Southwest Airlines Co. v. State of Wisconsin Department of Revenue

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
March 3, 2020
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2019AP818 Cir. Ct. No. 2017CV1965

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT I

SOUTHWEST AIRLINES CO. AND AIRTRAN AIRWAYS, INC.,

PLAINTIFFS-APPELLANTS,

V.

STATE OF WISCONSIN DEPARTMENT OF REVENUE,

DEFENDANT-RESPONDENT.

APPEAL from an order of the circuit court for Dane County:
RICHARD G. NIESS, Judge. Affirmed.

Before Brash, P.J., Dugan and Donald, JJ.

¶1 BRASH, P.J. Southwest Airlines Company and AirTran Airways,
Inc. (collectively, “the Airlines”) appeal the order of the trial court granting the
motion for summary judgment of the Department of Revenue (“DOR”) and denying
the Airlines’ motion for summary judgment. The Airlines had filed the underlying
No. 2019AP818

action against the DOR seeking adjustments on their 2013 and 2014 property
assessments—and, as such, refunds on the amounts they paid in property taxes—
based on their assertion that they qualified for the “hub facility” exemption during
those tax periods.

¶2 In granting the DOR’s motion, the trial court found that it was an
undisputed material fact that the Airlines did not meet the statutory requirements of
a hub facility in either of those tax periods. We agree and affirm.

BACKGROUND

¶3 Property tax assessments for air carrier companies are determined by
annual reports submitted to the DOR by the air carriers. See WIS. STAT. § 76.07
(2017-18).1 The DOR assesses the total market value of the property of the air
carrier companies, and then calculates the percentage of that assessment which
should be attributed to Wisconsin. See id.

¶4 However, an air carrier company may claim an exemption from
paying the property taxes imposed as a result of its assessment if it qualifies as a
“hub facility.” See WIS. STAT. § 70.11(42). There are several ways set forth in the
statute by which an air carrier company may demonstrate that it is a hub facility,
including establishing that it operated a minimum number of departing flights each
weekday during the property assessment year.2 See § 70.11(42)(a)2.a. Air carriers

1
All references to the Wisconsin Statutes are to the 2017-18 version unless otherwise
noted.
2
The 2013 assessment year runs from January 1, 2012 through December 31, 2012; the
2014 assessment year is from January 1, 2013 through December 31, 2013.

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seeking the exemption must submit flight records to support their claims to the
DOR.

¶5 With regard to this case, Southwest and AirTran merged in May 2011,
with Southwest being the “acquiring or controlling carrier[.]” Southwest’s Air
Carrier Certificate was amended to include AirTran on March 1, 2012; however,
AirTran continued flying under its own name until December 2014.

¶6 Additionally, for the property assessment years for which the Airlines
are seeking the hub facility exemption—2013 and 2014—Southwest and AirTran
filed separate air carrier reports with the DOR. Furthermore, neither Southwest nor
AirTran sought the hub facility exemption at the time the 2013 and 2014
assessments were being determined, nor did either airline submit flight information
for those years for review by the DOR.

¶7 Both Airlines were subsequently audited by the DOR: Southwest
received its audit notice in December 2014 for assessments done for the years 2010-
2013; AirTran received its notice in September 2016 for assessments done from
2011-2014. While going through the audit process—which included reviewing
flight data for 2013 and 2014—the Airlines believed that collectively their flight
data met the requirements for the hub facility exemption. The Airlines requested
that the DOR make adjustments to the information that they had originally
submitted with their original air carrier reports for 2013 and 2014, as provided by
WIS. STAT. § 76.075, to allow for the exemption to be applied. However, those
requests were denied by the DOR.

¶8 The Airlines then filed the underlying action against the DOR in
August 2017 seeking the amount they collectively paid in property taxes for 2013
and 2014—$4,177,574.00—asserting that their aggregate flight data met the

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requirements for the hub facility exemption. Both the Airlines and the DOR filed
motions for summary judgment, agreeing that the material facts of the case were
undisputed.

¶9 The trial court found that the Airlines had not satisfied the statutory
minimum number of weekday flights required to qualify for the hub facility
exemption in either 2013 or 2014. Therefore, the court granted summary judgment
in favor of the DOR, and denied the Airlines’ motion. This appeal follows.

DISCUSSION

¶10 This court reviews the trial court’s decision to grant summary
judgment de novo, applying the same methodology. Kohn v. Darlington Cmty.
Sch., 2005 WI 99, ¶11, 283 Wis. 2d 1, 698 N.W.2d 794. Summary judgment is
granted only if “the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” WIS. STAT. § 802.08(2). When parties file cross-motions for
summary judgment, it is “generally the equivalent of a stipulation of facts permitting
the trial court to determine the case on the legal issues presented.” BMO Harris
Bank, N.A. v. European Motor Works, 2016 WI App 91, ¶15, 372 Wis. 2d 656,
889 N.W.2d 165.

