1022-00001 · Northgate Networks America Inc · Internal Legal Memoranda & Strategy

status-report-feb-2024.docx DOCUMENT Antitrust

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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

MEMORANDUM

TO:

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

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

FROM:

Elaine Forsythe Calderwood & Harkness LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005

DATE: February 1, 2024

RE: Status Report — Ridgepoint Communications Inc. v. Northgate Networks America Inc. et al., Case No. 1:22-cv-01487-CMW (E.D. Va.); FCC Docket No. WC-23-0042 (In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251)

Engagement Reference: C&H-2022-ATR-00419

I. Executive Summary

The purpose of this memorandum is to provide a comprehensive update on the above-referenced matters following the conclusion of the FCC evidentiary hearing held January 22–24, 2024 before Administrative Law Judge Robert Fenwick. This report covers the hearing proceedings in detail, the current status of the related district court litigation, the litigation budget, insurance coverage, and strategic considerations looking ahead.

Key Developments. The FCC evidentiary hearing in Docket No. WC-23-0042 was completed over three days, during which testimony was received from both Northgate and Ridgepoint witnesses, including lay witnesses and expert witnesses for each party. ALJ Fenwick has set a post-hearing briefing schedule requiring simultaneous initial briefs by March 15, 2024, and simultaneous reply briefs by April 12, 2024. The district court case pending before Judge Claudia M. Wentworth in the Eastern District of Virginia (Case No. 1:22-cv-01487-CMW) remains stayed pursuant to the Court's March 14, 2023 order, pending resolution of the FCC proceeding. No activity in the district court case is anticipated until the FCC proceeding reaches at least the initial decision stage.

High-Level Assessment. We believe Northgate performed well at the hearing. Northgate's witnesses — Diane Okoro, Patrick Salazar, and Dr. Anton Berger — presented credible and well-prepared testimony. Several exchanges on the record were favorable to Northgate, particularly regarding the genuine nature of the capacity constraints at the 14 disputed facilities and the commercial reasonableness of Northgate's Wholesale Access Policy ("WAP"). Ridgepoint's witnesses were competent but, under cross-examination, made concessions that we expect to exploit in the post-hearing briefing. We discuss these exchanges in detail in Section II below.

Budget Summary. Total Calderwood & Harkness LLP fees billed to date are $1,931,000. Combined vendor and expert spend is $893,500, bringing the total aggregate litigation spend to $2,824,500. These costs remain well within the blended rate cap and monthly fee cap parameters established at the outset of the engagement, and well within the $10 million self-insured retention under Northgate's Directors & Officers / Entity Liability Policy with Clarendon Mutual Insurance Ltd.

Next Critical Milestones. The immediate priority is the preparation and filing of Northgate's post-hearing brief, due March 15, 2024, followed by the reply brief due April 12, 2024. ALJ Fenwick has not established a fixed deadline for the issuance of his initial decision, but based on historical FCC practice, we estimate a decision could issue in mid-to-late 2024. That timeline may be extended given the FCC staffing constraints that previously caused the postponement of the hearing from September 2023 to January 2024.

II. FCC Evidentiary Hearing — Summary (January 22–24, 2024)

A. Procedural Background

Ridgepoint Communications Inc. filed its formal complaint with the Federal Communications Commission on February 7, 2023, initiating Docket No. WC-23-0042. The complaint alleges that Northgate Networks America Inc. has 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 grant Ridgepoint access to 14 specified facilities across the Philadelphia–Baltimore–Washington, D.C. corridor and by implementing the Wholesale Access Policy in a manner that Ridgepoint contends is discriminatory and anticompetitive.

Calderwood & Harkness filed Northgate's Answer and Affirmative Defenses in March 2023, denying the material allegations of the complaint and asserting, among other things, that Northgate's interconnection practices are commercially reasonable and consistent with applicable FCC rules, that Northgate is not subject to unbundled access obligations at the specific facilities at issue, and that the WAP is a facially neutral, company-wide policy adopted for legitimate business purposes.

On June 12, 2023, ALJ Robert Fenwick issued a scheduling order establishing deadlines for the exchange of witness lists, exhibit lists, pre-hearing briefs, and the evidentiary hearing itself. The hearing was originally set for September 2023. On August 28, 2023, ALJ Fenwick issued an order postponing the hearing to January 2024, citing FCC staffing constraints and scheduling conflicts within the Administrative Law Judge Division.

The parties exchanged pre-hearing briefs and exhibit lists in accordance with the modified schedule. The three-day evidentiary hearing was conducted on January 22, 23, and 24, 2024, at the FCC's headquarters in Washington, D.C. ALJ Fenwick presided over the hearing, and a court reporter prepared a verbatim transcript. The transcript has been filed in the docket and a copy has been provided to Catherine Ng under separate cover.

B. Northgate's Witnesses and Key Testimony

1. Diane Okoro — U.S. President, Northgate Networks America Inc. Ms. Okoro testified on Day 1 (January 22) and the morning of Day 2 (January 23). Her testimony was the centerpiece of Northgate's factual presentation.

Direct Examination. During direct examination conducted by Elaine Forsythe, Ms. Okoro provided an overview of Northgate Networks America Inc.'s business operations in the United States. She testified that Northgate operates approximately 42,000 route-miles of fiber-optic backbone and metro-ring infrastructure across 18 states, concentrated primarily along the eastern seaboard from Maine to Georgia. She described the company's customer base, which includes enterprise customers, government agencies, and wholesale telecommunications carriers.

Ms. Okoro explained the rationale behind the Wholesale Access Policy, which Northgate adopted in January 2020. She testified that the WAP was developed following a comprehensive review of Northgate's facility capacity, customer economics, and competitive positioning. The WAP established a minimum annual revenue commitment of $5 million for new and renewing wholesale access relationships, with the stated purpose of optimizing limited facility capacity for higher-value wholesale relationships that generate sufficient revenue to justify the capital investment required to maintain and expand network infrastructure. Ms. Okoro emphasized that the WAP applies uniformly to all wholesale carriers and is not directed at any specific company.

Ms. Okoro testified that Ridgepoint's aggregate annual spend with Northgate was approximately $1.8 million in fiscal year 2021, significantly below the $5 million threshold established by the WAP. She further testified that the Master Interconnection Agreement ("MIA") between Northgate and Ridgepoint had a five-year term running from June 15, 2015 through June 14, 2020, and that upon expiration of the MIA, Northgate declined to renew under the terms of the WAP because Ridgepoint did not meet the minimum revenue commitment.

Ms. Okoro addressed the 14 disputed facilities in detail. She testified that all 14 facilities are currently operating at or above 85% capacity utilization, based on internal engineering assessments conducted in the ordinary course of business. She presented data from Northgate's internal capacity management system, showing that several of the facilities in question are nearing their maximum physical capacity for additional interconnection equipment. Ms. Okoro explained that granting Ridgepoint access at these facilities would require displacement of existing wholesale customers or significant capital expenditures for facility expansion, neither of which is commercially justified at Ridgepoint's current revenue level.

With respect to the existing colocation arrangements, Ms. Okoro confirmed that Ridgepoint continues to occupy three existing colocation spaces at Northgate facilities in northern Virginia under a month-to-month holdover arrangement. She explained that the holdover rate is set at 120% of the prior contractual rate — specifically, $14,400 per month per facility, compared to the prior rate of $12,000 per month per facility under the expired MIA. Ms. Okoro testified that this holdover arrangement was offered as a reasonable accommodation to allow Ridgepoint adequate time to transition its interconnection to alternative facilities, and that Northgate has not sought to evict Ridgepoint from these spaces.

Cross-Examination. Cross-examination was conducted by Victoria Hargrove of Hargrove, Winslow & Burke LLP, counsel for Ridgepoint. Ms. Hargrove focused primarily on the timing of the WAP adoption relative to Ridgepoint's initial interconnection inquiries. She attempted to establish a factual narrative in which the WAP was developed specifically to exclude Ridgepoint. Ms. Okoro was well-prepared for this line of questioning and maintained consistently that the WAP was a company-wide policy developed in response to industry trends and capacity constraints, not targeted at any single carrier. Ms. Okoro acknowledged that Northgate was aware of Ridgepoint's interest in expanding its interconnection with Northgate at the time the WAP was being developed, but she testified credibly that the WAP was applied equally to all carriers that did not meet the minimum revenue threshold, and that several other carriers in addition to Ridgepoint were affected by the policy.

Ms. Hargrove also questioned Ms. Okoro about internal communications regarding Ridgepoint. Ms. Okoro did not make any materially damaging concessions during this line of questioning. We will address the specific internal communications at issue in our post-hearing brief.

2. Patrick Salazar — Chief Regulatory Officer, Northgate Telecommunications PLC. Mr. Salazar testified on the afternoon of Day 2 (January 23). His testimony focused on the regulatory framework governing Northgate's interconnection obligations.

Direct Examination. During direct examination conducted by Aaron Liu, Mr. Salazar provided an overview of the regulatory landscape applicable to Northgate's interconnection practices under Sections 251 and 252 of the Communications Act. He drew a critical distinction between the unbundled access obligations imposed on incumbent local exchange carriers ("ILECs") under Section 251(c) and the commercially negotiated interconnection arrangements that govern the relationships between competitive carriers and facilities-based providers. Mr. Salazar testified that Northgate, as a facilities-based carrier with a mixed regulatory profile, is not subject to ILEC unbundling requirements at the specific facilities at issue in this proceeding.

Mr. Salazar provided detailed testimony regarding the 14 disputed facilities, which are located across the Philadelphia–Baltimore–Washington, D.C. corridor. He addressed the regulatory classification of each facility, explaining that many of the facilities are meet-me-room or non-ILEC central-office facilities, carrier hotels, or Northgate-owned co-location centers that do not trigger the same statutory interconnection obligations as traditional ILEC central offices. He testified that Northgate has been transparent with the FCC regarding the operational characteristics and regulatory status of these facilities throughout the proceeding.

Cross-Examination. During cross-examination, Ridgepoint's counsel pressed Mr. Salazar on whether certain of the 14 facilities function as de facto central offices, notwithstanding their formal regulatory classification. Ridgepoint argued that the practical function of these facilities — serving as critical points of interconnection for multiple carriers — renders them functionally equivalent to central offices for purposes of Section 251 obligations. Mr. Salazar maintained the regulatory distinction, testifying that the FCC has not adopted a "functional equivalence" test for determining ILEC status and that the regulatory classification of a facility is determined by statutory criteria, not by the volume of interconnection traffic passing through it. Mr. Salazar's performance on cross-examination was solid, though we note this issue of functional equivalence is likely to be a central point of contention in the post-hearing briefing.

3. Dr. Anton Berger — Senior Advisor, Torrence Policy Group LLC (Defendant's Regulatory Expert). Dr. Berger testified on Day 3 (January 24). Dr. Berger is a former Deputy Bureau Chief of the FCC's Wireline Competition Bureau and brings substantial credibility and expertise to the regulatory issues in this proceeding.

Direct Examination. Dr. Berger opined that Northgate's interconnection practices are commercially reasonable and consistent with established FCC precedent. He provided an extensive analysis of the FCC's rules governing interconnection and colocation obligations under Sections 251 and 252, as well as relevant FCC orders and advisory opinions addressing the scope of interconnection obligations in the context of facilities-based competition. Dr. Berger testified that minimum revenue commitments of the type embodied in Northgate's WAP are standard industry practice among incumbent and facilities-based carriers, and that such policies have not been found by the FCC to violate Section 251 obligations. He identified several analogous policies adopted by other major carriers and discussed the FCC's treatment of those policies in prior proceedings.

