An Airport Divided

The baggage system from hell at Denver International Airport still isn't working properly--but the lawsuit it spawned has turned into lawyer heaven. The case, which fills a two-foot-thick file at Denver District Court, is generating sky-high fees for some of Denver's most powerful law firms. And it promises the potential for a lively courtroom showdown between Mayor Wellington Webb, United Airlines executives, and engineers from Texas-based BAE Automated Systems, who will have to fly to Denver to defend their brainchild. Should the case make it to trial next year, Denver may finally hear the inside story of the biggest public-works boondoggle in Colorado history.

BAE, which designed and built the $232 million baggage system once heralded by Denver officials as a technological marvel, is afraid of being judged in Denver--so afraid that its attorneys spent much of the summer trying to convince a Texas judge to hear the case in Dallas. For its part, United Airlines has filed voluminous court documents that provide new details on the failings of a system it now describes as an "engineering disaster."

Denver's baggage follies hit bottom in March, when United and BAE sued each other for breach of contract. BAE claimed that United, the only DIA carrier actually using the high-tech baggage system, was unfairly withholding the final $17.5 million payment for the system. United said the newfangled contraption was so unreliable it might have to be junked altogether. The airline is asking to be let out of the $17.5 million payment; BAE wants the money, plus millions of dollars in additional operating costs it claims it was saddled with after United refused to certify the system as complete last November.

The two parties have spent the past few months in pretrial legal skirmishes as Dallas-based BAE has sought to have the trial held in that city. BAE's lawyers argued that the firm has about as much chance of receiving a fair trial in Denver as Timothy McVeigh had in Oklahoma City. United, which wanted the case tried in Denver, submitted an eight-inch stack of press clippings to demonstrate the high level of local interest in the case, including articles from Westword, transcripts of Peter Boyles's radio show, and stories from the Denver dailies, among them an October 28, 1995, article by Rocky Mountain News reporter Kevin Flynn trumpeting the success of the automated system. That story was optimistically headlined "DIA Bags Rolling at Last."

BAE lost the first round of the court fight at the end of June, when a Dallas judge ordered the trial moved to Denver. No trial date has been set, and those involved say the earliest the case could go to trial is late next year.

According to the court documents filed by United, the last straw for Denver's largest carrier came this past February, when the baggage system failed a series of tests during one of the airport's slowest periods. That followed the system's complete collapse during the Christmas holidays. During the ten-day February test, 40 percent of the inbound bags didn't show up on time, and more than 500 bags weren't delivered at all. The system for odd-sized parcels such as skis and backpacks "was so nonfunctional that it could not even be tested," United said in its court filing. The airline added that it is now "saddled with a system that is only one-third operational."

United and BAE were involved in increasingly tense negotiations in March, and the breakdown of those discussions on March 18 set off a semi-comic sprint to the courthouse. BAE filed suit against United in Dallas, and two hours later United did the same in Denver. In its complaint, the airline claimed that BAE brought suit in Dallas to avoid the wrath of the Denver citizenry. "BAE chose Dallas as a venue for only one reason: It is not Denver," asserted the airline's attorneys. "The vast majority of documents, witnesses--including a number of BAE employees involved with the system--reside in Denver, not Dallas. BAE's race to a courthouse nearly 900 miles from Denver reveals how desperately it wants to avoid having this controversy decided in a venue whose citizens and judiciary are affected every single day by BAE's engineering flop of a baggage system."

In its court filings, BAE argued that the trial should be held in Dallas because a single United employee who lives in Houston was involved in the negotiations between the airline and BAE. The company also told the judge it fears a judicial lynch mob in Colorado. "BAE will not likely receive a fair trial in Denver," the company stated. "While the newspaper articles and radio-talk-show transcripts submitted by United are undoubtedly hearsay and not competent evidence of anything, they do demonstrate the bitterness of citizens of Denver due to a number of problems at DIA. United's papers clearly evidence its hope that any blame for the general and historic problems at DIA will be placed on BAE in this dispute. BAE has been and will be held out to the Denver public as a scapegoat, precluding a fair trial of this case on the merits."

The court documents also reveal an all-star lineup of potential witnesses, including Mayor Webb; his chief of staff, Stephanie Foote; City Attorney Dan Muse; aviation director Jim DeLong; and former manager of public works Mike Musgrave, who left office last year to take a high-paying job with one of the private consulting firms he supervised during DIA's construction. Top executives from United and BAE can also be expected to make appearances.

The airline and the engineering company have both sought out the highest-priced legal talent in town for the battle. The powerhouse firm of Brownstein Hyatt Farber & Strickland is representing United, while BAE has retained the rival 17th Street firm of Davis Graham & Stubbs. Both United and BAE decline to comment on the upcoming trial.

Problems with the automated baggage system were largely responsible for delaying DIA's opening by more than a year. Those delays boosted the airport's final cost by $361 million; the city was forced to sell more bonds to cover interest costs as the spanking new airfield sat idle for months. To actually get the airport open, the city had to construct a $63 million tug-and-cart system much like the one it abandoned at Stapleton airport. That traditional system still serves all the carriers at DIA and moves most of the airport's luggage.

The BAE system, originally intended to serve the entire airport, now operates only in United's Concourse B and primarily moves outbound luggage for the Chicago-based carrier. The automated system installed on Concourse A is gathering dust, and the airlines using that wing of the airport say they're perfectly happy to let the octopus-like contraption lie dormant. Even so, the city is already forcing those carriers to help pay off the debt incurred in building the system.

In 1994 the city handed responsibility for the automated baggage system over to United, saying the carrier should supervise the system since it's the only user. Some observers speculate the city may have relished dumping the mess in United's lap, since it was the huge carrier that insisted Denver install an automated system in the first place. And this past March, United canceled BAE's contract to maintain the system, replacing it with Hensel Phelps Construction Company.

City officials, including airport boss DeLong, now refer all questions about the baggage system to United. An airline spokesman in Chicago failed to return phone calls seeking comment.

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Stuart Steers
Contact: Stuart Steers