Inc. v. FirstLight Fiber, Inc.

THE STATE OF NEW HAMPSHIRE
HILLSBOROUGH, SS SUPERIOR COURT
NORTHERN DISTRICT
Vermont Telephone Company, Inc.
v.
FirstLight Fiber, Inc.
Docket No. 216-2020-CV-00312
ORDER ON DEFENDANT’S MOTION TO EXCLUDE PLAINTIFF’S EXPERT
Plaintiff Vermont Telephone Company, Inc. (“VTel”) brought this action against
Defendant FirstLight Fiber, Inc. (“FirstLight”) arising out of FirstLight’s termination of the
parties’ contract. Plaintiff’s amended complaint alleges claims for breach of contract
(Count I) and breach of the implied covenant of good faith and fair dealing (Count II).
Defendant filed a counterclaim for breach of contract. FirstLight now moves in limine to
exclude VTel from introducing Brian Pitkin’s expert testimony about VTel’s alleged
damages at trial. (Doc. 156.) VTel objects. (Doc. 162.) Both FirstLight (Doc. 166) and
VTel (Doc. 169) further respond. The Court held a hearing on July 31, 2023. For the
reasons set forth below, FirstLight’s motion to exclude is DENIED.
The Court incorporates the facts set forth in the Court’s January 3, 2023
summary judgment order. (Doc. 144.) By way of further background, the parties
entered into a Dark Fiber Lease Agreement (the “Lease”) in 2014 which provided VTel
with access to a dark fiber route (the “Route”) between Lebanon, New Hampshire and
Boston, Massachusetts. FirstLight terminated the Lease, effective December 14, 2019.
VTel retained Pitkin from FTI Consulting (“FTI”) as its expert to determine the
damages VTel suffered as a result of FirstLight’s alleged breach of the Lease. Pitkin is
the senior managing director of FTI’s telecommunications group. (Pl.’s Ex. 1 ¶ 5.)
Pitkin has worked in the telecommunications industry for over twenty-five years and has
regularly testified in front of state and federal courts, the Federal Communications
Commission, and state regulatory commissions. (Id.) As part of his experience, Pitkin
routinely completes and evaluates detailed business case analyses to help support
damage claims. (Id.)
Pitkin completed his expert report on July 9, 2021. VTel’s counsel instructed
Pitkin to complete his report assuming the following two things: (1) FirstLight wrongfully
terminated the Lease effective December 14, 2019 and (2) VTel would have started
using the fiber route in 2020 to pursue additional business opportunities. (Id. ¶ 8.)
Pitkin divided his report into three sections: (1) an analysis of VTel’s business
opportunities over a five-year period; (2) extension of the business opportunities through
the end of the Lease; and (3) the financial damages that VTel suffered as a result of the
lost opportunities. (Id. ¶ 9.) Ultimately, Pitkin concluded that VTel’s lost profits ranged
from $10.4 million to $43.9 million, with a mean outcome of $27.2 million. (Id. ¶ 10.)
Pitkin authored a rebuttal report on June 15, 2022, in response to criticisms from
FirstLight’s expert, Kenneth Martin. (Pl.’s Ex. 2 at 1.) Martin works for the consulting
firm Altman Solon and has worked in the telecommunications industry for over twenty-
four years. Pitkin’s rebuttal report largely upheld the analysis and findings of his initial
report. (Id.) Specifically, Pitkin rejected Martin’s criticisms that (1) Pitkin’s initial report
was too speculative, (2) Pitkin misunderstood the Lease, (3) Pitkin should have used
historical data, and (4) Pitkin relied on unreasonable assumptions, to be unfounded.
(Id. at 2.) In his rebuttal report, Pitkin agreed that he initially overlooked the cost of
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additional equipment that VTel would need to use to realize its potential business
opportunities and accordingly revised his estimate of damages down to $24.7 million.
(Id. at 29.)
FirstLight now moves to exclude Pitkin’s expert testimony for a variety of
reasons. Broadly, FirstLight argues that Pitkin’s damage calculations “are not
sufficiently reliable or properly moored to actual facts to qualify as expert testimony.”