Dr. Berger also addressed Ridgepoint's argument that the WAP is pretextual — that is, that it was adopted for the purpose of excluding Ridgepoint specifically rather than for legitimate business reasons. Dr. Berger testified that the WAP, by its terms, is facially neutral and that the $5 million minimum revenue commitment reflects a rational economic threshold for the type of wholesale infrastructure access at issue. He noted that the WAP was adopted more than a year before Ridgepoint submitted its first interconnection request for the disputed facilities, which undermines the argument that the policy was developed in response to Ridgepoint's specific requests.

Cross-Examination. Cross-examination of Dr. Berger was conducted by Daniel Stoyanov of Hargrove, Winslow & Burke LLP. Mr. Stoyanov challenged Dr. Berger's characterization of industry norms, presenting data from a survey of carrier policies suggesting that minimum revenue commitments at the $5 million level are above the industry median. Dr. Berger acknowledged that the $5 million threshold is on the higher end of the range but testified that it is within the bounds of commercially reasonable practice, particularly for a carrier of Northgate's size and scale of infrastructure investment. Dr. Berger was well-prepared and maintained his positions effectively throughout the cross-examination. We consider his testimony to have been a significant asset to Northgate's presentation.

C. Ridgepoint's Witnesses and Key Testimony

1. Gregory Trent — CEO / Founder, Ridgepoint Communications Inc. Mr. Trent testified on Day 1 (January 22). He was the first witness called in the proceeding.

Direct Examination. Mr. Trent described Ridgepoint's business operations. Ridgepoint is a competitive local exchange carrier ("CLEC") and enterprise broadband provider operating across five states: Pennsylvania, New Jersey, Delaware, Maryland, and Virginia. The company owns and operates approximately 6,200 route-miles of owned and leased fiber-optic infrastructure, employs approximately 1,450 people, and reported fiscal year 2022 revenue of approximately $387 million. Mr. Trent testified that Ridgepoint has experienced significant growth over the past several years and has been actively expanding its enterprise service offerings in the Mid-Atlantic market.

Mr. Trent claimed that Northgate's refusal to grant Ridgepoint access at the 14 disputed facilities has caused substantial competitive harm and has resulted in lost business opportunities in the Mid-Atlantic enterprise market. He described specific potential customer contracts that Ridgepoint was allegedly unable to pursue because it lacked interconnection access at critical Northgate facilities. Mr. Trent characterized the WAP as a deliberate effort by Northgate to freeze out smaller competitors and consolidate its dominant market position.

Cross-Examination. Cross-examination of Mr. Trent was conducted by Elaine Forsythe and Aaron Liu. The cross-examination highlighted several points favorable to Northgate. First, we elicited testimony that Ridgepoint has in fact continued to grow its revenues year-over-year despite the alleged denial of access at the 14 facilities. Mr. Trent acknowledged that Ridgepoint's fiscal year 2023 revenue exceeded fiscal year 2022 revenue, though he attributed this growth to markets and services not dependent on Northgate infrastructure. Second, we explored alternative infrastructure options available to Ridgepoint in the Philadelphia–Baltimore–Washington, D.C. corridor, including third-party colocation providers, alternative fiber routes, and competitive carrier facilities. Mr. Trent acknowledged the availability of some alternative options but characterized them as inferior in terms of latency, capacity, and cost-effectiveness. Third, we established that Ridgepoint's decision not to pursue the WAP's $5 million minimum revenue commitment was based on Ridgepoint's own business judgment, not on an inability to meet the threshold. This point will be developed further in the post-hearing brief.

2. Samira Hashemi — COO, Ridgepoint Communications Inc. Ms. Hashemi testified on Day 2 (January 23). Her testimony focused on operational and technical issues.

Direct Examination. Ms. Hashemi provided operational testimony regarding Ridgepoint's interconnection requests, which were submitted between March 2021 and August 2022 for the 14 Northgate facilities. She walked through the correspondence between the parties, including initial requests, Northgate's responses citing the WAP requirements, and subsequent follow-up communications. Ms. Hashemi testified regarding the technical and economic necessity of access to Northgate's last-mile infrastructure, asserting that Northgate controls critical network assets that are not replicable by competitors in the relevant geography.

Cross-Examination. During cross-examination, the Calderwood & Harkness team elicited testimony from Ms. Hashemi that Ridgepoint had not fully explored all alternative colocation and interconnection options in the corridor before filing the FCC complaint. Specifically, Ms. Hashemi acknowledged that Ridgepoint had not submitted formal applications for colocation at several facilities operated by third-party providers, and that Ridgepoint's analysis of alternatives was based in part on preliminary cost estimates rather than formal proposals. This testimony is valuable because it supports Northgate's argument that Ridgepoint has not exhausted commercially available alternatives and that access to Northgate's specific facilities is not, in fact, essential to competition.

3. Dr. Leonard Kuo — Professor of Economics, Cavendish University (Plaintiff's Economic Expert). Dr. Kuo testified on Day 3 (January 24). Dr. Kuo is a professor of economics at Cavendish University and was retained by Ridgepoint to provide expert testimony on market definition, market power, and competitive effects.

Direct Examination. Dr. Kuo presented a preliminary market analysis in which he defined the relevant product market as last-mile enterprise fiber-optic transport services (lit and dark fiber) at speeds of 1 Gbps and above. He defined the relevant geographic market as the Philadelphia–Baltimore–Washington, D.C. corridor. Under this narrow market definition, Dr. Kuo asserted that Northgate holds approximately 68% market share based on available revenue and capacity data. Dr. Kuo testified that this market share, combined with alleged barriers to entry, supports a finding that Northgate possesses monopoly power or, at a minimum, significant market power, in the relevant market. Dr. Kuo also presented a preliminary framework for damages analysis, although he noted that a full damages report had not been prepared for the FCC proceeding, which is a regulatory proceeding focused on interconnection obligations under Sections 251 and 252, rather than an antitrust damages proceeding.

Cross-Examination. Cross-examination of Dr. Kuo was conducted by Aaron Liu. Mr. Liu challenged Dr. Kuo's narrow market definition, focusing on Dr. Kuo's exclusion of cable broadband services, fixed wireless access services, and wholesale ethernet services from the relevant product market. Mr. Liu presented data showing that several major cable operators and fixed wireless providers offer enterprise-grade services at speeds of 1 Gbps and above in the relevant geographic area, and that these services compete directly with fiber-optic transport services for many enterprise customers. Dr. Kuo defended his methodology, arguing that fiber-optic services offer distinct performance characteristics — particularly with respect to latency, symmetrical upload/download speeds, and reliability — that make them a separate product market. However, several of Dr. Kuo's responses appeared to concede that certain high-capacity cable and fixed wireless offerings may function as partial substitutes in some market segments. These concessions are significant and will be highlighted in our post-hearing brief. Dr. Kuo's concessions support the broader market definition proposed by Dr. Priya Narasimhan of Ellsworth Economic Consulting LLC, under which Northgate's market share is approximately 31% — well below the threshold typically required to establish monopoly power under Section 2 of the Sherman Act.

D. Overall Assessment of Hearing Performance

Overall, we assess Northgate's hearing performance as strong. The following points summarize our evaluation:

Favorable Developments. Northgate's witnesses were well-prepared and presented credible, consistent testimony. Coordination with Dr. Berger at Torrence Policy Group LLC was effective, and the regulatory arguments were clearly and persuasively presented. Key favorable moments include:

• Ms. Okoro's testimony regarding capacity utilization at or above 85% at all 14 disputed facilities was well-documented and supported by internal engineering data that was admitted into the record as Northgate Exhibits 14 through 27. The capacity data is a critical element of Northgate's defense, as it demonstrates that the decision to limit access at these facilities is grounded in genuine physical constraints, not in anticompetitive intent.

• Mr. Salazar's articulation of the regulatory distinction between ILEC unbundling obligations and commercially negotiated interconnection arrangements was clear and effective. This distinction is central to Northgate's defense and, if credited by ALJ Fenwick, could be dispositive of the FCC proceeding.

• Dr. Berger's testimony regarding industry norms for minimum revenue commitments was well-received. His experience as a former Deputy Bureau Chief of the FCC's Wireline Competition Bureau lends significant weight to his opinions.

• The cross-examination of Mr. Trent established that Ridgepoint has continued to grow despite the alleged denial of access, and the cross-examination of Ms. Hashemi revealed that Ridgepoint did not fully explore alternative interconnection options before filing its complaint.

• The cross-examination of Dr. Kuo elicited concessions regarding partial substitutability of cable and fixed wireless services that undermine his narrow market definition.

Risk Areas. We also note several areas of concern:

• Ridgepoint's counsel, Victoria Hargrove and Daniel Stoyanov, effectively elicited some sympathy during the hearing regarding the impact of the WAP on a smaller competitor. Mr. Trent's narrative of a smaller company being shut out by a larger incumbent resonated on a general level, and we expect Ridgepoint to emphasize this narrative in its post-hearing brief.

• The holdover arrangement at the three northern Virginia facilities — under which Ridgepoint continues to occupy colocation spaces on a month-to-month basis — could be used by Ridgepoint to argue a prior course of dealing that Northgate is selectively curtailing. We will need to address this argument carefully in the post-hearing brief, emphasizing that the holdover arrangement was offered as an accommodation, not as a recognition of an ongoing interconnection obligation.

• ALJ Fenwick appeared engaged and asked probing questions of both sides throughout the hearing. He showed particular interest in the capacity utilization data, including questions about the methodology used to calculate utilization percentages and whether Northgate had considered facility expansion. He also asked pointed questions about the timing of the WAP adoption relative to the expiration of the MIA with Ridgepoint. While these questions do not necessarily signal a predisposition, they indicate that ALJ Fenwick is likely to scrutinize these issues closely in reaching his decision.

III. Post-Hearing Briefing Schedule

Following the close of the evidentiary record on January 24, 2024, ALJ Fenwick entered an order establishing the following post-hearing briefing schedule:

• Post-Hearing Briefs: Due March 15, 2024 (simultaneous exchange). Each party shall file its initial post-hearing brief and proposed findings of fact and conclusions of law with the Administrative Law Judge Division by 5:00 p.m. Eastern Time. Briefs shall not exceed 75 pages, double-spaced, exclusive of the table of contents, table of authorities, and proposed findings of fact.

• Post-Hearing Reply Briefs: Due April 12, 2024 (simultaneous exchange). Each party shall file its reply brief by 5:00 p.m. Eastern Time. Reply briefs shall not exceed 40 pages, double-spaced.

Calderwood & Harkness is currently preparing Northgate's post-hearing brief. We are coordinating closely with Dr. Anton Berger at Torrence Policy Group LLC on the regulatory arguments and with Dr. Priya Narasimhan at Ellsworth Economic Consulting LLC on the economic analysis to be incorporated into the brief. Dr. Narasimhan was not a hearing witness (as her retained scope primarily pertains to the antitrust damages issues in the district court litigation), but her analysis of broader market definition and competitive dynamics is relevant to the FCC proceeding insofar as it bears on the commercial reasonableness of the WAP.

