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UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division

RIDGEPOINT COMMUNICATIONS INC.,

Plaintiff,

NORTHGATE TELECOMMUNICATIONS PLC and NORTHGATE NETWORKS AMERICA INC.,

Defendants.

Case No. 1:22-cv-01487-CMW

DEFENDANTS' REPLY MEMORANDUM IN FURTHER SUPPORT OF THEIR MOTION TO DISMISS PLAINTIFF'S COMPLAINT PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6)

Filed: January 30, 2023

Elaine Forsythe (VSB No. 78342) Howard Bellamy (admitted pro hac vice) Aaron Liu (admitted pro hac vice) Monica Reyes (admitted pro hac vice)

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

and

CALDERWOOD & HARKNESS LLP 450 Lexington Avenue, 35th Floor New York, NY 10017

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

TABLE OF AUTHORITIES

Cases

Statutes and Regulations

Secondary Authorities

PRELIMINARY STATEMENT

Ridgepoint Communications Inc.'s ("Ridgepoint") Opposition to Defendants' Motion to Dismiss (the "Opposition," Dkt. No. 34) fails to rehabilitate the fundamental legal deficiencies that pervade its Complaint. Ridgepoint brings a single-count claim under Section 2 of the Sherman Act, 15 U.S.C. § 2, alleging that Defendants Northgate Telecommunications PLC and Northgate Networks America Inc. (collectively, "Northgate") unlawfully monopolized the purported market for "last-mile enterprise fiber-optic transport services" by refusing to provide Ridgepoint with physical colocation and interconnection access at fourteen telecommunications facilities in the Mid-Atlantic region. The claim is a refusal-to-deal theory of monopolization liability — a theory that the Supreme Court has repeatedly cautioned courts to approach with extreme skepticism. As demonstrated in Defendants' opening Memorandum in Support of Their Motion to Dismiss (the "Opening Memorandum," Dkt. No. 28, filed November 14, 2022), and as further set forth herein, Ridgepoint's Complaint fails to state a plausible claim for relief under the exacting standards established by Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), and Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).

Ridgepoint's Opposition principally advances two arguments that Defendants address in this Reply. First, Ridgepoint contends that the prior Master Interconnection Agreement ("MIA"), dated June 15, 2015, which expired by its own terms on June 14, 2020, together with the subsequent month-to-month holdover arrangement at three northern Virginia colocation facilities, establishes a "prior voluntary course of dealing" sufficient to satisfy the Aspen Skiing framework with respect to all fourteen of the disputed facilities identified in the Complaint. Second, Ridgepoint argues that Northgate's Wholesale Access Policy (the "WAP"), adopted in January 2020, is pretextual — a policy adopted not for legitimate business reasons, but for the purpose of excluding Ridgepoint and other competitive carriers from the Mid-Atlantic market. Neither argument withstands legal or logical scrutiny.

As to the first argument, the MIA covered exactly three colocation facilities in northern Virginia — none of the fourteen facilities at issue in this case. There is no allegation, nor could there be, that Northgate ever provided Ridgepoint with access at any of the fourteen disputed locations. Ridgepoint's attempt to extrapolate a "general course of dealing" across the entire Mid-Atlantic region from a contract limited to three specific facilities is contrary to the well-settled principle that Aspen Skiing requires a prior voluntary dealing with respect to the specific product, service, or asset at issue. Moreover, the MIA was a fixed-term contract that ran its course and expired; Northgate did not terminate the MIA mid-stream. The decision not to renew a contract that has expired by its own terms is fundamentally different from the abrupt termination of a profitable, ongoing commercial relationship that animated the Supreme Court's analysis in Aspen Skiing.

As to the second argument, the WAP is a facially neutral, commercially reasonable policy that applies uniformly to all prospective colocation partners and establishes a minimum annual revenue commitment of $5 million. The policy was adopted in January 2020 — more than a year before Ridgepoint submitted its first interconnection request for any of the fourteen disputed facilities. Ridgepoint's allegation that the WAP was adopted "specifically to exclude competitive carriers" (Compl. ¶ 62) is a bare conclusory assertion, devoid of any factual support, and is entitled to no presumption of truth under Thackeray Corporation v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009). The Complaint identifies no internal communications, no admissions by Northgate personnel, and no pattern of discriminatory application suggesting that the WAP was designed as an instrument of competitive exclusion.

Even accepting every well-pleaded allegation in the Complaint as true and drawing all reasonable inferences in Ridgepoint's favor — as the Court must at this stage — the Complaint fails to state a plausible Section 2 refusal-to-deal claim. There was no voluntary prior course of dealing at the fourteen specific facilities at issue. The WAP is a facially legitimate unilateral business policy supported by independent capacity-allocation justifications. And the relevant market as alleged is implausibly narrow, excluding obvious demand-side substitutes and gerrymandering a geographic corridor to inflate Northgate's market share. The Complaint should be dismissed with prejudice.

I. RIDGEPOINT'S OPPOSITION MISSTATES THE LEGAL STANDARD FOR REFUSAL-TO-DEAL LIABILITY UNDER SECTION 2

A. The *Trinko* Framework Strictly Limits Refusal-to-Deal Claims

Ridgepoint's Opposition devotes remarkably little attention to the governing legal framework for refusal-to-deal claims under Section 2 of the Sherman Act, and for good reason: the framework overwhelmingly favors Defendants. The Supreme Court's decision in Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), established — in a case involving the telecommunications industry specifically — that antitrust law does not impose a general duty on monopolists to share their infrastructure with competitors.

The Trinko Court began its analysis by reaffirming the bedrock antitrust principle that "the right to refuse to deal with other firms" is not only lawful but is "a fundamental component of the free market system." Id. at 408. The Court expressly recognized that forcing a monopolist to share its facilities with competitors creates serious administrability problems, noting that "enforced sharing also requires antitrust courts to act as central planners, identifying the proper price, quantity, and other terms of dealing — a role for which they are ill suited." Id. at 408. Moreover, the Court identified the risk that compelling access would "lessen the incentive for the monopolist, the rival, or both to invest in those economically beneficial facilities," thereby harming the competitive process that antitrust law is designed to protect. Id.

These are not mere dicta or background principles. The Trinko Court's reluctance to expand refusal-to-deal liability was central to its holding and has been reiterated in subsequent Supreme Court decisions. In Pacific Bell Telephone Co. v. linkLine Communications, Inc., 555 U.S. 438 (2009), the Court again emphasized that "a firm with no duty to deal in the wholesale market has no obligation to deal under terms and conditions favorable to its competitors." Id. at 450. The teaching of Trinko and linkLine is unmistakable: absent the narrow circumstances described in Aspen Skiing, a monopolist has no antitrust obligation to assist its competitors by providing access to its facilities, and courts should be reluctant to recognize new duties to deal.

Ridgepoint's Opposition does not — and cannot — dispute these foundational principles. Instead, the Opposition attempts to sidestep Trinko by arguing that it addressed a different factual context (the existence of a comprehensive regulatory scheme under the Telecommunications Act of 1996 that separately addressed the duty to share). (Opp. at 12–14.) But this effort to distinguish Trinko misses the point. While it is true that the existence of a regulatory framework was one factor in the Trinko Court's analysis, the Court's pronouncements regarding the limited scope of refusal-to-deal liability were broadly stated and have been applied far beyond the telecommunications context. See, e.g., Novell, Inc. v. Kestrel Partners LLC, 731 F.3d 1064, 1074–75 (10th Cir. 2013) (applying Trinko's limiting principles in the software industry); Morris Communications Corp. v. PGA Tour, Inc., 364 F.3d 1288, 1295–96 (11th Cir. 2004) (same in sports media context). As Professor Hovenkamp has observed, Trinko "effectively limits the duty to deal under § 2 to fact patterns resembling Aspen Skiing — namely, cases involving an actual termination of a pre-existing voluntary course of dealing." Herbert Hovenkamp, Federal Antitrust Policy: The Law of Competition and Its Practice § 7.5, at 340 (6th ed. 2020).

Indeed, the leading antitrust treatise recognizes that Trinko significantly narrowed the scope of the Aspen Skiing exception: "After Trinko, the most that can be said for the duty to deal is that a monopolist may not discontinue an existing, profitable relationship with a competitor if the only plausible explanation for the discontinuance is the elimination of competition." Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 772c, at 227 (4th ed. 2018). That formulation — requiring an existing, profitable relationship that was discontinued with no plausible explanation other than the elimination of competition — is far more demanding than what Ridgepoint has alleged here, and Ridgepoint's Opposition fails to grapple with this standard.

In sum, the starting point for the Court's analysis must be the strong presumption, articulated in Trinko, that a firm's unilateral refusal to deal with a competitor does not violate Section 2. Ridgepoint bears the burden of pleading facts that bring its claim within the narrow Aspen Skiing exception to that general rule. As demonstrated below, it has not done so.

B. *Aspen Skiing* Is a Narrow Exception, Not a Broad Mandate

Ridgepoint's Opposition treats the Aspen Skiing exception as though it were a broad mandate requiring monopolists to deal with their rivals whenever a prior commercial relationship of any kind existed between the parties. That is not the law.

In Trinko, the Supreme Court expressly characterized the Aspen Skiing decision as sitting "at or near the outer boundary of § 2 liability." 540 U.S. at 409. The Court did not overrule Aspen Skiing, but it made clear that the case represented the "limiting rather than the leading case on the duty to deal." See Flat Rate Ideas, LLC v. Ridgeway Bancorp, No. 21-cv-4411, 2022 WL 1284036, at 7 (S.D.N.Y. Apr. 29, 2022) (noting that Trinko "recast Aspen Skiing* as a high-water mark, not a springboard for expansion").

Properly understood, Aspen Skiing requires a plaintiff alleging refusal-to-deal liability to plead facts supporting each of three critical elements. First, the plaintiff must demonstrate a voluntary and profitable prior course of dealing between the parties with respect to the specific product, service, or facility at issue. In Aspen Skiing, the defendant had voluntarily participated in a joint multi-area ski pass with the plaintiff for years, sharing revenues in a manner profitable to both. 472 U.S. at 593–94. It was the defendant's termination of that specific, previously profitable arrangement that gave rise to liability. Second, the monopolist must have terminated that prior voluntary course of dealing — not simply declined to initiate a new one. Id. at 604–05. Third, the circumstances must support a plausible inference that the monopolist was willing to sacrifice short-term profits to achieve an anticompetitive end. Id. at 610–11. The defendant in Aspen Skiing refused to accept the plaintiff's offer to purchase lift tickets at retail price for inclusion in a combined offering — a refusal that made no economic sense absent an intent to harm the plaintiff's competitive position. Id. at 608–10.

Each of these elements serves an important limiting function, ensuring that refusal-to-deal liability is not imposed merely because a monopolist declines to cooperate with a competitor, but only in the narrow circumstance where the monopolist walks away from a specific, profitable arrangement for no plausible reason other than to exclude competition. See Novell, 731 F.3d at 1075 (emphasizing that all three elements must be present for Aspen Skiing liability). The Tenth Circuit in Novell explained that the Aspen Skiing framework serves as a "careful screen" designed to "separate anticompetitive refusals to deal from mere hard-nosed — but procompetitive or competitively neutral — business decisions." Id. at 1074.

As demonstrated in the following sections, Ridgepoint's Complaint fails to allege facts supporting any of these three critical elements with respect to the fourteen disputed facilities. There was no prior course of dealing at those facilities. There was no termination of an existing arrangement. And there is no plausible inference that Northgate sacrificed short-term profits to achieve an anticompetitive end. The Aspen Skiing exception is therefore inapplicable, and the general rule of Trinko — that a monopolist has no antitrust duty to deal with its competitors — controls.

