CALDERWOOD & HARKNESS LLP Counselors at Law
425 Park Avenue, 33rd Floor New York, New York 10022 Telephone: (212) 554-7000 Facsimile: (212) 554-7001 www.calderwoodharkness.com
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
January 5, 2025
TO:
Dominic Hale, Esq. General Counsel Northgate Telecommunications PLC One Canada Square, Level 38 Canary Wharf, London E14 5AB United Kingdom
Helena Bright Chief Financial Officer Northgate Telecommunications PLC One Canada Square, Level 38 Canary Wharf, London E14 5AB United Kingdom
FROM:
Linda Osei, Responsible Partner Priya Anand, Billing Partner Calderwood & Harkness LLP
RE:
Quarterly Status Report — Q4 2024 (October 1 – December 31, 2024)
Meridian Infrastructure Partners LLC v. Northgate Fiber Americas Inc. Supreme Court of the State of New York New York County, Commercial Division Index No. 654321/2024, Part 49 Hon. Eleanor M. Ricci, J.S.C.
C&H Matter No.: 1022-00005
This report is a privileged and confidential attorney-client communication and constitutes attorney work product prepared in anticipation of litigation. It is intended solely for the use of the named addressees and authorized representatives of Northgate Telecommunications PLC and its subsidiaries. This report should not be disclosed, distributed, or shared with any third party without the prior written consent of Calderwood & Harkness LLP. Unauthorized disclosure may result in waiver of applicable privileges.
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I. EXECUTIVE SUMMARY
We are pleased to present this Quarterly Status Report covering the period from October 1 through December 31, 2024 (the "Reporting Period" or "Q4 2024") in connection with the above-captioned matter. This report provides a comprehensive summary of significant developments during Q4 2024, the current procedural posture of the litigation, the status of discovery and expert work, a detailed financial accounting of fees and costs incurred, and our strategic assessment and recommendations for the upcoming quarters.
Significant Q4 2024 Developments. The fourth quarter of 2024 was a period of substantial progress across multiple workstreams. The principal developments include:
• Document Production Completed. Both Northgate Fiber Americas Inc. ("NFA") and Meridian Infrastructure Partners LLC ("Meridian") substantially completed their respective document productions. NFA produced approximately 1.4 million documents (3.2 terabytes) from ten custodians, and Meridian produced approximately 890,000 documents (1.8 terabytes) from eight custodians. Third-party subpoena returns from seven Meridian subcontractors and three municipal permitting authorities are largely complete, with limited follow-up remaining.
• Four Fact Depositions Taken. We completed four fact depositions during Q4 2024: two defense witnesses (Renata Voss and Sean Calloway) and two Meridian witnesses (Marcus Henley and Victor Sandoval). As described in detail below, the depositions of Meridian witnesses yielded several favorable admissions that significantly strengthen Northgate's defense and counterclaim positions.
• Defense Experts Retained and Engaged. We retained two defense experts—Dr. Elinor Chazen of Lakeview Consulting Group LLC (construction delay analysis) and Professor Gordon Whitfield of Pinnacle Economics LLC (damages quantification)—and received preliminary findings memoranda from each. Their initial conclusions are well-aligned with Northgate's case theories.
• Privilege Motions Filed and Briefed. Meridian filed a motion to compel production of 214 documents on Northgate's privilege log. We filed an opposition and a cross-motion for a protective order seeking production of 187 documents withheld by Meridian under an asserted common interest privilege covering communications between Meridian and its majority investor, Ridgepoint Capital Group LP. Briefing is complete, and oral argument is scheduled for January 27, 2025.
Current Posture. The case is in active discovery and expert work phase. Expert reports from all parties are due March 31, 2025, with rebuttal reports due May 15, 2025. Justice Ricci has reserved a six-week trial window commencing in November 2025. Several additional fact depositions remain to be completed in Q1 2025, and expert depositions are anticipated for June 2025.
Claims at Issue. Meridian asserts four causes of action seeking a total of $200,000,000 in damages, comprising wrongful termination damages ($92,400,000), unpaid invoices ($16,500,000), wrongfully withheld retainage ($56,966,667), and breach of the implied covenant of good faith and fair dealing ($34,133,333). Northgate's counterclaims seek $149,000,000, comprising liquidated damages for schedule delays ($49,000,000), excess completion costs ($81,700,000), and remediation costs for defective work ($18,300,000).
Overall Assessment. We remain confident that Northgate's defense is strong and that the counterclaim positions are well-supported by documentary evidence and the testimony obtained to date. The Q4 2024 depositions were productive: Marcus Henley (Meridian's VP of Field Operations) made critical admissions regarding crew shortages and workmanship deficiencies, and Victor Sandoval (Meridian's CEO) was unable to document most of the alleged scope changes upon which Meridian's defense to the termination relies. The pending privilege dispute presents a manageable risk, particularly with respect to a discrete subset of documents containing mixed business and legal content, but we believe our position is sound on the core privilege assertions. Expert work is on schedule, and the preliminary findings of both defense experts are favorable to Northgate's position.
Fee Summary. Total fees and costs incurred through December 31, 2024 are set forth in detail in Section VIII below and in the accompanying Enclosure A. Inception-to-date fees and costs remain within the range of the original budget estimate of $8.5 million to $11.2 million for legal fees (plus $2.4 million to $3.1 million for expert costs), though we note that Q1 2025 will represent a period of accelerated spending as expert report preparation reaches its peak.