The key themes for Northgate's post-hearing brief will include:

(1) Northgate's interconnection practices are commercially reasonable under FCC precedent and consistent with the practices of similarly situated facilities-based carriers;

(2) The Wholesale Access Policy is a facially neutral, company-wide policy with legitimate business justification, adopted in January 2020 — more than a year before Ridgepoint submitted its first interconnection request for the disputed facilities — and applied uniformly across Northgate's wholesale customer base;

(3) The capacity constraints at the 14 disputed facilities are genuine, well-documented by internal engineering data admitted into the hearing record, and reflect real physical limitations on available colocation and interconnection space;

(4) Ridgepoint has not demonstrated entitlement to compelled access under Sections 251 or 252 of the Communications Act, because the specific facilities at issue are not subject to ILEC unbundled access obligations, and Ridgepoint has not exhausted commercially available alternative interconnection options.

With respect to the timeline for ALJ Fenwick's initial decision, we note that there is no fixed statutory or regulatory deadline for the issuance of the decision following completion of the post-hearing briefing. Based on historical FCC practice in contested evidentiary proceedings, we estimate that the initial decision could be issued in mid-to-late 2024, though this timeline may be further extended given the FCC resource constraints that already caused the postponement of the hearing from September 2023 to January 2024. We will monitor the docket closely and report any developments to you promptly.

IV. Status of District Court Litigation — Case No. 1:22-cv-01487-CMW

A. Continued Stay

The district court case, Ridgepoint Communications Inc. v. Northgate Networks America Inc. et al., Case No. 1:22-cv-01487-CMW, remains stayed pursuant to Judge Claudia M. Wentworth's order dated March 14, 2023. That order granted Northgate's Motion to Stay Pending Resolution of FCC Proceedings, filed on March 6, 2023. The Court found that the FCC proceeding involves threshold regulatory questions — specifically, the scope of Northgate's interconnection obligations under Sections 251 and 252 — that are within the primary jurisdiction of the FCC and whose resolution could substantially narrow or eliminate the issues in the district court case.

Northgate's Motion to Dismiss, filed on November 14, 2022, was denied without prejudice by Judge Wentworth in connection with the stay order. The Court's order expressly stated that Northgate may renew the Motion to Dismiss when the stay is lifted, and that the denial was based solely on the Court's determination that the motion would be better evaluated following the FCC's resolution of the regulatory issues. This procedural posture preserves Northgate's arguments for dismissal, including its arguments under the Trinko framework and the filed-rate doctrine.

The parties have been filing periodic joint status reports every 90 days, as required by the stay order. The most recent joint status report was filed in coordination with Daniel Stoyanov of Hargrove, Winslow & Burke LLP, who serves as lead counsel for Ridgepoint in the district court litigation. The joint status reports have been largely ministerial, reporting on the status of the FCC proceeding and confirming that both parties agree the stay should remain in effect. The next joint status report will be due in approximately March or April 2024, and Aaron Liu will coordinate with Mr. Stoyanov on that filing.

B. Anticipated Reactivation

The stay will likely be lifted following one or more of the following events: (1) the issuance of ALJ Fenwick's initial decision in FCC Docket No. WC-23-0042; (2) the issuance of any FCC final order on review of the initial decision; or (3) a motion by either party to lift the stay based on changed circumstances. We anticipate that neither party will move to lift the stay before the FCC issues at least the initial decision.

The outcome of the FCC proceeding will have significant strategic implications for the district court case:

• If the FCC rules favorably for Northgate — i.e., finding that Northgate's interconnection practices are compliant with Sections 251 and 252 — the FCC's determination could provide substantial support for a renewed Motion to Dismiss and/or a motion for summary judgment on Ridgepoint's Section 2 monopolization claim. A favorable FCC ruling would reinforce the argument that Northgate had no duty to deal and that the WAP constitutes a legitimate, commercially reasonable business practice, not an anticompetitive refusal to deal actionable under the Sherman Act.

• If the FCC rules against Northgate on the interconnection issue — i.e., finding that Northgate has violated Sections 251 and/or 252 — Ridgepoint will undoubtedly argue that this finding supports its antitrust claims. However, an adverse FCC ruling does not automatically establish antitrust liability. As the Supreme Court held in Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), a regulatory violation under the Telecommunications Act does not, standing alone, give rise to an antitrust claim under Section 2 of the Sherman Act. The Trinko framework distinguishes between regulatory duties and antitrust duties, and the availability of a regulatory remedy is a factor weighing against the recognition of an antitrust claim. We would emphasize in the district court litigation that even if the FCC imposes a regulatory remedy requiring Northgate to grant interconnection access, the Sherman Act does not create an additional private right of action for conduct already addressed by the comprehensive regulatory scheme of the Telecommunications Act. We discuss these strategic considerations in greater detail in Section VII below.

C. Discovery Readiness

Although discovery has not commenced due to the stay, we have maintained full readiness for the eventual resumption of the district court litigation:

Litigation Hold. The litigation hold imposed at the commencement of this engagement remains in effect across all 23 identified custodians at Northgate Networks America Inc. and Northgate Telecommunications PLC. Custodians include key executives, regulatory affairs personnel, network engineering personnel, and sales and wholesale operations personnel. The hold covers all categories of documents and electronically stored information ("ESI") potentially relevant to the claims and defenses in this matter.

Document Collection and Review. Candela discovery Solutions Inc. (project manager: Kenji Takahashi) continues to host the collected ESI on the Concordia Review™ platform. Approximately 1.2 million documents have been collected to date, and approximately 87,000 documents have been identified as potentially responsive based on preliminary search term and predictive coding analysis. No documents have been produced, as discovery has not been served, but the collection is being maintained in a state of readiness for production when the stay is lifted.

Compliance Audits. The most recent litigation hold compliance audit was conducted in August 2023. No material issues were identified. Periodic custodian verification is ongoing, with individual custodians being contacted on a rolling basis to confirm continued compliance with the hold obligations. We recommend scheduling the next comprehensive compliance audit for Q2 2024, as discussed in Section VIII below.

Draft discovery Plan. Calderwood & Harkness has maintained a draft Proposed discovery Plan and Scheduling Order in readiness for reactivation of the case. The draft contemplates a fact discovery period of approximately nine months and an expert discovery period of approximately four months. Proposed depositions include, on Ridgepoint's side, Gregory Trent (CEO), Samira Hashemi (COO), and Dr. Leonard Kuo (economic expert); and, on Northgate's side, Diane Okoro (U.S. President), Patrick Salazar (Chief Regulatory Officer), Dr. Priya Narasimhan (economic expert, Ellsworth Economic Consulting LLC), and Dr. Anton Berger (regulatory expert, Torrence Policy Group LLC). The draft will be updated as circumstances warrant.

V. Litigation Budget and Fee Summary

A. Calderwood & Harkness LLP Fees

Pre-Stay Period (September 2022 – March 2023): $1,247,600. This period encompasses the initial engagement, case assessment, and all pre-stay filings and proceedings. Key activities during this period include:

• Initial case assessment and litigation strategy development (September – October 2022);

• Preparation and filing of Northgate's Motion to Dismiss (November 14, 2022);

• Preparation of Northgate's reply brief in support of the Motion to Dismiss (January 30, 2023);

• Preparation for and attendance at oral argument on the Motion to Dismiss (February 22, 2023);

• Preparation and filing of Northgate's Motion to Stay Pending Resolution of FCC Proceedings (March 6, 2023), including supporting memorandum and declarations;

• Client communications, strategic coordination, and initial document preservation activities.

Dormancy / FCC-Related Work (April 2023 – Present): $683,400. This period covers the work performed during the stay of the district court case and the pendency of the FCC proceeding. Key activities during this period include:

• Preparation and filing of Northgate's Answer and Affirmative Defenses in FCC Docket No. WC-23-0042;

• Preparation of Northgate's FCC pre-hearing brief;

• Extensive hearing preparation, including witness preparation sessions with Diane Okoro, Patrick Salazar, and Dr. Anton Berger;

• Preparation and filing of exhibit lists and other pre-hearing submissions;

• Attendance at and participation in the FCC evidentiary hearing (January 22–24, 2024), including three full days of testimony;

• Periodic joint status report coordination with Ridgepoint's counsel in the district court case;

• Client reporting and strategic advice.

Total C&H Fees Billed to Date: $1,931,000.

The blended rate cap of $925 per hour and the monthly fee cap of $275,000 have been observed throughout the engagement. There have been no overages requiring prior approval from Catherine Ng. Detailed monthly invoices have been provided to the Northgate Networks America Inc. legal department in the ordinary course.

B. Expert and Vendor Fees

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

Ellsworth Economic Consulting's fees reflect Dr. Narasimhan's work on preliminary market definition analysis, development of a rebuttal damages framework, review of Dr. Kuo's methodologies, and ongoing advisory support. Torrence Policy Group's fees reflect Dr. Berger's regulatory analysis, hearing preparation, and testimony at the FCC evidentiary hearing. Candela discovery Solutions' fees reflect initial document collection, processing, hosting on the Concordia Review™ platform, and ongoing maintenance of the hosted collection.

C. Aggregate Litigation Spend

Total aggregate spend (C&H + experts + vendors): $2,824,500.

Please note that fees for coverage counsel Whitmore & Crane LLP (380 Madison Avenue, 22nd Floor, New York, NY 10017) are billed independently to Northgate and are not included in this total. Whitmore & Crane's fees relate to insurance coverage advice regarding the Clarendon Mutual Directors & Officers / Entity Liability Policy and are tracked separately.

Additionally, fees for Vantage Strategic Communications LLC (Allison Draper, Senior Managing Director) for media strategy related to the litigation and FCC proceeding are separately tracked by the Northgate corporate communications team and are not included in this aggregate total.

D. Budget Forecast

Near-Term Spend (February – April 2024). The primary near-term expenditure will be the preparation and filing of the post-hearing brief (due March 15, 2024) and the reply brief (due April 12, 2024). We estimate additional C&H fees for this post-hearing briefing phase of approximately $120,000 to $150,000, which includes drafting, internal review, expert coordination, and filing. Expert fees for Dr. Berger and Dr. Narasimhan's contributions to the post-hearing briefing are estimated at an additional $30,000 to $50,000 combined.

Ongoing Monitoring Costs. During the continued dormancy of the district court case, ongoing monitoring costs are estimated at $15,000 to $25,000 per month. These costs cover primarily the preparation and filing of periodic joint status reports, litigation hold monitoring and custodian compliance activities, client communications, and monitoring of the FCC docket for developments.

Post-Stay discovery Phase. We anticipate a significant budget increase when the district court stay is lifted and discovery commences. The cost of the discovery phase will depend on several variables, including the scope of discovery as defined by Judge Wentworth's scheduling order, the volume of documents to be reviewed and produced, the number and length of depositions, and the development of expert reports. We will prepare a revised and detailed litigation budget for the discovery phase and circulate it for Catherine Ng's review once the FCC timeline becomes clearer and the likely timing of the stay being lifted can be better estimated.

VI. Insurance Coverage Status

Northgate Networks America Inc. tendered the Ridgepoint claim to Clarendon Mutual Insurance Ltd. on October 12, 2022, promptly following service of the complaint. Clarendon Mutual issued a reservation of rights letter dated November 3, 2022, acknowledging coverage under the Directors & Officers / Entity Liability Policy but expressly reserving the right to deny coverage based on the applicability of the antitrust exclusion set forth in Exclusion 4(j) of the policy. The reservation of rights letter did not deny coverage; rather, it placed Northgate on notice that Clarendon Mutual may assert the antitrust exclusion as a basis for denying indemnification for any judgment or settlement arising from the antitrust claims asserted by Ridgepoint.

