Southwest Airlines Co. v. State of Wisconsin Department of Revenue ( 2021 )

2021 WI 54SUPREME COURT OF WISCONSIN
CASE NO.: 2019AP818
COMPLETE TITLE: Southwest Airlines Co. and Airtran Airways,
Inc.,
Plaintiffs-Appellants-Petitioners,
v.
State of Wisconsin Department of Revenue,
Defendant-Respondent.
REVIEW OF DECISION OF THE COURT OF APPEALS
Reported at 391 Wis. 2d 649,943 N.W.2d 355(2020 – unpublished)
OPINION FILED: June 8, 2021
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: February 23, 2021
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Dane
JUDGE: Richard G. Niess
JUSTICES:
ANN WALSH BRADLEY, J., delivered to majority opinion for a
unanimous Court.
NOT PARTICIPATING:
ATTORNEYS:
For the plaintiffs-appellants-petitioners, there were
briefs filed by Douglas A. Pessefall, Don M. Millis, Karla M.
Nettleton, and Reinhart Boerner Van Deuren S.C., Milwaukee.
There was an oral argument by Douglas A. Pessefall.
For the defendant-respondent, there was a brief filed by
Bran P. Kennan, assistant attorney general; with whom on the
brief was Joshua L. Kaul attorney general. There was an oral
argument by Brian P. Kennan.
2021 WI 54NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2019AP818
(L.C. No. 2017CV1965)
STATE OF WISCONSIN : IN SUPREME COURT
Southwest Airlines Co. and Airtran Airways,
Inc.,
Plaintiffs-Appellants-Petitioners, FILED
v.
JUN 8, 2021
State of Wisconsin Department of Revenue,
Sheila T. Reiff
Clerk of Supreme Court
Defendant-Respondent.
ANN WALSH BRADLEY, J., delivered the majority opinion for a
unanimous Court.
REVIEW of a decision of the Court of Appeals. Affirmed.
¶1 ANN WALSH BRADLEY, J. The petitioners, Southwest
Airlines and AirTran Airways (collectively, Southwest), seek
review of an unpublished opinion of the court of appeals
affirming the circuit court's determination that Southwest does
not qualify for the "hub facility" property tax exemption.1
1Southwest Airlines Co. v. DOR, No. 2019AP818, unpublished
slip op. (Wis. Ct. App. Mar. 3, 2020) (affirming the order of
the circuit court for Dane County, Richard G. Niess, Judge).
No. 2019AP818
Specifically, Southwest contends that under a "strict but
reasonable" interpretation of Wis. Stat. § 70.11(42)(a)2.a.
(2017-18),2 it is entitled to the exemption for both the 2013 and
2014 tax assessments.
¶2 The hub facility provision exempts from property taxes
all property of an air carrier company if the air carrier
company "operated at least 45 common carrier departing flights
each weekday in the prior year" from a facility at a Wisconsin
airport. Southwest argues that it is entitled to the exemption
despite admitting that it did not operate at least 45 departing
flights on each and every weekday of the subject years.
¶3 Nevertheless, Southwest advances that under a "strict
but reasonable" reading of the statute, it should be given an
allowance for holidays and days with bad weather when it did not
operate 45 departing flights. It further asserts that it is
entitled to the hub facility exemption if it operated an average
of over 45 flights each weekday in the subject year.
¶4 We conclude that Southwest is not entitled to the hub
facility exemption for either the 2013 or 2014 property tax
assessment. The plain language of the statute requires that an
air carrier company operate 45 departing flights on each weekday
without exception, and Southwest admittedly did not meet this
requirement.
2All references to the Wisconsin Statutes are to the 2017-
18 version unless otherwise indicated.
2
No. 2019AP818
¶5 Accordingly, we affirm the decision of the court of
appeals.
I
¶6 In May of 2011, Southwest completed an acquisition of
AirTran Airways. Despite the merger the two airlines continued
to file separate air carrier reports with the Department of
Revenue (DOR) for the 2013 property tax assessment (covering
January 1, 2012, to December 31, 2012) and the 2014 property tax
assessment (covering January 1, 2013, to December 31, 2013).
For the two years at issue, Southwest paid $4,177,574 in
property tax.
