit
Primary | Clarendon Mutual Insurance Ltd. | $50,000,000
First Excess | Avalon Specialty Underwriters Inc. | $30,000,000
Second Excess | Pinnacle Re Ltd. | $20,000,000
Total D&O Tower | $150,000,000 (inclusive of primary)
Attorney | Role | Standard Rate
Elaine Forsythe, Partner | Responsible Partner | $1,650/hour
Howard Bellamy, Partner | Billing Partner | $1,575/hour
Aaron Liu, Senior Associate | Lead Associate | $985/hour
Monica Reyes, Associate | Working Associate | $795/hour