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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION

RIDGEPOINT COMMUNICATIONS INC.,

Plaintiff,

NORTHGATE NETWORKS AMERICA INC. and NORTHGATE TELECOMMUNICATIONS PLC,

Defendants.

Civil Action No. 1:22-cv-01487-CMW

MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS' MOTION TO STAY PROCEEDINGS PENDING RESOLUTION OF FCC PROCEEDING

Elaine Forsythe (Va. Bar No. 48219) Howard Bellamy (admitted pro hac vice) Aaron Liu (Va. Bar No. 91734) Monica Reyes (Va. Bar No. 93405)

CALDERWOOD & HARKNESS LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7100 Facsimile: (202) 555-7101

Counsel for Defendants Northgate Telecommunications PLC and Northgate Networks America Inc.

Filed: March 6, 2023

TABLE OF AUTHORITIES

Cases.

Statutes and Rules

Regulatory Materials.

Secondary Sources.

I. PRELIMINARY STATEMENT

On September 19, 2022, Plaintiff Ridgepoint Communications Inc. ("Ridgepoint" or "Plaintiff") commenced this action by filing a complaint asserting a single count of monopolization under Section 2 of the Sherman Act, 15 U.S.C. § 2. Ridgepoint alleges that Defendants Northgate Networks America Inc. ("NNA") and Northgate Telecommunications PLC ("Northgate" and, together with NNA, "Defendants") engaged in an unlawful refusal to deal by declining to grant Ridgepoint interconnection and physical colocation access at fourteen central-office and meet-me-room facilities located in the Philadelphia–Baltimore–Washington, D.C. corridor (the "Mid-Atlantic Corridor"). Ridgepoint claims that Defendants' conduct constitutes the willful acquisition and maintenance of monopoly power in an alleged relevant market for "last-mile enterprise fiber-optic transport services" in that corridor, and seeks trebled damages in excess of $381 million and permanent injunctive relief compelling access to all fourteen facilities.

This Court should stay this action pending the resolution of a parallel administrative proceeding that Ridgepoint itself initiated at the Federal Communications Commission ("FCC"). On February 7, 2023—more than four months after filing the present antitrust suit—Ridgepoint filed a complaint at the FCC (Docket No. WC-23-0042) before Administrative Law Judge Robert Fenwick, alleging that Northgate violated its interconnection obligations under Sections 251 and 252 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, 47 U.S.C. §§ 251, 252. The FCC complaint targets the identical conduct at the identical fourteen facilities at issue in this litigation and raises the same core factual disputes regarding the legitimacy of Northgate's Wholesale Access Policy, the adequacy of capacity constraints as a justification for denying colocation access, and the significance of the parties' prior course of dealing under an expired Master Interconnection Agreement.

The primary jurisdiction doctrine and principles of judicial economy and inter-branch consistency compel a stay. The FCC possesses specialized expertise to determine whether Northgate's interconnection practices comply with the comprehensive regulatory framework established by Congress in Sections 251 and 252—an inquiry that lies at the very heart of Ridgepoint's antitrust claim. Under the Supreme Court's landmark decision in Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), the existence of a regulatory structure designed to deter and remedy anticompetitive harm in the telecommunications industry is a "factor of particular importance" in evaluating refusal-to-deal claims under Section 2. The FCC's determination of whether Northgate's conduct was lawful under the Communications Act will materially inform—and may well be dispositive of—the antitrust questions before this Court.

Defendants' Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) was fully briefed (Defendants' memorandum filed November 14, 2022; Plaintiff's opposition filed January 9, 2023; Defendants' reply filed January 30, 2023) and argued before this Court on February 22, 2023. The Court has taken the motion under advisement. In light of the intervening FCC proceeding and the requested stay, Defendants respectfully request that the pending Motion to Dismiss be denied without prejudice to renewal after the stay is lifted, so that the Court may have the benefit of the FCC's expert determination when it returns to the pleading-stage issues.

A stay serves the interests of all parties and the Court. It avoids the substantial risk that this Court and the FCC will reach conflicting conclusions on overlapping factual and legal issues. It conserves judicial and party resources by preventing duplicative discovery and factfinding on complex telecommunications matters. And it prejudices no one: Ridgepoint itself chose to invoke the FCC's jurisdiction, and a stay preserves—rather than extinguishes—Ridgepoint's antitrust claims while the agency with primary competence over interconnection disputes speaks first.

II. STATEMENT OF FACTS

A. The Parties

Defendants. Defendant Northgate Telecommunications PLC ("Northgate") is a public limited company organized under the laws of England and Wales (Company No. 07824561), with its principal offices at 14 Broadwall Lane, London SE1 9PQ, United Kingdom. Northgate's American Depositary Receipts are listed on the Nasdaq Global Select Market under the ticker symbol "NTP." As of September 2022, Northgate's market capitalization was approximately $11.3 billion. Northgate is a global provider of fiber-optic telecommunications infrastructure, enterprise connectivity solutions, and managed network services.

Defendant Northgate Networks America Inc. ("NNA") is a Delaware corporation and the wholly-owned U.S. operating subsidiary of Northgate. NNA is headquartered at 8200 Dulles Corner Boulevard, Suite 1100, Tysons Corner, Virginia 22182. NNA owns and operates approximately 42,000 route-miles of fiber-optic backbone and metro-ring infrastructure across eighteen states, concentrated primarily along the eastern seaboard from Massachusetts to Georgia. In addition to its fiber infrastructure, NNA offers enterprise cloud-connectivity services and SaaS-based network management platforms marketed under the NorthgateOS™ brand name. For fiscal year 2022, Northgate reported consolidated revenue of approximately £4.87 billion (approximately $5.96 billion at prevailing exchange rates), of which approximately $2.41 billion—representing approximately 40.4% of consolidated revenue—was generated through NNA's U.S. operations. Northgate's Chief Executive Officer is Sir Malcolm Prentice, KBE. NNA's U.S. President is Diane Okoro, and Northgate's Chief Regulatory Officer is Patrick Salazar.

Plaintiff. Plaintiff Ridgepoint Communications Inc. ("Ridgepoint") is a Delaware corporation headquartered at 3500 Market Street, Suite 700, Philadelphia, Pennsylvania 19104. Ridgepoint operates as a competitive local exchange carrier ("CLEC") and enterprise broadband provider in five states: Pennsylvania, New Jersey, Delaware, Maryland, and Virginia. Ridgepoint's network comprises approximately 6,200 route-miles of owned and leased fiber-optic infrastructure. For fiscal year 2022, Ridgepoint reported revenue of approximately $387 million and employed approximately 1,450 individuals. Ridgepoint's founder and Chief Executive Officer is Gregory Trent. Ridgepoint is privately held. In November 2018, Caravel Capital Partners LP acquired a 78% equity stake in Ridgepoint through a leveraged buyout valued at approximately $510 million; the Trent family retains the remaining 22% equity interest. Plaintiff is represented in this action by Victoria Hargrove (lead partner) and Daniel Stoyanov (senior associate) of Hargrove, Winslow & Burke LLP, 900 17th Street NW, Suite 600, Washington, D.C. 20006.

B. Northgate's Interconnection Practices and the Wholesale Access Policy

In January 2020, Northgate adopted an internal policy known as the Wholesale Access Policy (the "WAP"), which governs third-party requests for physical colocation at Northgate's central-office and meet-me-room facilities across the United States. Under the WAP, physical colocation is restricted to existing wholesale partners that maintain minimum annual revenue commitments of $5 million or more. The WAP was adopted as a legitimate business decision designed to optimize the allocation of limited facility capacity for higher-value wholesale relationships and to ensure the efficient utilization of finite rack space, power, and cooling resources at Northgate's most congested facilities. The fourteen facilities at issue in this action consistently operate at or above 85% capacity utilization, making space management a critical operational concern. Declaration of Patrick Salazar ("Salazar Decl.") ¶¶ 7–12.

Northgate and Ridgepoint have a history of doing business together. On June 15, 2015, the parties entered into a Master Interconnection Agreement (the "MIA") under which Ridgepoint was granted physical colocation access at three Northgate facilities in northern Virginia. The MIA had a five-year term and expired by its own terms on June 14, 2020. Salazar Decl. ¶ 14. In the months preceding the MIA's expiration, Ridgepoint sought to renew the agreement. Northgate declined to renew, citing the requirements of the recently adopted WAP. Ridgepoint's aggregate annual expenditure with Northgate was approximately $1.8 million in fiscal year 2021—well below the $5 million minimum threshold established by the WAP. Salazar Decl. ¶¶ 15–16.

Following the expiration of the MIA, Ridgepoint continued to occupy its existing colocation spaces at the three northern Virginia facilities under a month-to-month holdover arrangement. Consistent with the holdover provisions of the expired MIA, the holdover rate was set at 120% of the prior contractual rate, resulting in a monthly charge of $14,400 per facility (compared to the prior contractual rate of $12,000 per month per facility). The holdover premium amounts to $2,400 per month per facility, or an aggregate holdover premium of $7,200 per month ($86,400 per year). Ridgepoint continues to operate at these three facilities under this holdover arrangement to the present day. Salazar Decl. ¶ 17.

Between March 2021 and August 2022, Ridgepoint submitted a series of interconnection and colocation requests seeking access to fourteen additional Northgate facilities located throughout the Philadelphia–Baltimore–Washington, D.C. corridor. All fourteen requests were declined by Northgate on multiple independent grounds, including: (1) capacity constraints at the requested facilities; (2) the absence of any prior course of dealing between the parties at those specific locations; and (3) Ridgepoint's failure to satisfy the minimum revenue thresholds established by the WAP. Salazar Decl. ¶¶ 18–24. Northgate's declination letters consistently informed Ridgepoint of the reasons for denial and invited Ridgepoint to discuss alternative arrangements, including leased-capacity or virtual colocation options. Id. ¶ 23.

C. The District Court Litigation

Ridgepoint filed this action on September 19, 2022, asserting a single cause of action under Section 2 of the Sherman Act, 15 U.S.C. § 2, for monopolization through an alleged unlawful refusal to deal. Compl. ¶¶ 65–82 (Dkt. 1). Ridgepoint defines the relevant product market as "last-mile enterprise fiber-optic transport services" (both lit and dark fiber at speeds of 1 Gbps and above) in the geographic market of the Philadelphia–Baltimore–Washington, D.C. corridor. Compl. ¶¶ 33–48. Ridgepoint alleges that Northgate holds a 68% share of this purported relevant market, based on the preliminary expert report of Dr. Leonard Kuo, Professor of Economics at Cavendish University. Compl. ¶ 50; Compl. Ex. B (Kuo Preliminary Report). Ridgepoint claims $127 million in lost profits over a five-year projected period (2022–2027), trebled to $381 million under Section 4 of the Clayton Act, 15 U.S.C. § 15, and seeks permanent injunctive relief compelling Northgate to provide Ridgepoint with interconnection and colocation access at all fourteen facilities. Compl. ¶¶ 79–82.