(Doc. 158 at 1.) More specifically, FirstLight argues that: (1) there is no evidence that
VTel would have actually pursued the additional business opportunities upon which
Pitkin focused; (2) Pitkin modeled VTel’s telecom market share rather than using data
from VTel’s actual markets; (3) the industry estimations which Pitkin relied upon are
unreliable; and (4) Pitkin made flawed assumptions in calculating VTel’s long haul
opportunities between Montreal and Boston. (Id. at 1–2.) Therefore, FirstLight argues,
Pitkin’s testimony is inadmissible under New Hampshire Rules of Evidence 702 and 403
because it would be unreliable and highly prejudicial. VTel argues that Pitkin’s report
and testimony are sufficiently reliable and that FirstLight’s arguments go to the weight of
the evidence, which is left to the jury to determine. (Doc. 162 ¶ 3.) VTel also contends
that Pitkin’s testimony is not too speculative because he properly conducted a lost
future profits analysis. (Id. ¶ 4.)
Rule 702 provides: “If scientific, technical, or other specialized knowledge will
assist the trier of fact to understand the evidence or to determine a fact in issue, a
witness qualified as an expert by knowledge, skill, experience, training, or education,
may testify thereto in the form of an opinion or otherwise.” “Expert witnesses are called
to give their opinions on subjects about which they have special knowledge and
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experience, upon the assumption that, by reason of these qualifications, they will be
able to assist the jury in its search for the truth.” Brown v. Bonnin, 132 N.H. 488, 494
(1989).
“[E]xpert testimony must rise to a threshold level of reliability to be admissible.”
Baker Valley Lumber, Inc. v. Ingersoll-Rand Co., 148 N.H. 609, 614 (2002). In
determining the reliability of an expert’s testimony, the court in Baker Valley adopted the
framework set forth in Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993). The
State legislature has since codified this framework in RSA 516:29-a, which states:
I. A witness shall not be allowed to offer expert testimony unless the court
finds:
(a) Such testimony is based upon sufficient facts or data;
(b) Such testimony is the product of reliable principles and methods;
and
(c) The witness has applied the principles and methods reliably to
the facts of the case.
II. (a) In evaluating the basis for proffered expert testimony, the court shall
consider, if appropriate to the circumstances, whether the expert’s opinions
were supported by theories or techniques that:
(1) Have been or can be tested;
(2) Have been subjected to peer review and publication;
(3) Have a known or potential rate of error; and
(4) Are generally accepted in the appropriate scientific literature.
(b) In making its findings, the court may consider other factors specific to
the proffered testimony.
Under this analysis, “[t]he trial court functions only as a gatekeeper, ensuring a
methodology’s reliability before permitting the fact-finder to determine the weight and
credibility to be afforded an expert’s testimony.” Baker Valley, 148 N.H. at 616. “While
the proponent of the expert witness bears the burden of proving the admissibility of the
expert's testimony, this burden is not especially onerous.” Szewczyk v. Cont’l Paving,
Inc., __ N.H. __, __ (decided August 16, 2023) (slip op. at 8). “The overall purpose
of Rule 702 and RSA 516:29-a is to ensure that a fact-finder is presented with reliable
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and relevant evidence, not flawless evidence.” Id. “[A]s long as an expert’s scientific
testimony rests upon good grounds, . . . it should be tested by the adversary process—
competing expert testimony and active cross-examination—rather than excluded from
jurors’ scrutiny for fear that they will not grasp its complexities or satisfactorily weigh its
inadequacies.” State v. Langill, 157 N.H. 77, 88 (2008).
As a preliminary matter, the Court notes that it found Pitkin to be credible. Pitkin
provided clear and articulable reasons to support specific decisions that he made
throughout his report. For example, Pitkin testified that he identified six potential
business opportunities along the fiber route that VTel could have taken advantage of if
FirstLight never terminated the Lease. However, Pitkin further testified that he only
included two of them—enterprise and long haul opportunities between Boston and
Montreal—in his damages estimation. Pitkin’s knowledge and detailed rationale for
limiting the scope of his report’s analysis from the outset highlights his expertise and
methodology. Additionally, Pitkin coherently engaged with the criticism of his report and
readily admitted when he believed he made a mistake in his original report, further
emphasizing Pitkin’s knowledge and understanding of the telecommunications industry.
