Twister Communications Network, Inc. v. MCI WorldCom Network Services, Inc.
An Analysis Group team gave testimony and provided economic analysis to refute a plaintiff's claim that MCI WorldCom had behaved fraudulently against it. The plaintiff, Twister Communications Network, a prepaid calling card and long-distance services company, alleged that MCI fraudulently took over its operations and destroyed the company. Twister's primary shareholder sought to recover damages of $487 million based upon the company's forecast of the free cash flow it would have attained if MCI had not engaged in the purported wrongful conduct.
Analysis Group Managing Principal Keith Ugone testified regarding Twister's claimed damages calculations. Dr. Ugone's team, including Managing Principal Maureen Chakraborty and Vice President Bruce Blacker, evaluated Twister's discounted cash flow model by analyzing the underlying assumptions of the model compared to then-current market conditions.
Retained by MCI counsel, the law firm of DLA Piper Rudnick Gray Cary US LLP, Analysis Group showed that Twister would not have been able to charge the rates contained in its projections because customers in the prepaid calling card market were highly price-sensitive. In addition, Analysis Group showed that Twister could not have realized the profits it had projected because of fierce competition in the industry and ease of entry into its market. Finally, Analysis Group demonstrated that Twister's damages analysis did not adequately consider the company's poor financial health prior to MCI's alleged wrongful conduct, or the significant downturn in the telecom industry during the period Twister was experiencing financial difficulties.
Following a five-week trial, the jury rejected Twister's claim that MCI had defrauded Twister and did not award damages.