On November 14, 2022, Defendants filed a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6). Dkt. 18. Defendants argued, inter alia, that Ridgepoint's refusal-to-deal claim fails as a matter of law under the standards established by the Supreme Court in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), and Trinko, 540 U.S. 398, because Ridgepoint cannot plausibly allege that Northgate terminated a voluntary and profitable prior course of dealing (as opposed to declining to expand a commercial relationship beyond its contractual terms); that Ridgepoint's relevant market definition is implausibly narrow; and that the WAP constitutes a legitimate unilateral business decision that does not give rise to antitrust liability. Plaintiff filed its opposition on January 9, 2023 (Dkt. 24), and Defendants filed their reply on January 30, 2023 (Dkt. 27). Oral argument was held on February 22, 2023, and the Court took the Motion to Dismiss under advisement. Dkt. 30 (Minute Entry).

D. The Parallel FCC Proceeding

On February 7, 2023, Ridgepoint filed a formal complaint at the Federal Communications Commission, docketed as FCC Docket No. WC-23-0042 and captioned In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251. The complaint was assigned to Administrative Law Judge Robert Fenwick. Salazar Decl. ¶ 27; see also Exhibit A to Salazar Decl. (copy of the FCC complaint).

The FCC complaint alleges that Northgate violated its interconnection obligations under Sections 251 and 252 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, 47 U.S.C. §§ 251, 252, by refusing to provide Ridgepoint with interconnection and physical colocation access at the same fourteen facilities at issue in this litigation. The FCC complaint raises the same core factual questions that are presented in this case, including: whether Northgate's denial of Ridgepoint's interconnection and colocation requests was justified; whether the WAP constitutes a commercially reasonable basis for restricting colocation access; whether capacity constraints at the fourteen facilities were genuine or pretextual; and whether the parties' prior course of dealing under the expired MIA creates any continuing obligation on Northgate's part to provide colocation access. Salazar Decl. ¶¶ 28–31.

On February 10, 2023, Defendants filed a letter with this Court advising of the newly filed FCC complaint and flagging the potential applicability of the primary jurisdiction doctrine. Dkt. 31. As described in the accompanying Declaration of Patrick Salazar, Chief Regulatory Officer of Northgate Telecommunications PLC, the FCC proceeding involves the same facilities, the same underlying conduct, and substantially overlapping legal and factual issues concerning Northgate's obligations under federal telecommunications law. Salazar Decl. ¶¶ 32–36.

III. LEGAL STANDARD FOR A STAY UNDER THE PRIMARY JURISDICTION DOCTRINE

The primary jurisdiction doctrine is a prudential doctrine that applies "whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body." United States v. W. Pac. R.R. Co., 352 U.S. 59, 64 (1956). The doctrine is "concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties." Id. It "is not designed to secure expert advice from agencies every time a court is presented with an issue conceivably within the agency's ambit," but rather is reserved for cases in which "protection of the integrity of a regulatory scheme dictates preliminary resort to the agency which administers the scheme." Id. at 63–64; see also Reiter v. Sonotone Corp., 442 U.S. 330, 344 (1979).

Where the primary jurisdiction doctrine applies, the court does not dismiss the action or relinquish jurisdiction. Rather, the court retains jurisdiction but "stays further proceedings so as to give the parties reasonable opportunity to seek an administrative ruling." Far E. Conference v. United States, 342 U.S. 570, 577 (1952); Ricci v. Chi. Mercantile Exch., 409 U.S. 289, 302 (1973). The stay is a means of ensuring that the court has the benefit of the agency's expertise before proceeding to adjudicate the claims within its jurisdiction.

Courts in this Circuit and others have identified four factors that guide the primary jurisdiction analysis: (1) whether the agency possesses specialized expertise necessary to resolve the issues presented; (2) whether the agency's determination may be dispositive of, or materially inform, the court proceeding; (3) whether there is a risk of inconsistent results if the court and the agency proceed simultaneously; and (4) whether judicial economy is served by deferral to the agency. See, e.g., Nat'l Commc'ns Ass'n v. Quillon Industries, 46 F.3d 220, 222–23 (2d Cir. 1995); Taffet v. S. Co., 958 F.2d 1514, 1521 (11th Cir. 1992); see also Areeda & Hovenkamp, Antitrust Law ¶ 240 (4th ed. 2022).

The doctrine has particular force when antitrust claims are intertwined with regulatory determinations committed to agency expertise. As the Supreme Court has emphasized, "[w]here the problem is one for ultimate judicial resolution, but requires in the first instance expert agency consideration of facts and factors peculiarly within the agency's province, primary jurisdiction principles counsel that the court stay its hand until the agency has had an opportunity to pass on the issues." W. Pac. R.R. Co., 352 U.S. at 64; see also Breyer, Regulation and Its Reform 168 (1982) (observing that primary jurisdiction "enables the court to benefit from the agency's expertise" and to "avoid the danger of inconsistent judicial and administrative action"). The antitrust–regulatory intersection in the telecommunications industry presents a paradigmatic case for the application of primary jurisdiction, because the FCC administers a comprehensive statutory scheme governing interconnection that bears directly on the competitive dynamics at issue in antitrust litigation. See Trinko, 540 U.S. at 411–13.

Wholly apart from the primary jurisdiction doctrine, courts possess broad inherent authority to manage their dockets, including the discretion to stay proceedings pending the resolution of related administrative proceedings. See Landis v. N. Am. Co., 299 U.S. 248, 254–55 (1936) ("[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants."). The decision whether to grant a stay rests within the sound discretion of the trial court. Id.; Hadix v. Johnson, 182 F.3d 400, 404 (6th Cir. 1999). In exercising this discretion, the court weighs the competing interests of the parties, including the potential hardship or inequity to any party from the imposition or denial of a stay. Landis, 299 U.S. at 255.

IV. ARGUMENT

A. The FCC Possesses Specialized Expertise Over the Interconnection Issues at the Heart of This Case

The interconnection issues that lie at the center of this litigation fall squarely within the FCC's specialized domain. Sections 251 and 252 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, establish a comprehensive regulatory framework governing the interconnection obligations of local exchange carriers. Section 251(c) imposes specific duties on incumbent local exchange carriers ("ILECs"), including: (1) the duty to negotiate interconnection agreements in good faith, 47 U.S.C. § 251(c)(1); (2) the duty to provide interconnection "at any technically feasible point within the carrier's network," id. § 251(c)(2); and (3) the duty to provide physical colocation of equipment at the premises of the local exchange carrier, or, in the alternative, virtual colocation, id. § 251(c)(6). Section 252 establishes the procedural framework for the negotiation, arbitration, and approval of interconnection agreements. See id. § 252(a)–(e).

The FCC has promulgated detailed regulations implementing these provisions, including rules governing the terms and conditions of physical colocation, 47 C.F.R. §§ 51.321, 51.323, and the standards for determining when a carrier's denial of colocation requests is lawful. See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, First Report and Order, 11 FCC Rcd 15499 (1996) ("Local Competition Order"); In re Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, Report and Order, 18 FCC Rcd 16978 (2003) ("Triennial Review Order"). Through decades of rulemaking and adjudication, the FCC has developed a substantial body of expertise in interpreting and applying these provisions, including the standards for "just, reasonable, and nondiscriminatory" interconnection, the scope and limitations of colocation obligations, and the circumstances under which capacity constraints constitute a legitimate basis for denying access requests.

Whether Northgate's interconnection practices—including the adoption and application of the WAP and the denial of Ridgepoint's colocation requests at the fourteen facilities—comply with or violate the standards of Sections 251 and 252 is a quintessential question of telecommunications regulatory policy that is best resolved in the first instance by the agency that Congress specifically charged with administering these provisions. The FCC possesses specialized knowledge of network architecture, facility-level capacity utilization metrics, wholesale market dynamics, and the technical and economic considerations that inform the determination of whether a carrier's colocation policies are commercially reasonable under the statutory framework. This expertise is not replicated in the federal courts. See Trinko, 540 U.S. at 412 (emphasizing the significance of "the FCC's ability to oversee" interconnection practices under the Telecommunications Act); MCI Commc'ns Corp. v. Am. Tel. & Tel. Co., 708 F.2d 1081, 1103–04 (7th Cir. 1983) (recognizing the FCC's superior expertise in evaluating the reasonableness of carrier practices under the Communications Act).

The FCC proceeding, now pending before ALJ Robert Fenwick as FCC Docket No. WC-23-0042, will involve a full evidentiary hearing in which the ALJ will receive testimony and documentary evidence regarding the operational characteristics of each of the fourteen facilities, the rationale for and application of the WAP, and the history of the parties' commercial relationship. The ALJ will issue an initial decision addressing whether Northgate's interconnection practices violate the carrier's obligations under Sections 251 and 252—a determination that requires exactly the kind of specialized, fact-intensive regulatory analysis that Congress entrusted to the FCC. Salazar Decl. ¶¶ 33–35.

The FCC's factual findings regarding capacity utilization at the fourteen facilities, the commercial reasonableness of the WAP's minimum-revenue thresholds, and whether Northgate's conduct constitutes a violation of its statutory interconnection obligations will provide an expert regulatory determination on the very issues that underlie Ridgepoint's antitrust claims. The first factor of the primary jurisdiction analysis—whether the agency possesses specialized expertise necessary to resolve the issues presented—is overwhelmingly satisfied here.

B. The FCC's Determination Will Materially Inform and May Be Dispositive of the Antitrust Claims

1. The FCC Proceeding Addresses the Same Conduct and the Same Facilities. The overlap between this litigation and the FCC proceeding is not partial or incidental—it is complete. The FCC complaint targets Northgate's refusal to grant interconnection and colocation access at the identical fourteen facilities in the Philadelphia–Baltimore–Washington, D.C. corridor that are at issue in this Court:

1. 401 N. Broad Street, Philadelphia, Pennsylvania

2. 1500 Spring Garden Street, Philadelphia, Pennsylvania

3. 100 Delancey Place, Cherry Hill, New Jersey

4. 220 S. Warren Street, Trenton, New Jersey

5. 700 E. Pratt Street, Baltimore, Maryland

6. 1 W. Fayette Street, Baltimore, Maryland

7. 33 S. Gay Street, Baltimore, Maryland

8. 9221 Corporate Boulevard, Rockville, Maryland

9. 1200 New Hampshire Avenue NW, Washington, D.C.

10. 600 New Jersey Avenue NW, Washington, D.C.