II. CASE BACKGROUND AND PROCEDURAL POSTURE
A. Summary of the Dispute
This litigation arises from NFA's termination for cause, effective April 1, 2024, of the Master Construction Agreement dated March 15, 2020 (the "MCA"), under which Meridian was engaged as general contractor for the design, engineering, permitting, and construction of NFA's fiber-optic network build-out across the northeastern United States.
The MCA governed the construction of approximately 18,500 route miles of fiber-optic cable spanning a seven-state footprint encompassing New York, New Jersey, Connecticut, Massachusetts, Pennsylvania, Maryland, and Virginia. The contract price under the MCA was $1.2 billion over a five-year performance period. The project was divided into three principal phases, each with defined milestones, completion deadlines, and associated liquidated damages provisions.
NFA terminated the MCA for cause pursuant to Section 14.1 thereof, based on Meridian's material breach of its performance obligations. The grounds for termination included persistent and escalating schedule delays across multiple milestones in all three project phases, the issuance of 287 non-conformance reports ("NCRs")—43 of which were classified as critical—reflecting systemic quality deficiencies in Meridian's work, and Meridian's failure to cure these defaults after receiving two formal Cure Notices issued on October 15, 2023 and January 22, 2024, respectively, each providing a 30-day cure period as required under MCA § 14.1(b).
On July 15, 2024, Meridian filed its Verified Complaint in the Supreme Court of the State of New York, New York County, Commercial Division, asserting four causes of action and seeking approximately $200 million in damages. Meridian's central theory is that NFA's termination for cause was wrongful and pretextual—specifically, that NFA terminated the MCA not because of Meridian's alleged breaches, but in order to award the remaining work to a lower-cost replacement contractor or, alternatively, to bring the construction in-house as part of an internal strategic initiative to develop proprietary construction capabilities.
Calderwood & Harkness LLP was engaged as litigation counsel for NFA on August 19, 2024, following a conflicts check and the execution of our engagement letter dated August 16, 2024. On September 3, 2024, we filed NFA's Answer with Affirmative Defenses and Counterclaims, asserting three counterclaims seeking $149 million in damages. Meridian filed its Reply to Counterclaims on September 18, 2024.
B. Summary of Claims and Counterclaims
Meridian's Claims. Meridian's Verified Complaint asserts the following four causes of action:
Count I: Breach of Contract — Wrongful Termination ($92,400,000). Meridian alleges that NFA's termination for cause was wrongful because Meridian was not in material breach of the MCA, or alternatively, that any delays or deficiencies were excused by force majeure events and NFA's own conduct, including alleged scope changes and permit delays. Meridian seeks $92,400,000 in damages, comprising: (a) $50,424,000 as a hypothetical termination-for-convenience fee calculated under MCA § 14.3 at 8% of the approximately $630.3 million in unperformed contract value remaining at the time of termination; and (b) $41,976,000 in alleged lost profits that Meridian claims it would have earned on the remaining scope of work but for the wrongful termination.
Count II: Breach of Contract — Unpaid Invoices ($16,500,000). Meridian alleges that NFA wrongfully refused to pay $16,500,000 in Phase 3 payment applications that were submitted prior to termination and that Meridian contends were properly documented and entitled to certification under MCA § 7.2.
Count III: Breach of Contract — Wrongful Withholding of Retainage ($56,966,667). Meridian seeks release of the full retainage balance of $56,966,667, computed as 10% of $569,666,670 in gross certified work completed prior to termination. Meridian's position is that retainage became due and payable upon termination because, in its view, the termination was wrongful and should be treated as a termination for convenience under MCA § 14.3, which provides for retainage release within 60 days of termination. NFA's position is that retainage is not due under MCA § 14.1(d) following a valid termination for cause until all claims and counterclaims have been resolved and set off.
Count IV: Breach of Implied Covenant of Good Faith and Fair Dealing ($34,133,333). Meridian alleges that NFA acted in bad faith by terminating the MCA as a pretext for bringing construction in-house or obtaining a lower-cost contractor, and that NFA's conduct deprived Meridian of the benefit of its bargain. Meridian seeks $34,133,333 in consequential damages for alleged loss of bonding capacity and reputational harm in the infrastructure construction market.
Total Claimed Damages: $200,000,000.
Northgate's Counterclaims. NFA's Answer and Counterclaims assert the following three counterclaims:
Counterclaim I: Liquidated Damages ($49,000,000). NFA seeks $49,000,000 in liquidated damages for Meridian's failure to achieve milestone completion dates across Phases 1 and 2, calculated pursuant to MCA § 9.1 as follows:
• Phase 1, Milestone 3 ("MS3"): $8,225,000 (47 days of delay at $175,000 per day)
• Phase 2, Milestone 5 ("MS5"): $3,850,000 (22 days of delay at $175,000 per day)
• Phase 2, Milestone 6 ("MS6"): $11,900,000 (68 days of delay at $175,000 per day)
• Phase 2, Milestone 7 ("MS7"): $15,925,000 (91 days of delay at $175,000 per day)
• Phase 2, Milestone 8 ("MS8"): $9,100,000 (capped at 10% of the $91,000,000 milestone value)
• Total: $49,000,000 (below the aggregate cap of $60,000,000 set forth in MCA § 9.1(c))
Counterclaim II: Excess Completion Costs ($81,700,000). NFA seeks $81,700,000 representing the difference between the replacement contract price of $712,000,000 (awarded to Crestline Construction Group Inc. on June 1, 2024) and the remaining unperformed MCA value of $630,300,000. This counterclaim is asserted pursuant to MCA § 14.1(e), which provides that upon a valid termination for cause, the Owner is entitled to recover the excess cost of completing the work through a replacement contractor.