Broadly, the Court agrees with VTel that the true gist of FirstLight’s arguments
goes to the weight and not the reliability of Pitkin’s testimony. Crucially, expert
testimony need not be perfect to be reliable under Rule 702. See Szewczyk, __ N.H. at
8. The Court agrees that Pitkin’s testimony is not flawless, especially the data that
Pitkin used from Montpelier, Vermont. Nevertheless, Pitkin relies on methods and facts
that are “generally accepted” in the telecommunications industry. Moscicki v. Leno, 173
N.H. 121, 125 (2020) (“RSA 516:29-a, II requires courts to consider whether the
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proffered testimony is based upon theories or techniques that are generally accepted; it
does not require courts to exclude testimony where the testimony is not supported by
the theory or technique that has the most acceptance.”). Indeed, Pitkin credibly
testified, for example, it was standard practice in the telecommunications industry to use
industry models rather than historical company data. There are no bright line rules for
determining the admissibility for expert testimony as courts instead must focus on
whether the underlying facts or methodologies are reliable. See id. (declining to adopt a
bright-line rule that a specific generally accepted methodology in toxic torts cases must
be used as long as another generally accepted methodology is). The Court will now
turn to FirstLight’s specific grievances to demonstrate why Pitkin’s testimony is
sufficiently reliable under Rule 702 and RSA 516:29-a, II.
The Court addresses FirstLight’s contention that the basis for Pitkin’s analysis
was flawed because there was no indication that VTel would have utilized splices along
the Route. Putting aside the unresolved legal question of how many data splices would
be allowed under the Lease,1 the Court finds that the basis of Pitkin’s report is not so
speculative as to render his opinion unreliable. Forecasting lost profits, which is an
accepted form of damages, inherently requires a degree of speculation. See Boyle v.
City of Portsmouth, 172 N.H. 781, 792 (2020) (stating that “while absolute certainty” is
not required to support a lost profits damages award, “damages cannot be awarded for
speculative losses.”). Here, given the existence and length of the Lease, including the
Lease’s provision allowing for splices along the Route and the unique opportunities that
dark fiber presents, Pitkin had a factual basis upon which to reliably forecast that VTel
1 At the July 31, 2023 hearing, the parties stated that they will file separate motions to determine how
many, if any, splices along the fiber route that VTel would have been entitled to.
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would have engaged in additional business opportunities had FirstLight not terminated
the Lease. See Stachulski v. Apple New England, LLC, 171 N.H. 158, 164–65 (2018)
(finding that expert testimony had sufficient facts that the defendant’s hamburger
caused the plaintiff’s food poisoning where the circumstantial evidence that ruled out
other possible causes of the plaintiff’s illness).
This is not a situation where Pitkin relied exclusively on historical profits to
anticipate future profits or where FirstLight presented evidence beyond challenging
Pitkin’s methodologies that VTel would not earn the profits that Pitkin estimated. See
Bezanson v. Hampshire Meadows Dev. Corp., 144 N.H. 298, 304–06 (1999) (rejecting
plaintiff’s lost profit analysis because there was no evidence in the record demonstrating
how the plaintiff’ s historical profits in one year would translate to the future). Thus, the
fact that VTel had not begun utilizing additional opportunities along the Route does not
automatically render Pitkin’s analysis too speculative to be reliable. See Boyle, 172
N.H. at 792; Bezanson, 144 N.H. at 304–06.
Next, FirstLight also takes issue with Pitkin’s decision to use industry forecasts
rather than VTel’s historical data to predict its future income. (Doc. 158 at 5–6.) More
specifically, FirstLight contends that the amount of estimated revenue VTel would have
obtained cannot be verified due to the manner in which Pitkin calculated the value of the
telecom market in the twenty markets he identified. (Pl.’s Ex. 1 at 16); (Doc. 158 at 5–
6.) At the hearing, Pitkin explained in detail why he used industry benchmarks and
databases to forecast the revenue VTel would have expected to earn if it took
advantage of opportunities along the fiber route.
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More specifically, FirstLight contends that the manner in which Pitkin calculated
the amount of telecom market in each of the twenty markets he identified (Pl.’s Ex. 1 at
16) was unreliable and thus claims that the amount of the estimated revenue from the
markets cannot be verified. (Doc. 158 at 5–6.) During the July 31 hearing, Pitkin
testified that he utilized GeoTel and S&P Capital IQ to help model VTel’s lost business
opportunities along the fiber route by providing customer information in the twenty
identified markets to forecast lost profits. Pitkin further testified at length about his
decision to use modeled data rather than historical VTel data to model the amount VTel
would have likely made had FirstLight not terminated the Lease. Pitkin explained that
historical data does not provide the same level of information as the benchmarks he
utilized instead. He further articulated that using historical VTel data would make his
analysis unreliable because he would be using inconsistent data sets, making his
analysis “an apples to oranges” comparison. Pitkin opined that such a comparison
would be “meaningless” because the amount that an actual customer spends on
telecom services contemplates a different analysis than GeoTel’s database that
includes average customer telecom spend. (H’rg 10:52.)