11. 44755 Prentice Drive, Ashburn, Virginia

12. 21571 Beaumeade Circle, Ashburn, Virginia

13. 1807 Michael Faraday Court, Reston, Virginia

14. 8100 Boone Boulevard, Tysons Corner, Virginia

Salazar Decl. ¶ 29; Compl. ¶ 25; FCC Complaint ¶ 18 (attached as Exhibit A to Salazar Decl.).

The FCC complaint involves the same parties (Ridgepoint as complainant and Northgate Networks America Inc. as respondent), targets the same underlying conduct (the denial of interconnection and colocation requests submitted between March 2021 and August 2022), and raises the same factual disputes that are at issue here—namely, the legitimacy of the WAP, whether capacity utilization at the fourteen facilities justified the denials, and whether the parties' prior course of dealing under the expired MIA gives rise to any continuing obligation on Northgate's part to provide colocation access. The factual record that the FCC will develop—including facility-specific utilization data, evidence concerning Northgate's internal policies and decision-making processes, and the commercial history of the parties' relationship—will substantially overlap with the factual record that would be developed through discovery in this litigation. Salazar Decl. ¶¶ 30–31.

2. The FCC's Findings on Regulatory Compliance Will Inform the Antitrust Analysis. The FCC's determination of whether Northgate's conduct complied with or violated the requirements of Sections 251 and 252 will have direct and material implications for the resolution of Ridgepoint's Section 2 claim.

If the FCC concludes that Northgate's interconnection practices comply with Sections 251 and 252—that the WAP is commercially reasonable, that Northgate's capacity justifications were genuine, and that Northgate had no obligation under the Communications Act to grant colocation access at the fourteen facilities—such a finding would significantly undermine Ridgepoint's antitrust claim. Ridgepoint's Section 2 theory depends on characterizing Northgate's refusal to deal as anticompetitive conduct designed to maintain monopoly power. A determination by the expert regulatory agency that the same conduct was lawful under the comprehensive regulatory framework governing interconnection would substantially weaken the foundation of that antitrust theory, because it would demonstrate that the conduct at issue was consistent with the very regulatory obligations that Congress imposed to govern interconnection in the telecommunications industry.

The Supreme Court's decision in Trinko makes this point with particular clarity. In Trinko, the Court held that "[o]ne factor of particular importance" in evaluating refusal-to-deal claims under Section 2 "is the existence of a regulatory structure designed to deter and remedy anticompetitive harm." 540 U.S. at 412. The Court reasoned that where a "regulatory structure exists to deter and remedy anticompetitive harm, the additional benefit to competition provided by antitrust enforcement will tend to be small, and it will be less plausible that the antitrust laws contemplate such additional scrutiny." Id. Here, the Communications Act provides precisely such a regulatory structure—Sections 251 and 252 were enacted for the express purpose of promoting competition in local telecommunications markets by imposing interconnection obligations on incumbent carriers and providing mechanisms for enforcement of those obligations. If the FCC's regulatory framework adequately addresses Ridgepoint's grievance—a question that the FCC is uniquely positioned to answer—the justification for layering antitrust liability on top of regulatory compliance is, under Trinko, substantially diminished.

Conversely, if the FCC finds that Northgate did violate Sections 251 and 252—that the WAP was not commercially reasonable, that the capacity justifications were pretextual, or that Northgate failed to comply with its statutory interconnection obligations—that finding would bear on the antitrust analysis as well. A regulatory violation would not automatically establish Section 2 liability, given the distinct elements of an antitrust monopolization claim (including the requirements of monopoly power in a properly defined relevant market, anticompetitive conduct, and willful acquisition or maintenance of monopoly power through exclusionary means). Nevertheless, a finding of regulatory noncompliance would provide important context for evaluating the nature and purpose of Northgate's conduct and could inform the Court's analysis of whether the refusal to deal was motivated by legitimate business justifications or by an anticompetitive purpose.

In either scenario, the FCC's expert determination on the regulatory lawfulness of Northgate's interconnection practices is essential context for the Court's resolution of the antitrust claim. The second factor of the primary jurisdiction analysis—whether the agency's determination may be dispositive of or materially inform the court proceeding—is amply satisfied.

3. The Trinko Framework Underscores the Importance of Regulatory Resolution. The Trinko decision warrants further discussion, because its reasoning goes directly to the question of why this Court should defer to the FCC before adjudicating Ridgepoint's antitrust claim.

In Trinko, a local telephone service customer brought a Section 2 claim against Harborview Holdings Inc., alleging that Harborview Holdings Inc.'s failure to provide adequate interconnection services to rival carriers constituted an anticompetitive refusal to deal. 540 U.S. at 402–05. The Supreme Court reversed the Second Circuit and held that the complaint failed to state a claim. Central to the Court's analysis was the intersection between antitrust law and the regulatory framework established by the Telecommunications Act of 1996. The Court identified two critical considerations: first, the defendant's alleged conduct did not fit the narrow paradigm of the Aspen Skiing refusal-to-deal doctrine, because the defendant had never voluntarily engaged in a course of dealing with the rival carriers whose access it allegedly impaired, id. at 409; and second, the Telecommunications Act's regulatory framework provided its own mechanisms for addressing anticompetitive conduct in the interconnection context, diminishing the need for—and the appropriateness of—antitrust intervention, id. at 411–13.

Ridgepoint's Section 2 claim is squarely governed by the Trinko framework. The alleged refusal to deal involves interconnection and colocation access that is subject to the comprehensive regulatory regime established by Sections 251 and 252. The FCC possesses the authority to adjudicate complaints alleging violations of interconnection obligations and to order remedial relief, including compelled interconnection. See 47 U.S.C. § 252(d)–(e); see also Pac. Bell Tel. Co. v. Greaves Corporation, 555 U.S. 438, 452 (2009) (reaffirming Trinko's emphasis on the relevance of the regulatory framework in evaluating antitrust claims arising from regulated conduct). Ridgepoint has itself invoked this regulatory authority by filing its FCC complaint.

The FCC's resolution of Ridgepoint's complaint will establish whether the existing regulatory regime adequately addresses Ridgepoint's grievance—a determination that, under Trinko, is central to whether Ridgepoint's antitrust claim can survive scrutiny. If the FCC provides Ridgepoint with the relief it seeks (or determines that such relief is unwarranted), the regulatory resolution will materially affect the antitrust calculus. Allowing the FCC to address the regulatory issues first ensures that this Court will have the benefit of the agency's expert findings and conclusions when it returns to the antitrust questions—and avoids the risk of an antitrust adjudication that proceeds in ignorance of the regulatory context that Trinko instructs courts to consider.

C. A Stay Will Avoid the Risk of Inconsistent Results

Without a stay, there is a substantial risk that this Court and the FCC will reach conflicting conclusions on overlapping factual and legal issues, to the detriment of all parties and the integrity of both the judicial and regulatory systems.

Both proceedings involve the fundamental question of whether Northgate's denial of Ridgepoint's colocation requests was justified. This Court would evaluate that question under the antitrust framework of Section 2 of the Sherman Act, applying the standards of Aspen Skiing and Trinko to determine whether Northgate's conduct constituted an unlawful refusal to deal amounting to exclusionary conduct in furtherance of monopoly maintenance. The FCC, by contrast, will evaluate the same conduct under the regulatory standards of Sections 251 and 252 of the Communications Act, applying the Commission's rules and precedents governing interconnection obligations, colocation requirements, and the reasonableness of capacity-based denials of access.

Although the legal frameworks differ, both inquiries will require evaluation of the same underlying factual questions: Was the WAP a genuine and commercially reasonable policy, or was it a pretext for denying access to a competitor? Were the capacity constraints at the fourteen facilities real and documented, or were they manufactured to justify exclusionary conduct? Did the prior course of dealing under the expired MIA create any continuing obligation—whether regulatory or equitable—to provide colocation access? These factual questions will be addressed on the basis of the same evidentiary record: facility-level utilization data, Northgate's internal policy documents, communications between the parties, and expert testimony regarding network architecture and capacity management.

The risk of inconsistency is not theoretical. It is entirely conceivable that this Court, applying antitrust principles, could find that Northgate's refusal to deal constituted anticompetitive conduct warranting treble damages and injunctive relief, while the FCC simultaneously concludes that the same conduct was fully consistent with Northgate's regulatory obligations under the Communications Act. Such an outcome would place Northgate in the untenable position of being subject to antitrust liability for conduct that the expert regulatory agency has determined was lawful. Alternatively, the FCC could find a regulatory violation and order interconnection, while this Court—perhaps ruling on a different evidentiary record or at a different procedural stage—could dismiss the antitrust claim on the ground that the relevant market is improperly defined or that Ridgepoint failed to establish monopoly power. Either scenario would create confusion, undermine respect for the regulatory framework, and subject the parties to inconsistent legal obligations.

The risk of inconsistency is heightened in this case because the FCC's determination of the commercial reasonableness of the WAP and the adequacy of capacity justifications requires precisely the kind of fact-intensive, technically sophisticated analysis that the Commission is uniquely equipped to perform. If this Court were to conduct its own independent analysis of the same facts—without the benefit of the FCC's expert assessment—the probability of reaching a different conclusion increases, not because either tribunal would necessarily err, but because the antitrust and regulatory frameworks evaluate the same facts through different analytical lenses. A stay eliminates this risk by ensuring that the agency with primary competence over interconnection disputes speaks first, providing a regulatory baseline against which the antitrust claims can then be evaluated.

See Sprint Nextel Corp. v. Quillon Group, 821 F. Supp. 2d 308, 319 (D.D.C. 2011) (staying antitrust claims pending FCC resolution of regulatory issues where "the risk of inconsistent determinations is apparent"); Calderon Commerce Bank Sec. (USA) LLC v. Billing, 551 U.S. 264, 275 (2007) (emphasizing the need to avoid "conflicting requirements" arising from simultaneous antitrust and regulatory proceedings); Goldstein v. Exxon Research & Eng'g Co., 62 F. Supp. 2d 854, 862–63 (S.D.N.Y. 1999) (granting stay under primary jurisdiction to "avoid the risk of inconsistent results" between judicial and administrative proceedings).

D. Judicial Economy Strongly Favors a Stay

The FCC proceeding has the potential to narrow significantly—or eliminate entirely—the issues before this Court, making a stay the most efficient course of action for the Court, the parties, and the judicial system.

If the FCC finds in favor of Northgate and determines that Northgate's interconnection practices comply with Sections 251 and 252, that regulatory determination will significantly bolster Defendants' Trinko-based arguments in this Court. A finding of regulatory compliance would demonstrate that the existing regulatory framework adequately addresses the conduct at issue, which, under Trinko, diminishes the justification for imposing antitrust liability. Such a finding could be dispositive of Ridgepoint's refusal-to-deal claim at the summary judgment stage, or could provide an additional basis for dismissal on the pleadings if the Court permits renewal of the Motion to Dismiss.