II. THE EXPIRED MIA AND HOLDOVER ARRANGEMENT DO NOT ESTABLISH A PRIOR COURSE OF DEALING AT THE 14 DISPUTED FACILITIES

The centerpiece of Ridgepoint's Opposition is its argument that the prior MIA and the subsequent month-to-month holdover arrangement demonstrate a "prior voluntary course of dealing" between the parties that satisfies the Aspen Skiing framework. (Opp. at 16–24.) This argument fails for three independently sufficient reasons: (A) the MIA covered only three northern Virginia facilities, not the fourteen facilities at issue; (B) the MIA expired by its own terms and was not terminated by Northgate; and (C) the holdover arrangement, rather than supporting Ridgepoint's theory, actually undermines it.

A. The MIA Covered Only Three Northern Virginia Facilities — Not the 14 Facilities at Issue

The Master Interconnection Agreement was executed on June 15, 2015 and, by its express terms, granted Ridgepoint physical colocation and interconnection access at exactly three Northgate facilities in northern Virginia: (1) 1775 Wiehle Avenue, Reston, Virginia 20190; (2) 44330 Mercure Circle, Sterling, Virginia 20166; and (3) 21715 Filigree Court, Ashburn, Virginia 20147. (Compl. ¶ 38; MIA § 2.1, attached to the Complaint as Exhibit A.) The MIA contained no provision granting Ridgepoint access to any other Northgate facility, and it included no option, right of first refusal, or similar mechanism by which Ridgepoint could expand its colocation footprint to additional locations.

The fourteen facilities identified in the Complaint — at which Ridgepoint seeks colocation and interconnection access — are entirely distinct from the three MIA facilities. For the sake of clarity, those fourteen facilities are:

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

None of these fourteen addresses corresponds to any of the three MIA facilities. Northgate has never — at any point — provided Ridgepoint with colocation, interconnection, or any form of physical access at any of these fourteen locations. The Complaint does not allege otherwise. There is no allegation that Ridgepoint ever had a cage, cabinet, rack, cross-connect, or any physical presence at any of these fourteen facilities. There is no allegation that Ridgepoint ever entered into any agreement, whether written or oral, formal or informal, with respect to colocation or interconnection at any of these fourteen facilities prior to submitting its requests in March 2021 through August 2022.

Ridgepoint's Opposition attempts to bridge this fundamental gap by asserting that the MIA demonstrates a "general course of dealing" between the parties in the "Mid-Atlantic region" that should be viewed holistically. (Opp. at 18–19.) According to Ridgepoint, the relevant inquiry is whether the parties had an "ongoing commercial relationship involving interconnection services," not whether there was a prior dealing at each specific facility. (Id. at 19.) This argument is legally incorrect and, if accepted, would dramatically expand Aspen Skiing far beyond the narrow confines recognized by the Supreme Court.

The Aspen Skiing framework requires a prior voluntary course of dealing with respect to the specific product, service, or asset at issue. In Aspen Skiing itself, the prior course of dealing was the joint multi-area ski pass that gave customers access to all four mountains — the very same arrangement whose termination gave rise to the antitrust claim. 472 U.S. at 593–94. The defendant did not refuse access to mountains that had never been part of the joint arrangement; it terminated the plaintiff's participation in the existing four-mountain pass. The congruence between the prior voluntary dealing and the access sought was exact.

Courts in the Fourth Circuit and elsewhere have consistently applied this specificity requirement. In MetroNet Services Corp. v. Qwest Corp., 383 F.3d 1124 (9th Cir. 2004), the Ninth Circuit rejected the argument that a prior interconnection agreement covering certain facilities established a course of dealing at different facilities. The court explained that "a general commercial relationship between the parties does not suffice; the prior course of dealing must relate to the specific product or service that the defendant allegedly refused to provide." Id. at 1133. Similarly, courts have rejected attempts to establish a "regional" or "industry-wide" course of dealing based on a limited prior arrangement at specific locations. See, e.g., Morris Communications, 364 F.3d at 1296–97 (distinguishing between cooperation at certain events and refusal to cooperate at different events).

Ridgepoint's approach would effectively allow any plaintiff that has any prior commercial relationship with a monopolist to claim an Aspen Skiing-style duty to deal across the monopolist's entire network. Such a rule would be unworkable, would contradict the Supreme Court's insistence that refusal-to-deal liability be confined to a narrow set of circumstances, and would create precisely the kind of open-ended obligation that Trinko cautioned against. If the existence of a colocation agreement at three facilities in northern Virginia were sufficient to create a duty to deal at fourteen entirely different facilities spanning five states and the District of Columbia, the limiting principle of Aspen Skiing would be swallowed whole. Any company that had ever done business with a monopolist in any capacity could claim a right of access to the monopolist's entire infrastructure.

The Court should reject Ridgepoint's invitation to read Aspen Skiing so broadly. There was no prior course of dealing at the fourteen facilities at issue. That is dispositive.

B. The MIA Was a Fixed-Term Contract That Expired by Its Own Terms

Even setting aside the geographic mismatch between the MIA and the fourteen disputed facilities, Ridgepoint's Aspen Skiing theory fails for an additional, independently sufficient reason: the MIA was not terminated by Northgate. It expired by its own terms.

The MIA had a defined five-year term running from June 15, 2015 through June 14, 2020. (Compl. ¶ 47; MIA § 11.1.) The contract contained a mutual option to renew for an additional five-year term, exercisable by written notice delivered not less than 180 days prior to the expiration date. (MIA § 11.2.) It is undisputed that neither party exercised the renewal option within the contractual window. As a result, the MIA expired by operation of its own terms on June 14, 2020.

The Complaint itself acknowledges this fact. Paragraph 47 of the Complaint states: "The MIA expired by its terms on June 14, 2020." (Compl. ¶ 47.) There is no allegation that Northgate breached the MIA, refused to perform under the MIA during its term, or took any action to terminate the MIA prior to its natural expiration date.

This is a critical distinction. The Aspen Skiing framework contemplates a termination of a voluntary course of dealing — i.e., an affirmative decision by the monopolist to walk away from an ongoing, profitable arrangement. In Aspen Skiing, the defendant unilaterally refused to continue the multi-mountain ski pass that had been offered for years. 472 U.S. at 593–94. The defendant terminated the arrangement in the middle of what had been a long-running, cooperative commercial relationship. That is fundamentally different from the natural expiration of a fixed-term contract.

A party's decision not to renew an expired contract does not constitute an anticompetitive termination of a voluntary course of dealing. As the Eleventh Circuit explained in Morris Communications:

"The antitrust laws do not require that a firm perpetually renew its contracts with competitors. A fixed-term agreement that expires according to its terms is not 'terminated' in any meaningful sense; it simply runs its course. The decision not to enter into a new agreement after the expiration of the old one is a quintessential exercise of business judgment."

364 F.3d at 1297. The Tenth Circuit reached the same conclusion in Novell, observing that "[w]here a contractual relationship ends by its own terms, the monopolist's decision not to renew does not transform a lawful refusal to deal into an antitrust violation." 731 F.3d at 1076.

Ridgepoint's Opposition offers no meaningful response to this point. The Opposition asserts that the "practical effect" of nonrenewal was the same as a termination because Ridgepoint lost access that it had previously enjoyed. (Opp. at 21.) But this conflates the economic impact on Ridgepoint with the legal question of whether Northgate engaged in the type of conduct cognizable under Aspen Skiing. Every expired contract results in the loss of benefits that the non-renewing party previously enjoyed; that does not convert the expiration into an antitrust violation. If it did, every monopolist that declined to renew a contract with a competitor would face potential Section 2 liability — a result that would be flatly inconsistent with Trinko's admonition that a firm generally has no duty to deal with its rivals.

C. The Month-to-Month Holdover Arrangement Actually Undermines Ridgepoint's Theory

Ridgepoint's Opposition also points to the month-to-month holdover arrangement at the three MIA facilities as evidence of Northgate's duty to deal. (Opp. at 22–23.) This argument not only fails to support Ridgepoint's claims — it affirmatively undermines them.

After the MIA expired on June 14, 2020, Ridgepoint continued to occupy its colocation spaces at the three northern Virginia facilities under a month-to-month holdover arrangement. Pursuant to the MIA's holdover clause (MIA § 11.3), the holdover rate was set at 120% of the prior contractual rate. Ridgepoint's monthly colocation fee at each of the three facilities increased from $12,000 per month under the MIA to $14,400 per month under the holdover arrangement — a holdover premium of $2,400 per month per facility. Across the three facilities, this amounts to an aggregate monthly premium of $7,200, or $86,400 per year.

Northgate's continued accommodation of Ridgepoint at these three facilities — albeit at an increased holdover rate reflecting the absence of a long-term contractual commitment — directly refutes the central premise of Ridgepoint's case: that Northgate has engaged in an exclusionary blanket refusal to deal with Ridgepoint. To the contrary, Northgate continues to provide colocation service to Ridgepoint at the facilities where a prior contractual relationship existed. Northgate has not evicted Ridgepoint from these facilities, has not cut off Ridgepoint's interconnection links, and has not refused to maintain the existing colocation arrangement. In short, Northgate has not engaged in the type of scorched-earth refusal to deal that characterized the defendant's conduct in Aspen Skiing.

The holdover arrangement is significant for another reason as well. In Aspen Skiing, the Court found it probative that the defendant refused to accept retail-priced lift tickets from the plaintiff — a refusal that made no economic sense absent an intent to harm the plaintiff's competitive position. 472 U.S. at 608–10. The implication was that the defendant was willing to sacrifice short-term revenue in order to exclude the plaintiff from the market. Here, by contrast, Northgate is not sacrificing any revenue with respect to Ridgepoint; it is earning more from Ridgepoint under the holdover arrangement than it did under the MIA. There is no allegation that Northgate has turned away Ridgepoint's money at the three existing facilities or refused to continue the holdover arrangement. The "sacrifice of short-term profits" element of the Aspen Skiing framework is entirely absent.

Finally, and critically, the holdover arrangement is limited to the three facilities covered by the expired MIA. It has no bearing whatsoever on the fourteen different facilities at which Ridgepoint has never had access. The holdover arrangement does not create any inference that Northgate had a prior course of dealing with Ridgepoint at the fourteen disputed facilities, and it does not support an inference that Northgate is required to extend colocation access to facilities that were never part of any agreement between the parties.

III. THE WHOLESALE ACCESS POLICY IS A LEGITIMATE UNILATERAL BUSINESS DECISION, NOT A PRETEXT FOR EXCLUSION

A. The WAP Is Facially Neutral and Commercially Reasonable

Ridgepoint's Opposition contends that the Wholesale Access Policy is a pretext for anticompetitive exclusion. (Opp. at 25–30.) This argument is not supported by the allegations in the Complaint and is foreclosed by the governing legal standards.

The WAP, adopted by Northgate in January 2020, establishes that third-party physical colocation at Northgate-owned or Northgate-leased telecommunications facilities is available only to existing wholesale partners that meet a minimum annual revenue commitment of $5 million in combined transport, backhaul, and interconnection services. (Compl. ¶ 58.) The policy reflects a straightforward commercial judgment: given the physical constraints of Northgate's facilities — each of which has finite power, cooling, and floor-space capacity — Northgate elected to prioritize colocation access for its most significant commercial partners, whose higher revenue contributions justify the allocation of scarce facility resources.