The relevant insurance coverage structure is as follows:

• Primary Policy: Clarendon Mutual Insurance Ltd. — Directors & Officers / Entity Liability Policy, with a $50 million per-occurrence limit and a $10 million self-insured retention ("SIR").

• Excess D&O Tower: Three layers of excess coverage totaling $100 million in aggregate, structured as follows:

• Clarendon Mutual Insurance Ltd.: $50 million primary layer;

• Avalon Specialty Underwriters Inc.: $30 million first excess layer;

• Pinnacle Re Ltd.: $20 million second excess layer.

• Total D&O Tower: $150 million (inclusive of the primary layer).

Whitmore & Crane LLP continues to monitor the coverage position on Northgate's behalf. There has been no further communication from Clarendon Mutual since the issuance of the reservation of rights letter in November 2022. We understand that Whitmore & Crane has been in periodic informal contact with Clarendon Mutual's coverage counsel to maintain the dialogue and preserve Northgate's coverage rights.

Northgate's total litigation spend to date ($2,824,500) remains well within the $10 million self-insured retention. Accordingly, all defense costs incurred to date are being borne entirely by Northgate, and no claim for reimbursement of defense costs has been submitted to Clarendon Mutual.

With respect to damages exposure, we note the following:

• Ridgepoint's damages claim, as articulated in its district court complaint, is $127 million in pre-trebling damages under Section 2 of the Sherman Act, which would yield $381 million in trebled damages under Section 4 of the Clayton Act. A judgment at this level would exceed the primary policy limit of $50 million but would fall within the total D&O tower of $150 million, provided that coverage is confirmed and the antitrust exclusion under Exclusion 4(j) is determined not to apply.

• Dr. Narasimhan's preliminary rebuttal damages estimate, based on her broader market definition and alternative damages methodology, places the range of potential damages at $18 million to $24 million pre-trebling, or $54 million to $72 million trebled. A judgment in this range would remain within the primary layer of the D&O tower, above the $10 million SIR.

We recommend following up with Whitmore & Crane LLP regarding Clarendon Mutual's coverage position in advance of any material increase in litigation activity, particularly as the FCC proceeding nears its conclusion and the district court case moves toward reactivation. A proactive engagement with the insurer may be advisable to clarify the coverage position before significant additional defense costs are incurred.

VII. Impact of FCC Outcome on Antitrust Defense — Strategic Considerations

A. Favorable FCC Outcome Scenario

If ALJ Fenwick, and ultimately the full Commission on any review, finds that Northgate's interconnection practices are compliant with Sections 251 and 252, this outcome would significantly bolster the defense of the Section 2 monopolization claim in the district court case. A favorable FCC determination would support the following arguments:

• Northgate had no regulatory duty to deal with Ridgepoint at the 14 disputed facilities, and the absence of a regulatory duty strongly weighs against finding an antitrust duty to deal under Trinko;

• The WAP is a commercially reasonable business practice that has been examined and validated by the agency with primary jurisdiction over interconnection obligations;

• A favorable FCC ruling could serve as the basis for a renewed Motion to Dismiss under Rule 12(b)(6) or, depending on the stage of the proceedings, a motion for summary judgment under Rule 56, arguing that the undisputed facts — including the FCC's regulatory determination — preclude Ridgepoint's antitrust claims as a matter of law.

We would seek to present the FCC's findings as quasi-binding or, at a minimum, highly persuasive on the issue of whether Northgate's conduct constitutes an actionable refusal to deal under antitrust law. While the district court is not strictly bound by the FCC's findings on antitrust issues, the FCC's expertise in telecommunications regulation and its detailed factual findings would carry substantial weight.

B. Adverse FCC Outcome Scenario

If the FCC finds that Northgate violated its interconnection obligations under Sections 251 and/or 252, Ridgepoint will argue that this regulatory finding supports its contention that Northgate engaged in anticompetitive conduct constituting monopolization or attempted monopolization under Section 2 of the Sherman Act. This is a significant risk that we are preparing to address.

However, an adverse FCC ruling does not automatically establish antitrust liability, and several important legal distinctions would remain in Northgate's favor:

• Under the Trinko framework, the Supreme Court held that the existence of a regulatory duty to provide access does not give rise to a corresponding antitrust duty. The availability of a regulatory remedy is itself a factor that weighs against recognition of an antitrust claim, because the regulatory regime provides a mechanism for addressing the alleged competitive harm without resort to the antitrust laws.

• Even if the FCC were to impose a regulatory remedy requiring Northgate to grant interconnection access, the Sherman Act does not create an additional private right of action for conduct that is already addressed by the comprehensive regulatory scheme of the Telecommunications Act. The defense would emphasize that the FCC's remedial authority is the appropriate mechanism for addressing any regulatory violations, and that Ridgepoint should not be permitted to recover antitrust damages for conduct that the FCC is already equipped to remedy.

• Dr. Narasimhan's broader market definition — which includes cable broadband, fixed wireless access, and wholesale ethernet services, and under which Northgate's market share is approximately 31% — would remain the core defense on the market power element regardless of the FCC's outcome. Market power and monopoly power are distinct elements of a Section 2 claim that must be independently established, and the FCC's analysis of interconnection obligations under Sections 251 and 252 does not address the antitrust market definition question.

C. Coordination with Regulatory Strategy

We continue to coordinate closely with Dr. Berger at Torrence Policy Group LLC on monitoring FCC Staff positions and any informal guidance that may emerge during the post-hearing briefing period and prior to the issuance of the initial decision. Dr. Berger's contacts within the FCC provide valuable insight into the likely direction and timing of the decision, although we emphasize that any such information is informal and should not be relied upon as predictive of the ultimate outcome.

Vantage Strategic Communications LLC (Allison Draper, Senior Managing Director) remains on standby for any public communications that may be necessary in response to the issuance of the FCC initial decision. The initial decision will be a public document, and depending on the outcome, it may attract media attention. We recommend coordinating with Ms. Draper and the Northgate corporate communications team to prepare draft press statements and talking points in advance of the decision, so that Northgate is prepared to respond promptly regardless of the outcome.

VIII. Recommendations and Next Steps

Based on the foregoing, we recommend the following actions:

1. Post-Hearing Briefs. Calderwood & Harkness will prepare and file Northgate's post-hearing brief by March 15, 2024, and the reply brief by April 12, 2024, in coordination with Torrence Policy Group LLC (Dr. Anton Berger) and Ellsworth Economic Consulting LLC (Dr. Priya Narasimhan). We will circulate a draft of the post-hearing brief to Catherine Ng and James Whitford for review and comment no later than March 8, 2024.

2. Joint Status Report. The next joint status report to Judge Wentworth is due in approximately March or April 2024, based on the 90-day cycle established in the stay order. Aaron Liu will coordinate with Daniel Stoyanov at Hargrove, Winslow & Burke LLP on the preparation and filing of the report.

3. Litigation Hold Compliance. We recommend scheduling the next comprehensive litigation hold compliance audit for Q2 2024 across all 23 custodians at Northgate Networks America Inc. and Northgate Telecommunications PLC. We will coordinate with Candela discovery Solutions Inc. (project manager: Kenji Takahashi) to confirm continued document preservation and the integrity of the hosted collection on the Concordia Review™ platform.

4. Board Reporting. We recommend that a summary update regarding the status of the Ridgepoint litigation and FCC proceeding be provided to the Northgate Telecommunications PLC Board of Directors through James Whitford. A separate Quarterly Client Report / Board Update Letter for Q1 2024 will be prepared by Calderwood & Harkness and provided to Mr. Whitford under separate cover following this memorandum. That letter will be prepared in a format suitable for distribution to the Board and will not contain attorney-client privileged work product analysis.

5. Budget Planning. We recommend beginning preparations for a revised and comprehensive litigation budget covering the anticipated post-stay discovery phase in the district court case. The budget will address projected costs for document review and production, depositions, expert discovery, and pre-trial motions. We will circulate the revised budget for Catherine Ng's review and approval once the FCC timeline becomes clearer and the likely timing of the stay being lifted can be better estimated.

6. Insurance. We recommend a follow-up engagement with Whitmore & Crane LLP regarding Clarendon Mutual Insurance Ltd.'s coverage position. Specifically, we recommend requesting a meeting or call with Clarendon Mutual's coverage counsel to discuss the status of the reservation of rights, the potential applicability of the antitrust exclusion, and the timeline for any coverage determination. This engagement should occur in advance of any material increase in litigation activity, so that Northgate can plan its defense budget with greater certainty regarding the availability of insurance coverage.

IX. Conclusion

The FCC evidentiary hearing held January 22–24, 2024 represented a significant milestone in the defense of the Ridgepoint matter. We believe that Northgate's witnesses and experts performed credibly and effectively, and that the hearing record is favorable to Northgate on the key issues of capacity utilization at the 14 disputed facilities, the commercial reasonableness of the Wholesale Access Policy, and Northgate's compliance with its interconnection obligations under Sections 251 and 252 of the Communications Act. While risks remain — particularly regarding the narrative of competitive harm to a smaller competitor and the question of functional equivalence of certain facilities — we are confident that Northgate's position is well-supported by the evidence and the law.

The district court case remains dormant under the stay order and the litigation is well-preserved through ongoing litigation hold compliance and document collection activities. No action is required in the district court in the near term beyond the periodic joint status reports.

The critical near-term focus is the preparation and filing of Northgate's post-hearing brief by March 15, 2024, and the reply brief by April 12, 2024. Following the completion of post-hearing briefing, the matter will enter a period of monitoring as we await ALJ Fenwick's initial decision, which we estimate could issue in mid-to-late 2024.

Calderwood & Harkness remains available at all times to discuss any aspect of this report or any other issues arising in connection with the Ridgepoint litigation and FCC proceeding. Please direct any questions or comments to Elaine Forsythe at (202) 555-0147 or eforsythe@calderwoodharkness.com, or to Aaron Liu at (202) 555-0163 or aliu@calderwoodharkness.com.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Elaine Forsythe Partner, Antitrust & Competition 1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-0147

Email: eforsythe@calderwoodharkness.com

cc:

Howard Bellamy, Partner, Calderwood & Harkness LLP, New York Aaron Liu, Senior Associate, Calderwood & Harkness LLP, Washington, D.C. Monica Reyes, Associate, Calderwood & Harkness LLP, Washington, D.C.

CONFIDENTIALITY NOTICE: This memorandum is a privileged and confidential attorney-client communication and attorney work product prepared by Calderwood & Harkness LLP for the exclusive use of the named recipients. This document contains confidential legal analysis, mental impressions, and strategic advice of counsel. It is not intended for distribution to any third party and should not be disclosed, copied, or distributed without the prior written consent of Calderwood & Harkness LLP and the client. Any inadvertent disclosure of this memorandum does not constitute a waiver of the attorney-client privilege or work product protection. If you have received this document in error, please notify Elaine Forsythe immediately at (202) 555-0147 and destroy all copies.