If the FCC finds in favor of Ridgepoint and orders Northgate to provide interconnection access at some or all of the fourteen facilities, the regulatory relief obtained may moot Ridgepoint's claim for permanent injunctive relief in this Court—which seeks precisely the same relief (an order compelling access to all fourteen facilities). In that event, the scope of the antitrust litigation would be substantially reduced, potentially narrowing the case to Ridgepoint's damages claim alone. And even with respect to damages, the FCC's factual findings regarding the duration, scope, and impact of any regulatory violation would inform the damages analysis and reduce the need for duplicative judicial factfinding.

In either scenario, this Court will benefit enormously from having the FCC's factual findings and expert analysis in hand before proceeding to adjudicate the antitrust claims. The telecommunications issues in this case—including the technical specifications of colocation arrangements, the measurement and evaluation of facility capacity, the industry-specific meaning of the WAP's minimum-revenue thresholds, and the regulatory history of interconnection obligations in the Mid-Atlantic region—are complex and specialized. Requiring this Court to develop the factual record on these issues independently, without the benefit of the FCC's expert determination, would entail significant expenditures of judicial resources that could be avoided or substantially reduced by awaiting the outcome of the FCC proceeding.

The parties will likewise benefit from the avoidance of parallel discovery in both forums on overlapping issues. If this action proceeds contemporaneously with the FCC proceeding, both Northgate and Ridgepoint will be required to produce substantially the same documents, prepare many of the same witnesses, and engage the same or similar experts in two separate proceedings—an inefficient and burdensome duplication of effort. A stay will preserve resources for all parties, including Defendants (who face significant litigation costs in defending simultaneous proceedings in two forums), Plaintiff (which, although backed by a private equity sponsor, is a privately held company with $387 million in annual revenue and finite litigation resources), and the Court itself.

E. Ridgepoint Will Not Be Prejudiced by a Stay

The question of prejudice to the opposing party is an important consideration in the stay analysis, but on the facts of this case, there is no cognizable prejudice to Ridgepoint from a stay.

As a threshold matter, Ridgepoint itself initiated the parallel FCC proceeding on February 7, 2023. Having voluntarily invoked the FCC's jurisdiction over the same interconnection disputes that are at issue in this litigation, Ridgepoint cannot credibly argue that deferral to the FCC proceeding—its own chosen forum—causes undue prejudice. Ridgepoint elected to pursue its regulatory claims before the FCC, and Defendants are entitled to ask this Court to await the outcome of that proceeding before adjudicating overlapping antitrust claims. It would be anomalous, to say the least, for Ridgepoint to contend that the resolution of its own administrative complaint should not be given the opportunity to inform the judicial proceedings.

Ridgepoint will have a full and fair opportunity to litigate its interconnection claims before the FCC. The FCC proceeding will include an evidentiary hearing before ALJ Fenwick, with the opportunity for discovery, testimony, cross-examination, and the submission of expert evidence. If the FCC finds in Ridgepoint's favor, it may order the relief that Ridgepoint seeks—compelled interconnection and colocation access at the fourteen facilities. The FCC's proceedings are subject to established procedural safeguards, including the right to seek review of the ALJ's initial decision by the full Commission and, ultimately, judicial review in the courts of appeals. Ridgepoint will thus have ample opportunity to vindicate its regulatory rights during the pendency of the stay.

Ridgepoint's antitrust claims are preserved, not extinguished, by a stay. The stay defers the exercise of this Court's jurisdiction; it does not divest the Court of jurisdiction or dismiss Ridgepoint's complaint. The statute of limitations on Ridgepoint's Section 2 claim will be tolled during the pendency of the stay, and Ridgepoint will be free to resume prosecution of its antitrust claims once the FCC proceeding is concluded and the stay is lifted. No legal rights are forfeited by the imposition of a stay.

Moreover, Ridgepoint continues to operate at the three existing colocation facilities in northern Virginia under the month-to-month holdover arrangement that has been in place since June 2020. Although Ridgepoint pays a holdover premium (120% of the prior contractual rate), it retains its existing colocation access and is not deprived of all interconnection during the pendency of the stay. Ridgepoint's ongoing operations at these three facilities ensure that the company is not shut out of Northgate's network entirely while the regulatory proceeding is pending.

Any claimed harm to Ridgepoint from the delay associated with a stay is speculative at best. Ridgepoint asserts lost profits based on a five-year projected period, but those projections depend on the assumption that Ridgepoint would have obtained—and successfully monetized—colocation access at all fourteen facilities, an assumption that has yet to be tested through discovery or at trial. The speculative nature of this claimed harm is far outweighed by the substantial and concrete benefits of regulatory resolution: the avoidance of inconsistent outcomes, the conservation of judicial and party resources, and the assurance that the antitrust analysis will be informed by the expert regulatory determination that the Trinko framework contemplates.

F. The Pending Motion to Dismiss Should Be Denied Without Prejudice

In light of the requested stay, Defendants respectfully request that the Court deny the pending Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) without prejudice to renewal after the stay is lifted. This approach best serves the interests of judicial economy and ensures that the Court can address the pleading-stage issues with the full benefit of the FCC's regulatory determination.

The FCC's resolution of the interconnection issues may substantially alter the legal landscape in which the Motion to Dismiss would be evaluated. If the FCC finds that Northgate's conduct complied with Sections 251 and 252, that determination would provide additional grounds for dismissal under Trinko, strengthening the argument that the existence of an adequate regulatory remedy undermines the viability of Ridgepoint's antitrust claim. If the FCC finds a regulatory violation, that finding could affect the Court's assessment of whether Ridgepoint has plausibly alleged anticompetitive conduct. In either event, the Court will be better positioned to rule on the Motion to Dismiss after the FCC has spoken.

Denying the Motion to Dismiss without prejudice also avoids the risk that the Court's ruling on the motion—whichever way it comes out—will be rendered moot or require reconsideration in light of subsequent FCC action. Preserving Defendants' right to renew the Motion to Dismiss after the stay is lifted is the most efficient course and avoids the expenditure of judicial resources on a ruling that may be overtaken by events during the pendency of the stay.

V. CONCLUSION

For the foregoing reasons, Defendants Northgate Networks America Inc. and Northgate Telecommunications PLC respectfully request that this Court enter an order:

1. Staying all proceedings in this action pending resolution of FCC Docket No. WC-23-0042, In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251;

2. Denying the pending Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) (Dkt. 18) without prejudice to renewal by Defendants after the stay is lifted;

3. Directing the parties to file joint status reports with this Court every ninety (90) days during the pendency of the stay, advising the Court of the progress of the FCC proceeding and any material developments; and

4. Granting such other and further relief as the Court deems just and proper.

A Proposed Order Granting Stay of Proceedings is filed concurrently herewith.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Elaine Forsythe (Va. Bar No. 48219) Responsible Partner

Howard Bellamy (admitted pro hac vice) Aaron Liu (Va. Bar No. 91734) Monica Reyes (Va. Bar No. 93405)

1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7100 Facsimile: (202) 555-7101

Counsel for Defendants Northgate Telecommunications PLC and Northgate Networks America Inc.

Dated: March 6, 2023

CERTIFICATE OF SERVICE

I hereby certify that on March 6, 2023, I caused the foregoing Memorandum of Law in Support of Defendants' Motion to Stay Proceedings Pending Resolution of FCC Proceeding, together with all accompanying exhibits, to be electronically filed with the Clerk of the Court using the CM/ECF system, which will send a notification of such filing to all counsel of record registered to receive electronic notifications in this case, including:

Victoria Hargrove, Esq. Daniel Stoyanov, Esq. Hargrove, Winslow & Burke LLP 900 17th Street NW, Suite 600 Washington, D.C. 20006

________________________________________

Elaine Forsythe (Va. Bar No. 48219)

Case	Page(s)
Am. Tel. & Tel. Co. v. Cent. Office Tel., Inc., 524 U.S. 214 (1998)	14
Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985)	8, 19, 23
Behrend v. Granite Harbor Partners LLC, 655 F.3d 182 (3d Cir. 2011), rev'd on other grounds, 569 U.S. 27 (2013)	20
Calderon Commerce Bank Sec. (USA) LLC v. Billing, 551 U.S. 264 (2007)	21
Elec. Power Supply Ass'n v. FERC, 753 F.3d 216 (D.C. Cir. 2014)	16
Far E. Conference v. United States, 342 U.S. 570 (1952)	12, 13
Goldstein v. Exxon Research & Eng'g Co., 62 F. Supp. 2d 854 (S.D.N.Y. 1999)	21
Hadix v. Johnson, 182 F.3d 400 (6th Cir. 1999)	15
Landis v. N. Am. Co., 299 U.S. 248 (1936)	13, 15
MCI Commc'ns Corp. v. Am. Tel. & Tel. Co., 708 F.2d 1081 (7th Cir. 1983)	16, 20
Nat'l Commc'ns Ass'n v. Quillon Industries, 46 F.3d 220 (2d Cir. 1995)	16
Pac. Bell Tel. Co. v. Greaves Corporation, 555 U.S. 438 (2009)	19
Reiter v. Sonotone Corp., 442 U.S. 330 (1979)	12
Ricci v. Chi. Mercantile Exch., 409 U.S. 289 (1973)	13
Sprint Nextel Corp. v. Quillon Group, 821 F. Supp. 2d 308 (D.D.C. 2011)	17, 22
Taffet v. S. Co., 958 F.2d 1514 (11th Cir. 1992)	14
United States v. W. Pac. R.R. Co., 352 U.S. 59 (1956)	12, 13, 14
Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004)	passim
Authority	Page(s)
15 U.S.C. § 2 (Sherman Act § 2)	1, 7, 8, 18, 19, 22, 24
15 U.S.C. § 15 (Clayton Act § 4)	8
47 U.S.C. § 251	passim
47 U.S.C. § 252	passim
Fed. R. Civ. P. 12(b)(6)	2, 7, 27, 28

Authority	Page(s)
Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, First Report and Order, 11 FCC Rcd 15499 (1996) ("Local Competition Order")	15, 16, 17
In re Qwest Corp., Memorandum Opinion and Order, 24 FCC Rcd 1821 (2009)	17
In re Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, Report and Order, 18 FCC Rcd 16978 (2003) ("Triennial Review Order")	15, 16
47 C.F.R. § 51.321	16
47 C.F.R. § 51.323	16
Authority	Page(s)
Areeda & Hovenkamp, Antitrust Law ¶¶ 240–243 (4th ed. 2022)	14, 19
Breyer, Stephen, Regulation and Its Reform (1982)	14