Ridgepoint's annual spend with Northgate for transport and backhaul services on other routes was approximately $1.8 million in fiscal year 2021. (Compl. ¶ 60.) This figure is well below the WAP's $5 million threshold. Ridgepoint does not allege that it has ever met, or come close to meeting, the $5 million revenue commitment required by the WAP. Ridgepoint's inability to satisfy the threshold is not a function of any anticompetitive barrier; it is a function of the relatively modest scale of Ridgepoint's commercial relationship with Northgate.

Critically, the WAP applies uniformly to all prospective colocation partners. The policy does not mention Ridgepoint by name. It does not single out competitive local exchange carriers ("CLECs"), enterprise fiber providers, or any identifiable class of Northgate's competitors. Ridgepoint's Opposition does not allege — because it cannot — that the WAP was applied differently to Ridgepoint than to any other entity seeking colocation at Northgate facilities. There is no allegation that Northgate granted colocation access to a carrier with annual revenue below $5 million while denying such access to Ridgepoint. The Complaint is devoid of any allegation of discriminatory application.

A firm's decision to reserve limited facility capacity for its most significant commercial partners is a textbook example of a legitimate business justification — precisely the type of unilateral commercial decision that Section 2 does not reach. As the Supreme Court recognized in Trinko, antitrust law does not require a monopolist to provide access to its facilities on terms favorable to its rivals, and "a monopolist's desire to maximize its own profits" is not an antitrust offense. 540 U.S. at 407–08. The WAP reflects Northgate's legitimate interest in optimizing the allocation of its finite physical infrastructure — an interest that the antitrust laws protect, not penalize.

B. Ridgepoint's "Pretext" Allegations Are Conclusory and Insufficient Under *Twombly*/*Iqbal*

Ridgepoint's Opposition rests its pretext theory primarily on Paragraph 62 of the Complaint, which asserts that the WAP was "adopted specifically to exclude competitive carriers from the Mid-Atlantic market." (Compl. ¶ 62.) This allegation is paradigmatically conclusory. It states a legal conclusion — that the WAP was adopted with an anticompetitive purpose — without any supporting factual allegations from which such a conclusion could reasonably be inferred.

Under the well-established pleading standards of Thackeray Corporation v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), a court presented with a motion to dismiss must distinguish between well-pleaded factual allegations, which are entitled to a presumption of truth, and conclusory assertions, which are not. The allegation that the WAP was adopted "specifically to exclude competitive carriers" is a conclusion, not a fact. It is the type of "threadbare recital" that Iqbal held is insufficient to survive a motion to dismiss. 556 U.S. at 678.

Ridgepoint's Complaint offers no factual basis for the proposition that the WAP was pretextual. There are no allegations of internal communications — no emails, memoranda, board minutes, or other documents — in which Northgate personnel discussed the purpose of excluding competitors. There are no allegations of admissions by any Northgate employee or officer. There is no pattern of discriminatory application from which an anticompetitive intent could be inferred. There is no allegation that the $5 million threshold was set at a level designed to exclude Ridgepoint specifically while admitting other, similarly situated competitors.

Ridgepoint's Opposition attempts to salvage its pretext theory by pointing to the temporal proximity between the WAP's adoption in January 2020 and Ridgepoint's interconnection requests, which were submitted between March 2021 and August 2022. (Opp. at 28–29.) But this argument actually undercuts Ridgepoint's theory. The WAP was adopted more than a year before Ridgepoint submitted its first interconnection request for any of the fourteen disputed facilities. The policy predated the conduct that is alleged to constitute the antitrust violation. Temporal proximity alone is insufficient to create a plausible inference of pretext, and the temporal proximity here does not even exist — there is a gap of more than fourteen months between the policy's adoption and the earliest of Ridgepoint's requests.

Moreover, the WAP was adopted on the heels of significant capital investments by Northgate in upgrading its fiber infrastructure, including the deployment of high-count fiber bundles and next-generation optical transport equipment across its Mid-Atlantic facilities. (Compl. ¶ 55.) The adoption of a threshold-based colocation policy in the wake of such investments is entirely consistent with a legitimate interest in recouping capital expenditures by prioritizing high-revenue wholesale relationships. The timing, properly understood, supports Northgate's position, not Ridgepoint's.

Ridgepoint cannot meet its pleading burden by labeling a facially neutral business policy "pretextual" without alleging any facts from which pretext could plausibly be inferred. The law requires more than labels and conclusions; it requires facts. Ridgepoint has not alleged them.

C. Capacity Constraints Provide an Independent Business Justification

Even if the Court were to conclude that the WAP alone is insufficient to justify Northgate's decision to deny Ridgepoint colocation access at the fourteen disputed facilities — and Defendants submit it is more than sufficient — capacity constraints provide an independent and compelling business justification for Northgate's conduct.

As alleged in the Complaint, Northgate's fourteen disputed facilities serve as critical hub sites in its Mid-Atlantic fiber network, housing not only colocation space for wholesale partners but also Northgate's own core network equipment, optical transport systems, power distribution infrastructure, and network operations monitoring equipment. (Compl. ¶¶ 30–35.) These are not vacant warehouses awaiting occupants; they are densely populated, operationally critical telecommunications facilities.

During the relevant period — March 2021 through August 2022, when Ridgepoint submitted its interconnection requests — Northgate's fourteen disputed facilities were at or above 85% capacity utilization, measured by available cabinet space, power capacity, and cooling capacity. (Compl. ¶ 36.) At such utilization levels, the allocation of remaining capacity requires careful prioritization to ensure that Northgate can continue to serve its existing customer base, accommodate growth from existing wholesale partners, and maintain adequate reserve capacity for network redundancy and disaster recovery.

The Complaint does not allege that capacity was available at the fourteen facilities and was being withheld exclusively from Ridgepoint while being made available to other similarly situated carriers. There is no allegation that any carrier with annual revenue below the $5 million WAP threshold was granted colocation access at any of the fourteen facilities during the relevant period. There is no allegation that Northgate turned away Ridgepoint while simultaneously on-boarding new colocation customers of comparable or lesser size. In the absence of such allegations, there is no plausible inference of anticompetitive animus. The allegations, taken as true, are equally — indeed, more — consistent with a firm rationally allocating scarce physical resources among its highest-value customers.

A monopolist's decision to allocate scarce physical capacity among its customers based on revenue thresholds is quintessentially the kind of ordinary business decision that courts have declined to second-guess under the antitrust laws. The antitrust laws are not a mechanism for compelling a firm to build more capacity or reallocate existing capacity to benefit a competitor. Such decisions are within the firm's legitimate business discretion, and Ridgepoint's displeasure with the outcome does not transform a rational business judgment into an antitrust violation.

IV. RIDGEPOINT'S RELEVANT MARKET DEFINITION REMAINS IMPLAUSIBLY NARROW

A. The Complaint's Product Market Excludes Obvious Substitutes

Ridgepoint defines the relevant product market as "last-mile enterprise fiber-optic transport services (lit and dark fiber) with speeds of 1 Gbps and above" sold to enterprise and government customers in the Mid-Atlantic corridor. (Compl. ¶ 68.) Defendants demonstrated in their Opening Memorandum that this market definition is implausibly narrow because it arbitrarily excludes several categories of services that enterprise and government customers demonstrably use as substitutes for last-mile fiber transport. (Opening Mem. at 28–34.) Ridgepoint's Opposition fails to cure this deficiency.

The product market alleged in the Complaint excludes, among other things: (1) cable broadband services offering speeds of 1 Gbps and above, which are widely available from Northgate Enterprises, Brightwater Partners LLC, and other cable operators throughout the alleged geographic market; (2) fixed wireless access ("FWA") services, which multiple providers now offer at enterprise-grade speeds and with service-level agreements comparable to those offered for fiber services; and (3) wholesale ethernet transport services, which provide point-to-point connectivity at speeds equivalent to those of lit fiber and are offered by numerous providers in the Mid-Atlantic corridor.

Each of these service categories is reasonably interchangeable with last-mile fiber transport for a significant segment of enterprise and government customers. The principle of reasonable interchangeability is the cornerstone of product market definition under the antitrust laws. See Calderon Industries v. Image Technical Services, Inc., 504 U.S. 451, 482 (1992). A relevant market must include "all products reasonably interchangeable by consumers for the same purposes." Id. (internal quotation marks omitted). Ridgepoint's exclusion of cable broadband, fixed wireless, and wholesale ethernet from the relevant market is not based on any allegation that these services are not reasonably interchangeable with fiber transport; it is based on the unstated premise that fiber is inherently different from other high-speed transport technologies. But at speeds of 1 Gbps and above — the very threshold that Ridgepoint itself uses to define its market — the performance characteristics of cable, fixed wireless, and wholesale ethernet increasingly converge with those of fiber.

The practical significance of this market definition issue is substantial. Ridgepoint alleges that Northgate holds a 68% share of the purported "last-mile enterprise fiber-optic transport" market, based on a preliminary analysis by Dr. Leonard Kuo, an economist retained by Ridgepoint's counsel, Hargrove, Winslow & Burke LLP. (Compl. ¶ 72.) But this share figure is an artifact of the artificially narrow market definition. A properly defined market that includes cable broadband, fixed wireless, and wholesale ethernet would encompass a far larger universe of competitors and revenues, reducing Northgate's share to approximately 31% — a level at which monopoly power, as a matter of law, cannot plausibly be inferred. See Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993) (recognizing that monopoly power requires a dominant share of the relevant market, typically above 70%).

Defendants acknowledge that market definition is often a factual question inappropriate for resolution on a motion to dismiss. But the Fourth Circuit has recognized that dismissal is appropriate where the alleged market is "facially unsustainable" — i.e., where the market as defined "clearly does not encompass all interchangeable substitute products." SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412, 422 (4th Cir. 2015). Other circuits have reached the same conclusion. See Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997) (dismissing antitrust claims where the alleged market excluded obvious substitutes); Todd v. Severin Corporation, 275 F.3d 191, 199–200 (2d Cir. 2001) (noting that "a complaint may be dismissed if the market alleged is clearly unreasonable"). Ridgepoint's market definition, which excludes entire categories of competing high-speed transport services available to the same enterprise and government customers, is precisely the type of facially unsustainable market definition that warrants dismissal at the pleading stage.

B. The Geographic Market Is Similarly Overbroad and Gerrymandered

Ridgepoint's geographic market definition is equally deficient. The Complaint alleges a geographic market defined as the "Philadelphia–Baltimore–Washington, D.C. metropolitan corridor" spanning portions of six jurisdictions: Pennsylvania, New Jersey, Delaware, Maryland, Virginia, and the District of Columbia. (Compl. ¶ 74.) This corridor-wide definition lumps together distinct metropolitan statistical areas — Philadelphia, Trenton, Baltimore, Washington, D.C., and northern Virginia — that have different competitive conditions, different sets of competitors, different customer bases, and different regulatory environments.

Ridgepoint's Opposition does not meaningfully respond to Defendants' argument that this geographic market definition is gerrymandered to inflate Northgate's share. (Opening Mem. at 34–37.) Defendants demonstrated that Northgate's competitive position varies significantly across the alleged corridor: Northgate has a strong presence in the Baltimore and Washington, D.C. metropolitan areas, where it has invested heavily in fiber infrastructure, but faces significantly more competition from other fiber providers in the Philadelphia market and in New Jersey. By aggregating these distinct local markets into a single corridor-wide market, Ridgepoint obscures these competitive variations and inflates Northgate's overall share.

A properly defined geographic market would reflect the reality that enterprise and government customers typically purchase last-mile fiber transport services on a local or metropolitan basis, not on a corridor-wide basis. A customer in downtown Philadelphia does not view a fiber connection in Baltimore as a substitute, and vice versa. The corridor-wide market definition is inconsistent with the economic realities of how these services are purchased and sold.

