In re WorldCom, Inc.

WorldCom Communications, Inc. and its subsidiaries (collectively, WorldCom) (debtor) were a global communications-services provider. WorldCom had contracts with Communications Network International, Ltd. (CNI) (creditor), under which CNI resold telecommunications services from WorldCom to CNI’s customers. In February 2001, WorldCom sued CNI in federal district court to recover allegedly unpaid amounts due under the contracts. CNI asserted counterclaims against WorldCom, alleging that WorldCom had improperly billed CNI and failed to provide promised rebates and reimbursements. In 2002, WorldCom filed for Chapter 11 bankruptcy. CNI filed a proof of claim for $17,701,534 in the bankruptcy action. WorldCom commenced an adversary proceeding against CNI in the bankruptcy court, objecting to CNI’s proof of claim and reasserting the breach-of-contract and other claims against CNI from the district-court action. CNI answered WorldCom’s adversary complaint and demanded a jury trial. The bankruptcy court ultimately denied CNI’s proof of claim and granted summary judgment for WorldCom on the issue of CNI’s liability for breaching its agreements with WorldCom. However, the court found that a genuine issue of material fact remained regarding WorldCom’s claim for damages. WorldCom subsequently moved to strike CNI’s demand for a jury trial, asserting that CNI had waived its jury-trial right by filing its proof of claim. CNI argued that it had not waived its jury-trial right by filing a proof of claim because WorldCom’s claim against CNI was only incidentally related to the bankruptcy process. The bankruptcy court considered the parties’ arguments.