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION
RIDGEPOINT COMMUNICATIONS INC.,
Plaintiff,
v.
NORTHGATE NETWORKS AMERICA INC. and NORTHGATE TELECOMMUNICATIONS PLC,
Defendants.
Civil Action No. 1:22-cv-01487-CMW
MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS' MOTION TO STAY PROCEEDINGS PENDING RESOLUTION OF FCC PROCEEDING
Elaine Forsythe (Va. Bar No. 48219) Howard Bellamy (admitted pro hac vice) Aaron Liu (Va. Bar No. 91734) Monica Reyes (Va. Bar No. 93405)
CALDERWOOD & HARKNESS LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7100 Facsimile: (202) 555-7101
Counsel for Defendants Northgate Telecommunications PLC and Northgate Networks America Inc.
Filed: March 6, 2023
TABLE OF AUTHORITIES
Cases.
Statutes and Rules
Regulatory Materials.
Secondary Sources.
I. PRELIMINARY STATEMENT
On September 19, 2022, Plaintiff Ridgepoint Communications Inc. ("Ridgepoint" or "Plaintiff") commenced this action by filing a complaint asserting a single count of monopolization under Section 2 of the Sherman Act, 15 U.S.C. § 2. Ridgepoint alleges that Defendants Northgate Networks America Inc. ("NNA") and Northgate Telecommunications PLC ("Northgate" and, together with NNA, "Defendants") engaged in an unlawful refusal to deal by declining to grant Ridgepoint interconnection and physical colocation access at fourteen central-office and meet-me-room facilities located in the Philadelphia–Baltimore–Washington, D.C. corridor (the "Mid-Atlantic Corridor"). Ridgepoint claims that Defendants' conduct constitutes the willful acquisition and maintenance of monopoly power in an alleged relevant market for "last-mile enterprise fiber-optic transport services" in that corridor, and seeks trebled damages in excess of $381 million and permanent injunctive relief compelling access to all fourteen facilities.
This Court should stay this action pending the resolution of a parallel administrative proceeding that Ridgepoint itself initiated at the Federal Communications Commission ("FCC"). On February 7, 2023—more than four months after filing the present antitrust suit—Ridgepoint filed a complaint at the FCC (Docket No. WC-23-0042) before Administrative Law Judge Robert Fenwick, alleging that Northgate violated its interconnection obligations under Sections 251 and 252 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, 47 U.S.C. §§ 251, 252. The FCC complaint targets the identical conduct at the identical fourteen facilities at issue in this litigation and raises the same core factual disputes regarding the legitimacy of Northgate's Wholesale Access Policy, the adequacy of capacity constraints as a justification for denying colocation access, and the significance of the parties' prior course of dealing under an expired Master Interconnection Agreement.
The primary jurisdiction doctrine and principles of judicial economy and inter-branch consistency compel a stay. The FCC possesses specialized expertise to determine whether Northgate's interconnection practices comply with the comprehensive regulatory framework established by Congress in Sections 251 and 252—an inquiry that lies at the very heart of Ridgepoint's antitrust claim. Under the Supreme Court's landmark decision in Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), the existence of a regulatory structure designed to deter and remedy anticompetitive harm in the telecommunications industry is a "factor of particular importance" in evaluating refusal-to-deal claims under Section 2. The FCC's determination of whether Northgate's conduct was lawful under the Communications Act will materially inform—and may well be dispositive of—the antitrust questions before this Court.
Defendants' Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) was fully briefed (Defendants' memorandum filed November 14, 2022; Plaintiff's opposition filed January 9, 2023; Defendants' reply filed January 30, 2023) and argued before this Court on February 22, 2023. The Court has taken the motion under advisement. In light of the intervening FCC proceeding and the requested stay, Defendants respectfully request that the pending Motion to Dismiss be denied without prejudice to renewal after the stay is lifted, so that the Court may have the benefit of the FCC's expert determination when it returns to the pleading-stage issues.
A stay serves the interests of all parties and the Court. It avoids the substantial risk that this Court and the FCC will reach conflicting conclusions on overlapping factual and legal issues. It conserves judicial and party resources by preventing duplicative discovery and factfinding on complex telecommunications matters. And it prejudices no one: Ridgepoint itself chose to invoke the FCC's jurisdiction, and a stay preserves—rather than extinguishes—Ridgepoint's antitrust claims while the agency with primary competence over interconnection disputes speaks first.
II. STATEMENT OF FACTS
A. The Parties
Defendants. Defendant Northgate Telecommunications PLC ("Northgate") is a public limited company organized under the laws of England and Wales (Company No. 07824561), with its principal offices at 14 Broadwall Lane, London SE1 9PQ, United Kingdom. Northgate's American Depositary Receipts are listed on the Nasdaq Global Select Market under the ticker symbol "NTP." As of September 2022, Northgate's market capitalization was approximately $11.3 billion. Northgate is a global provider of fiber-optic telecommunications infrastructure, enterprise connectivity solutions, and managed network services.
Defendant Northgate Networks America Inc. ("NNA") is a Delaware corporation and the wholly-owned U.S. operating subsidiary of Northgate. NNA is headquartered at 8200 Dulles Corner Boulevard, Suite 1100, Tysons Corner, Virginia 22182. NNA owns and operates approximately 42,000 route-miles of fiber-optic backbone and metro-ring infrastructure across eighteen states, concentrated primarily along the eastern seaboard from Massachusetts to Georgia. In addition to its fiber infrastructure, NNA offers enterprise cloud-connectivity services and SaaS-based network management platforms marketed under the NorthgateOS™ brand name. For fiscal year 2022, Northgate reported consolidated revenue of approximately £4.87 billion (approximately $5.96 billion at prevailing exchange rates), of which approximately $2.41 billion—representing approximately 40.4% of consolidated revenue—was generated through NNA's U.S. operations. Northgate's Chief Executive Officer is Sir Malcolm Prentice, KBE. NNA's U.S. President is Diane Okoro, and Northgate's Chief Regulatory Officer is Patrick Salazar.
Plaintiff. Plaintiff Ridgepoint Communications Inc. ("Ridgepoint") is a Delaware corporation headquartered at 3500 Market Street, Suite 700, Philadelphia, Pennsylvania 19104. Ridgepoint operates as a competitive local exchange carrier ("CLEC") and enterprise broadband provider in five states: Pennsylvania, New Jersey, Delaware, Maryland, and Virginia. Ridgepoint's network comprises approximately 6,200 route-miles of owned and leased fiber-optic infrastructure. For fiscal year 2022, Ridgepoint reported revenue of approximately $387 million and employed approximately 1,450 individuals. Ridgepoint's founder and Chief Executive Officer is Gregory Trent. Ridgepoint is privately held. In November 2018, Caravel Capital Partners LP acquired a 78% equity stake in Ridgepoint through a leveraged buyout valued at approximately $510 million; the Trent family retains the remaining 22% equity interest. Plaintiff is represented in this action by Victoria Hargrove (lead partner) and Daniel Stoyanov (senior associate) of Hargrove, Winslow & Burke LLP, 900 17th Street NW, Suite 600, Washington, D.C. 20006.
B. Northgate's Interconnection Practices and the Wholesale Access Policy
In January 2020, Northgate adopted an internal policy known as the Wholesale Access Policy (the "WAP"), which governs third-party requests for physical colocation at Northgate's central-office and meet-me-room facilities across the United States. Under the WAP, physical colocation is restricted to existing wholesale partners that maintain minimum annual revenue commitments of $5 million or more. The WAP was adopted as a legitimate business decision designed to optimize the allocation of limited facility capacity for higher-value wholesale relationships and to ensure the efficient utilization of finite rack space, power, and cooling resources at Northgate's most congested facilities. The fourteen facilities at issue in this action consistently operate at or above 85% capacity utilization, making space management a critical operational concern. Declaration of Patrick Salazar ("Salazar Decl.") ¶¶ 7–12.
Northgate and Ridgepoint have a history of doing business together. On June 15, 2015, the parties entered into a Master Interconnection Agreement (the "MIA") under which Ridgepoint was granted physical colocation access at three Northgate facilities in northern Virginia. The MIA had a five-year term and expired by its own terms on June 14, 2020. Salazar Decl. ¶ 14. In the months preceding the MIA's expiration, Ridgepoint sought to renew the agreement. Northgate declined to renew, citing the requirements of the recently adopted WAP. Ridgepoint's aggregate annual expenditure with Northgate was approximately $1.8 million in fiscal year 2021—well below the $5 million minimum threshold established by the WAP. Salazar Decl. ¶¶ 15–16.
Following the expiration of the MIA, Ridgepoint continued to occupy its existing colocation spaces at the three northern Virginia facilities under a month-to-month holdover arrangement. Consistent with the holdover provisions of the expired MIA, the holdover rate was set at 120% of the prior contractual rate, resulting in a monthly charge of $14,400 per facility (compared to the prior contractual rate of $12,000 per month per facility). The holdover premium amounts to $2,400 per month per facility, or an aggregate holdover premium of $7,200 per month ($86,400 per year). Ridgepoint continues to operate at these three facilities under this holdover arrangement to the present day. Salazar Decl. ¶ 17.
Between March 2021 and August 2022, Ridgepoint submitted a series of interconnection and colocation requests seeking access to fourteen additional Northgate facilities located throughout the Philadelphia–Baltimore–Washington, D.C. corridor. All fourteen requests were declined by Northgate on multiple independent grounds, including: (1) capacity constraints at the requested facilities; (2) the absence of any prior course of dealing between the parties at those specific locations; and (3) Ridgepoint's failure to satisfy the minimum revenue thresholds established by the WAP. Salazar Decl. ¶¶ 18–24. Northgate's declination letters consistently informed Ridgepoint of the reasons for denial and invited Ridgepoint to discuss alternative arrangements, including leased-capacity or virtual colocation options. Id. ¶ 23.
C. The District Court Litigation
Ridgepoint filed this action on September 19, 2022, asserting a single cause of action under Section 2 of the Sherman Act, 15 U.S.C. § 2, for monopolization through an alleged unlawful refusal to deal. Compl. ¶¶ 65–82 (Dkt. 1). Ridgepoint defines the relevant product market as "last-mile enterprise fiber-optic transport services" (both lit and dark fiber at speeds of 1 Gbps and above) in the geographic market of the Philadelphia–Baltimore–Washington, D.C. corridor. Compl. ¶¶ 33–48. Ridgepoint alleges that Northgate holds a 68% share of this purported relevant market, based on the preliminary expert report of Dr. Leonard Kuo, Professor of Economics at Cavendish University. Compl. ¶ 50; Compl. Ex. B (Kuo Preliminary Report). Ridgepoint claims $127 million in lost profits over a five-year projected period (2022–2027), trebled to $381 million under Section 4 of the Clayton Act, 15 U.S.C. § 15, and seeks permanent injunctive relief compelling Northgate to provide Ridgepoint with interconnection and colocation access at all fourteen facilities. Compl. ¶¶ 79–82.