The Fourth Circuit has recognized that a geographic market must be defined to reflect "the area of effective competition — that is, the area in which the seller operates and to which the purchaser can practicably turn for supplies." SD3, 801 F.3d at 423 (internal quotation marks omitted). Ridgepoint's corridor-wide market definition does not satisfy this standard, and the Complaint should be dismissed on this independent ground as well.

V. RIDGEPOINT'S OPPOSITION RAISES NO ARGUMENT WARRANTING DENIAL OF DISMISSAL

A. The Opposition Conflates Regulatory Obligations with Antitrust Duties

A recurring theme in Ridgepoint's Opposition is the invocation of Northgate's 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. Ridgepoint argues that Northgate, as an incumbent local exchange carrier ("ILEC"), has a statutory obligation to provide interconnection and colocation to competitive carriers, and that Northgate's refusal to comply with these regulatory obligations supports the inference that its refusal is anticompetitive. (Opp. at 31–35.)

This argument was squarely rejected by the Supreme Court in Trinko. The Trinko Court held that a claim that a regulated entity failed to comply with its regulatory obligations to share its network "does not state a claim under the antitrust laws." 540 U.S. at 410–11. The Court explained that the Telecommunications Act of 1996 created a comprehensive regulatory framework for addressing interconnection disputes, including administrative enforcement mechanisms overseen by the Federal Communications Commission ("FCC") and state public utility commissions. The existence of this regulatory scheme, the Court held, "was an additional factor" weighing against recognition of an antitrust duty to deal, because the regulatory framework already provides "a means of access to the bottleneck facilities" that the antitrust laws need not duplicate. Id. at 411–12.

The Fourth Circuit has applied Trinko's reasoning to hold that alleged violations of the Telecommunications Act do not give rise to antitrust liability. See Cavalier Telephone, LLC v. Ashgrove & Co. Virginia, Inc., 330 F.3d 176, 189 (4th Cir. 2003) (noting that antitrust claims must be evaluated independently of regulatory obligations). The D.C. Circuit has reached the same conclusion. See Covad Communications Co. v. Thackeray Corporation, 398 F.3d 666, 673–74 (D.C. Cir. 2005) (holding that an ILEC's alleged failure to comply with interconnection obligations under the Telecommunications Act did not state an antitrust claim).

The distinction between regulatory and antitrust obligations is not merely academic — it is dispositive. Sections 251 and 252 impose specific, detailed obligations regarding interconnection, unbundled network elements, colocation, and resale. These obligations are enforced through a specialized regulatory apparatus, including the FCC's complaint procedures and state commission arbitration proceedings. The antitrust laws serve a different purpose: they prohibit monopolistic conduct that harms the competitive process, not noncompliance with regulatory directives.

The existence of a parallel FCC proceeding — initiated by Ridgepoint itself — further underscores this point. On February 7, 2023, Ridgepoint filed a complaint with the FCC, Docket No. WC-23-0042, alleging that Northgate violated Sections 251 and 252 by failing to negotiate interconnection agreements in good faith and by refusing to provide colocation at the disputed facilities. The fact that Ridgepoint is simultaneously pursuing its regulatory claims before the very agency charged with enforcing the interconnection obligations of the Telecommunications Act undermines any argument that antitrust law must serve as the enforcement vehicle for those obligations. Ridgepoint has an adequate regulatory remedy; it does not need — and the law does not provide — a duplicative antitrust remedy for the same alleged conduct.

B. The Complaint Cannot Be Saved by Liberal Pleading Standards

Finally, Ridgepoint's Opposition falls back on the general principle that complaints should be liberally construed and that dismissal is disfavored. (Opp. at 36–37.) While it is true that the federal rules contemplate notice pleading, even under that standard a complaint must contain "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. The plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678.

Ridgepoint's Complaint alleges, at most, that Northgate declined to extend interconnection and colocation access to fourteen facilities at which Ridgepoint has never previously had access, pursuant to a facially neutral, commercially reasonable policy that was adopted more than a year before Ridgepoint submitted its first request. These allegations — even accepted as true in their entirety — do not cross the line "from conceivable to plausible." Twombly, 550 U.S. at 570. They describe a monopolist exercising its lawful right to decline to deal with a competitor under circumstances that do not satisfy any of the elements of the Aspen Skiing exception.

As the Fourth Circuit has explained, the plausibility standard requires the Court to draw upon "its judicial experience and common sense" in evaluating whether the facts alleged, taken as true, plausibly give rise to an entitlement to relief. Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting Iqbal, 556 U.S. at 679). Common sense dictates that a firm's refusal to provide colocation access at facilities where no prior relationship existed, pursuant to a pre-existing, uniformly applied business policy, does not plausibly give rise to antitrust liability. The Complaint should be dismissed.

CONCLUSION

For all of the foregoing reasons, and those stated in Defendants' Opening Memorandum in Support of Their Motion to Dismiss (Dkt. No. 28, filed November 14, 2022), Defendants Northgate Telecommunications PLC and Northgate Networks America Inc. respectfully request that this Court dismiss Plaintiff Ridgepoint Communications Inc.'s Complaint in its entirety with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6).

In the alternative, Defendants respectfully submit that, at a minimum, the Complaint should be dismissed without prejudice and with leave for Ridgepoint to replead only if it can cure the deficiencies identified herein and in Defendants' Opening Memorandum. Defendants note, however, that the deficiencies in the Complaint are not the product of inartful drafting — they are structural, reflecting the fundamental absence of factual predicates necessary to state a refusal-to-deal claim under Section 2. No amount of repleading can cure the absence of a prior course of dealing at the fourteen disputed facilities, and no amendment can render the facially neutral Wholesale Access Policy pretextual in the absence of facts supporting that conclusion.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Elaine Forsythe (VSB No. 78342) Howard Bellamy (admitted pro hac vice) Aaron Liu (admitted pro hac vice) Monica Reyes (admitted pro hac vice)

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

and

Calderwood & Harkness LLP 450 Lexington Avenue, 35th Floor New York, NY 10017

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

Dated: January 30, 2023

CERTIFICATE OF SERVICE

I hereby certify that on this 30th day of January, 2023, a true and correct copy of the foregoing Defendants' Reply Memorandum in Further Support of Their Motion to Dismiss Plaintiff's Complaint Pursuant to Federal Rule of Civil Procedure 12(b)(6) was served on all counsel of record via the Court's CM/ECF electronic filing system, which will send notification of such filing to the following:

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

Counsel for Plaintiff Ridgepoint Communications Inc.

________________________________________

Elaine Forsythe (VSB No. 78342)

Page

PRELIMINARY STATEMENT	1
I. RIDGEPOINT'S OPPOSITION MISSTATES THE LEGAL STANDARD FOR REFUSAL-TO-DEAL LIABILITY UNDER SECTION 2	4
A. The Trinko Framework Strictly Limits Refusal-to-Deal Claims	4
B. Aspen Skiing Is a Narrow Exception, Not a Broad Mandate	7
II. THE EXPIRED MIA AND HOLDOVER ARRANGEMENT DO NOT ESTABLISH A PRIOR COURSE OF DEALING AT THE 14 DISPUTED FACILITIES	9
A. The MIA Covered Only Three Northern Virginia Facilities — Not the 14 Facilities at Issue	9
B. The MIA Was a Fixed-Term Contract That Expired by Its Own Terms	12
C. The Month-to-Month Holdover Arrangement Actually Undermines Ridgepoint's Theory	14
III. THE WHOLESALE ACCESS POLICY IS A LEGITIMATE UNILATERAL BUSINESS DECISION, NOT A PRETEXT FOR EXCLUSION	16
A. The WAP Is Facially Neutral and Commercially Reasonable	16
B. Ridgepoint's "Pretext" Allegations Are Conclusory and Insufficient Under Twombly/Iqbal	18
C. Capacity Constraints Provide an Independent Business Justification	20
IV. RIDGEPOINT'S RELEVANT MARKET DEFINITION REMAINS IMPLAUSIBLY NARROW	22
A. The Complaint's Product Market Excludes Obvious Substitutes	22
B. The Geographic Market Is Similarly Overbroad and Gerrymandered	24
V. RIDGEPOINT'S OPPOSITION RAISES NO ARGUMENT WARRANTING DENIAL OF DISMISSAL	26
A. The Opposition Conflates Regulatory Obligations with Antitrust Duties	26
B. The Complaint Cannot Be Saved by Liberal Pleading Standards	28
CONCLUSION	30

Page(s)

Ashcroft v. Iqbal, 556 U.S. 662 (2009)	3, 18, 19, 28, 29
Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985)	passim
Thackeray Corporation v. Twombly, 550 U.S. 544 (2007)	3, 18, 19, 28, 29
Westvale Holdings. v. Pemberton Corporation, 501 F.3d 297 (3d Cir. 2007)	23
Cavalier Telephone, LLC v. Ashgrove & Co. Virginia, Inc., 330 F.3d 176 (4th Cir. 2003)	27
Covad Communications Co. v. Thackeray Corporation, 398 F.3d 666 (D.C. Cir. 2005)	27
Calderon Industries v. Image Technical Services, Inc., 504 U.S. 451 (1992)	23
Flat Rate Ideas, LLC v. Ridgeway Bancorp, No. 21-cv-4411, 2022 WL 1284036 (S.D.N.Y. Apr. 29, 2022)	7
Francis v. Giacomelli, 588 F.3d 186 (4th Cir. 2009)	29
In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (Fed. Cir. 2008)	23
LinkLine Communications, Inc. v. SBC California, Inc., 555 U.S. 438 (2009)	5, 6
MetroNet Services Corp. v. Qwest Corp., 383 F.3d 1124 (9th Cir. 2004)	11, 12
Morris Communications Corp. v. PGA Tour, Inc., 364 F.3d 1288 (11th Cir. 2004)	6, 13
Novell, Inc. v. Kestrel Partners LLC, 731 F.3d 1064 (10th Cir. 2013)	7, 8, 14
Ohio v. Halcyon Corporation, 138 S. Ct. 2274 (2018)	23
Pac. Bell Telephone Co. v. linkLine Communications, Inc., 555 U.S. 438 (2009)	5
Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430 (3d Cir. 1997)	24
SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412 (4th Cir. 2015)	22, 25
Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447 (1993)	22
Todd v. Severin Corporation, 275 F.3d 191 (2d Cir. 2001)	24
Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004)	passim

Page(s)

15 U.S.C. § 2	passim
47 U.S.C. § 251	26, 27
47 U.S.C. § 252	26, 27
Fed. R. Civ. P. 12(b)(6)	1, 29, 30

Page(s)

Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 772 (4th ed. 2018)	6, 8
Herbert Hovenkamp, Federal Antitrust Policy: The Law of Competition and Its Practice § 7.5 (6th ed. 2020)	6
Robert H. Bork, The Antitrust Paradox 344–45 (2d ed. 1993)	5