Counterclaim III: Cost of Remediation of Defective Work ($18,300,000). NFA seeks $18,300,000 for the estimated cost of remediating defective work identified in the 287 NCRs issued during the course of the project. The remediation cost estimate comprises $11,825,000 for the 43 critical NCRs (at an average remediation cost of approximately $275,000 per NCR) and $6,466,000 for the 244 non-critical NCRs (at an average remediation cost of approximately $26,500 per NCR).
Total Counterclaim Damages: $149,000,000.
C. Procedural History Through Q3 2024
For context, we summarize below the principal procedural developments that occurred prior to the Q4 2024 Reporting Period:
• July 15, 2024: Meridian filed its Verified Complaint in the Supreme Court of the State of New York, New York County, Commercial Division, asserting four causes of action and seeking $200,000,000 in damages.
• August 5, 2024: Service of the Verified Complaint and Summons on NFA was completed via service on the Secretary of State of the State of New York, NFA's designated agent for service of process.
• August 19, 2024: Calderwood & Harkness LLP was engaged as litigation counsel for NFA. The engagement followed a preliminary case assessment and conflicts review conducted during the preceding week.
• September 3, 2024: NFA's Answer with Affirmative Defenses and Counterclaims was filed. The Answer asserted twenty-two affirmative defenses, including material breach, failure to mitigate, contractual limitations on damages (including the consequential damages waiver in MCA § 20.1), force majeure inapplicability, failure to satisfy the MCA's written Change Order requirement (MCA § 16.1), and unclean hands. The three counterclaims described above were asserted.
• September 10, 2024: Vantage Litigation Support LLC was engaged as the e-discovery vendor for document collection, processing, hosting, and production management.
• September 18, 2024: Meridian filed its Reply to Counterclaims, denying each of the three counterclaims and asserting affirmative defenses including Owner-caused delay, failure to mitigate, unenforceability of liquidated damages provisions as penalties, and mutual fault.
• October 1, 2024: The Preliminary Conference before Justice Ricci was held. At the conference, the Court established a comprehensive discovery schedule, including deadlines for document production, fact depositions, expert reports, rebuttal expert reports, and a six-week trial window commencing in November 2025. The Stipulated E-discovery Protocol and Confidentiality Stipulation and Protective Order were so-ordered by the Court at the Preliminary Conference.
III. DISCOVERY — Q4 2024 DEVELOPMENTS
A. Document Productions
1. Northgate's Production
During Q4 2024, NFA completed its document production in accordance with the discovery schedule established at the October 1, 2024 Preliminary Conference. NFA produced documents from ten custodians, consisting of the following individuals:
1. Renata Voss — Vice President, US Network Infrastructure, NFA
2. Sean Calloway — Director, Construction Management, NFA
3. Helena Bright — Chief Financial Officer, Northgate Telecommunications PLC
4. Dominic Hale — General Counsel, Northgate Telecommunications PLC
5. Thomas Kearney — Senior Vice President, US Operations, NFA
6. Jennifer Liu — Director, Procurement and Contracts, NFA
7. David Osborne — Manager, Quality Assurance, NFA
8. Philip Strand — Senior Project Manager, NFA
9. Michelle Cortez — Vice President, Finance, NFA
10. Robert Tanaka — Director, Engineering, NFA
In total, NFA produced approximately 1.4 million documents comprising 3.2 terabytes of data. The production was completed on a rolling basis through October and November 2024, with the final rolling production delivered on November 15, 2024. The production encompassed the following key document categories:
• The MCA and all amendments thereto (Amendments 1 through 6)
• Milestone certification packages for all completed milestones across Phases 1, 2, and 3
• Complete NCR files for all 287 NCRs, including underlying inspection reports, photographic documentation, cure correspondence, and disposition records
• Cure Notice correspondence, including the two formal Cure Notices dated October 15, 2023 and January 22, 2024, together with Meridian's responses and related communications
• Payment applications and supporting documentation for all phases
• Internal quality assurance reports and audit findings
• Project management records, including monthly progress reports, schedule updates, meeting minutes, and correspondence with Meridian's project management team
A total of 214 documents were withheld on the basis of attorney-client privilege and/or work product doctrine. NFA's privilege log was served contemporaneously with the final rolling production on October 31, 2024, in accordance with the Stipulated E-discovery Protocol. The 214 withheld documents fall into two principal categories: (a) communications between NFA personnel and in-house counsel (Dominic Hale and his legal team) reflecting legal advice regarding the termination decision and the analysis of NFA's rights and obligations under MCA § 14.1; and (b) communications between NFA and Calderwood & Harkness LLP constituting pre-litigation counseling and litigation strategy discussions that commenced in the spring of 2024 as the termination was being evaluated.
As discussed in Section V below, Meridian has challenged the privilege designations for these 214 documents, and cross-motions on the privilege dispute are pending before Justice Ricci.