On November 14, 2022, Defendants filed a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6). Dkt. 18. Defendants argued, inter alia, that Ridgepoint's refusal-to-deal claim fails as a matter of law under the standards established by the Supreme Court in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), and Trinko, 540 U.S. 398, because Ridgepoint cannot plausibly allege that Northgate terminated a voluntary and profitable prior course of dealing (as opposed to declining to expand a commercial relationship beyond its contractual terms); that Ridgepoint's relevant market definition is implausibly narrow; and that the WAP constitutes a legitimate unilateral business decision that does not give rise to antitrust liability. Plaintiff filed its opposition on January 9, 2023 (Dkt. 24), and Defendants filed their reply on January 30, 2023 (Dkt. 27). Oral argument was held on February 22, 2023, and the Court took the Motion to Dismiss under advisement. Dkt. 30 (Minute Entry).
D. The Parallel FCC Proceeding
On February 7, 2023, Ridgepoint filed a formal complaint at the Federal Communications Commission, docketed as FCC Docket No. WC-23-0042 and captioned In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251. The complaint was assigned to Administrative Law Judge Robert Fenwick. Salazar Decl. ¶ 27; see also Exhibit A to Salazar Decl. (copy of the FCC complaint).
The FCC complaint alleges that Northgate violated its interconnection obligations under Sections 251 and 252 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, 47 U.S.C. §§ 251, 252, by refusing to provide Ridgepoint with interconnection and physical colocation access at the same fourteen facilities at issue in this litigation. The FCC complaint raises the same core factual questions that are presented in this case, including: whether Northgate's denial of Ridgepoint's interconnection and colocation requests was justified; whether the WAP constitutes a commercially reasonable basis for restricting colocation access; whether capacity constraints at the fourteen facilities were genuine or pretextual; and whether the parties' prior course of dealing under the expired MIA creates any continuing obligation on Northgate's part to provide colocation access. Salazar Decl. ¶¶ 28–31.
On February 10, 2023, Defendants filed a letter with this Court advising of the newly filed FCC complaint and flagging the potential applicability of the primary jurisdiction doctrine. Dkt. 31. As described in the accompanying Declaration of Patrick Salazar, Chief Regulatory Officer of Northgate Telecommunications PLC, the FCC proceeding involves the same facilities, the same underlying conduct, and substantially overlapping legal and factual issues concerning Northgate's obligations under federal telecommunications law. Salazar Decl. ¶¶ 32–36.
III. LEGAL STANDARD FOR A STAY UNDER THE PRIMARY JURISDICTION DOCTRINE
The primary jurisdiction doctrine is a prudential doctrine that applies "whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body." United States v. W. Pac. R.R. Co., 352 U.S. 59, 64 (1956). The doctrine is "concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties." Id. It "is not designed to secure expert advice from agencies every time a court is presented with an issue conceivably within the agency's ambit," but rather is reserved for cases in which "protection of the integrity of a regulatory scheme dictates preliminary resort to the agency which administers the scheme." Id. at 63–64; see also Reiter v. Sonotone Corp., 442 U.S. 330, 344 (1979).
Where the primary jurisdiction doctrine applies, the court does not dismiss the action or relinquish jurisdiction. Rather, the court retains jurisdiction but "stays further proceedings so as to give the parties reasonable opportunity to seek an administrative ruling." Far E. Conference v. United States, 342 U.S. 570, 577 (1952); Ricci v. Chi. Mercantile Exch., 409 U.S. 289, 302 (1973). The stay is a means of ensuring that the court has the benefit of the agency's expertise before proceeding to adjudicate the claims within its jurisdiction.
Courts in this Circuit and others have identified four factors that guide the primary jurisdiction analysis: (1) whether the agency possesses specialized expertise necessary to resolve the issues presented; (2) whether the agency's determination may be dispositive of, or materially inform, the court proceeding; (3) whether there is a risk of inconsistent results if the court and the agency proceed simultaneously; and (4) whether judicial economy is served by deferral to the agency. See, e.g., Nat'l Commc'ns Ass'n v. Quillon Industries, 46 F.3d 220, 222–23 (2d Cir. 1995); Taffet v. S. Co., 958 F.2d 1514, 1521 (11th Cir. 1992); see also Areeda & Hovenkamp, Antitrust Law ¶ 240 (4th ed. 2022).
The doctrine has particular force when antitrust claims are intertwined with regulatory determinations committed to agency expertise. As the Supreme Court has emphasized, "[w]here the problem is one for ultimate judicial resolution, but requires in the first instance expert agency consideration of facts and factors peculiarly within the agency's province, primary jurisdiction principles counsel that the court stay its hand until the agency has had an opportunity to pass on the issues." W. Pac. R.R. Co., 352 U.S. at 64; see also Breyer, Regulation and Its Reform 168 (1982) (observing that primary jurisdiction "enables the court to benefit from the agency's expertise" and to "avoid the danger of inconsistent judicial and administrative action"). The antitrust–regulatory intersection in the telecommunications industry presents a paradigmatic case for the application of primary jurisdiction, because the FCC administers a comprehensive statutory scheme governing interconnection that bears directly on the competitive dynamics at issue in antitrust litigation. See Trinko, 540 U.S. at 411–13.
Wholly apart from the primary jurisdiction doctrine, courts possess broad inherent authority to manage their dockets, including the discretion to stay proceedings pending the resolution of related administrative proceedings. See Landis v. N. Am. Co., 299 U.S. 248, 254–55 (1936) ("[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants."). The decision whether to grant a stay rests within the sound discretion of the trial court. Id.; Hadix v. Johnson, 182 F.3d 400, 404 (6th Cir. 1999). In exercising this discretion, the court weighs the competing interests of the parties, including the potential hardship or inequity to any party from the imposition or denial of a stay. Landis, 299 U.S. at 255.
IV. ARGUMENT
A. The FCC Possesses Specialized Expertise Over the Interconnection Issues at the Heart of This Case
The interconnection issues that lie at the center of this litigation fall squarely within the FCC's specialized domain. Sections 251 and 252 of the Communications Act of 1934, as amended by the Telecommunications Act of 1996, establish a comprehensive regulatory framework governing the interconnection obligations of local exchange carriers. Section 251(c) imposes specific duties on incumbent local exchange carriers ("ILECs"), including: (1) the duty to negotiate interconnection agreements in good faith, 47 U.S.C. § 251(c)(1); (2) the duty to provide interconnection "at any technically feasible point within the carrier's network," id. § 251(c)(2); and (3) the duty to provide physical colocation of equipment at the premises of the local exchange carrier, or, in the alternative, virtual colocation, id. § 251(c)(6). Section 252 establishes the procedural framework for the negotiation, arbitration, and approval of interconnection agreements. See id. § 252(a)–(e).
The FCC has promulgated detailed regulations implementing these provisions, including rules governing the terms and conditions of physical colocation, 47 C.F.R. §§ 51.321, 51.323, and the standards for determining when a carrier's denial of colocation requests is lawful. See Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, First Report and Order, 11 FCC Rcd 15499 (1996) ("Local Competition Order"); In re Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, Report and Order, 18 FCC Rcd 16978 (2003) ("Triennial Review Order"). Through decades of rulemaking and adjudication, the FCC has developed a substantial body of expertise in interpreting and applying these provisions, including the standards for "just, reasonable, and nondiscriminatory" interconnection, the scope and limitations of colocation obligations, and the circumstances under which capacity constraints constitute a legitimate basis for denying access requests.
Whether Northgate's interconnection practices—including the adoption and application of the WAP and the denial of Ridgepoint's colocation requests at the fourteen facilities—comply with or violate the standards of Sections 251 and 252 is a quintessential question of telecommunications regulatory policy that is best resolved in the first instance by the agency that Congress specifically charged with administering these provisions. The FCC possesses specialized knowledge of network architecture, facility-level capacity utilization metrics, wholesale market dynamics, and the technical and economic considerations that inform the determination of whether a carrier's colocation policies are commercially reasonable under the statutory framework. This expertise is not replicated in the federal courts. See Trinko, 540 U.S. at 412 (emphasizing the significance of "the FCC's ability to oversee" interconnection practices under the Telecommunications Act); MCI Commc'ns Corp. v. Am. Tel. & Tel. Co., 708 F.2d 1081, 1103–04 (7th Cir. 1983) (recognizing the FCC's superior expertise in evaluating the reasonableness of carrier practices under the Communications Act).
The FCC proceeding, now pending before ALJ Robert Fenwick as FCC Docket No. WC-23-0042, will involve a full evidentiary hearing in which the ALJ will receive testimony and documentary evidence regarding the operational characteristics of each of the fourteen facilities, the rationale for and application of the WAP, and the history of the parties' commercial relationship. The ALJ will issue an initial decision addressing whether Northgate's interconnection practices violate the carrier's obligations under Sections 251 and 252—a determination that requires exactly the kind of specialized, fact-intensive regulatory analysis that Congress entrusted to the FCC. Salazar Decl. ¶¶ 33–35.
The FCC's factual findings regarding capacity utilization at the fourteen facilities, the commercial reasonableness of the WAP's minimum-revenue thresholds, and whether Northgate's conduct constitutes a violation of its statutory interconnection obligations will provide an expert regulatory determination on the very issues that underlie Ridgepoint's antitrust claims. The first factor of the primary jurisdiction analysis—whether the agency possesses specialized expertise necessary to resolve the issues presented—is overwhelmingly satisfied here.
B. The FCC's Determination Will Materially Inform and May Be Dispositive of the Antitrust Claims
1. The FCC Proceeding Addresses the Same Conduct and the Same Facilities. The overlap between this litigation and the FCC proceeding is not partial or incidental—it is complete. The FCC complaint targets Northgate's refusal to grant interconnection and colocation access at the identical fourteen facilities in the Philadelphia–Baltimore–Washington, D.C. corridor that are at issue in this Court:
1. 401 N. Broad Street, Philadelphia, Pennsylvania
2. 1500 Spring Garden Street, Philadelphia, Pennsylvania
3. 100 Delancey Place, Cherry Hill, New Jersey
4. 220 S. Warren Street, Trenton, New Jersey
5. 700 E. Pratt Street, Baltimore, Maryland
6. 1 W. Fayette Street, Baltimore, Maryland
7. 33 S. Gay Street, Baltimore, Maryland
8. 9221 Corporate Boulevard, Rockville, Maryland
9. 1200 New Hampshire Avenue NW, Washington, D.C.
10. 600 New Jersey Avenue NW, Washington, D.C.
11. 44755 Prentice Drive, Ashburn, Virginia
12. 21571 Beaumeade Circle, Ashburn, Virginia
13. 1807 Michael Faraday Court, Reston, Virginia
14. 8100 Boone Boulevard, Tysons Corner, Virginia
Salazar Decl. ¶ 29; Compl. ¶ 25; FCC Complaint ¶ 18 (attached as Exhibit A to Salazar Decl.).