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

Vendor / Expert	Role	Fees to Date
Ellsworth Economic Consulting LLC (Dr. Priya Narasimhan)	Economic expert — market definition, damages analysis	$412,000
Torrence Policy Group LLC (Dr. Anton Berger)	Regulatory expert — Section 251/252 compliance	$187,500
Candela discovery Solutions Inc. (Kenji Takahashi)	E-discovery collection, hosting, and review platform	$294,000
Total Expert / Vendor Fees	$893,500

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
MEMORANDUM
TO:
Catherine Ng U.S. Deputy General Counsel Northgate Networks America Inc. 8200 Dulles Corner Boulevard, Suite 1100 Tysons Corner, VA 22182
James Whitford Group General Counsel Northgate Telecommunications PLC 14 Broadwall Lane London SE1 9PQ United Kingdom
FROM:
Elaine Forsythe Calderwood & Harkness LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005
DATE: February 1, 2024
RE: Status Report — Ridgepoint Communications Inc. v. Northgate Networks America Inc. et al., Case No. 1:22-cv-01487-CMW (E.D. Va.); FCC Docket No. WC-23-0042 (In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251)
Engagement Reference: C&H-2022-ATR-00419
I. Executive Summary
The purpose of this memorandum is to provide a comprehensive update on the above-referenced matters following the conclusion of the FCC evidentiary hearing held January 22–24, 2024 before Administrative Law Judge Robert Fenwick. This report covers the hearing proceedings in detail, the current status of the related district court litigation, the litigation budget, insurance coverage, and strategic considerations looking ahead.
Key Developments. The FCC evidentiary hearing in Docket No. WC-23-0042 was completed over three days, during which testimony was received from both Northgate and Ridgepoint witnesses, including lay witnesses and expert witnesses for each party. ALJ Fenwick has set a post-hearing briefing schedule requiring simultaneous initial briefs by March 15, 2024, and simultaneous reply briefs by April 12, 2024. The district court case pending before Judge Claudia M. Wentworth in the Eastern District of Virginia (Case No. 1:22-cv-01487-CMW) remains stayed pursuant to the Court's March 14, 2023 order, pending resolution of the FCC proceeding. No activity in the district court case is anticipated until the FCC proceeding reaches at least the initial decision stage.
High-Level Assessment. We believe Northgate performed well at the hearing. Northgate's witnesses — Diane Okoro, Patrick Salazar, and Dr. Anton Berger — presented credible and well-prepared testimony. Several exchanges on the record were favorable to Northgate, particularly regarding the genuine nature of the capacity constraints at the 14 disputed facilities and the commercial reasonableness of Northgate's Wholesale Access Policy ("WAP"). Ridgepoint's witnesses were competent but, under cross-examination, made concessions that we expect to exploit in the post-hearing briefing. We discuss these exchanges in detail in Section II below.
Budget Summary. Total Calderwood & Harkness LLP fees billed to date are $1,931,000. Combined vendor and expert spend is $893,500, bringing the total aggregate litigation spend to $2,824,500. These costs remain well within the blended rate cap and monthly fee cap parameters established at the outset of the engagement, and well within the $10 million self-insured retention under Northgate's Directors & Officers / Entity Liability Policy with Clarendon Mutual Insurance Ltd.
Next Critical Milestones. The immediate priority is the preparation and filing of Northgate's post-hearing brief, due March 15, 2024, followed by the reply brief due April 12, 2024. ALJ Fenwick has not established a fixed deadline for the issuance of his initial decision, but based on historical FCC practice, we estimate a decision could issue in mid-to-late 2024. That timeline may be extended given the FCC staffing constraints that previously caused the postponement of the hearing from September 2023 to January 2024.
II. FCC Evidentiary Hearing — Summary (January 22–24, 2024)
A. Procedural Background
Ridgepoint Communications Inc. filed its formal complaint with the Federal Communications Commission on February 7, 2023, initiating Docket No. WC-23-0042. The complaint alleges that Northgate Networks America Inc. has 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 grant Ridgepoint access to 14 specified facilities across the Philadelphia–Baltimore–Washington, D.C. corridor and by implementing the Wholesale Access Policy in a manner that Ridgepoint contends is discriminatory and anticompetitive.
Calderwood & Harkness filed Northgate's Answer and Affirmative Defenses in March 2023, denying the material allegations of the complaint and asserting, among other things, that Northgate's interconnection practices are commercially reasonable and consistent with applicable FCC rules, that Northgate is not subject to unbundled access obligations at the specific facilities at issue, and that the WAP is a facially neutral, company-wide policy adopted for legitimate business purposes.
On June 12, 2023, ALJ Robert Fenwick issued a scheduling order establishing deadlines for the exchange of witness lists, exhibit lists, pre-hearing briefs, and the evidentiary hearing itself. The hearing was originally set for September 2023. On August 28, 2023, ALJ Fenwick issued an order postponing the hearing to January 2024, citing FCC staffing constraints and scheduling conflicts within the Administrative Law Judge Division.
The parties exchanged pre-hearing briefs and exhibit lists in accordance with the modified schedule. The three-day evidentiary hearing was conducted on January 22, 23, and 24, 2024, at the FCC's headquarters in Washington, D.C. ALJ Fenwick presided over the hearing, and a court reporter prepared a verbatim transcript. The transcript has been filed in the docket and a copy has been provided to Catherine Ng under separate cover.
B. Northgate's Witnesses and Key Testimony
1. Diane Okoro — U.S. President, Northgate Networks America Inc. Ms. Okoro testified on Day 1 (January 22) and the morning of Day 2 (January 23). Her testimony was the centerpiece of Northgate's factual presentation.
Direct Examination. During direct examination conducted by Elaine Forsythe, Ms. Okoro provided an overview of Northgate Networks America Inc.'s business operations in the United States. She testified that Northgate operates approximately 42,000 route-miles of fiber-optic backbone and metro-ring infrastructure across 18 states, concentrated primarily along the eastern seaboard from Maine to Georgia. She described the company's customer base, which includes enterprise customers, government agencies, and wholesale telecommunications carriers.
Ms. Okoro explained the rationale behind the Wholesale Access Policy, which Northgate adopted in January 2020. She testified that the WAP was developed following a comprehensive review of Northgate's facility capacity, customer economics, and competitive positioning. The WAP established a minimum annual revenue commitment of $5 million for new and renewing wholesale access relationships, with the stated purpose of optimizing limited facility capacity for higher-value wholesale relationships that generate sufficient revenue to justify the capital investment required to maintain and expand network infrastructure. Ms. Okoro emphasized that the WAP applies uniformly to all wholesale carriers and is not directed at any specific company.
Ms. Okoro testified that Ridgepoint's aggregate annual spend with Northgate was approximately $1.8 million in fiscal year 2021, significantly below the $5 million threshold established by the WAP. She further testified that the Master Interconnection Agreement ("MIA") between Northgate and Ridgepoint had a five-year term running from June 15, 2015 through June 14, 2020, and that upon expiration of the MIA, Northgate declined to renew under the terms of the WAP because Ridgepoint did not meet the minimum revenue commitment.
Ms. Okoro addressed the 14 disputed facilities in detail. She testified that all 14 facilities are currently operating at or above 85% capacity utilization, based on internal engineering assessments conducted in the ordinary course of business. She presented data from Northgate's internal capacity management system, showing that several of the facilities in question are nearing their maximum physical capacity for additional interconnection equipment. Ms. Okoro explained that granting Ridgepoint access at these facilities would require displacement of existing wholesale customers or significant capital expenditures for facility expansion, neither of which is commercially justified at Ridgepoint's current revenue level.
With respect to the existing colocation arrangements, Ms. Okoro confirmed that Ridgepoint continues to occupy three existing colocation spaces at Northgate facilities in northern Virginia under a month-to-month holdover arrangement. She explained that the holdover rate is set at 120% of the prior contractual rate — specifically, $14,400 per month per facility, compared to the prior rate of $12,000 per month per facility under the expired MIA. Ms. Okoro testified that this holdover arrangement was offered as a reasonable accommodation to allow Ridgepoint adequate time to transition its interconnection to alternative facilities, and that Northgate has not sought to evict Ridgepoint from these spaces.
Cross-Examination. Cross-examination was conducted by Victoria Hargrove of Hargrove, Winslow & Burke LLP, counsel for Ridgepoint. Ms. Hargrove focused primarily on the timing of the WAP adoption relative to Ridgepoint's initial interconnection inquiries. She attempted to establish a factual narrative in which the WAP was developed specifically to exclude Ridgepoint. Ms. Okoro was well-prepared for this line of questioning and maintained consistently that the WAP was a company-wide policy developed in response to industry trends and capacity constraints, not targeted at any single carrier. Ms. Okoro acknowledged that Northgate was aware of Ridgepoint's interest in expanding its interconnection with Northgate at the time the WAP was being developed, but she testified credibly that the WAP was applied equally to all carriers that did not meet the minimum revenue threshold, and that several other carriers in addition to Ridgepoint were affected by the policy.
Ms. Hargrove also questioned Ms. Okoro about internal communications regarding Ridgepoint. Ms. Okoro did not make any materially damaging concessions during this line of questioning. We will address the specific internal communications at issue in our post-hearing brief.
2. Patrick Salazar — Chief Regulatory Officer, Northgate Telecommunications PLC. Mr. Salazar testified on the afternoon of Day 2 (January 23). His testimony focused on the regulatory framework governing Northgate's interconnection obligations.
Direct Examination. During direct examination conducted by Aaron Liu, Mr. Salazar provided an overview of the regulatory landscape applicable to Northgate's interconnection practices under Sections 251 and 252 of the Communications Act. He drew a critical distinction between the unbundled access obligations imposed on incumbent local exchange carriers ("ILECs") under Section 251(c) and the commercially negotiated interconnection arrangements that govern the relationships between competitive carriers and facilities-based providers. Mr. Salazar testified that Northgate, as a facilities-based carrier with a mixed regulatory profile, is not subject to ILEC unbundling requirements at the specific facilities at issue in this proceeding.
Mr. Salazar provided detailed testimony regarding the 14 disputed facilities, which are located across the Philadelphia–Baltimore–Washington, D.C. corridor. He addressed the regulatory classification of each facility, explaining that many of the facilities are meet-me-room or non-ILEC central-office facilities, carrier hotels, or Northgate-owned co-location centers that do not trigger the same statutory interconnection obligations as traditional ILEC central offices. He testified that Northgate has been transparent with the FCC regarding the operational characteristics and regulatory status of these facilities throughout the proceeding.
Cross-Examination. During cross-examination, Ridgepoint's counsel pressed Mr. Salazar on whether certain of the 14 facilities function as de facto central offices, notwithstanding their formal regulatory classification. Ridgepoint argued that the practical function of these facilities — serving as critical points of interconnection for multiple carriers — renders them functionally equivalent to central offices for purposes of Section 251 obligations. Mr. Salazar maintained the regulatory distinction, testifying that the FCC has not adopted a "functional equivalence" test for determining ILEC status and that the regulatory classification of a facility is determined by statutory criteria, not by the volume of interconnection traffic passing through it. Mr. Salazar's performance on cross-examination was solid, though we note this issue of functional equivalence is likely to be a central point of contention in the post-hearing briefing.
3. Dr. Anton Berger — Senior Advisor, Torrence Policy Group LLC (Defendant's Regulatory Expert). Dr. Berger testified on Day 3 (January 24). Dr. Berger is a former Deputy Bureau Chief of the FCC's Wireline Competition Bureau and brings substantial credibility and expertise to the regulatory issues in this proceeding.