2. Meridian's Production
Meridian produced approximately 890,000 documents comprising 1.8 terabytes of data from eight custodians. The Meridian custodians included the following individuals, among others:
1. Victor Sandoval — Chief Executive Officer and Managing Member, Meridian
2. Bridget Yeung — Chief Operating Officer, Meridian
3. Marcus Henley — Vice President, Field Operations, Northeast Division, Meridian
4. Carlos Rivera — Vice President, Estimating and Preconstruction, Meridian
5. Angela Wu — Director, Project Controls, Meridian
6. James Marchetti — Site Superintendent, Phase 2, Meridian
7. Diane Kowalski — Director, Subcontractor Relations, Meridian
8. Nathan Brooks — Chief Financial Officer, Meridian
Meridian withheld 187 documents under a claimed "common interest privilege" covering communications between Meridian and Ridgepoint Capital Group LP, Meridian's majority equity investor. As discussed in Section V below, we have challenged this privilege designation on the grounds that Ridgepoint's interest is financial rather than legal, that no joint defense agreement exists between Meridian and Ridgepoint, and that Ridgepoint is not a party to this litigation and does not share a common legal interest with Meridian sufficient to support the privilege.
Upon receipt of Meridian's production, our review team at Calderwood & Harkness identified several material deficiencies. On November 1, 2024, we transmitted a detailed deficiency letter to Meridian's counsel, Thomas Deluca of Hargrove, Deluca & Stein LLP ("HDS"), identifying the following gaps:
• Missing project files for Phases 2 and 3, including daily construction logs, crew deployment records, and progress photographs for multiple work segments
• Incomplete subcontractor communications, particularly with respect to Meridian's three largest subcontractors (Apex Boring Solutions LLC, Summit Fiber Installations Inc., and Trident Underground Services Corp.)
• Absent Ridgepoint-related documents beyond those withheld on the privilege log, including board presentations, investment committee materials, and financial reports shared with Ridgepoint that did not contain legal advice and therefore should not be subject to any privilege claim
Meridian made a supplemental production on or about November 25, 2024, which addressed some but not all of the identified deficiencies. In particular, we continue to believe that Meridian has not produced the complete set of subcontractor communications and daily construction logs, and we have reserved Northgate's rights to seek further relief from the Court if these deficiencies are not resolved through the meet-and-confer process. We intend to send a follow-up letter to HDS in January 2025 addressing the remaining outstanding issues.
3. Third-Party Subpoenas
During Q4 2024, we issued non-party subpoenas for documents to the following entities:
Subcontractors (7):
1. Apex Boring Solutions LLC (horizontal directional drilling)
2. Summit Fiber Installations Inc. (fiber splicing and testing)
3. Trident Underground Services Corp. (underground conduit installation)
4. Northeast Permitting Associates Inc. (permitting support)
5. Galway Traffic Control LLC (traffic management and flagging)
6. Harbor Environmental Consultants Inc. (environmental compliance)
7. Precision Surveying & Mapping LLC (route survey and as-built documentation)
Municipal Permitting Authorities (3):
1. New York City Department of Transportation, Office of Construction Mitigation and Coordination
2. Maryland State Highway Administration, Utility Permits Division
3. Virginia Department of Transportation, Land Use Permit Office
As of the close of the Reporting Period, the majority of the subcontractors have produced responsive documents. The subcontractor productions are particularly valuable because they corroborate NFA's position in two key respects. First, several subcontractor records document the crew shortage issues that plagued Meridian's operations, including communications from subcontractors to Meridian expressing concern about inadequate crew levels and the impact on project schedules. Second, quality-related communications from Summit Fiber Installations and Trident Underground Services confirm that workmanship deficiencies identified in the NCRs were genuine and not, as Meridian has suggested, the product of NFA's allegedly unreasonable quality standards.
The municipal permitting authorities have produced partial records. The New York City DOT has been fully responsive, and its records confirm that permits for which NFA bore responsibility under MCA § 5.3 were obtained on schedule or with only minimal administrative delays. The Maryland State Highway Administration and Virginia DOT have produced partial responses, and we are in the process of following up to obtain the balance of the requested records. These permitting records are important to rebut Meridian's defense that NFA's alleged failure to timely obtain municipal permits was a contributing cause of Meridian's schedule delays—a defense that rests on a misreading of MCA § 5.3, which allocates the majority of permitting obligations to the Contractor (Meridian), with only specified categories of owner-procured permits assigned to NFA.
B. Document Review Status
Document review has been conducted on the Vantage Litigation Support platform in accordance with Calderwood & Harkness's Document Review Protocol and Coding Manual, which were developed at the outset of the engagement and have been updated as the review has progressed.
Review of Northgate's Document Set. The review of NFA's 1.4-million-document collection is substantially complete. The review served the dual purpose of identifying responsive documents for production and cataloging key documents that support Northgate's defense and counterclaim theories. Approximately 150 documents have been identified and indexed as "key" or "hot" documents—documents that are particularly probative on the central issues in the case, including the justification for termination, the chronology of cure notices and Meridian's responses, the severity of NCR-documented defects, and the negotiation and execution of the Crestline replacement contract. These key documents have been organized into a centralized case database and are being used to support deposition preparation, expert analysis, and motion practice.
Review of Meridian's Document Set. The review of Meridian's 890,000-document production is ongoing. The preliminary first-level review, which involved coding all documents for relevance, privilege, and issue categories, has been completed. We have now transitioned to a targeted deep review of documents from the priority custodians—Victor Sandoval, Marcus Henley, and Bridget Yeung—whose files are most likely to contain evidence relevant to the core issues of Meridian's performance failures, knowledge of quality and schedule deficiencies, and the alleged scope change defense.