The FCC complaint involves the same parties (Ridgepoint as complainant and Northgate Networks America Inc. as respondent), targets the same underlying conduct (the denial of interconnection and colocation requests submitted between March 2021 and August 2022), and raises the same factual disputes that are at issue here—namely, the legitimacy of the WAP, whether capacity utilization at the fourteen facilities justified the denials, and whether the parties' prior course of dealing under the expired MIA gives rise to any continuing obligation on Northgate's part to provide colocation access. The factual record that the FCC will develop—including facility-specific utilization data, evidence concerning Northgate's internal policies and decision-making processes, and the commercial history of the parties' relationship—will substantially overlap with the factual record that would be developed through discovery in this litigation. Salazar Decl. ¶¶ 30–31.
2. The FCC's Findings on Regulatory Compliance Will Inform the Antitrust Analysis. The FCC's determination of whether Northgate's conduct complied with or violated the requirements of Sections 251 and 252 will have direct and material implications for the resolution of Ridgepoint's Section 2 claim.
If the FCC concludes that Northgate's interconnection practices comply with Sections 251 and 252—that the WAP is commercially reasonable, that Northgate's capacity justifications were genuine, and that Northgate had no obligation under the Communications Act to grant colocation access at the fourteen facilities—such a finding would significantly undermine Ridgepoint's antitrust claim. Ridgepoint's Section 2 theory depends on characterizing Northgate's refusal to deal as anticompetitive conduct designed to maintain monopoly power. A determination by the expert regulatory agency that the same conduct was lawful under the comprehensive regulatory framework governing interconnection would substantially weaken the foundation of that antitrust theory, because it would demonstrate that the conduct at issue was consistent with the very regulatory obligations that Congress imposed to govern interconnection in the telecommunications industry.
The Supreme Court's decision in Trinko makes this point with particular clarity. In Trinko, the Court held that "[o]ne factor of particular importance" in evaluating refusal-to-deal claims under Section 2 "is the existence of a regulatory structure designed to deter and remedy anticompetitive harm." 540 U.S. at 412. The Court reasoned that where a "regulatory structure exists to deter and remedy anticompetitive harm, the additional benefit to competition provided by antitrust enforcement will tend to be small, and it will be less plausible that the antitrust laws contemplate such additional scrutiny." Id. Here, the Communications Act provides precisely such a regulatory structure—Sections 251 and 252 were enacted for the express purpose of promoting competition in local telecommunications markets by imposing interconnection obligations on incumbent carriers and providing mechanisms for enforcement of those obligations. If the FCC's regulatory framework adequately addresses Ridgepoint's grievance—a question that the FCC is uniquely positioned to answer—the justification for layering antitrust liability on top of regulatory compliance is, under Trinko, substantially diminished.
Conversely, if the FCC finds that Northgate did violate Sections 251 and 252—that the WAP was not commercially reasonable, that the capacity justifications were pretextual, or that Northgate failed to comply with its statutory interconnection obligations—that finding would bear on the antitrust analysis as well. A regulatory violation would not automatically establish Section 2 liability, given the distinct elements of an antitrust monopolization claim (including the requirements of monopoly power in a properly defined relevant market, anticompetitive conduct, and willful acquisition or maintenance of monopoly power through exclusionary means). Nevertheless, a finding of regulatory noncompliance would provide important context for evaluating the nature and purpose of Northgate's conduct and could inform the Court's analysis of whether the refusal to deal was motivated by legitimate business justifications or by an anticompetitive purpose.
In either scenario, the FCC's expert determination on the regulatory lawfulness of Northgate's interconnection practices is essential context for the Court's resolution of the antitrust claim. The second factor of the primary jurisdiction analysis—whether the agency's determination may be dispositive of or materially inform the court proceeding—is amply satisfied.
3. The Trinko Framework Underscores the Importance of Regulatory Resolution. The Trinko decision warrants further discussion, because its reasoning goes directly to the question of why this Court should defer to the FCC before adjudicating Ridgepoint's antitrust claim.
In Trinko, a local telephone service customer brought a Section 2 claim against Harborview Holdings Inc., alleging that Harborview Holdings Inc.'s failure to provide adequate interconnection services to rival carriers constituted an anticompetitive refusal to deal. 540 U.S. at 402–05. The Supreme Court reversed the Second Circuit and held that the complaint failed to state a claim. Central to the Court's analysis was the intersection between antitrust law and the regulatory framework established by the Telecommunications Act of 1996. The Court identified two critical considerations: first, the defendant's alleged conduct did not fit the narrow paradigm of the Aspen Skiing refusal-to-deal doctrine, because the defendant had never voluntarily engaged in a course of dealing with the rival carriers whose access it allegedly impaired, id. at 409; and second, the Telecommunications Act's regulatory framework provided its own mechanisms for addressing anticompetitive conduct in the interconnection context, diminishing the need for—and the appropriateness of—antitrust intervention, id. at 411–13.
Ridgepoint's Section 2 claim is squarely governed by the Trinko framework. The alleged refusal to deal involves interconnection and colocation access that is subject to the comprehensive regulatory regime established by Sections 251 and 252. The FCC possesses the authority to adjudicate complaints alleging violations of interconnection obligations and to order remedial relief, including compelled interconnection. See 47 U.S.C. § 252(d)–(e); see also Pac. Bell Tel. Co. v. Greaves Corporation, 555 U.S. 438, 452 (2009) (reaffirming Trinko's emphasis on the relevance of the regulatory framework in evaluating antitrust claims arising from regulated conduct). Ridgepoint has itself invoked this regulatory authority by filing its FCC complaint.
The FCC's resolution of Ridgepoint's complaint will establish whether the existing regulatory regime adequately addresses Ridgepoint's grievance—a determination that, under Trinko, is central to whether Ridgepoint's antitrust claim can survive scrutiny. If the FCC provides Ridgepoint with the relief it seeks (or determines that such relief is unwarranted), the regulatory resolution will materially affect the antitrust calculus. Allowing the FCC to address the regulatory issues first ensures that this Court will have the benefit of the agency's expert findings and conclusions when it returns to the antitrust questions—and avoids the risk of an antitrust adjudication that proceeds in ignorance of the regulatory context that Trinko instructs courts to consider.
C. A Stay Will Avoid the Risk of Inconsistent Results
Without a stay, there is a substantial risk that this Court and the FCC will reach conflicting conclusions on overlapping factual and legal issues, to the detriment of all parties and the integrity of both the judicial and regulatory systems.
Both proceedings involve the fundamental question of whether Northgate's denial of Ridgepoint's colocation requests was justified. This Court would evaluate that question under the antitrust framework of Section 2 of the Sherman Act, applying the standards of Aspen Skiing and Trinko to determine whether Northgate's conduct constituted an unlawful refusal to deal amounting to exclusionary conduct in furtherance of monopoly maintenance. The FCC, by contrast, will evaluate the same conduct under the regulatory standards of Sections 251 and 252 of the Communications Act, applying the Commission's rules and precedents governing interconnection obligations, colocation requirements, and the reasonableness of capacity-based denials of access.
Although the legal frameworks differ, both inquiries will require evaluation of the same underlying factual questions: Was the WAP a genuine and commercially reasonable policy, or was it a pretext for denying access to a competitor? Were the capacity constraints at the fourteen facilities real and documented, or were they manufactured to justify exclusionary conduct? Did the prior course of dealing under the expired MIA create any continuing obligation—whether regulatory or equitable—to provide colocation access? These factual questions will be addressed on the basis of the same evidentiary record: facility-level utilization data, Northgate's internal policy documents, communications between the parties, and expert testimony regarding network architecture and capacity management.
The risk of inconsistency is not theoretical. It is entirely conceivable that this Court, applying antitrust principles, could find that Northgate's refusal to deal constituted anticompetitive conduct warranting treble damages and injunctive relief, while the FCC simultaneously concludes that the same conduct was fully consistent with Northgate's regulatory obligations under the Communications Act. Such an outcome would place Northgate in the untenable position of being subject to antitrust liability for conduct that the expert regulatory agency has determined was lawful. Alternatively, the FCC could find a regulatory violation and order interconnection, while this Court—perhaps ruling on a different evidentiary record or at a different procedural stage—could dismiss the antitrust claim on the ground that the relevant market is improperly defined or that Ridgepoint failed to establish monopoly power. Either scenario would create confusion, undermine respect for the regulatory framework, and subject the parties to inconsistent legal obligations.
The risk of inconsistency is heightened in this case because the FCC's determination of the commercial reasonableness of the WAP and the adequacy of capacity justifications requires precisely the kind of fact-intensive, technically sophisticated analysis that the Commission is uniquely equipped to perform. If this Court were to conduct its own independent analysis of the same facts—without the benefit of the FCC's expert assessment—the probability of reaching a different conclusion increases, not because either tribunal would necessarily err, but because the antitrust and regulatory frameworks evaluate the same facts through different analytical lenses. A stay eliminates this risk by ensuring that the agency with primary competence over interconnection disputes speaks first, providing a regulatory baseline against which the antitrust claims can then be evaluated.
See Sprint Nextel Corp. v. Quillon Group, 821 F. Supp. 2d 308, 319 (D.D.C. 2011) (staying antitrust claims pending FCC resolution of regulatory issues where "the risk of inconsistent determinations is apparent"); Calderon Commerce Bank Sec. (USA) LLC v. Billing, 551 U.S. 264, 275 (2007) (emphasizing the need to avoid "conflicting requirements" arising from simultaneous antitrust and regulatory proceedings); Goldstein v. Exxon Research & Eng'g Co., 62 F. Supp. 2d 854, 862–63 (S.D.N.Y. 1999) (granting stay under primary jurisdiction to "avoid the risk of inconsistent results" between judicial and administrative proceedings).
D. Judicial Economy Strongly Favors a Stay
The FCC proceeding has the potential to narrow significantly—or eliminate entirely—the issues before this Court, making a stay the most efficient course of action for the Court, the parties, and the judicial system.