Direct Examination. Dr. Berger opined that Northgate's interconnection practices are commercially reasonable and consistent with established FCC precedent. He provided an extensive analysis of the FCC's rules governing interconnection and colocation obligations under Sections 251 and 252, as well as relevant FCC orders and advisory opinions addressing the scope of interconnection obligations in the context of facilities-based competition. Dr. Berger testified that minimum revenue commitments of the type embodied in Northgate's WAP are standard industry practice among incumbent and facilities-based carriers, and that such policies have not been found by the FCC to violate Section 251 obligations. He identified several analogous policies adopted by other major carriers and discussed the FCC's treatment of those policies in prior proceedings.
Dr. Berger also addressed Ridgepoint's argument that the WAP is pretextual — that is, that it was adopted for the purpose of excluding Ridgepoint specifically rather than for legitimate business reasons. Dr. Berger testified that the WAP, by its terms, is facially neutral and that the $5 million minimum revenue commitment reflects a rational economic threshold for the type of wholesale infrastructure access at issue. He noted that the WAP was adopted more than a year before Ridgepoint submitted its first interconnection request for the disputed facilities, which undermines the argument that the policy was developed in response to Ridgepoint's specific requests.
Cross-Examination. Cross-examination of Dr. Berger was conducted by Daniel Stoyanov of Hargrove, Winslow & Burke LLP. Mr. Stoyanov challenged Dr. Berger's characterization of industry norms, presenting data from a survey of carrier policies suggesting that minimum revenue commitments at the $5 million level are above the industry median. Dr. Berger acknowledged that the $5 million threshold is on the higher end of the range but testified that it is within the bounds of commercially reasonable practice, particularly for a carrier of Northgate's size and scale of infrastructure investment. Dr. Berger was well-prepared and maintained his positions effectively throughout the cross-examination. We consider his testimony to have been a significant asset to Northgate's presentation.
C. Ridgepoint's Witnesses and Key Testimony
1. Gregory Trent — CEO / Founder, Ridgepoint Communications Inc. Mr. Trent testified on Day 1 (January 22). He was the first witness called in the proceeding.
Direct Examination. Mr. Trent described Ridgepoint's business operations. Ridgepoint is a competitive local exchange carrier ("CLEC") and enterprise broadband provider operating across five states: Pennsylvania, New Jersey, Delaware, Maryland, and Virginia. The company owns and operates approximately 6,200 route-miles of owned and leased fiber-optic infrastructure, employs approximately 1,450 people, and reported fiscal year 2022 revenue of approximately $387 million. Mr. Trent testified that Ridgepoint has experienced significant growth over the past several years and has been actively expanding its enterprise service offerings in the Mid-Atlantic market.
Mr. Trent claimed that Northgate's refusal to grant Ridgepoint access at the 14 disputed facilities has caused substantial competitive harm and has resulted in lost business opportunities in the Mid-Atlantic enterprise market. He described specific potential customer contracts that Ridgepoint was allegedly unable to pursue because it lacked interconnection access at critical Northgate facilities. Mr. Trent characterized the WAP as a deliberate effort by Northgate to freeze out smaller competitors and consolidate its dominant market position.
Cross-Examination. Cross-examination of Mr. Trent was conducted by Elaine Forsythe and Aaron Liu. The cross-examination highlighted several points favorable to Northgate. First, we elicited testimony that Ridgepoint has in fact continued to grow its revenues year-over-year despite the alleged denial of access at the 14 facilities. Mr. Trent acknowledged that Ridgepoint's fiscal year 2023 revenue exceeded fiscal year 2022 revenue, though he attributed this growth to markets and services not dependent on Northgate infrastructure. Second, we explored alternative infrastructure options available to Ridgepoint in the Philadelphia–Baltimore–Washington, D.C. corridor, including third-party colocation providers, alternative fiber routes, and competitive carrier facilities. Mr. Trent acknowledged the availability of some alternative options but characterized them as inferior in terms of latency, capacity, and cost-effectiveness. Third, we established that Ridgepoint's decision not to pursue the WAP's $5 million minimum revenue commitment was based on Ridgepoint's own business judgment, not on an inability to meet the threshold. This point will be developed further in the post-hearing brief.
2. Samira Hashemi — COO, Ridgepoint Communications Inc. Ms. Hashemi testified on Day 2 (January 23). Her testimony focused on operational and technical issues.
Direct Examination. Ms. Hashemi provided operational testimony regarding Ridgepoint's interconnection requests, which were submitted between March 2021 and August 2022 for the 14 Northgate facilities. She walked through the correspondence between the parties, including initial requests, Northgate's responses citing the WAP requirements, and subsequent follow-up communications. Ms. Hashemi testified regarding the technical and economic necessity of access to Northgate's last-mile infrastructure, asserting that Northgate controls critical network assets that are not replicable by competitors in the relevant geography.
Cross-Examination. During cross-examination, the Calderwood & Harkness team elicited testimony from Ms. Hashemi that Ridgepoint had not fully explored all alternative colocation and interconnection options in the corridor before filing the FCC complaint. Specifically, Ms. Hashemi acknowledged that Ridgepoint had not submitted formal applications for colocation at several facilities operated by third-party providers, and that Ridgepoint's analysis of alternatives was based in part on preliminary cost estimates rather than formal proposals. This testimony is valuable because it supports Northgate's argument that Ridgepoint has not exhausted commercially available alternatives and that access to Northgate's specific facilities is not, in fact, essential to competition.
3. Dr. Leonard Kuo — Professor of Economics, Cavendish University (Plaintiff's Economic Expert). Dr. Kuo testified on Day 3 (January 24). Dr. Kuo is a professor of economics at Cavendish University and was retained by Ridgepoint to provide expert testimony on market definition, market power, and competitive effects.
Direct Examination. Dr. Kuo presented a preliminary market analysis in which he defined the relevant product market as last-mile enterprise fiber-optic transport services (lit and dark fiber) at speeds of 1 Gbps and above. He defined the relevant geographic market as the Philadelphia–Baltimore–Washington, D.C. corridor. Under this narrow market definition, Dr. Kuo asserted that Northgate holds approximately 68% market share based on available revenue and capacity data. Dr. Kuo testified that this market share, combined with alleged barriers to entry, supports a finding that Northgate possesses monopoly power or, at a minimum, significant market power, in the relevant market. Dr. Kuo also presented a preliminary framework for damages analysis, although he noted that a full damages report had not been prepared for the FCC proceeding, which is a regulatory proceeding focused on interconnection obligations under Sections 251 and 252, rather than an antitrust damages proceeding.
Cross-Examination. Cross-examination of Dr. Kuo was conducted by Aaron Liu. Mr. Liu challenged Dr. Kuo's narrow market definition, focusing on Dr. Kuo's exclusion of cable broadband services, fixed wireless access services, and wholesale ethernet services from the relevant product market. Mr. Liu presented data showing that several major cable operators and fixed wireless providers offer enterprise-grade services at speeds of 1 Gbps and above in the relevant geographic area, and that these services compete directly with fiber-optic transport services for many enterprise customers. Dr. Kuo defended his methodology, arguing that fiber-optic services offer distinct performance characteristics — particularly with respect to latency, symmetrical upload/download speeds, and reliability — that make them a separate product market. However, several of Dr. Kuo's responses appeared to concede that certain high-capacity cable and fixed wireless offerings may function as partial substitutes in some market segments. These concessions are significant and will be highlighted in our post-hearing brief. Dr. Kuo's concessions support the broader market definition proposed by Dr. Priya Narasimhan of Ellsworth Economic Consulting LLC, under which Northgate's market share is approximately 31% — well below the threshold typically required to establish monopoly power under Section 2 of the Sherman Act.
D. Overall Assessment of Hearing Performance
Overall, we assess Northgate's hearing performance as strong. The following points summarize our evaluation:
Favorable Developments. Northgate's witnesses were well-prepared and presented credible, consistent testimony. Coordination with Dr. Berger at Torrence Policy Group LLC was effective, and the regulatory arguments were clearly and persuasively presented. Key favorable moments include:
• Ms. Okoro's testimony regarding capacity utilization at or above 85% at all 14 disputed facilities was well-documented and supported by internal engineering data that was admitted into the record as Northgate Exhibits 14 through 27. The capacity data is a critical element of Northgate's defense, as it demonstrates that the decision to limit access at these facilities is grounded in genuine physical constraints, not in anticompetitive intent.
• Mr. Salazar's articulation of the regulatory distinction between ILEC unbundling obligations and commercially negotiated interconnection arrangements was clear and effective. This distinction is central to Northgate's defense and, if credited by ALJ Fenwick, could be dispositive of the FCC proceeding.
• Dr. Berger's testimony regarding industry norms for minimum revenue commitments was well-received. His experience as a former Deputy Bureau Chief of the FCC's Wireline Competition Bureau lends significant weight to his opinions.
• The cross-examination of Mr. Trent established that Ridgepoint has continued to grow despite the alleged denial of access, and the cross-examination of Ms. Hashemi revealed that Ridgepoint did not fully explore alternative interconnection options before filing its complaint.
• The cross-examination of Dr. Kuo elicited concessions regarding partial substitutability of cable and fixed wireless services that undermine his narrow market definition.
Risk Areas. We also note several areas of concern:
• Ridgepoint's counsel, Victoria Hargrove and Daniel Stoyanov, effectively elicited some sympathy during the hearing regarding the impact of the WAP on a smaller competitor. Mr. Trent's narrative of a smaller company being shut out by a larger incumbent resonated on a general level, and we expect Ridgepoint to emphasize this narrative in its post-hearing brief.
• The holdover arrangement at the three northern Virginia facilities — under which Ridgepoint continues to occupy colocation spaces on a month-to-month basis — could be used by Ridgepoint to argue a prior course of dealing that Northgate is selectively curtailing. We will need to address this argument carefully in the post-hearing brief, emphasizing that the holdover arrangement was offered as an accommodation, not as a recognition of an ongoing interconnection obligation.
• ALJ Fenwick appeared engaged and asked probing questions of both sides throughout the hearing. He showed particular interest in the capacity utilization data, including questions about the methodology used to calculate utilization percentages and whether Northgate had considered facility expansion. He also asked pointed questions about the timing of the WAP adoption relative to the expiration of the MIA with Ridgepoint. While these questions do not necessarily signal a predisposition, they indicate that ALJ Fenwick is likely to scrutinize these issues closely in reaching his decision.
III. Post-Hearing Briefing Schedule
Following the close of the evidentiary record on January 24, 2024, ALJ Fenwick entered an order establishing the following post-hearing briefing schedule:
• Post-Hearing Briefs: Due March 15, 2024 (simultaneous exchange). Each party shall file its initial post-hearing brief and proposed findings of fact and conclusions of law with the Administrative Law Judge Division by 5:00 p.m. Eastern Time. Briefs shall not exceed 75 pages, double-spaced, exclusive of the table of contents, table of authorities, and proposed findings of fact.
• Post-Hearing Reply Briefs: Due April 12, 2024 (simultaneous exchange). Each party shall file its reply brief by 5:00 p.m. Eastern Time. Reply briefs shall not exceed 40 pages, double-spaced.
Calderwood & Harkness is currently preparing Northgate's post-hearing brief. We are coordinating closely with Dr. Anton Berger at Torrence Policy Group LLC on the regulatory arguments and with Dr. Priya Narasimhan at Ellsworth Economic Consulting LLC on the economic analysis to be incorporated into the brief. Dr. Narasimhan was not a hearing witness (as her retained scope primarily pertains to the antitrust damages issues in the district court litigation), but her analysis of broader market definition and competitive dynamics is relevant to the FCC proceeding insofar as it bears on the commercial reasonableness of the WAP.
The key themes for Northgate's post-hearing brief will include:
(1) Northgate's interconnection practices are commercially reasonable under FCC precedent and consistent with the practices of similarly situated facilities-based carriers;