Key documents identified to date in the Meridian production include the following:
• Internal Meridian emails between Marcus Henley and Bridget Yeung, dated between June and December 2023, acknowledging schedule slippage on Phases 2 and 3 and attributing delays in part to Meridian's inability to recruit and retain qualified splicers and boring crews in the northeastern market
• Ridgepoint Capital Group board presentations prepared by Victor Sandoval and Nathan Brooks, which reference the Northgate contract as Meridian's "anchor program" and a core component of the investment thesis underlying Ridgepoint's 2018 acquisition of its 55% stake in Meridian
• Project controls reports prepared by Angela Wu showing that Meridian's earned value metrics consistently trailed planned progress from Q2 2023 onward, with cost performance indices indicating cost overruns on multiple work packages
• Subcontractor correspondence reflecting complaints about late payments, inadequate crew deployment instructions, and scope ambiguity
The deep review of priority custodian files is expected to be completed by mid-February 2025.
C. Interrogatories and Written discovery
In addition to document production, the parties have exchanged written discovery as follows:
On October 8, 2024, NFA served its First Set of Document Requests (56 requests) and First Set of Interrogatories (25 interrogatories, including contention interrogatories) on Meridian. These discovery requests targeted, among other things, Meridian's factual basis for claiming wrongful termination, the identity and basis for each alleged scope change, the calculation methodology underlying each component of Meridian's damages, the terms and nature of Ridgepoint's investment in Meridian and its involvement in litigation funding decisions, and Meridian's post-termination business operations and financial condition.
Meridian served its own First Set of Document Requests (62 requests) and interrogatories on NFA on a parallel track. NFA's responses and objections were timely served on October 22, 2024. We asserted objections where appropriate—including objections to overly broad requests for NFA's strategic planning documents unrelated to the Meridian contract, and to requests seeking communications protected by the attorney-client privilege—while providing substantive responses to all properly framed requests.
Meridian's responses to NFA's discovery requests have been received and are currently under review for sufficiency. Our preliminary assessment is that Meridian's interrogatory responses contain several deficiencies, including boilerplate objections that may not be preserved absent timely assertion, evasive answers to contention interrogatories regarding the alleged scope changes, and incomplete damage calculation methodologies. We expect to address these deficiencies through the meet-and-confer process in early Q1 2025 and, if necessary, through motion practice.
IV. DEPOSITIONS — Q4 2024
A. Completed Depositions
We completed four fact depositions during Q4 2024. Two of these depositions involved defense witnesses (NFA personnel whose testimony was sought by Meridian), and two involved key Meridian witnesses whose cross-examination by Calderwood & Harkness yielded important admissions favorable to Northgate's defense and counterclaim positions. A summary of each deposition follows.
1. Renata Voss (NFA Vice President, US Network Infrastructure) — November 12–13, 2024
Ms. Voss was deposed over two days at Calderwood & Harkness's offices, 425 Park Avenue, New York, by Thomas Deluca of Hargrove, Deluca & Stein LLP. Linda Osei defended the deposition.
Topics Covered. Meridian's counsel examined Ms. Voss on a wide range of subjects, including her role in overseeing the fiber build-out program, the process by which NFA tracked milestone progress and schedule performance, the issuance and content of the two formal Cure Notices, the NCR documentation and escalation process, quality oversight and the classification of NCRs as critical versus non-critical, and the internal deliberations leading to NFA's decision to terminate the MCA for cause.
Key Favorable Testimony. Ms. Voss was an effective and well-prepared witness. She clearly and consistently articulated the factual basis for each of the two Cure Notices, describing in detail the specific schedule delays and quality failures that prompted each notice. She provided compelling testimony regarding the progressive deterioration of Meridian's performance over the final eighteen months of the MCA, beginning with Phase 2 Milestone 5 delays in mid-2023 and escalating through Phase 2 Milestones 6, 7, and 8 and into Phase 3 mobilization in late 2023 and early 2024. Ms. Voss also provided detailed testimony regarding the 43 critical NCRs, explaining the severity classification criteria and the potential impact of each category of defect on long-term network reliability and maintenance costs. Her testimony was internally consistent and well-supported by contemporaneous documentation.
Areas of Concern. Meridian's counsel devoted approximately two hours of examination to probing the timing and substance of internal NFA discussions about developing in-house construction capabilities. This line of questioning is directed at Meridian's "pretext" theory—the claim that NFA terminated the MCA not because of Meridian's breaches, but as a strategic maneuver to bring construction in-house at lower cost. Ms. Voss appropriately deflected questions that implicated communications with legal counsel, invoking the attorney-client privilege where necessary. She testified credibly that any internal discussions about potential in-house construction were separate from and did not influence the termination decision, which was driven by Meridian's documented performance failures. However, Meridian will likely continue to press this theory through other witnesses and document discovery, and the outcome of the pending privilege motion (discussed in Section V below) may affect the scope of evidence available on this issue.
A detailed deposition summary was prepared by Yuki Nakamura and circulated to the case team on November 20, 2024.
2. Sean Calloway (NFA Director, Construction Management) — November 19, 2024
Mr. Calloway was deposed over one day at Calderwood & Harkness's offices by Miriam Vasquez of HDS. Jeffrey Park defended the deposition.