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division
RIDGEPOINT COMMUNICATIONS INC.,
Plaintiff,
v.
NORTHGATE TELECOMMUNICATIONS PLC and NORTHGATE NETWORKS AMERICA INC.,
Defendants.
Case No. 1:22-cv-01487-CMW
DEFENDANTS' REPLY MEMORANDUM IN FURTHER SUPPORT OF THEIR MOTION TO DISMISS PLAINTIFF'S COMPLAINT PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6)
Filed: January 30, 2023
Elaine Forsythe (VSB No. 78342) Howard Bellamy (admitted pro hac vice) Aaron Liu (admitted pro hac vice) Monica Reyes (admitted pro hac vice)
CALDERWOOD & HARKNESS LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7100 Facsimile: (202) 555-7101
and
CALDERWOOD & HARKNESS LLP 450 Lexington Avenue, 35th Floor New York, NY 10017
Counsel for Defendants Northgate Telecommunications PLC and Northgate Networks America Inc.
TABLE OF CONTENTS
TABLE OF AUTHORITIES
Cases
Statutes and Regulations
Secondary Authorities
PRELIMINARY STATEMENT
Ridgepoint Communications Inc.'s ("Ridgepoint") Opposition to Defendants' Motion to Dismiss (the "Opposition," Dkt. No. 34) fails to rehabilitate the fundamental legal deficiencies that pervade its Complaint. Ridgepoint brings a single-count claim under Section 2 of the Sherman Act, 15 U.S.C. § 2, alleging that Defendants Northgate Telecommunications PLC and Northgate Networks America Inc. (collectively, "Northgate") unlawfully monopolized the purported market for "last-mile enterprise fiber-optic transport services" by refusing to provide Ridgepoint with physical colocation and interconnection access at fourteen telecommunications facilities in the Mid-Atlantic region. The claim is a refusal-to-deal theory of monopolization liability — a theory that the Supreme Court has repeatedly cautioned courts to approach with extreme skepticism. As demonstrated in Defendants' opening Memorandum in Support of Their Motion to Dismiss (the "Opening Memorandum," Dkt. No. 28, filed November 14, 2022), and as further set forth herein, Ridgepoint's Complaint fails to state a plausible claim for relief under the exacting standards established by Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), and Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).
Ridgepoint's Opposition principally advances two arguments that Defendants address in this Reply. First, Ridgepoint contends that the prior Master Interconnection Agreement ("MIA"), dated June 15, 2015, which expired by its own terms on June 14, 2020, together with the subsequent month-to-month holdover arrangement at three northern Virginia colocation facilities, establishes a "prior voluntary course of dealing" sufficient to satisfy the Aspen Skiing framework with respect to all fourteen of the disputed facilities identified in the Complaint. Second, Ridgepoint argues that Northgate's Wholesale Access Policy (the "WAP"), adopted in January 2020, is pretextual — a policy adopted not for legitimate business reasons, but for the purpose of excluding Ridgepoint and other competitive carriers from the Mid-Atlantic market. Neither argument withstands legal or logical scrutiny.
As to the first argument, the MIA covered exactly three colocation facilities in northern Virginia — none of the fourteen facilities at issue in this case. There is no allegation, nor could there be, that Northgate ever provided Ridgepoint with access at any of the fourteen disputed locations. Ridgepoint's attempt to extrapolate a "general course of dealing" across the entire Mid-Atlantic region from a contract limited to three specific facilities is contrary to the well-settled principle that Aspen Skiing requires a prior voluntary dealing with respect to the specific product, service, or asset at issue. Moreover, the MIA was a fixed-term contract that ran its course and expired; Northgate did not terminate the MIA mid-stream. The decision not to renew a contract that has expired by its own terms is fundamentally different from the abrupt termination of a profitable, ongoing commercial relationship that animated the Supreme Court's analysis in Aspen Skiing.
As to the second argument, the WAP is a facially neutral, commercially reasonable policy that applies uniformly to all prospective colocation partners and establishes a minimum annual revenue commitment of $5 million. The policy was adopted in January 2020 — more than a year before Ridgepoint submitted its first interconnection request for any of the fourteen disputed facilities. Ridgepoint's allegation that the WAP was adopted "specifically to exclude competitive carriers" (Compl. ¶ 62) is a bare conclusory assertion, devoid of any factual support, and is entitled to no presumption of truth under Thackeray Corporation v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009). The Complaint identifies no internal communications, no admissions by Northgate personnel, and no pattern of discriminatory application suggesting that the WAP was designed as an instrument of competitive exclusion.
Even accepting every well-pleaded allegation in the Complaint as true and drawing all reasonable inferences in Ridgepoint's favor — as the Court must at this stage — the Complaint fails to state a plausible Section 2 refusal-to-deal claim. There was no voluntary prior course of dealing at the fourteen specific facilities at issue. The WAP is a facially legitimate unilateral business policy supported by independent capacity-allocation justifications. And the relevant market as alleged is implausibly narrow, excluding obvious demand-side substitutes and gerrymandering a geographic corridor to inflate Northgate's market share. The Complaint should be dismissed with prejudice.
I. RIDGEPOINT'S OPPOSITION MISSTATES THE LEGAL STANDARD FOR REFUSAL-TO-DEAL LIABILITY UNDER SECTION 2
A. The *Trinko* Framework Strictly Limits Refusal-to-Deal Claims
Ridgepoint's Opposition devotes remarkably little attention to the governing legal framework for refusal-to-deal claims under Section 2 of the Sherman Act, and for good reason: the framework overwhelmingly favors Defendants. The Supreme Court's decision in Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004), established — in a case involving the telecommunications industry specifically — that antitrust law does not impose a general duty on monopolists to share their infrastructure with competitors.
The Trinko Court began its analysis by reaffirming the bedrock antitrust principle that "the right to refuse to deal with other firms" is not only lawful but is "a fundamental component of the free market system." Id. at 408. The Court expressly recognized that forcing a monopolist to share its facilities with competitors creates serious administrability problems, noting that "enforced sharing also requires antitrust courts to act as central planners, identifying the proper price, quantity, and other terms of dealing — a role for which they are ill suited." Id. at 408. Moreover, the Court identified the risk that compelling access would "lessen the incentive for the monopolist, the rival, or both to invest in those economically beneficial facilities," thereby harming the competitive process that antitrust law is designed to protect. Id.
These are not mere dicta or background principles. The Trinko Court's reluctance to expand refusal-to-deal liability was central to its holding and has been reiterated in subsequent Supreme Court decisions. In Pacific Bell Telephone Co. v. linkLine Communications, Inc., 555 U.S. 438 (2009), the Court again emphasized that "a firm with no duty to deal in the wholesale market has no obligation to deal under terms and conditions favorable to its competitors." Id. at 450. The teaching of Trinko and linkLine is unmistakable: absent the narrow circumstances described in Aspen Skiing, a monopolist has no antitrust obligation to assist its competitors by providing access to its facilities, and courts should be reluctant to recognize new duties to deal.
Ridgepoint's Opposition does not — and cannot — dispute these foundational principles. Instead, the Opposition attempts to sidestep Trinko by arguing that it addressed a different factual context (the existence of a comprehensive regulatory scheme under the Telecommunications Act of 1996 that separately addressed the duty to share). (Opp. at 12–14.) But this effort to distinguish Trinko misses the point. While it is true that the existence of a regulatory framework was one factor in the Trinko Court's analysis, the Court's pronouncements regarding the limited scope of refusal-to-deal liability were broadly stated and have been applied far beyond the telecommunications context. See, e.g., Novell, Inc. v. Kestrel Partners LLC, 731 F.3d 1064, 1074–75 (10th Cir. 2013) (applying Trinko's limiting principles in the software industry); Morris Communications Corp. v. PGA Tour, Inc., 364 F.3d 1288, 1295–96 (11th Cir. 2004) (same in sports media context). As Professor Hovenkamp has observed, Trinko "effectively limits the duty to deal under § 2 to fact patterns resembling Aspen Skiing — namely, cases involving an actual termination of a pre-existing voluntary course of dealing." Herbert Hovenkamp, Federal Antitrust Policy: The Law of Competition and Its Practice § 7.5, at 340 (6th ed. 2020).
Indeed, the leading antitrust treatise recognizes that Trinko significantly narrowed the scope of the Aspen Skiing exception: "After Trinko, the most that can be said for the duty to deal is that a monopolist may not discontinue an existing, profitable relationship with a competitor if the only plausible explanation for the discontinuance is the elimination of competition." Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 772c, at 227 (4th ed. 2018). That formulation — requiring an existing, profitable relationship that was discontinued with no plausible explanation other than the elimination of competition — is far more demanding than what Ridgepoint has alleged here, and Ridgepoint's Opposition fails to grapple with this standard.
In sum, the starting point for the Court's analysis must be the strong presumption, articulated in Trinko, that a firm's unilateral refusal to deal with a competitor does not violate Section 2. Ridgepoint bears the burden of pleading facts that bring its claim within the narrow Aspen Skiing exception to that general rule. As demonstrated below, it has not done so.
B. *Aspen Skiing* Is a Narrow Exception, Not a Broad Mandate
Ridgepoint's Opposition treats the Aspen Skiing exception as though it were a broad mandate requiring monopolists to deal with their rivals whenever a prior commercial relationship of any kind existed between the parties. That is not the law.
In Trinko, the Supreme Court expressly characterized the Aspen Skiing decision as sitting "at or near the outer boundary of § 2 liability." 540 U.S. at 409. The Court did not overrule Aspen Skiing, but it made clear that the case represented the "limiting rather than the leading case on the duty to deal." See Flat Rate Ideas, LLC v. Ridgeway Bancorp, No. 21-cv-4411, 2022 WL 1284036, at 7 (S.D.N.Y. Apr. 29, 2022) (noting that Trinko "recast Aspen Skiing* as a high-water mark, not a springboard for expansion").
Properly understood, Aspen Skiing requires a plaintiff alleging refusal-to-deal liability to plead facts supporting each of three critical elements. First, the plaintiff must demonstrate a voluntary and profitable prior course of dealing between the parties with respect to the specific product, service, or facility at issue. In Aspen Skiing, the defendant had voluntarily participated in a joint multi-area ski pass with the plaintiff for years, sharing revenues in a manner profitable to both. 472 U.S. at 593–94. It was the defendant's termination of that specific, previously profitable arrangement that gave rise to liability. Second, the monopolist must have terminated that prior voluntary course of dealing — not simply declined to initiate a new one. Id. at 604–05. Third, the circumstances must support a plausible inference that the monopolist was willing to sacrifice short-term profits to achieve an anticompetitive end. Id. at 610–11. The defendant in Aspen Skiing refused to accept the plaintiff's offer to purchase lift tickets at retail price for inclusion in a combined offering — a refusal that made no economic sense absent an intent to harm the plaintiff's competitive position. Id. at 608–10.
Each of these elements serves an important limiting function, ensuring that refusal-to-deal liability is not imposed merely because a monopolist declines to cooperate with a competitor, but only in the narrow circumstance where the monopolist walks away from a specific, profitable arrangement for no plausible reason other than to exclude competition. See Novell, 731 F.3d at 1075 (emphasizing that all three elements must be present for Aspen Skiing liability). The Tenth Circuit in Novell explained that the Aspen Skiing framework serves as a "careful screen" designed to "separate anticompetitive refusals to deal from mere hard-nosed — but procompetitive or competitively neutral — business decisions." Id. at 1074.