¶11 Since the parties agreed that the material facts of the case were
undisputed, the trial court focused on the legal issue of whether the Airlines had met
the statutory requirements for a hub facility for their 2013 and 2014 assessments,
finding this issue to be dispositive. In making its determination, the trial court
interpreted the statutory definition of “hub facility,” as set forth in WIS. STAT.
§ 70.11(42)(a)2. The purpose of statutory interpretation “is to determine what the

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statute means so that it may be given its full, proper, and intended effect.” State ex
rel. Kalal v. Circuit Court for Dane Cty., 2004 WI 58, ¶44, 271 Wis. 2d 633, 681
N.W.2d 110. Statutory interpretation is a question of law, which we also review de
novo. DOR v. River City Refuse Removal, Inc., 2007 WI 27, ¶26, 299 Wis. 2d 561,
729 N.W.2d 396.

¶12 The definition of a “hub facility,” as relevant here, is:

A facility at an airport from which an air carrier
company operated at least 45 common carrier departing
flights each weekday in the prior year and from which it
transported passengers to at least 15 nonstop destinations, as
defined by rule by the [DOR], or transported cargo to
nonstop destinations, as defined by rule by the [DOR].

WIS. STAT. § 70.11(42)(a)2.a.

¶13 The Airlines contend that they “substantially” met the statutory
requirements for being a hub facility. For the 2013 assessment, the Airlines concede
that there were six weekdays during the 2012 calendar year in which they did not
meet the minimum forty-five departing flights required by WIS. STAT.
§ 70.11(42)(a)2.a. However, they argue that these shortfalls were due to holidays
or bad weather. For the 2014 assessment, the Airlines assert that the weekday flight
minimum was met based on the average number of departing flights that were
scheduled.

¶14 The Airlines further contend that substantially meeting the
requirements of WIS. STAT. § 70.11(42)(a)2.a. is sufficient for purposes of
qualifying for the tax exemption based on the “strict but reasonable” interpretation
that is applied to tax exemption statutes. Covenant Healthcare Sys., Inc. v. City of
Wauwatosa, 2011 WI 80, ¶22, 336 Wis. 2d 522, 800 N.W.2d 906 (citation omitted).
That standard recognizes that “[t]ax exemption statutes are to be strictly construed

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against granting an exemption,” but does not mean that courts are required to
interpret the statute with “the narrowest possible reading or an unreasonable
construction.” Id.

¶15 However, statutory interpretation cannot “read into the statute
language that the legislature did not put in.” Brauneis v. LIRC, 2000 WI 69, ¶27,
236 Wis. 2d 27, 612 N.W.2d 635. A plain reading of WIS. STAT. § 70.11(42)(a)2.a.
indicates that to qualify as a hub facility, that Airlines were required to “operate[]
at least 45 common carrier departing flights each weekday” during the assessment
year for which it seeks the exemption. Id. (emphasis added). The statute does not
provide exceptions to the weekday minimum number of flights for holidays or bad
weather; it does not allow for consideration of the average number of weekday
flights of an airline; and it does not permit using the number of scheduled flights,
but rather requires that airlines count only the number of flights that were
operational—that is, those that actually departed—in order to meet that minimum.

¶16 When a statute “manifests a clear meaning, our inquiry ceases and we
will apply that meaning.” River City Refuse Removal, Inc., 299 Wis. 2d 561, ¶26.
Furthermore, we assume that the language of a statute “expresses the legislature’s
intent.” Id. Had the legislature wanted to provide for exceptions to the weekday
flight minimum, or permit other calculations as a means of achieving the minimum
number of weekday flights, we must presume that it would have included such
specific language in the statute. See id. Simply put, based on the language of the

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statute as currently written and the undisputed facts of this case, the Airlines cannot
prevail.3

¶17 Therefore, we affirm the trial court’s grant of summary judgment in
favor of the DOR.

By the Court.—Order affirmed.

Not recommended for publication in the official reports.

3
The Airlines presented several other arguments on appeal that are inapposite given our
decision. See Maryland Arms Ltd. P’ship v. Connell, 2010 WI 64, ¶48, 326 Wis. 2d 300, 786
N.W.2d 15 (“Issues that are not dispositive need not be addressed.”). The Airlines also raise a
number of constitutional arguments, including that the DOR violated the Uniformity Clause of the
Wisconsin Constitution. However, their arguments merely cite general standards without applying
those standards to the facts of this case, and we therefore will not consider them. See State v. Pettit,
171 Wis. 2d 627, 646, 492 N.W.2d 633 (Ct. App. 1992) (we may decline to review arguments that
do not have “developed themes reflecting any legal reasoning” and are supported by “only general
statements”).

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