Topics Covered. Ms. Vasquez examined Mr. Calloway on day-to-day contract administration under the MCA, the NCR documentation process from identification through disposition, the milestone certification and progress measurement procedures, the payment application review and approval process under MCA § 7.2, and Mr. Calloway's communications with Marcus Henley and other Meridian personnel regarding performance issues.
Key Favorable Testimony. Mr. Calloway was a strong technical witness who demonstrated thorough knowledge of the project's operational details. He provided detailed testimony on the NCR severity classification system, explaining the objective criteria used to distinguish critical from non-critical NCRs and confirming that each classification was reviewed by NFA's Quality Assurance Manager (David Osborne) before being finalized. Critically, Mr. Calloway confirmed that Meridian was notified of each critical NCR in real time—typically within 24 to 48 hours of identification—and that Meridian's responses to critical NCRs were frequently inadequate or untimely. He described specific instances where Meridian's remediation efforts were superficial and did not address the root cause of the deficiency, resulting in repeat NCRs for the same or similar conditions on adjacent work segments.
Mr. Calloway's testimony effectively corroborated Ms. Voss's testimony regarding the escalating pattern of quality and schedule concerns. His testimony also addressed the payment application review process, confirming that the disputed Phase 3 payment applications (Count II, $16,500,000) were rejected because Meridian failed to provide the required supporting documentation, including certified daily reports, material testing records, and lien waivers from subcontractors—documentation required under MCA § 7.2(c).
A detailed deposition summary was prepared by Yuki Nakamura and circulated to the case team on November 27, 2024.
3. Marcus Henley (Meridian Vice President, Field Operations, Northeast Division) — December 3–4, 2024
Mr. Henley was deposed over two days at the offices of Hargrove, Deluca & Stein LLP, 375 Lexington Avenue, New York. Jeffrey Park conducted the cross-examination on behalf of NFA, with Linda Osei attending on the second day.
Key Admissions Obtained. Mr. Henley's deposition was the most productive of the Q4 2024 depositions from an affirmative case development standpoint. The following key admissions were obtained:
• Crew Shortages. Mr. Henley acknowledged that Meridian experienced "persistent crew shortages" throughout Phase 2 and into Phase 3 of the project. He testified that Meridian's planned crew levels for horizontal directional drilling and fiber splicing were consistently below the staffing projections set forth in Meridian's approved Staffing Plan, and that Meridian was unable to fully staff its work fronts for extended periods during 2023 and early 2024.
• Workmanship Deficiencies. Mr. Henley admitted that at least some of the NCRs issued by NFA reflected "genuine workmanship deficiencies" rather than, as Meridian has alleged, the application of unreasonable or shifting quality standards by NFA. Specifically, he acknowledged that NCRs relating to splice loss exceeding specification limits and improper conduit depth in multiple work segments were attributable to installation errors by Meridian's crews and subcontractors.
• Phase 3 Mobilization Delays. Mr. Henley conceded that Meridian's Phase 3 mobilization in Maryland was "behind where it needed to be" and that the delays were attributable in part to Meridian's decision to redeploy crews from the Maryland corridor to address completion priorities in the Phase 2 Connecticut and Massachusetts segments—a redeployment that was not coordinated with or approved by NFA.
• Labor Market Conditions. Significantly, Mr. Henley attributed some of the crew shortages and resulting delays to Meridian's difficulty in "recruiting qualified splicers and boring crews" in the competitive northeastern labor market, rather than to force majeure events or COVID-19 aftereffects. This admission substantially undermines Meridian's force majeure defense, which posits that lingering effects of the COVID-19 pandemic—including labor supply disruptions and material shortages—excused Meridian's performance failures.
Meridian's Counter-Narrative. Mr. Henley attempted to shift responsibility for delays to NFA, testifying that NFA made unformalized scope changes to the work and that NFA failed to timely obtain certain municipal permits for which NFA bore responsibility under MCA § 5.3. However, when pressed on the specifics of the alleged scope changes, Mr. Henley was unable to identify written Change Orders or written requests for Change Orders supporting most of the 14 alleged scope modifications that Meridian has identified in discovery. This testimony is consistent with Victor Sandoval's subsequent deposition testimony (discussed below) and supports Northgate's position that MCA § 16.1's written Change Order requirement was not satisfied.
A detailed deposition summary was prepared by Yuki Nakamura and circulated to the case team on December 10, 2024. Key transcript excerpts are included in Enclosure C.
4. Victor Sandoval (Meridian CEO and Managing Member) — December 10–11, 2024
Mr. Sandoval was deposed over two days at the offices of Hargrove, Deluca & Stein LLP. Linda Osei and Jeffrey Park conducted the cross-examination on behalf of NFA.
Key Testimony. Mr. Sandoval's deposition was the most wide-ranging of the Q4 2024 depositions, covering Meridian's corporate structure and governance, the Ridgepoint Capital investment, Meridian's financial condition before and after termination, the Corrective Action Plan submitted in March 2024, and the alleged scope changes.
The key testimony obtained from Mr. Sandoval includes the following:
• Corrective Action Plan. Mr. Sandoval described in detail Meridian's Corrective Action Plan, which was submitted to NFA on March 5, 2024—approximately five weeks before the termination. The Corrective Action Plan proposed a revised schedule, additional crew mobilization, and enhanced quality control measures. However, it also demanded $87 million in additional compensation from NFA and a nine-month extension of the contract completion date. Mr. Sandoval testified that the Corrective Action Plan was "Meridian's good-faith effort to get the project back on track," but acknowledged under cross-examination that the Plan did not address the remediation of the 43 critical NCRs then outstanding, and that the $87 million demand was based on cost estimates that Meridian's own internal documents show were preliminary and unsubstantiated.
