Local Access, LLC v. Peerless Network, Inc.

CourtDistrict Court, M.D. Florida
DecidedMarch 4, 2024
Docket6:17-cv-00236
StatusUnknown

This text of Local Access, LLC v. Peerless Network, Inc. (Local Access, LLC v. Peerless Network, Inc.) is published on Counsel Stack Legal Research, covering District Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Local Access, LLC v. Peerless Network, Inc., (M.D. Fla. 2024).

Opinion

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION

LOCAL ACCESS, LLC,

Plaintiff,

v. Case No.: 6:17-cv-236-WWB-EJK

PEERLESS NETWORK, INC.,

Defendant. / ORDER THIS CAUSE is before the Court on Defendant’s Motion to Exclude Expert David Gabel (Doc. Nos. 1052, 1080); Defendant’s Motion to Exclude Expert James Smith (Doc. Nos.1053, 1073); Defendant’s Motion to Exclude Expert David Malfara (Doc. Nos. 1055, 1074); Plaintiff’s Motion to Exclude Expert Michael Starkey (Doc. 1058); and Plaintiff’s Motion to Exclude Expert James Webber (Doc. Nos. 1059, 1082).1 I. BACKGROUND This dispute arises out of a 2012 agreement wherein Defendant, Peerless Network, Inc. (“Peerless”) agreed to provide Plaintiff, Local Access, LLC (“Local Access”) with Homing Tandem Service. (Doc. 135-1 at 2–12). The agreement, known as the Master Service Agreement (“Contract”), obligated Local Access to populate the Local Exchange Routing Guide (“LERG”) with routing instructions designating Peerless as the default tandem provider for all traffic directed to Local Access within the Peerless

1 With the Court’s permission, the parties have submitted a number of filings under seal. However, recognizing that proceedings in the United States District Court are public and court filings are matters of public record, this Order has been filed publicly. footprint. (Id.; Doc. 1075-1 at 134:6–23; Doc. 1075-4 at 58:14–19; Doc. 1075-16 at 17:12–17). There are many points of contention between the parties, but as relevant here, the dispute begins with § 3.3 of the Contract, which established that Local Access would be

entitled to reroute traffic designated for Peerless in the event it received a competitive offer that Peerless failed to match. (Doc. 135-1 at 4). On July 31, 2015, Inteliquent, Inc. (“Inteliquent”), a non-party telecommunications company, sent Local Access a competitive offer. (Doc. 1075-17 at 345). This competitive offer included a revenue sharing agreement wherein Inteliquent agreed to share seventy-five percent of all “Collected Tandem Access Revenue” with Local Access. (Id.). Peerless matched the competitive offer, which became the First Amendment to the Master Service Agreement. (“First Amendment,” Doc. 135-1 at 14–15). Peerless has never paid Local Access any percentage of the Collected Tandem Access Revenue it obtained from Local Access’s traffic. (Doc. 1075-4 at 242:6–243:19). In the summary judgment Order (Doc. 1201), the

Court ruled that Peerless was obligated to pay seventy-five percent of its Collected Tandem Access Revenue to Local Access but found the First Amendment ambiguous as to the scope of the traffic to which the revenue sharing provision applies. (Id. at 14–19). Shortly after the execution of the First Amendment, Inteliquent presented Local Access with a second competitive offer that Peerless declined to match. (Doc. 1075-6 489–492). Local Access then shifted the majority of its traffic to Inteliquent, but some traffic remained with Peerless. (Doc. 1075-3 at 269–270; Doc. 1075-17 at 365–366). Over two years later, Peerless unilaterally cancelled the Contract with Local Access, claiming that Local Access violated its right of complete exclusivity by routing traffic to Inteliquent prior to its decision not to match the second competitive offer. (Doc. 1137-5 at 4). In the summary judgment Order, the Court found that the extent of Peerless’s exclusivity over Local Access’s traffic within the Peerless footprint was ambiguous as well. (Doc. 1201 at 12–14).

II. LEGAL STANDARD Although opinion testimony is generally inadmissible, Federal Rule of Evidence 702 permits “[a] witness who is qualified as an expert by knowledge, skill, experience, training, or education” to provide opinion testimony in limited circumstances. Expert opinion testimony is admissible if: (1) “the expert’s . . . specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue”; (2) “the testimony is based on sufficient facts or data”; (3) “the testimony is the product of reliable principles and methods”; and (4) “the expert has reliably applied the principles and methods to the facts of the case.” Id. “[T]he Federal Rules of Evidence ‘assign to the trial judge the task of ensuring that

an expert’s testimony both rests on a reliable foundation and is relevant to the task at hand.’” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999) (quoting Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597 (1993)). Pursuant to Daubert, the determination of admissibility is “uniquely entrusted to the district court,” which is given “considerable leeway in the execution of its duty.” Rink v. Cheminova, Inc., 400 F.3d 1286, 1291 (11th Cir. 2005) (quotation omitted). However, “[t]he burden of laying the proper foundation for the admission of the expert testimony is on the party offering the expert, and admissibility must be shown by a preponderance of the evidence.” Allison v. McGhan Med. Corp., 184 F.3d 1300, 1306 (11th Cir. 1999). The Eleventh Circuit has distilled the test for determining the admissibility of expert testimony under Rule 702 and Daubert into three basic inquiries—(1) is the expert qualified; (2) is the expert’s methodology reliable; and (3) will the testimony assist the trier of fact. City of Tuscaloosa v. Harcros Chems., Inc., 158 F.3d 548, 562 (11th Cir. 1998).

III. DISCUSSION The parties have retained experts who have opined as to: (1) the scope of the seventy-five percent revenue sharing provision; (2) the extent of exclusivity provided for by the Contract; (3) the composition of the traffic that Peerless sent to Local Access; and (4) damages. The parties have moved to exclude expert testimony on each of these issues. In addition, the parties seek to exclude expert testimony relating to whether the Contract allows for outbound traffic. Because the Court determined as a matter of law that Local Access cannot recover damages for its lost profits or business opportunities flowing from Peerless’s failure to route its outbound traffic, this issue has become moot. (Doc. 1201 at 7–11); see also Daubert, 509 U.S. at 591 (“Expert testimony which does

not relate to any issue in the case is not relevant and, ergo, non-helpful.” (quotation omitted)). The parties’ remaining arguments will be addressed in turn below. A. Gabel There is no dispute that Gabel is a qualified expert in the fields of telecommunications and economics, and the Court finds that he is qualified based on the evidence before the Court. Rather, Peerless moves to strike his opinions on the basis that they are unreliable. Specifically, Peerless argues that: (1) Gabel’s estimate of the traffic mix delivered to Local Access is unreliable; and (2) Gabel’s chosen rate to calculate Local Access’s alleged damages is unreliable. 1. Traffic Mix Estimate Peerless challenges Gabel’s opinion estimating the minutes of Long-Distance Termination traffic to which the revenue sharing provision could apply. In his May 1, 2023 report, Gabel adopted a methodology developed by Peerless’s expert, James D. Webber.

(Doc. 1080-11, ¶ 21; see also Doc. 1080-12).

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