The Court finds that FirstLight’s arguments attempt to undermine the weight of
Pitkin’s testimony rather than its reliability. Pitkin credibly testified that he used the
indexes and benchmarks consistent with the way they are commonly used throughout
the telecommunications industry. In fact, Pitkin explained that Altman Solon uses the
same databases in a similar manner. This demonstrates that although FirstLight may
quibble with the specific way in which Pitkin used the GeoTel or S&P Capital IQ
databases, Pitkin nevertheless used generally accepted methods. See Moscicki, 173
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N.H. at 125. Any concerns that FirstLight has about how Pitkin used these databases to
arrive at his ultimate damages calculation can be addressed on cross-examination at
trial. See Langill, 157 N.H. at 88.
The Court acknowledges that FirstLight’s expert disagrees with Pitkin’s
methodology, explaining that using historical VTel data would create a more reliable
damages determination than Pitkin’s use of GeoTel data. However, this strikes the
Court as the kind of challenge best left to cross-examination. Id. FirstLight’s arguments
do not demonstrate that Pitkin’s use of industry databases is not a generally accepted
practice in the telecommunications industry. See Moscicki, 173 N.H. at 125. In fact, the
evidence presented shows the opposite to be true. Because Pitkin used a generally
accepted method, his methodology is sufficiently reliable to allow the jury to hear and
assess it. Langill, 157 N.H. at 88.
FirstLight next takes issue with Pitkin’s analysis of VTel historical data from
Montpelier, Vermont. Specifically, FirstLight contends that the inconsistencies between
the industry benchmark data for Montpelier ($92,615) and VTel’s actual wallet share of
telecom spend in Montpelier ($9,600) demonstrates Pitkin’s unreliability because
Pitkin’s calculations artificially inflated VTel’s damages. (Doc. 158 at 13.) Pitkin
explained that he used Montpelier as a focal point in his analysis because it is the one
market where VTel has a pre-existing customer base. Pitkin further articulated that his
analysis was not trying to show the pre-existing wallet share but was rather trying to
establish a baseline to consistently compare against other industry benchmarks.
FirstLight spent significant time during the July 31 hearing going through Pitkin’s
projected telecom spend that he calculated for Montpelier. In FirstLight’s estimation, the
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data Pitkin relied upon was unreliable because of various irregularities including
categories that had no customers or duplicate entries. Overall, FirstLight’s objections to
Pitkin’s methodology about Montpelier echo its problems with Pitkin’s use of industry
recognized benchmarks. Pitkin emphasized in his rebuttal report that he estimated
VTel’s fair market share in Montpelier based off of VTel’s pre-existing customer base in
order to have a consistent set of data upon which to calculate VTel’s estimated
damages. (Pl.’s Ex. 2 ¶¶ 56–57.)
The Court finds that FirstLight’s arguments again go towards the weight of the
evidence rather than its reliability. As the Court addressed above, Pitkin’s use of widely
recognized industry databases is a regularly accepted industry practice. See Langill,
157 N.H. at 88. To the extent that FirstLight contends that Pitkin should have used
another method instead, the Court is not persuaded because the methodology that
Pitkin used is nevertheless generally accepted in the telecommunications industry. See
Moscicki, 173 N.H. at 125. Pitkin credibly testified that although he used VTel’s existing
customer base, he modeled the customer data accordingly so he could properly
compare it with the other identifiable markets. The Court finds this to be in harmony
with the generally accepted methods Pitkin used to calculate expected profits from the
other twenty identifiable markets. See id.
Presently, there is enough evidence in the record demonstrating that Pitkin’s
methodology was reliable even if there is other evidence in the record suggesting that
Pitkin’s data set was potentially flawed. See Szewczyk, __ N.H. at 8 (concluding that an
expert’s testimony that a damaged polyethylene liner likely caused flooding was
admissible despite the fact that there was no evidence in the record documenting that
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the liner was damaged or defective). Ultimately, because Pitkin’s methodology in using
the Montpelier case study is reliable, any unresolved questions is best left for the jury.
Cf. Beckles v. Madden, 160 N.H. 118, 128 (2010) (acknowledging that lay witnesses
could provide needed factual context for expert testimony which should be best left for
the jury to consider).