• Ridgepoint Capital Involvement. Mr. Sandoval confirmed that Ridgepoint Capital Group LP acquired a 55% equity stake in Meridian in 2018 for approximately $285 million. He acknowledged that Ridgepoint's investment thesis was premised in significant part on the Northgate contract as Meridian's "anchor program," which was projected to generate substantial revenue and serve as a platform for Meridian to pursue additional fiber-optic infrastructure work in the northeastern United States. Mr. Sandoval also confirmed that Ridgepoint is funding this litigation, estimating the litigation funding commitment at approximately $12 million based on discovery responses. This testimony is significant because it provides context for Meridian's aggressive litigation posture and may be relevant to challenging the independence of Meridian's litigation judgments.
• Post-Termination Financial Impact. Mr. Sandoval testified that following NFA's termination of the MCA, Meridian's total backlog dropped from approximately $1.4 billion to approximately $770 million. This testimony is relevant to Meridian's Count IV claim for reputational harm and lost bonding capacity, but it also opens the door for NFA to argue that the backlog reduction was driven by Meridian's own performance failures and the resulting market perception, rather than by any wrongful conduct by NFA.
• Alleged Scope Changes. When pressed on the 14 alleged unformalized scope changes that form the basis of Meridian's defense to the termination-for-cause, Mr. Sandoval was unable to identify written documentation—written Change Orders, written change requests, or even contemporaneous written memorializations—for the majority of the alleged changes. He testified that most of the alleged scope changes were communicated verbally through field-level discussions between Meridian's and NFA's project managers. This testimony is highly favorable to Northgate's position because MCA § 16.1 provides that "[n]o change in the scope of the Work shall be effective unless and until memorialized in a written Change Order executed by authorized representatives of both parties." Meridian's failure to obtain written Change Orders, even assuming the alleged scope changes occurred, is fatal to its claim that those changes excused its performance failures.
A detailed deposition summary was prepared by Jeffrey Park and circulated to the case team on December 18, 2024. Key transcript excerpts are included in Enclosure C.
B. Upcoming Depositions (Q1 2025)
Four additional depositions are scheduled or anticipated in Q1 2025. We describe each below, together with the current status of preparation.
1. Bridget Yeung (Meridian Chief Operating Officer) — February 4, 2025
The deposition of Bridget Yeung is scheduled for February 4, 2025 at the offices of HDS. Jeffrey Park will conduct the cross-examination on behalf of NFA.
Ms. Yeung served as Meridian's Chief Operating Officer throughout the performance period under the MCA and had direct oversight responsibility for operational management, subcontractor selection and oversight, and day-to-day project execution. She is expected to be an important witness on several critical issues, including Meridian's internal project management decisions, the allocation of resources and crews among project phases, Meridian's knowledge of and response to quality failures documented in the NCRs, and the factual basis for Meridian's scope change claims. A cross-examination outline is currently in preparation by Jeffrey Park and is expected to be finalized by mid-January 2025.
2. Helena Bright (Northgate Telecommunications PLC, CFO) — February 18, 2025
The deposition of Helena Bright is scheduled for February 18, 2025 by letters rogatory/commission at a venue in London, England, to be coordinated with Meridian's counsel. This deposition will be taken by Meridian's counsel, with Calderwood & Harkness defending.
As Northgate Telecommunications PLC's Chief Financial Officer, Ms. Bright is expected to be examined on financial and budgetary decisions relating to the US fiber build-out, capital expenditure allocation, internal financial modeling for the Northgate infrastructure program, and any communications with NFA management regarding the cost and timing of the Meridian contract. Privilege preparation is critical in advance of this deposition, as we anticipate Meridian's counsel will probe into communications between Ms. Bright and in-house and outside counsel regarding the evaluation and timing of the termination decision. We will conduct a thorough preparation session with Ms. Bright in London in advance of the deposition.
Logistical coordination for the London venue is being handled by Miriam Vasquez of HDS (for Meridian) and Jeffrey Park (for C&H). We are in the process of identifying an appropriate venue and arranging for a qualified English court reporter and videographer.
3. Dominic Hale (Northgate Telecommunications PLC, General Counsel) — February 25, 2025
Meridian noticed the deposition of Dominic Hale for February 25, 2025. On January 10, 2025, Calderwood & Harkness transmitted an objection letter to Thomas Deluca at HDS asserting that Mr. Hale's deposition is improper under the Shelton doctrine and related principles, which protect in-house counsel from deposition where the deposition is sought primarily to inquire into privileged communications and legal advice provided in the lawyer's professional capacity.
Meridian's position, as articulated in its correspondence, is that Mr. Hale was involved in "business decisions" regarding the termination of the MCA and did not function solely as a legal advisor. Meridian contends that Mr. Hale participated in management meetings at which the termination was discussed and voted upon, and that his testimony regarding the non-legal aspects of those discussions is discoverable.
Our position is that Mr. Hale functioned as Northgate's chief legal officer throughout the relevant period and that his participation in the termination decision was in his capacity as legal advisor, providing legal analysis of NFA's rights and obligations under the MCA and assessing litigation risk. Requiring his deposition would inevitably intrude upon the attorney-client privilege and would have a chilling effect on the ability of in-house counsel to participate in corporate decision-making while providing legal guidance.