As demonstrated in the following sections, Ridgepoint's Complaint fails to allege facts supporting any of these three critical elements with respect to the fourteen disputed facilities. There was no prior course of dealing at those facilities. There was no termination of an existing arrangement. And there is no plausible inference that Northgate sacrificed short-term profits to achieve an anticompetitive end. The Aspen Skiing exception is therefore inapplicable, and the general rule of Trinko — that a monopolist has no antitrust duty to deal with its competitors — controls.
II. THE EXPIRED MIA AND HOLDOVER ARRANGEMENT DO NOT ESTABLISH A PRIOR COURSE OF DEALING AT THE 14 DISPUTED FACILITIES
The centerpiece of Ridgepoint's Opposition is its argument that the prior MIA and the subsequent month-to-month holdover arrangement demonstrate a "prior voluntary course of dealing" between the parties that satisfies the Aspen Skiing framework. (Opp. at 16–24.) This argument fails for three independently sufficient reasons: (A) the MIA covered only three northern Virginia facilities, not the fourteen facilities at issue; (B) the MIA expired by its own terms and was not terminated by Northgate; and (C) the holdover arrangement, rather than supporting Ridgepoint's theory, actually undermines it.
A. The MIA Covered Only Three Northern Virginia Facilities — Not the 14 Facilities at Issue
The Master Interconnection Agreement was executed on June 15, 2015 and, by its express terms, granted Ridgepoint physical colocation and interconnection access at exactly three Northgate facilities in northern Virginia: (1) 1775 Wiehle Avenue, Reston, Virginia 20190; (2) 44330 Mercure Circle, Sterling, Virginia 20166; and (3) 21715 Filigree Court, Ashburn, Virginia 20147. (Compl. ¶ 38; MIA § 2.1, attached to the Complaint as Exhibit A.) The MIA contained no provision granting Ridgepoint access to any other Northgate facility, and it included no option, right of first refusal, or similar mechanism by which Ridgepoint could expand its colocation footprint to additional locations.
The fourteen facilities identified in the Complaint — at which Ridgepoint seeks colocation and interconnection access — are entirely distinct from the three MIA facilities. For the sake of clarity, those fourteen facilities are:
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
None of these fourteen addresses corresponds to any of the three MIA facilities. Northgate has never — at any point — provided Ridgepoint with colocation, interconnection, or any form of physical access at any of these fourteen locations. The Complaint does not allege otherwise. There is no allegation that Ridgepoint ever had a cage, cabinet, rack, cross-connect, or any physical presence at any of these fourteen facilities. There is no allegation that Ridgepoint ever entered into any agreement, whether written or oral, formal or informal, with respect to colocation or interconnection at any of these fourteen facilities prior to submitting its requests in March 2021 through August 2022.
Ridgepoint's Opposition attempts to bridge this fundamental gap by asserting that the MIA demonstrates a "general course of dealing" between the parties in the "Mid-Atlantic region" that should be viewed holistically. (Opp. at 18–19.) According to Ridgepoint, the relevant inquiry is whether the parties had an "ongoing commercial relationship involving interconnection services," not whether there was a prior dealing at each specific facility. (Id. at 19.) This argument is legally incorrect and, if accepted, would dramatically expand Aspen Skiing far beyond the narrow confines recognized by the Supreme Court.
The Aspen Skiing framework requires a prior voluntary course of dealing with respect to the specific product, service, or asset at issue. In Aspen Skiing itself, the prior course of dealing was the joint multi-area ski pass that gave customers access to all four mountains — the very same arrangement whose termination gave rise to the antitrust claim. 472 U.S. at 593–94. The defendant did not refuse access to mountains that had never been part of the joint arrangement; it terminated the plaintiff's participation in the existing four-mountain pass. The congruence between the prior voluntary dealing and the access sought was exact.
Courts in the Fourth Circuit and elsewhere have consistently applied this specificity requirement. In MetroNet Services Corp. v. Qwest Corp., 383 F.3d 1124 (9th Cir. 2004), the Ninth Circuit rejected the argument that a prior interconnection agreement covering certain facilities established a course of dealing at different facilities. The court explained that "a general commercial relationship between the parties does not suffice; the prior course of dealing must relate to the specific product or service that the defendant allegedly refused to provide." Id. at 1133. Similarly, courts have rejected attempts to establish a "regional" or "industry-wide" course of dealing based on a limited prior arrangement at specific locations. See, e.g., Morris Communications, 364 F.3d at 1296–97 (distinguishing between cooperation at certain events and refusal to cooperate at different events).
Ridgepoint's approach would effectively allow any plaintiff that has any prior commercial relationship with a monopolist to claim an Aspen Skiing-style duty to deal across the monopolist's entire network. Such a rule would be unworkable, would contradict the Supreme Court's insistence that refusal-to-deal liability be confined to a narrow set of circumstances, and would create precisely the kind of open-ended obligation that Trinko cautioned against. If the existence of a colocation agreement at three facilities in northern Virginia were sufficient to create a duty to deal at fourteen entirely different facilities spanning five states and the District of Columbia, the limiting principle of Aspen Skiing would be swallowed whole. Any company that had ever done business with a monopolist in any capacity could claim a right of access to the monopolist's entire infrastructure.
The Court should reject Ridgepoint's invitation to read Aspen Skiing so broadly. There was no prior course of dealing at the fourteen facilities at issue. That is dispositive.
B. The MIA Was a Fixed-Term Contract That Expired by Its Own Terms
Even setting aside the geographic mismatch between the MIA and the fourteen disputed facilities, Ridgepoint's Aspen Skiing theory fails for an additional, independently sufficient reason: the MIA was not terminated by Northgate. It expired by its own terms.
The MIA had a defined five-year term running from June 15, 2015 through June 14, 2020. (Compl. ¶ 47; MIA § 11.1.) The contract contained a mutual option to renew for an additional five-year term, exercisable by written notice delivered not less than 180 days prior to the expiration date. (MIA § 11.2.) It is undisputed that neither party exercised the renewal option within the contractual window. As a result, the MIA expired by operation of its own terms on June 14, 2020.
The Complaint itself acknowledges this fact. Paragraph 47 of the Complaint states: "The MIA expired by its terms on June 14, 2020." (Compl. ¶ 47.) There is no allegation that Northgate breached the MIA, refused to perform under the MIA during its term, or took any action to terminate the MIA prior to its natural expiration date.
This is a critical distinction. The Aspen Skiing framework contemplates a termination of a voluntary course of dealing — i.e., an affirmative decision by the monopolist to walk away from an ongoing, profitable arrangement. In Aspen Skiing, the defendant unilaterally refused to continue the multi-mountain ski pass that had been offered for years. 472 U.S. at 593–94. The defendant terminated the arrangement in the middle of what had been a long-running, cooperative commercial relationship. That is fundamentally different from the natural expiration of a fixed-term contract.
A party's decision not to renew an expired contract does not constitute an anticompetitive termination of a voluntary course of dealing. As the Eleventh Circuit explained in Morris Communications:
"The antitrust laws do not require that a firm perpetually renew its contracts with competitors. A fixed-term agreement that expires according to its terms is not 'terminated' in any meaningful sense; it simply runs its course. The decision not to enter into a new agreement after the expiration of the old one is a quintessential exercise of business judgment."
364 F.3d at 1297. The Tenth Circuit reached the same conclusion in Novell, observing that "[w]here a contractual relationship ends by its own terms, the monopolist's decision not to renew does not transform a lawful refusal to deal into an antitrust violation." 731 F.3d at 1076.
Ridgepoint's Opposition offers no meaningful response to this point. The Opposition asserts that the "practical effect" of nonrenewal was the same as a termination because Ridgepoint lost access that it had previously enjoyed. (Opp. at 21.) But this conflates the economic impact on Ridgepoint with the legal question of whether Northgate engaged in the type of conduct cognizable under Aspen Skiing. Every expired contract results in the loss of benefits that the non-renewing party previously enjoyed; that does not convert the expiration into an antitrust violation. If it did, every monopolist that declined to renew a contract with a competitor would face potential Section 2 liability — a result that would be flatly inconsistent with Trinko's admonition that a firm generally has no duty to deal with its rivals.
C. The Month-to-Month Holdover Arrangement Actually Undermines Ridgepoint's Theory
Ridgepoint's Opposition also points to the month-to-month holdover arrangement at the three MIA facilities as evidence of Northgate's duty to deal. (Opp. at 22–23.) This argument not only fails to support Ridgepoint's claims — it affirmatively undermines them.
After the MIA expired on June 14, 2020, Ridgepoint continued to occupy its colocation spaces at the three northern Virginia facilities under a month-to-month holdover arrangement. Pursuant to the MIA's holdover clause (MIA § 11.3), the holdover rate was set at 120% of the prior contractual rate. Ridgepoint's monthly colocation fee at each of the three facilities increased from $12,000 per month under the MIA to $14,400 per month under the holdover arrangement — a holdover premium of $2,400 per month per facility. Across the three facilities, this amounts to an aggregate monthly premium of $7,200, or $86,400 per year.
Northgate's continued accommodation of Ridgepoint at these three facilities — albeit at an increased holdover rate reflecting the absence of a long-term contractual commitment — directly refutes the central premise of Ridgepoint's case: that Northgate has engaged in an exclusionary blanket refusal to deal with Ridgepoint. To the contrary, Northgate continues to provide colocation service to Ridgepoint at the facilities where a prior contractual relationship existed. Northgate has not evicted Ridgepoint from these facilities, has not cut off Ridgepoint's interconnection links, and has not refused to maintain the existing colocation arrangement. In short, Northgate has not engaged in the type of scorched-earth refusal to deal that characterized the defendant's conduct in Aspen Skiing.
The holdover arrangement is significant for another reason as well. In Aspen Skiing, the Court found it probative that the defendant refused to accept retail-priced lift tickets from the plaintiff — a refusal that made no economic sense absent an intent to harm the plaintiff's competitive position. 472 U.S. at 608–10. The implication was that the defendant was willing to sacrifice short-term revenue in order to exclude the plaintiff from the market. Here, by contrast, Northgate is not sacrificing any revenue with respect to Ridgepoint; it is earning more from Ridgepoint under the holdover arrangement than it did under the MIA. There is no allegation that Northgate has turned away Ridgepoint's money at the three existing facilities or refused to continue the holdover arrangement. The "sacrifice of short-term profits" element of the Aspen Skiing framework is entirely absent.
Finally, and critically, the holdover arrangement is limited to the three facilities covered by the expired MIA. It has no bearing whatsoever on the fourteen different facilities at which Ridgepoint has never had access. The holdover arrangement does not create any inference that Northgate had a prior course of dealing with Ridgepoint at the fourteen disputed facilities, and it does not support an inference that Northgate is required to extend colocation access to facilities that were never part of any agreement between the parties.
III. THE WHOLESALE ACCESS POLICY IS A LEGITIMATE UNILATERAL BUSINESS DECISION, NOT A PRETEXT FOR EXCLUSION
A. The WAP Is Facially Neutral and Commercially Reasonable
Ridgepoint's Opposition contends that the Wholesale Access Policy is a pretext for anticompetitive exclusion. (Opp. at 25–30.) This argument is not supported by the allegations in the Complaint and is foreclosed by the governing legal standards.
The WAP, adopted by Northgate in January 2020, establishes that third-party physical colocation at Northgate-owned or Northgate-leased telecommunications facilities is available only to existing wholesale partners that meet a minimum annual revenue commitment of $5 million in combined transport, backhaul, and interconnection services. (Compl. ¶ 58.) The policy reflects a straightforward commercial judgment: given the physical constraints of Northgate's facilities — each of which has finite power, cooling, and floor-space capacity — Northgate elected to prioritize colocation access for its most significant commercial partners, whose higher revenue contributions justify the allocation of scarce facility resources.