If the FCC finds in favor of Northgate and determines that Northgate's interconnection practices comply with Sections 251 and 252, that regulatory determination will significantly bolster Defendants' Trinko-based arguments in this Court. A finding of regulatory compliance would demonstrate that the existing regulatory framework adequately addresses the conduct at issue, which, under Trinko, diminishes the justification for imposing antitrust liability. Such a finding could be dispositive of Ridgepoint's refusal-to-deal claim at the summary judgment stage, or could provide an additional basis for dismissal on the pleadings if the Court permits renewal of the Motion to Dismiss.
If the FCC finds in favor of Ridgepoint and orders Northgate to provide interconnection access at some or all of the fourteen facilities, the regulatory relief obtained may moot Ridgepoint's claim for permanent injunctive relief in this Court—which seeks precisely the same relief (an order compelling access to all fourteen facilities). In that event, the scope of the antitrust litigation would be substantially reduced, potentially narrowing the case to Ridgepoint's damages claim alone. And even with respect to damages, the FCC's factual findings regarding the duration, scope, and impact of any regulatory violation would inform the damages analysis and reduce the need for duplicative judicial factfinding.
In either scenario, this Court will benefit enormously from having the FCC's factual findings and expert analysis in hand before proceeding to adjudicate the antitrust claims. The telecommunications issues in this case—including the technical specifications of colocation arrangements, the measurement and evaluation of facility capacity, the industry-specific meaning of the WAP's minimum-revenue thresholds, and the regulatory history of interconnection obligations in the Mid-Atlantic region—are complex and specialized. Requiring this Court to develop the factual record on these issues independently, without the benefit of the FCC's expert determination, would entail significant expenditures of judicial resources that could be avoided or substantially reduced by awaiting the outcome of the FCC proceeding.
The parties will likewise benefit from the avoidance of parallel discovery in both forums on overlapping issues. If this action proceeds contemporaneously with the FCC proceeding, both Northgate and Ridgepoint will be required to produce substantially the same documents, prepare many of the same witnesses, and engage the same or similar experts in two separate proceedings—an inefficient and burdensome duplication of effort. A stay will preserve resources for all parties, including Defendants (who face significant litigation costs in defending simultaneous proceedings in two forums), Plaintiff (which, although backed by a private equity sponsor, is a privately held company with $387 million in annual revenue and finite litigation resources), and the Court itself.
E. Ridgepoint Will Not Be Prejudiced by a Stay
The question of prejudice to the opposing party is an important consideration in the stay analysis, but on the facts of this case, there is no cognizable prejudice to Ridgepoint from a stay.
As a threshold matter, Ridgepoint itself initiated the parallel FCC proceeding on February 7, 2023. Having voluntarily invoked the FCC's jurisdiction over the same interconnection disputes that are at issue in this litigation, Ridgepoint cannot credibly argue that deferral to the FCC proceeding—its own chosen forum—causes undue prejudice. Ridgepoint elected to pursue its regulatory claims before the FCC, and Defendants are entitled to ask this Court to await the outcome of that proceeding before adjudicating overlapping antitrust claims. It would be anomalous, to say the least, for Ridgepoint to contend that the resolution of its own administrative complaint should not be given the opportunity to inform the judicial proceedings.
Ridgepoint will have a full and fair opportunity to litigate its interconnection claims before the FCC. The FCC proceeding will include an evidentiary hearing before ALJ Fenwick, with the opportunity for discovery, testimony, cross-examination, and the submission of expert evidence. If the FCC finds in Ridgepoint's favor, it may order the relief that Ridgepoint seeks—compelled interconnection and colocation access at the fourteen facilities. The FCC's proceedings are subject to established procedural safeguards, including the right to seek review of the ALJ's initial decision by the full Commission and, ultimately, judicial review in the courts of appeals. Ridgepoint will thus have ample opportunity to vindicate its regulatory rights during the pendency of the stay.
Ridgepoint's antitrust claims are preserved, not extinguished, by a stay. The stay defers the exercise of this Court's jurisdiction; it does not divest the Court of jurisdiction or dismiss Ridgepoint's complaint. The statute of limitations on Ridgepoint's Section 2 claim will be tolled during the pendency of the stay, and Ridgepoint will be free to resume prosecution of its antitrust claims once the FCC proceeding is concluded and the stay is lifted. No legal rights are forfeited by the imposition of a stay.
Moreover, Ridgepoint continues to operate at the three existing colocation facilities in northern Virginia under the month-to-month holdover arrangement that has been in place since June 2020. Although Ridgepoint pays a holdover premium (120% of the prior contractual rate), it retains its existing colocation access and is not deprived of all interconnection during the pendency of the stay. Ridgepoint's ongoing operations at these three facilities ensure that the company is not shut out of Northgate's network entirely while the regulatory proceeding is pending.
Any claimed harm to Ridgepoint from the delay associated with a stay is speculative at best. Ridgepoint asserts lost profits based on a five-year projected period, but those projections depend on the assumption that Ridgepoint would have obtained—and successfully monetized—colocation access at all fourteen facilities, an assumption that has yet to be tested through discovery or at trial. The speculative nature of this claimed harm is far outweighed by the substantial and concrete benefits of regulatory resolution: the avoidance of inconsistent outcomes, the conservation of judicial and party resources, and the assurance that the antitrust analysis will be informed by the expert regulatory determination that the Trinko framework contemplates.
F. The Pending Motion to Dismiss Should Be Denied Without Prejudice
In light of the requested stay, Defendants respectfully request that the Court deny the pending Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) without prejudice to renewal after the stay is lifted. This approach best serves the interests of judicial economy and ensures that the Court can address the pleading-stage issues with the full benefit of the FCC's regulatory determination.
The FCC's resolution of the interconnection issues may substantially alter the legal landscape in which the Motion to Dismiss would be evaluated. If the FCC finds that Northgate's conduct complied with Sections 251 and 252, that determination would provide additional grounds for dismissal under Trinko, strengthening the argument that the existence of an adequate regulatory remedy undermines the viability of Ridgepoint's antitrust claim. If the FCC finds a regulatory violation, that finding could affect the Court's assessment of whether Ridgepoint has plausibly alleged anticompetitive conduct. In either event, the Court will be better positioned to rule on the Motion to Dismiss after the FCC has spoken.
Denying the Motion to Dismiss without prejudice also avoids the risk that the Court's ruling on the motion—whichever way it comes out—will be rendered moot or require reconsideration in light of subsequent FCC action. Preserving Defendants' right to renew the Motion to Dismiss after the stay is lifted is the most efficient course and avoids the expenditure of judicial resources on a ruling that may be overtaken by events during the pendency of the stay.
V. CONCLUSION
For the foregoing reasons, Defendants Northgate Networks America Inc. and Northgate Telecommunications PLC respectfully request that this Court enter an order:
1. Staying all proceedings in this action pending resolution of FCC Docket No. WC-23-0042, In the Matter of Northgate Networks America Inc. — Complaint Regarding Interconnection Obligations under Section 251;
2. Denying the pending Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) (Dkt. 18) without prejudice to renewal by Defendants after the stay is lifted;
3. Directing the parties to file joint status reports with this Court every ninety (90) days during the pendency of the stay, advising the Court of the progress of the FCC proceeding and any material developments; and
4. Granting such other and further relief as the Court deems just and proper.
A Proposed Order Granting Stay of Proceedings is filed concurrently herewith.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Elaine Forsythe (Va. Bar No. 48219) Responsible Partner
Howard Bellamy (admitted pro hac vice) Aaron Liu (Va. Bar No. 91734) Monica Reyes (Va. Bar No. 93405)
1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7100 Facsimile: (202) 555-7101
Counsel for Defendants Northgate Telecommunications PLC and Northgate Networks America Inc.
Dated: March 6, 2023
CERTIFICATE OF SERVICE
I hereby certify that on March 6, 2023, I caused the foregoing Memorandum of Law in Support of Defendants' Motion to Stay Proceedings Pending Resolution of FCC Proceeding, together with all accompanying exhibits, to be electronically filed with the Clerk of the Court using the CM/ECF system, which will send a notification of such filing to all counsel of record registered to receive electronic notifications in this case, including:
Victoria Hargrove, Esq. Daniel Stoyanov, Esq. Hargrove, Winslow & Burke LLP 900 17th Street NW, Suite 600 Washington, D.C. 20006
________________________________________
Elaine Forsythe (Va. Bar No. 48219)
Case | Page(s)
Am. Tel. & Tel. Co. v. Cent. Office Tel., Inc., 524 U.S. 214 (1998) | 14
Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985) | 8, 19, 23
Behrend v. Granite Harbor Partners LLC, 655 F.3d 182 (3d Cir. 2011), rev'd on other grounds, 569 U.S. 27 (2013) | 20
Calderon Commerce Bank Sec. (USA) LLC v. Billing, 551 U.S. 264 (2007) | 21
Elec. Power Supply Ass'n v. FERC, 753 F.3d 216 (D.C. Cir. 2014) | 16
Far E. Conference v. United States, 342 U.S. 570 (1952) | 12, 13
Goldstein v. Exxon Research & Eng'g Co., 62 F. Supp. 2d 854 (S.D.N.Y. 1999) | 21
Hadix v. Johnson, 182 F.3d 400 (6th Cir. 1999) | 15
Landis v. N. Am. Co., 299 U.S. 248 (1936) | 13, 15
MCI Commc'ns Corp. v. Am. Tel. & Tel. Co., 708 F.2d 1081 (7th Cir. 1983) | 16, 20
Nat'l Commc'ns Ass'n v. Quillon Industries, 46 F.3d 220 (2d Cir. 1995) | 16
Pac. Bell Tel. Co. v. Greaves Corporation, 555 U.S. 438 (2009) | 19
Reiter v. Sonotone Corp., 442 U.S. 330 (1979) | 12
Ricci v. Chi. Mercantile Exch., 409 U.S. 289 (1973) | 13
Sprint Nextel Corp. v. Quillon Group, 821 F. Supp. 2d 308 (D.D.C. 2011) | 17, 22
Taffet v. S. Co., 958 F.2d 1514 (11th Cir. 1992) | 14
United States v. W. Pac. R.R. Co., 352 U.S. 59 (1956) | 12, 13, 14
Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) | passim
Authority | Page(s)
15 U.S.C. § 2 (Sherman Act § 2) | 1, 7, 8, 18, 19, 22, 24
15 U.S.C. § 15 (Clayton Act § 4) | 8
47 U.S.C. § 251 | passim
47 U.S.C. § 252 | passim
Fed. R. Civ. P. 12(b)(6) | 2, 7, 27, 28
Authority | Page(s)
Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, First Report and Order, 11 FCC Rcd 15499 (1996) ("Local Competition Order") | 15, 16, 17
In re Qwest Corp., Memorandum Opinion and Order, 24 FCC Rcd 1821 (2009) | 17
In re Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, Report and Order, 18 FCC Rcd 16978 (2003) ("Triennial Review Order") | 15, 16
47 C.F.R. § 51.321 | 16
47 C.F.R. § 51.323 | 16
Authority | Page(s)
Areeda & Hovenkamp, Antitrust Law ¶¶ 240–243 (4th ed. 2022) | 14, 19
Breyer, Stephen, Regulation and Its Reform (1982) | 14