We expect this dispute may result in motion practice if Meridian does not withdraw or modify its deposition notice. We are prepared to seek a protective order if necessary.
4. Frank DiBello (Crestline Construction Group Inc., CEO) — March 4, 2025
A non-party subpoena is being served on Frank DiBello, Chief Executive Officer of Crestline Construction Group Inc. ("Crestline"), the replacement contractor engaged by NFA to complete the fiber build-out following termination of the Meridian MCA. The deposition is scheduled for March 4, 2025.
Jeffrey Park is preparing a cross-examination outline focusing on the terms of the Crestline replacement contract ($712 million), the scope of remaining work assumed by Crestline, the competitive bidding or negotiation process through which Crestline was selected, and the basis for Crestline's pricing. Mr. DiBello's testimony is expected to support NFA's Counterclaim II for excess completion costs of $81,700,000 by establishing that the Crestline replacement contract was negotiated at arm's length and that the $712 million price reflects the reasonable market cost of completing the remaining scope of work.
V. PRIVILEGE DISPUTES AND PENDING MOTIONS
A. Meridian's Motion to Compel (Filed November 22, 2024)
On November 22, 2024, Meridian filed a motion to compel the production of 214 documents identified on Northgate's privilege log. Meridian's motion argues that the 214 documents are not properly subject to the attorney-client privilege because they relate to "business decisions" about NFA's in-house fiber construction strategy and the termination of the MCA, rather than to legal advice. Meridian does not assert the crime-fraud exception, but argues that NFA has effected an "at-issue waiver" of the privilege by placing the termination decision at the center of its defense and counterclaims. Specifically, Meridian contends that by asserting that the termination was justified under MCA § 14.1, NFA has put its own state of mind and decision-making process at issue, thereby waiving any privilege attaching to communications that informed that process.
Prior to the filing of Meridian's motion, C&H (Linda Osei) engaged in a good-faith meet-and-confer with Thomas Deluca by email on November 15, 2024. The parties were unable to resolve the dispute, and Meridian proceeded to file its motion on November 22, 2024.
B. Northgate's Opposition (Filed December 2, 2024)
On December 2, 2024, Calderwood & Harkness filed Northgate's Memorandum of Law in Opposition to Meridian's Motion to Compel. Our opposition argues the following:
• The attorney-client privilege properly protects the 214 withheld documents, which reflect internal legal advice provided by Dominic Hale and his in-house legal team regarding NFA's rights and obligations under MCA § 14.1 and the legal risks associated with termination for cause.
• A significant subset of the 214 documents reflects pre-litigation counseling and strategy discussions between NFA personnel and Calderwood & Harkness LLP, which constitute protected work product prepared in anticipation of litigation.
• NFA has not effected an at-issue waiver. The mere assertion of a defense based on the validity of the termination does not place the content of legal advice at issue. NFA's defense rests on the objective facts supporting termination—schedule delays, NCRs, and cure notice failures—not on the legal advice NFA received about those facts. The at-issue waiver doctrine requires affirmative reliance on privileged communications as an element of a claim or defense, which NFA has not done.
• NFA has carefully distinguished between business-purpose documents (which were produced) and legal-advice documents (which were withheld). Documents reflecting business discussions about project performance, schedule status, and operational matters—even where those discussions occurred in meetings at which counsel was present—were produced if they did not contain or reflect legal advice. Only documents whose dominant purpose was the provision or receipt of legal advice were withheld.
The opposition was supported by the Declaration of Jeffrey Park, which authenticated and described the privilege log entries and provided additional context for the privilege designations without disclosing privileged content.
C. Northgate's Cross-Motion for Protective Order (Filed December 6, 2024)
On December 6, 2024, Calderwood & Harkness filed Northgate's Cross-Motion for a Protective Order, seeking an order compelling Meridian to produce the 187 documents withheld under the claimed common interest privilege covering communications between Meridian and Ridgepoint Capital Group LP.
Our memorandum of law in support of the cross-motion argues the following:
• The common interest privilege (also referred to as the joint defense privilege or allied litigation privilege) does not apply to the Meridian-Ridgepoint communications because Ridgepoint's interest in this litigation is financial, not legal. Ridgepoint is a majority equity investor in Meridian and is funding this litigation as an investment protection measure, but it is not a party to the action, it faces no independent legal exposure, and it shares no common legal interest with Meridian in the sense required to invoke the privilege.
• No joint defense agreement or common interest agreement exists between Meridian and Ridgepoint. The absence of such an agreement undercuts the applicability of the common interest doctrine, which under New York law requires a showing of a shared legal, as distinct from commercial, interest and typically (though not invariably) requires a formal agreement memorializing the parties' intent to share information for the purpose of a coordinated legal strategy.
• Ridgepoint's role as a litigation funder does not transform its financial interest into a legal one. Courts have consistently held that the common interest privilege does not extend to communications between a litigant and its financial backers absent a showing that the backer faces its own legal exposure and is coordinating a joint legal defense.
• As alternative relief, we have requested that the Court conduct an in camera review of the 187 withheld documents to determine whether any subset of the documents is properly subject to the common interest privilege and, if so, whether that privilege has been waived by the selective disclosure of Ridgepoint-related documents in other contexts (e.g., Meridian's production of Ridgepoint board presentations that were not claimed as privileged).
D. Status and Next Steps