Ridgepoint's annual spend with Northgate for transport and backhaul services on other routes was approximately $1.8 million in fiscal year 2021. (Compl. ¶ 60.) This figure is well below the WAP's $5 million threshold. Ridgepoint does not allege that it has ever met, or come close to meeting, the $5 million revenue commitment required by the WAP. Ridgepoint's inability to satisfy the threshold is not a function of any anticompetitive barrier; it is a function of the relatively modest scale of Ridgepoint's commercial relationship with Northgate.
Critically, the WAP applies uniformly to all prospective colocation partners. The policy does not mention Ridgepoint by name. It does not single out competitive local exchange carriers ("CLECs"), enterprise fiber providers, or any identifiable class of Northgate's competitors. Ridgepoint's Opposition does not allege — because it cannot — that the WAP was applied differently to Ridgepoint than to any other entity seeking colocation at Northgate facilities. There is no allegation that Northgate granted colocation access to a carrier with annual revenue below $5 million while denying such access to Ridgepoint. The Complaint is devoid of any allegation of discriminatory application.
A firm's decision to reserve limited facility capacity for its most significant commercial partners is a textbook example of a legitimate business justification — precisely the type of unilateral commercial decision that Section 2 does not reach. As the Supreme Court recognized in Trinko, antitrust law does not require a monopolist to provide access to its facilities on terms favorable to its rivals, and "a monopolist's desire to maximize its own profits" is not an antitrust offense. 540 U.S. at 407–08. The WAP reflects Northgate's legitimate interest in optimizing the allocation of its finite physical infrastructure — an interest that the antitrust laws protect, not penalize.
B. Ridgepoint's "Pretext" Allegations Are Conclusory and Insufficient Under *Twombly*/*Iqbal*
Ridgepoint's Opposition rests its pretext theory primarily on Paragraph 62 of the Complaint, which asserts that the WAP was "adopted specifically to exclude competitive carriers from the Mid-Atlantic market." (Compl. ¶ 62.) This allegation is paradigmatically conclusory. It states a legal conclusion — that the WAP was adopted with an anticompetitive purpose — without any supporting factual allegations from which such a conclusion could reasonably be inferred.
Under the well-established pleading standards of Thackeray Corporation v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), a court presented with a motion to dismiss must distinguish between well-pleaded factual allegations, which are entitled to a presumption of truth, and conclusory assertions, which are not. The allegation that the WAP was adopted "specifically to exclude competitive carriers" is a conclusion, not a fact. It is the type of "threadbare recital" that Iqbal held is insufficient to survive a motion to dismiss. 556 U.S. at 678.
Ridgepoint's Complaint offers no factual basis for the proposition that the WAP was pretextual. There are no allegations of internal communications — no emails, memoranda, board minutes, or other documents — in which Northgate personnel discussed the purpose of excluding competitors. There are no allegations of admissions by any Northgate employee or officer. There is no pattern of discriminatory application from which an anticompetitive intent could be inferred. There is no allegation that the $5 million threshold was set at a level designed to exclude Ridgepoint specifically while admitting other, similarly situated competitors.
Ridgepoint's Opposition attempts to salvage its pretext theory by pointing to the temporal proximity between the WAP's adoption in January 2020 and Ridgepoint's interconnection requests, which were submitted between March 2021 and August 2022. (Opp. at 28–29.) But this argument actually undercuts Ridgepoint's theory. The WAP was adopted more than a year before Ridgepoint submitted its first interconnection request for any of the fourteen disputed facilities. The policy predated the conduct that is alleged to constitute the antitrust violation. Temporal proximity alone is insufficient to create a plausible inference of pretext, and the temporal proximity here does not even exist — there is a gap of more than fourteen months between the policy's adoption and the earliest of Ridgepoint's requests.
Moreover, the WAP was adopted on the heels of significant capital investments by Northgate in upgrading its fiber infrastructure, including the deployment of high-count fiber bundles and next-generation optical transport equipment across its Mid-Atlantic facilities. (Compl. ¶ 55.) The adoption of a threshold-based colocation policy in the wake of such investments is entirely consistent with a legitimate interest in recouping capital expenditures by prioritizing high-revenue wholesale relationships. The timing, properly understood, supports Northgate's position, not Ridgepoint's.
Ridgepoint cannot meet its pleading burden by labeling a facially neutral business policy "pretextual" without alleging any facts from which pretext could plausibly be inferred. The law requires more than labels and conclusions; it requires facts. Ridgepoint has not alleged them.
C. Capacity Constraints Provide an Independent Business Justification
Even if the Court were to conclude that the WAP alone is insufficient to justify Northgate's decision to deny Ridgepoint colocation access at the fourteen disputed facilities — and Defendants submit it is more than sufficient — capacity constraints provide an independent and compelling business justification for Northgate's conduct.
As alleged in the Complaint, Northgate's fourteen disputed facilities serve as critical hub sites in its Mid-Atlantic fiber network, housing not only colocation space for wholesale partners but also Northgate's own core network equipment, optical transport systems, power distribution infrastructure, and network operations monitoring equipment. (Compl. ¶¶ 30–35.) These are not vacant warehouses awaiting occupants; they are densely populated, operationally critical telecommunications facilities.
During the relevant period — March 2021 through August 2022, when Ridgepoint submitted its interconnection requests — Northgate's fourteen disputed facilities were at or above 85% capacity utilization, measured by available cabinet space, power capacity, and cooling capacity. (Compl. ¶ 36.) At such utilization levels, the allocation of remaining capacity requires careful prioritization to ensure that Northgate can continue to serve its existing customer base, accommodate growth from existing wholesale partners, and maintain adequate reserve capacity for network redundancy and disaster recovery.
The Complaint does not allege that capacity was available at the fourteen facilities and was being withheld exclusively from Ridgepoint while being made available to other similarly situated carriers. There is no allegation that any carrier with annual revenue below the $5 million WAP threshold was granted colocation access at any of the fourteen facilities during the relevant period. There is no allegation that Northgate turned away Ridgepoint while simultaneously on-boarding new colocation customers of comparable or lesser size. In the absence of such allegations, there is no plausible inference of anticompetitive animus. The allegations, taken as true, are equally — indeed, more — consistent with a firm rationally allocating scarce physical resources among its highest-value customers.
A monopolist's decision to allocate scarce physical capacity among its customers based on revenue thresholds is quintessentially the kind of ordinary business decision that courts have declined to second-guess under the antitrust laws. The antitrust laws are not a mechanism for compelling a firm to build more capacity or reallocate existing capacity to benefit a competitor. Such decisions are within the firm's legitimate business discretion, and Ridgepoint's displeasure with the outcome does not transform a rational business judgment into an antitrust violation.
IV. RIDGEPOINT'S RELEVANT MARKET DEFINITION REMAINS IMPLAUSIBLY NARROW
A. The Complaint's Product Market Excludes Obvious Substitutes
Ridgepoint defines the relevant product market as "last-mile enterprise fiber-optic transport services (lit and dark fiber) with speeds of 1 Gbps and above" sold to enterprise and government customers in the Mid-Atlantic corridor. (Compl. ¶ 68.) Defendants demonstrated in their Opening Memorandum that this market definition is implausibly narrow because it arbitrarily excludes several categories of services that enterprise and government customers demonstrably use as substitutes for last-mile fiber transport. (Opening Mem. at 28–34.) Ridgepoint's Opposition fails to cure this deficiency.
The product market alleged in the Complaint excludes, among other things: (1) cable broadband services offering speeds of 1 Gbps and above, which are widely available from Northgate Enterprises, Brightwater Partners LLC, and other cable operators throughout the alleged geographic market; (2) fixed wireless access ("FWA") services, which multiple providers now offer at enterprise-grade speeds and with service-level agreements comparable to those offered for fiber services; and (3) wholesale ethernet transport services, which provide point-to-point connectivity at speeds equivalent to those of lit fiber and are offered by numerous providers in the Mid-Atlantic corridor.
Each of these service categories is reasonably interchangeable with last-mile fiber transport for a significant segment of enterprise and government customers. The principle of reasonable interchangeability is the cornerstone of product market definition under the antitrust laws. See Calderon Industries v. Image Technical Services, Inc., 504 U.S. 451, 482 (1992). A relevant market must include "all products reasonably interchangeable by consumers for the same purposes." Id. (internal quotation marks omitted). Ridgepoint's exclusion of cable broadband, fixed wireless, and wholesale ethernet from the relevant market is not based on any allegation that these services are not reasonably interchangeable with fiber transport; it is based on the unstated premise that fiber is inherently different from other high-speed transport technologies. But at speeds of 1 Gbps and above — the very threshold that Ridgepoint itself uses to define its market — the performance characteristics of cable, fixed wireless, and wholesale ethernet increasingly converge with those of fiber.
The practical significance of this market definition issue is substantial. Ridgepoint alleges that Northgate holds a 68% share of the purported "last-mile enterprise fiber-optic transport" market, based on a preliminary analysis by Dr. Leonard Kuo, an economist retained by Ridgepoint's counsel, Hargrove, Winslow & Burke LLP. (Compl. ¶ 72.) But this share figure is an artifact of the artificially narrow market definition. A properly defined market that includes cable broadband, fixed wireless, and wholesale ethernet would encompass a far larger universe of competitors and revenues, reducing Northgate's share to approximately 31% — a level at which monopoly power, as a matter of law, cannot plausibly be inferred. See Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993) (recognizing that monopoly power requires a dominant share of the relevant market, typically above 70%).
Defendants acknowledge that market definition is often a factual question inappropriate for resolution on a motion to dismiss. But the Fourth Circuit has recognized that dismissal is appropriate where the alleged market is "facially unsustainable" — i.e., where the market as defined "clearly does not encompass all interchangeable substitute products." SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412, 422 (4th Cir. 2015). Other circuits have reached the same conclusion. See Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997) (dismissing antitrust claims where the alleged market excluded obvious substitutes); Todd v. Severin Corporation, 275 F.3d 191, 199–200 (2d Cir. 2001) (noting that "a complaint may be dismissed if the market alleged is clearly unreasonable"). Ridgepoint's market definition, which excludes entire categories of competing high-speed transport services available to the same enterprise and government customers, is precisely the type of facially unsustainable market definition that warrants dismissal at the pleading stage.
B. The Geographic Market Is Similarly Overbroad and Gerrymandered
Ridgepoint's geographic market definition is equally deficient. The Complaint alleges a geographic market defined as the "Philadelphia–Baltimore–Washington, D.C. metropolitan corridor" spanning portions of six jurisdictions: Pennsylvania, New Jersey, Delaware, Maryland, Virginia, and the District of Columbia. (Compl. ¶ 74.) This corridor-wide definition lumps together distinct metropolitan statistical areas — Philadelphia, Trenton, Baltimore, Washington, D.C., and northern Virginia — that have different competitive conditions, different sets of competitors, different customer bases, and different regulatory environments.