(2) The Wholesale Access Policy is a facially neutral, company-wide policy with legitimate business justification, adopted in January 2020 — more than a year before Ridgepoint submitted its first interconnection request for the disputed facilities — and applied uniformly across Northgate's wholesale customer base;
(3) The capacity constraints at the 14 disputed facilities are genuine, well-documented by internal engineering data admitted into the hearing record, and reflect real physical limitations on available colocation and interconnection space;
(4) Ridgepoint has not demonstrated entitlement to compelled access under Sections 251 or 252 of the Communications Act, because the specific facilities at issue are not subject to ILEC unbundled access obligations, and Ridgepoint has not exhausted commercially available alternative interconnection options.
With respect to the timeline for ALJ Fenwick's initial decision, we note that there is no fixed statutory or regulatory deadline for the issuance of the decision following completion of the post-hearing briefing. Based on historical FCC practice in contested evidentiary proceedings, we estimate that the initial decision could be issued in mid-to-late 2024, though this timeline may be further extended given the FCC resource constraints that already caused the postponement of the hearing from September 2023 to January 2024. We will monitor the docket closely and report any developments to you promptly.
IV. Status of District Court Litigation — Case No. 1:22-cv-01487-CMW
A. Continued Stay
The district court case, Ridgepoint Communications Inc. v. Northgate Networks America Inc. et al., Case No. 1:22-cv-01487-CMW, remains stayed pursuant to Judge Claudia M. Wentworth's order dated March 14, 2023. That order granted Northgate's Motion to Stay Pending Resolution of FCC Proceedings, filed on March 6, 2023. The Court found that the FCC proceeding involves threshold regulatory questions — specifically, the scope of Northgate's interconnection obligations under Sections 251 and 252 — that are within the primary jurisdiction of the FCC and whose resolution could substantially narrow or eliminate the issues in the district court case.
Northgate's Motion to Dismiss, filed on November 14, 2022, was denied without prejudice by Judge Wentworth in connection with the stay order. The Court's order expressly stated that Northgate may renew the Motion to Dismiss when the stay is lifted, and that the denial was based solely on the Court's determination that the motion would be better evaluated following the FCC's resolution of the regulatory issues. This procedural posture preserves Northgate's arguments for dismissal, including its arguments under the Trinko framework and the filed-rate doctrine.
The parties have been filing periodic joint status reports every 90 days, as required by the stay order. The most recent joint status report was filed in coordination with Daniel Stoyanov of Hargrove, Winslow & Burke LLP, who serves as lead counsel for Ridgepoint in the district court litigation. The joint status reports have been largely ministerial, reporting on the status of the FCC proceeding and confirming that both parties agree the stay should remain in effect. The next joint status report will be due in approximately March or April 2024, and Aaron Liu will coordinate with Mr. Stoyanov on that filing.
B. Anticipated Reactivation
The stay will likely be lifted following one or more of the following events: (1) the issuance of ALJ Fenwick's initial decision in FCC Docket No. WC-23-0042; (2) the issuance of any FCC final order on review of the initial decision; or (3) a motion by either party to lift the stay based on changed circumstances. We anticipate that neither party will move to lift the stay before the FCC issues at least the initial decision.
The outcome of the FCC proceeding will have significant strategic implications for the district court case:
• If the FCC rules favorably for Northgate — i.e., finding that Northgate's interconnection practices are compliant with Sections 251 and 252 — the FCC's determination could provide substantial support for a renewed Motion to Dismiss and/or a motion for summary judgment on Ridgepoint's Section 2 monopolization claim. A favorable FCC ruling would reinforce the argument that Northgate had no duty to deal and that the WAP constitutes a legitimate, commercially reasonable business practice, not an anticompetitive refusal to deal actionable under the Sherman Act.
• If the FCC rules against Northgate on the interconnection issue — i.e., finding that Northgate has violated Sections 251 and/or 252 — Ridgepoint will undoubtedly argue that this finding supports its antitrust claims. However, an adverse FCC ruling does not automatically establish antitrust liability. As the Supreme Court held in Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), a regulatory violation under the Telecommunications Act does not, standing alone, give rise to an antitrust claim under Section 2 of the Sherman Act. The Trinko framework distinguishes between regulatory duties and antitrust duties, and the availability of a regulatory remedy is a factor weighing against the recognition of an antitrust claim. We would emphasize in the district court litigation that even if the FCC imposes a regulatory remedy requiring Northgate to grant interconnection access, the Sherman Act does not create an additional private right of action for conduct already addressed by the comprehensive regulatory scheme of the Telecommunications Act. We discuss these strategic considerations in greater detail in Section VII below.
C. Discovery Readiness
Although discovery has not commenced due to the stay, we have maintained full readiness for the eventual resumption of the district court litigation:
Litigation Hold. The litigation hold imposed at the commencement of this engagement remains in effect across all 23 identified custodians at Northgate Networks America Inc. and Northgate Telecommunications PLC. Custodians include key executives, regulatory affairs personnel, network engineering personnel, and sales and wholesale operations personnel. The hold covers all categories of documents and electronically stored information ("ESI") potentially relevant to the claims and defenses in this matter.
Document Collection and Review. Candela discovery Solutions Inc. (project manager: Kenji Takahashi) continues to host the collected ESI on the Concordia Review™ platform. Approximately 1.2 million documents have been collected to date, and approximately 87,000 documents have been identified as potentially responsive based on preliminary search term and predictive coding analysis. No documents have been produced, as discovery has not been served, but the collection is being maintained in a state of readiness for production when the stay is lifted.
Compliance Audits. The most recent litigation hold compliance audit was conducted in August 2023. No material issues were identified. Periodic custodian verification is ongoing, with individual custodians being contacted on a rolling basis to confirm continued compliance with the hold obligations. We recommend scheduling the next comprehensive compliance audit for Q2 2024, as discussed in Section VIII below.
Draft discovery Plan. Calderwood & Harkness has maintained a draft Proposed discovery Plan and Scheduling Order in readiness for reactivation of the case. The draft contemplates a fact discovery period of approximately nine months and an expert discovery period of approximately four months. Proposed depositions include, on Ridgepoint's side, Gregory Trent (CEO), Samira Hashemi (COO), and Dr. Leonard Kuo (economic expert); and, on Northgate's side, Diane Okoro (U.S. President), Patrick Salazar (Chief Regulatory Officer), Dr. Priya Narasimhan (economic expert, Ellsworth Economic Consulting LLC), and Dr. Anton Berger (regulatory expert, Torrence Policy Group LLC). The draft will be updated as circumstances warrant.
V. Litigation Budget and Fee Summary
A. Calderwood & Harkness LLP Fees
Pre-Stay Period (September 2022 – March 2023): $1,247,600. This period encompasses the initial engagement, case assessment, and all pre-stay filings and proceedings. Key activities during this period include:
• Initial case assessment and litigation strategy development (September – October 2022);
• Preparation and filing of Northgate's Motion to Dismiss (November 14, 2022);
• Preparation of Northgate's reply brief in support of the Motion to Dismiss (January 30, 2023);
• Preparation for and attendance at oral argument on the Motion to Dismiss (February 22, 2023);
• Preparation and filing of Northgate's Motion to Stay Pending Resolution of FCC Proceedings (March 6, 2023), including supporting memorandum and declarations;
• Client communications, strategic coordination, and initial document preservation activities.
Dormancy / FCC-Related Work (April 2023 – Present): $683,400. This period covers the work performed during the stay of the district court case and the pendency of the FCC proceeding. Key activities during this period include:
• Preparation and filing of Northgate's Answer and Affirmative Defenses in FCC Docket No. WC-23-0042;
• Preparation of Northgate's FCC pre-hearing brief;
• Extensive hearing preparation, including witness preparation sessions with Diane Okoro, Patrick Salazar, and Dr. Anton Berger;
• Preparation and filing of exhibit lists and other pre-hearing submissions;
• Attendance at and participation in the FCC evidentiary hearing (January 22–24, 2024), including three full days of testimony;
• Periodic joint status report coordination with Ridgepoint's counsel in the district court case;
• Client reporting and strategic advice.
Total C&H Fees Billed to Date: $1,931,000.
The blended rate cap of $925 per hour and the monthly fee cap of $275,000 have been observed throughout the engagement. There have been no overages requiring prior approval from Catherine Ng. Detailed monthly invoices have been provided to the Northgate Networks America Inc. legal department in the ordinary course.
B. Expert and Vendor Fees
The following table summarizes expert and vendor fees incurred to date:
Ellsworth Economic Consulting's fees reflect Dr. Narasimhan's work on preliminary market definition analysis, development of a rebuttal damages framework, review of Dr. Kuo's methodologies, and ongoing advisory support. Torrence Policy Group's fees reflect Dr. Berger's regulatory analysis, hearing preparation, and testimony at the FCC evidentiary hearing. Candela discovery Solutions' fees reflect initial document collection, processing, hosting on the Concordia Review™ platform, and ongoing maintenance of the hosted collection.
C. Aggregate Litigation Spend
Total aggregate spend (C&H + experts + vendors): $2,824,500.
Please note that fees for coverage counsel Whitmore & Crane LLP (380 Madison Avenue, 22nd Floor, New York, NY 10017) are billed independently to Northgate and are not included in this total. Whitmore & Crane's fees relate to insurance coverage advice regarding the Clarendon Mutual Directors & Officers / Entity Liability Policy and are tracked separately.
Additionally, fees for Vantage Strategic Communications LLC (Allison Draper, Senior Managing Director) for media strategy related to the litigation and FCC proceeding are separately tracked by the Northgate corporate communications team and are not included in this aggregate total.
D. Budget Forecast
Near-Term Spend (February – April 2024). The primary near-term expenditure will be the preparation and filing of the post-hearing brief (due March 15, 2024) and the reply brief (due April 12, 2024). We estimate additional C&H fees for this post-hearing briefing phase of approximately $120,000 to $150,000, which includes drafting, internal review, expert coordination, and filing. Expert fees for Dr. Berger and Dr. Narasimhan's contributions to the post-hearing briefing are estimated at an additional $30,000 to $50,000 combined.
Ongoing Monitoring Costs. During the continued dormancy of the district court case, ongoing monitoring costs are estimated at $15,000 to $25,000 per month. These costs cover primarily the preparation and filing of periodic joint status reports, litigation hold monitoring and custodian compliance activities, client communications, and monitoring of the FCC docket for developments.
Post-Stay discovery Phase. We anticipate a significant budget increase when the district court stay is lifted and discovery commences. The cost of the discovery phase will depend on several variables, including the scope of discovery as defined by Judge Wentworth's scheduling order, the volume of documents to be reviewed and produced, the number and length of depositions, and the development of expert reports. We will prepare a revised and detailed litigation budget for the discovery phase and circulate it for Catherine Ng's review once the FCC timeline becomes clearer and the likely timing of the stay being lifted can be better estimated.
VI. Insurance Coverage Status
Northgate Networks America Inc. tendered the Ridgepoint claim to Clarendon Mutual Insurance Ltd. on October 12, 2022, promptly following service of the complaint. Clarendon Mutual issued a reservation of rights letter dated November 3, 2022, acknowledging coverage under the Directors & Officers / Entity Liability Policy but expressly reserving the right to deny coverage based on the applicability of the antitrust exclusion set forth in Exclusion 4(j) of the policy. The reservation of rights letter did not deny coverage; rather, it placed Northgate on notice that Clarendon Mutual may assert the antitrust exclusion as a basis for denying indemnification for any judgment or settlement arising from the antitrust claims asserted by Ridgepoint.