Additionally, FirstLight also maintains that Pitkin’s testimony is unreliable
because of errors in modeling lost profits along a long haul fiber route between Montreal
and Boston. FirstLight asserts that there would be more robust competitors than what
Pitkin relied upon in his modeling, thus making his conclusion that the best case
scenario of VTel capturing twenty percent of the market unreliable. (Doc. 158 at 15).
Lastly, FirstLight also questions VTel’s desire and preparation to develop the long haul
market in the first place. (Id.) Pitkin explained at the hearing that VTel had no
Canadian data available to examine long haul opportunities available in Montreal.
Thus, Pitkin used United States cities based on similar population characteristics as a
proxy because in his experience United State cities have similar telecom data to
Canadian cities. VTel argues that FirstLight merely demonstrated that FirstLight’s
expert disagreed with Pitkin’s calculations and used a different model but failed to show
why Pitkin’s model was unreliable. (Doc. 162 at 27–28.)
The Court agrees with VTel. It is clear that FirstLight’s expert disagrees with
Pitkin’s analysis. However, a mere disagreement between experts where both experts
rely on generally accepted methodologies is not sufficient to exclude Pitkin as an expert.
Cf. Moscicki, 173 N.H. at 125. Pitkin utilized GeoTel data to approximate Canadian
data. The Court above has already found that Pitkin’s utilization of industry benchmarks
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and databases is a generally accepted methodology in the telecommunications industry.
Additionally, the Court finds Pitkin, with all of his experience, to be credible when he
testified that data from American cities is similar enough to Canadian cities to serve as a
reliable proxy. Additionally, similar to the Court’s previous analysis on the speculative
nature of Pitkin’s testimony, Pitkin’s reliance on the unique opportunities that the Route
presented to VTel demonstrates that Pitkin’s analysis of the long haul opportunities had
a basis in the record. (Pl.’s Ex. 2 ¶ 50); see Bezanson, 144 N.H. at 304–06. Simply
put, FirstLight’s questions about the soundness of Pitkin’s methodology compared to
Martin’s methodology goes to the weight of Pitkin’s testimony and should be left for a
jury to decide. Langill, 157 N.H. at 88.
Likewise, the Court finds the rest of Pitkin’s analysis to fall within generally
accepted industry standards. At the hearing, Pitkin explained that after he completed
the above business case analyses, he engaged in standard forecasting models that he
testified are easily reviewable on multiple levels. The Court agrees, especially with the
fact that Pitkin used industry accepted data that is from readily accessible databases.
The heart of FirstLight’s challenges to Pitkin stems from its belief that his attempt to
calculate any degree of damages for business opportunities that where there was no
proof that VTel would every realize these opportunities is too speculative. As the Court
touched on above, damages calculations have to “address a hypothetical world that
never existed, one in which other things remained the same but the breach had not
occurred.” Alaska Rent-A-Car, Inc. v. Avis Budget Grp., Inc., 738 F.3d 968 (9th Cir.
2013). Thus, especially in the context of a pre-existing venture branching into new
opportunities afforded to them by a terminated contract, forecasting what revenue VTel
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could have owned based off of pre-existing models is not prohibitively speculative. Id.at 969–70 (finding an expert’s general methodology of “comparing the unknown to an
analogous known experience” to be reliable).
Ultimately, the Court disagrees with FirstLight’s contention that Pitkin’s
methodology was so unreliable as to create biased and “garbage” results. (H’rg 11:28.)
VTel has carried its burden to show that Pitkin’s testimony meets the threshold
requirement for reliability. To be sure, Pitkin is not a flawless witness, but he is not
required to be. FirstLight’s proper recourse to challenge Pitkin’s reliability is to cross-
examine him, especially pertaining to the differences in approaches and methodologies
between him and Martin. Langill, 157 N.H. at 88. The Court is not persuaded that
allowing Pitkin to testify would be unfairly prejudicial to FirstLight because it will have an
opportunity to cross-examine Pitkin and to call its own expert to attempt to sway the jury
to its side. Were the Court to side with FirstLight here, the Court would exceed its gate-
keeping function. See Szewczyk, __ N.H. at 9. Therefore, Pitkin’s testimony is
admissible under Rule 702 and RSA 516:29-a.
Conclusion
Accordingly, for the foregoing reasons, the Court DENIES FirstLight’s motion.
SO ORDERED.
__________________________
September 5, 2023 David A. Anderson
Associate Justice
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