Ridgepoint's Opposition does not meaningfully respond to Defendants' argument that this geographic market definition is gerrymandered to inflate Northgate's share. (Opening Mem. at 34–37.) Defendants demonstrated that Northgate's competitive position varies significantly across the alleged corridor: Northgate has a strong presence in the Baltimore and Washington, D.C. metropolitan areas, where it has invested heavily in fiber infrastructure, but faces significantly more competition from other fiber providers in the Philadelphia market and in New Jersey. By aggregating these distinct local markets into a single corridor-wide market, Ridgepoint obscures these competitive variations and inflates Northgate's overall share.
A properly defined geographic market would reflect the reality that enterprise and government customers typically purchase last-mile fiber transport services on a local or metropolitan basis, not on a corridor-wide basis. A customer in downtown Philadelphia does not view a fiber connection in Baltimore as a substitute, and vice versa. The corridor-wide market definition is inconsistent with the economic realities of how these services are purchased and sold.
The Fourth Circuit has recognized that a geographic market must be defined to reflect "the area of effective competition — that is, the area in which the seller operates and to which the purchaser can practicably turn for supplies." SD3, 801 F.3d at 423 (internal quotation marks omitted). Ridgepoint's corridor-wide market definition does not satisfy this standard, and the Complaint should be dismissed on this independent ground as well.
V. RIDGEPOINT'S OPPOSITION RAISES NO ARGUMENT WARRANTING DENIAL OF DISMISSAL
A. The Opposition Conflates Regulatory Obligations with Antitrust Duties
A recurring theme in Ridgepoint's Opposition is the invocation of Northgate's 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. Ridgepoint argues that Northgate, as an incumbent local exchange carrier ("ILEC"), has a statutory obligation to provide interconnection and colocation to competitive carriers, and that Northgate's refusal to comply with these regulatory obligations supports the inference that its refusal is anticompetitive. (Opp. at 31–35.)
This argument was squarely rejected by the Supreme Court in Trinko. The Trinko Court held that a claim that a regulated entity failed to comply with its regulatory obligations to share its network "does not state a claim under the antitrust laws." 540 U.S. at 410–11. The Court explained that the Telecommunications Act of 1996 created a comprehensive regulatory framework for addressing interconnection disputes, including administrative enforcement mechanisms overseen by the Federal Communications Commission ("FCC") and state public utility commissions. The existence of this regulatory scheme, the Court held, "was an additional factor" weighing against recognition of an antitrust duty to deal, because the regulatory framework already provides "a means of access to the bottleneck facilities" that the antitrust laws need not duplicate. Id. at 411–12.
The Fourth Circuit has applied Trinko's reasoning to hold that alleged violations of the Telecommunications Act do not give rise to antitrust liability. See Cavalier Telephone, LLC v. Ashgrove & Co. Virginia, Inc., 330 F.3d 176, 189 (4th Cir. 2003) (noting that antitrust claims must be evaluated independently of regulatory obligations). The D.C. Circuit has reached the same conclusion. See Covad Communications Co. v. Thackeray Corporation, 398 F.3d 666, 673–74 (D.C. Cir. 2005) (holding that an ILEC's alleged failure to comply with interconnection obligations under the Telecommunications Act did not state an antitrust claim).
The distinction between regulatory and antitrust obligations is not merely academic — it is dispositive. Sections 251 and 252 impose specific, detailed obligations regarding interconnection, unbundled network elements, colocation, and resale. These obligations are enforced through a specialized regulatory apparatus, including the FCC's complaint procedures and state commission arbitration proceedings. The antitrust laws serve a different purpose: they prohibit monopolistic conduct that harms the competitive process, not noncompliance with regulatory directives.
The existence of a parallel FCC proceeding — initiated by Ridgepoint itself — further underscores this point. On February 7, 2023, Ridgepoint filed a complaint with the FCC, Docket No. WC-23-0042, alleging that Northgate violated Sections 251 and 252 by failing to negotiate interconnection agreements in good faith and by refusing to provide colocation at the disputed facilities. The fact that Ridgepoint is simultaneously pursuing its regulatory claims before the very agency charged with enforcing the interconnection obligations of the Telecommunications Act undermines any argument that antitrust law must serve as the enforcement vehicle for those obligations. Ridgepoint has an adequate regulatory remedy; it does not need — and the law does not provide — a duplicative antitrust remedy for the same alleged conduct.
B. The Complaint Cannot Be Saved by Liberal Pleading Standards
Finally, Ridgepoint's Opposition falls back on the general principle that complaints should be liberally construed and that dismissal is disfavored. (Opp. at 36–37.) While it is true that the federal rules contemplate notice pleading, even under that standard a complaint must contain "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. The plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678.
Ridgepoint's Complaint alleges, at most, that Northgate declined to extend interconnection and colocation access to fourteen facilities at which Ridgepoint has never previously had access, pursuant to a facially neutral, commercially reasonable policy that was adopted more than a year before Ridgepoint submitted its first request. These allegations — even accepted as true in their entirety — do not cross the line "from conceivable to plausible." Twombly, 550 U.S. at 570. They describe a monopolist exercising its lawful right to decline to deal with a competitor under circumstances that do not satisfy any of the elements of the Aspen Skiing exception.
As the Fourth Circuit has explained, the plausibility standard requires the Court to draw upon "its judicial experience and common sense" in evaluating whether the facts alleged, taken as true, plausibly give rise to an entitlement to relief. Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting Iqbal, 556 U.S. at 679). Common sense dictates that a firm's refusal to provide colocation access at facilities where no prior relationship existed, pursuant to a pre-existing, uniformly applied business policy, does not plausibly give rise to antitrust liability. The Complaint should be dismissed.
CONCLUSION
For all of the foregoing reasons, and those stated in Defendants' Opening Memorandum in Support of Their Motion to Dismiss (Dkt. No. 28, filed November 14, 2022), Defendants Northgate Telecommunications PLC and Northgate Networks America Inc. respectfully request that this Court dismiss Plaintiff Ridgepoint Communications Inc.'s Complaint in its entirety with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6).
In the alternative, Defendants respectfully submit that, at a minimum, the Complaint should be dismissed without prejudice and with leave for Ridgepoint to replead only if it can cure the deficiencies identified herein and in Defendants' Opening Memorandum. Defendants note, however, that the deficiencies in the Complaint are not the product of inartful drafting — they are structural, reflecting the fundamental absence of factual predicates necessary to state a refusal-to-deal claim under Section 2. No amount of repleading can cure the absence of a prior course of dealing at the fourteen disputed facilities, and no amendment can render the facially neutral Wholesale Access Policy pretextual in the absence of facts supporting that conclusion.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Elaine Forsythe (VSB No. 78342) Howard Bellamy (admitted pro hac vice) Aaron Liu (admitted pro hac vice) Monica Reyes (admitted pro hac vice)
Calderwood & Harkness LLP 1200 K Street NW, Suite 900 Washington, D.C. 20005 Telephone: (202) 555-7100 Facsimile: (202) 555-7101
and
Calderwood & Harkness LLP 450 Lexington Avenue, 35th Floor New York, NY 10017
Counsel for Defendants Northgate Telecommunications PLC and Northgate Networks America Inc.
Dated: January 30, 2023
CERTIFICATE OF SERVICE
I hereby certify that on this 30th day of January, 2023, a true and correct copy of the foregoing Defendants' Reply Memorandum in Further Support of Their Motion to Dismiss Plaintiff's Complaint Pursuant to Federal Rule of Civil Procedure 12(b)(6) was served on all counsel of record via the Court's CM/ECF electronic filing system, which will send notification of such filing to the following:
Victoria Hargrove Daniel Stoyanov Hargrove, Winslow & Burke LLP 900 17th Street NW, Suite 600 Washington, D.C. 20006
Counsel for Plaintiff Ridgepoint Communications Inc.
________________________________________
Elaine Forsythe (VSB No. 78342)
Page
PRELIMINARY STATEMENT | 1
I. RIDGEPOINT'S OPPOSITION MISSTATES THE LEGAL STANDARD FOR REFUSAL-TO-DEAL LIABILITY UNDER SECTION 2 | 4
A. The Trinko Framework Strictly Limits Refusal-to-Deal Claims | 4
B. Aspen Skiing Is a Narrow Exception, Not a Broad Mandate | 7
II. THE EXPIRED MIA AND HOLDOVER ARRANGEMENT DO NOT ESTABLISH A PRIOR COURSE OF DEALING AT THE 14 DISPUTED FACILITIES | 9
A. The MIA Covered Only Three Northern Virginia Facilities — Not the 14 Facilities at Issue | 9
B. The MIA Was a Fixed-Term Contract That Expired by Its Own Terms | 12
C. The Month-to-Month Holdover Arrangement Actually Undermines Ridgepoint's Theory | 14
III. THE WHOLESALE ACCESS POLICY IS A LEGITIMATE UNILATERAL BUSINESS DECISION, NOT A PRETEXT FOR EXCLUSION | 16
A. The WAP Is Facially Neutral and Commercially Reasonable | 16
B. Ridgepoint's "Pretext" Allegations Are Conclusory and Insufficient Under Twombly/Iqbal | 18
C. Capacity Constraints Provide an Independent Business Justification | 20
IV. RIDGEPOINT'S RELEVANT MARKET DEFINITION REMAINS IMPLAUSIBLY NARROW | 22
A. The Complaint's Product Market Excludes Obvious Substitutes | 22
B. The Geographic Market Is Similarly Overbroad and Gerrymandered | 24
V. RIDGEPOINT'S OPPOSITION RAISES NO ARGUMENT WARRANTING DENIAL OF DISMISSAL | 26
A. The Opposition Conflates Regulatory Obligations with Antitrust Duties | 26
B. The Complaint Cannot Be Saved by Liberal Pleading Standards | 28
CONCLUSION | 30
Page(s)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) | 3, 18, 19, 28, 29
Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985) | passim
Thackeray Corporation v. Twombly, 550 U.S. 544 (2007) | 3, 18, 19, 28, 29
Westvale Holdings. v. Pemberton Corporation, 501 F.3d 297 (3d Cir. 2007) | 23
Cavalier Telephone, LLC v. Ashgrove & Co. Virginia, Inc., 330 F.3d 176 (4th Cir. 2003) | 27
Covad Communications Co. v. Thackeray Corporation, 398 F.3d 666 (D.C. Cir. 2005) | 27
Calderon Industries v. Image Technical Services, Inc., 504 U.S. 451 (1992) | 23
Flat Rate Ideas, LLC v. Ridgeway Bancorp, No. 21-cv-4411, 2022 WL 1284036 (S.D.N.Y. Apr. 29, 2022) | 7
Francis v. Giacomelli, 588 F.3d 186 (4th Cir. 2009) | 29
In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323 (Fed. Cir. 2008) | 23
LinkLine Communications, Inc. v. SBC California, Inc., 555 U.S. 438 (2009) | 5, 6
MetroNet Services Corp. v. Qwest Corp., 383 F.3d 1124 (9th Cir. 2004) | 11, 12
Morris Communications Corp. v. PGA Tour, Inc., 364 F.3d 1288 (11th Cir. 2004) | 6, 13
Novell, Inc. v. Kestrel Partners LLC, 731 F.3d 1064 (10th Cir. 2013) | 7, 8, 14
Ohio v. Halcyon Corporation, 138 S. Ct. 2274 (2018) | 23
Pac. Bell Telephone Co. v. linkLine Communications, Inc., 555 U.S. 438 (2009) | 5
Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430 (3d Cir. 1997) | 24
SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412 (4th Cir. 2015) | 22, 25
Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447 (1993) | 22
Todd v. Severin Corporation, 275 F.3d 191 (2d Cir. 2001) | 24
Harborview Holdings Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) | passim
Page(s)
15 U.S.C. § 2 | passim
47 U.S.C. § 251 | 26, 27
47 U.S.C. § 252 | 26, 27
Fed. R. Civ. P. 12(b)(6) | 1, 29, 30
Page(s)
Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 772 (4th ed. 2018) | 6, 8
Herbert Hovenkamp, Federal Antitrust Policy: The Law of Competition and Its Practice § 7.5 (6th ed. 2020) | 6
Robert H. Bork, The Antitrust Paradox 344–45 (2d ed. 1993) | 5

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division

RIDGEPOINT COMMUNICATIONS INC.,

TABLE OF CONTENTS

TABLE OF AUTHORITIES

PRELIMINARY STATEMENT

IV. RIDGEPOINT'S RELEVANT MARKET DEFINITION REMAINS IMPLAUSIBLY NARROW

V. RIDGEPOINT'S OPPOSITION RAISES NO ARGUMENT WARRANTING DENIAL OF DISMISSAL

CONCLUSION

CALDERWOOD & HARKNESS LLP

CERTIFICATE OF SERVICE

Record

Parties

Dates

Amounts