The relevant insurance coverage structure is as follows:
• Primary Policy: Clarendon Mutual Insurance Ltd. — Directors & Officers / Entity Liability Policy, with a $50 million per-occurrence limit and a $10 million self-insured retention ("SIR").
• Excess D&O Tower: Three layers of excess coverage totaling $100 million in aggregate, structured as follows:
• Clarendon Mutual Insurance Ltd.: $50 million primary layer;
• Avalon Specialty Underwriters Inc.: $30 million first excess layer;
• Pinnacle Re Ltd.: $20 million second excess layer.
• Total D&O Tower: $150 million (inclusive of the primary layer).
Whitmore & Crane LLP continues to monitor the coverage position on Northgate's behalf. There has been no further communication from Clarendon Mutual since the issuance of the reservation of rights letter in November 2022. We understand that Whitmore & Crane has been in periodic informal contact with Clarendon Mutual's coverage counsel to maintain the dialogue and preserve Northgate's coverage rights.
Northgate's total litigation spend to date ($2,824,500) remains well within the $10 million self-insured retention. Accordingly, all defense costs incurred to date are being borne entirely by Northgate, and no claim for reimbursement of defense costs has been submitted to Clarendon Mutual.
With respect to damages exposure, we note the following:
• Ridgepoint's damages claim, as articulated in its district court complaint, is $127 million in pre-trebling damages under Section 2 of the Sherman Act, which would yield $381 million in trebled damages under Section 4 of the Clayton Act. A judgment at this level would exceed the primary policy limit of $50 million but would fall within the total D&O tower of $150 million, provided that coverage is confirmed and the antitrust exclusion under Exclusion 4(j) is determined not to apply.
• Dr. Narasimhan's preliminary rebuttal damages estimate, based on her broader market definition and alternative damages methodology, places the range of potential damages at $18 million to $24 million pre-trebling, or $54 million to $72 million trebled. A judgment in this range would remain within the primary layer of the D&O tower, above the $10 million SIR.
We recommend following up with Whitmore & Crane LLP regarding Clarendon Mutual's coverage position in advance of any material increase in litigation activity, particularly as the FCC proceeding nears its conclusion and the district court case moves toward reactivation. A proactive engagement with the insurer may be advisable to clarify the coverage position before significant additional defense costs are incurred.
VII. Impact of FCC Outcome on Antitrust Defense — Strategic Considerations
A. Favorable FCC Outcome Scenario
If ALJ Fenwick, and ultimately the full Commission on any review, finds that Northgate's interconnection practices are compliant with Sections 251 and 252, this outcome would significantly bolster the defense of the Section 2 monopolization claim in the district court case. A favorable FCC determination would support the following arguments:
• Northgate had no regulatory duty to deal with Ridgepoint at the 14 disputed facilities, and the absence of a regulatory duty strongly weighs against finding an antitrust duty to deal under Trinko;
• The WAP is a commercially reasonable business practice that has been examined and validated by the agency with primary jurisdiction over interconnection obligations;
• A favorable FCC ruling could serve as the basis for a renewed Motion to Dismiss under Rule 12(b)(6) or, depending on the stage of the proceedings, a motion for summary judgment under Rule 56, arguing that the undisputed facts — including the FCC's regulatory determination — preclude Ridgepoint's antitrust claims as a matter of law.
We would seek to present the FCC's findings as quasi-binding or, at a minimum, highly persuasive on the issue of whether Northgate's conduct constitutes an actionable refusal to deal under antitrust law. While the district court is not strictly bound by the FCC's findings on antitrust issues, the FCC's expertise in telecommunications regulation and its detailed factual findings would carry substantial weight.
B. Adverse FCC Outcome Scenario
If the FCC finds that Northgate violated its interconnection obligations under Sections 251 and/or 252, Ridgepoint will argue that this regulatory finding supports its contention that Northgate engaged in anticompetitive conduct constituting monopolization or attempted monopolization under Section 2 of the Sherman Act. This is a significant risk that we are preparing to address.
However, an adverse FCC ruling does not automatically establish antitrust liability, and several important legal distinctions would remain in Northgate's favor:
• Under the Trinko framework, the Supreme Court held that the existence of a regulatory duty to provide access does not give rise to a corresponding antitrust duty. The availability of a regulatory remedy is itself a factor that weighs against recognition of an antitrust claim, because the regulatory regime provides a mechanism for addressing the alleged competitive harm without resort to the antitrust laws.
• Even if the FCC were to impose a regulatory remedy requiring Northgate to grant interconnection access, the Sherman Act does not create an additional private right of action for conduct that is already addressed by the comprehensive regulatory scheme of the Telecommunications Act. The defense would emphasize that the FCC's remedial authority is the appropriate mechanism for addressing any regulatory violations, and that Ridgepoint should not be permitted to recover antitrust damages for conduct that the FCC is already equipped to remedy.
• Dr. Narasimhan's broader market definition — which includes cable broadband, fixed wireless access, and wholesale ethernet services, and under which Northgate's market share is approximately 31% — would remain the core defense on the market power element regardless of the FCC's outcome. Market power and monopoly power are distinct elements of a Section 2 claim that must be independently established, and the FCC's analysis of interconnection obligations under Sections 251 and 252 does not address the antitrust market definition question.
C. Coordination with Regulatory Strategy
We continue to coordinate closely with Dr. Berger at Torrence Policy Group LLC on monitoring FCC Staff positions and any informal guidance that may emerge during the post-hearing briefing period and prior to the issuance of the initial decision. Dr. Berger's contacts within the FCC provide valuable insight into the likely direction and timing of the decision, although we emphasize that any such information is informal and should not be relied upon as predictive of the ultimate outcome.
Vantage Strategic Communications LLC (Allison Draper, Senior Managing Director) remains on standby for any public communications that may be necessary in response to the issuance of the FCC initial decision. The initial decision will be a public document, and depending on the outcome, it may attract media attention. We recommend coordinating with Ms. Draper and the Northgate corporate communications team to prepare draft press statements and talking points in advance of the decision, so that Northgate is prepared to respond promptly regardless of the outcome.
VIII. Recommendations and Next Steps
Based on the foregoing, we recommend the following actions:
1. Post-Hearing Briefs. Calderwood & Harkness will prepare and file Northgate's post-hearing brief by March 15, 2024, and the reply brief by April 12, 2024, in coordination with Torrence Policy Group LLC (Dr. Anton Berger) and Ellsworth Economic Consulting LLC (Dr. Priya Narasimhan). We will circulate a draft of the post-hearing brief to Catherine Ng and James Whitford for review and comment no later than March 8, 2024.
2. Joint Status Report. The next joint status report to Judge Wentworth is due in approximately March or April 2024, based on the 90-day cycle established in the stay order. Aaron Liu will coordinate with Daniel Stoyanov at Hargrove, Winslow & Burke LLP on the preparation and filing of the report.
3. Litigation Hold Compliance. We recommend scheduling the next comprehensive litigation hold compliance audit for Q2 2024 across all 23 custodians at Northgate Networks America Inc. and Northgate Telecommunications PLC. We will coordinate with Candela discovery Solutions Inc. (project manager: Kenji Takahashi) to confirm continued document preservation and the integrity of the hosted collection on the Concordia Review™ platform.
4. Board Reporting. We recommend that a summary update regarding the status of the Ridgepoint litigation and FCC proceeding be provided to the Northgate Telecommunications PLC Board of Directors through James Whitford. A separate Quarterly Client Report / Board Update Letter for Q1 2024 will be prepared by Calderwood & Harkness and provided to Mr. Whitford under separate cover following this memorandum. That letter will be prepared in a format suitable for distribution to the Board and will not contain attorney-client privileged work product analysis.
5. Budget Planning. We recommend beginning preparations for a revised and comprehensive litigation budget covering the anticipated post-stay discovery phase in the district court case. The budget will address projected costs for document review and production, depositions, expert discovery, and pre-trial motions. We will circulate the revised budget for Catherine Ng's review and approval once the FCC timeline becomes clearer and the likely timing of the stay being lifted can be better estimated.
6. Insurance. We recommend a follow-up engagement with Whitmore & Crane LLP regarding Clarendon Mutual Insurance Ltd.'s coverage position. Specifically, we recommend requesting a meeting or call with Clarendon Mutual's coverage counsel to discuss the status of the reservation of rights, the potential applicability of the antitrust exclusion, and the timeline for any coverage determination. This engagement should occur in advance of any material increase in litigation activity, so that Northgate can plan its defense budget with greater certainty regarding the availability of insurance coverage.
IX. Conclusion
The FCC evidentiary hearing held January 22–24, 2024 represented a significant milestone in the defense of the Ridgepoint matter. We believe that Northgate's witnesses and experts performed credibly and effectively, and that the hearing record is favorable to Northgate on the key issues of capacity utilization at the 14 disputed facilities, the commercial reasonableness of the Wholesale Access Policy, and Northgate's compliance with its interconnection obligations under Sections 251 and 252 of the Communications Act. While risks remain — particularly regarding the narrative of competitive harm to a smaller competitor and the question of functional equivalence of certain facilities — we are confident that Northgate's position is well-supported by the evidence and the law.
The district court case remains dormant under the stay order and the litigation is well-preserved through ongoing litigation hold compliance and document collection activities. No action is required in the district court in the near term beyond the periodic joint status reports.
The critical near-term focus is the preparation and filing of Northgate's post-hearing brief by March 15, 2024, and the reply brief by April 12, 2024. Following the completion of post-hearing briefing, the matter will enter a period of monitoring as we await ALJ Fenwick's initial decision, which we estimate could issue in mid-to-late 2024.
Calderwood & Harkness remains available at all times to discuss any aspect of this report or any other issues arising in connection with the Ridgepoint litigation and FCC proceeding. Please direct any questions or comments to Elaine Forsythe at (202) 555-0147 or eforsythe@calderwoodharkness.com, or to Aaron Liu at (202) 555-0163 or aliu@calderwoodharkness.com.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Elaine Forsythe Partner, Antitrust & Competition 1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-0147
Email: eforsythe@calderwoodharkness.com
cc:
Howard Bellamy, Partner, Calderwood & Harkness LLP, New York Aaron Liu, Senior Associate, Calderwood & Harkness LLP, Washington, D.C. Monica Reyes, Associate, Calderwood & Harkness LLP, Washington, D.C.
CONFIDENTIALITY NOTICE: This memorandum is a privileged and confidential attorney-client communication and attorney work product prepared by Calderwood & Harkness LLP for the exclusive use of the named recipients. This document contains confidential legal analysis, mental impressions, and strategic advice of counsel. It is not intended for distribution to any third party and should not be disclosed, copied, or distributed without the prior written consent of Calderwood & Harkness LLP and the client. Any inadvertent disclosure of this memorandum does not constitute a waiver of the attorney-client privilege or work product protection. If you have received this document in error, please notify Elaine Forsythe immediately at (202) 555-0147 and destroy all copies.
Engagement Reference No. C&H-2022-ATR-00419
Vendor / Expert | Role | Fees to Date
Ellsworth Economic Consulting LLC (Dr. Priya Narasimhan) | Economic expert — market definition, damages analysis | $412,000
Torrence Policy Group LLC (Dr. Anton Berger) | Regulatory expert — Section 251/252 compliance | $187,500
Candela discovery Solutions Inc. (Kenji Takahashi) | E-discovery collection, hosting, and review platform | $294,000
Total Expert / Vendor Fees | $893,500

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

MEMORANDUM

CALDERWOOD & HARKNESS LLP

Record

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