¶7 At the time they filed their reports, neither
Southwest nor AirTran claimed the hub facility exemption.
Likewise, neither submitted any flight data along with their
reports.
¶8 During the course of an audit conducted by DOR,
Southwest came to believe that it may qualify for the hub
facility exemption. Accordingly, on April 6, 2015, it submitted
flight information to DOR. However, the flight information was
provided in the form of scheduled departures, not actual
departures.
¶9 Southwest followed up its submission of the flight
data with a request pursuant to Wis. Stat. § 76.0753 that DOR
3Wisconsin Stat. § 76.075, entitled "Adjustments of
assessments," provides in relevant part:
Within 4 years after the due date, or extended due
date, of the report under s. 76.04, any person subject
(continued)
3
No. 2019AP818
make adjustments to the data Southwest had previously submitted.
Through the request, Southwest sought to consolidate the reports
previously filed by Southwest and AirTran. The request was
"accompanied by workpapers and flight records to support a claim
for the hub facility exemption."
¶10 DOR denied Southwest's request. It gave three main
reasons for the denial. First, DOR determined that Wis. Stat.
§ 76.075 was not the proper mechanism for seeking the hub
facility exemption. Second, DOR concluded that Southwest's
request for the hub facility exemption was untimely.
¶11 Finally, as most relevant here, DOR denied the
exemption on the basis that Southwest failed to establish that
it met the statutory 45-departing-flights threshold. Even
assuming that Southwest and AirTran could pool their flights
together and that scheduling a flight is the equivalent of
to taxation under this subchapter may request the
department to make, or the department may make, an
adjustment to the data under s. 76.07(4g) or (4r)
submitted by the person. If an adjustment under this
section results in an increase in the tax due under
this subchapter, the person shall pay the amount of
the tax increase plus interest on that amount at the
rate of 1 percent per month from the due date or
extended due data of the report under s. 76.04 until
the date of final determination and interest at the
rate of 1.5 percent per month from the date of final
determination until the date of payment. If an
adjustment under this section results in a decrease in
the tax due under this subchapter, the department
shall refund the appropriate amount plus interest at
the rate of 0.25 percent per month from the due date
or extended due date under s. 76.04 until the date of
refund.
4
No. 2019AP818
"operating" a flight, DOR determined that there were still four
weekdays for 2013 and 91 weekdays for 2014 on which Southwest
did not schedule 45 departing flights.
¶12 Southwest sought judicial review of DOR's
determination in Dane County circuit court pursuant to Wis.
Stat. § 76.08(1).4 Both Southwest and DOR filed motions for
summary judgment. The circuit court granted DOR's motion for
summary judgment and denied Southwest's. It concluded that "on
the undisputed facts, the airlines did not satisfy the statutory
requirements in either tax year to qualify for the exemption."
¶13 Specifically, the circuit court determined that
Southwest did not meet the 45-departing-flight requirement. It
rejected Southwest's argument that in order to qualify for the
hub facility exemption an airline need only schedule departing
flights and not have them actually depart. The circuit court
observed that "[a]s anyone who flies commercial airlines on a
regular basis can unfortunately attest, a scheduled flight is
not always a 'departing flight.'" Further, determining that
there was no textual support for Southwest's reading of Wis.
4 In relevant part, Wis. Stat. § 76.08(1) sets forth:
Any company aggrieved by the assessment or adjustment
of its property thus made may have its assessment or
adjustment redetermined by the Dane County circuit
court if within 30 days after notice of assessment or
adjustment is mailed to the company under s. 76.07(3)
an action for the redetermination is commenced by
filing a summons and complaint with that court, and
service of authenticated copies of the summons and
complaint is made upon the department of revenue.
5
No. 2019AP818
Stat. § 70.11(42)(a)2.a., the circuit court found unpersuasive
Southwest's argument that it need only average 45 departing
flights each weekday.
¶14 Southwest appealed and the court of appeals affirmed
the circuit court's decision. Southwest Airlines Co. v. DOR,
No. 2019AP818, unpublished slip op. (Wis. Ct. App. Mar. 3,
2020). Following the same rationale as the circuit court, the
court of appeals concluded that "based on the language of the
statute as currently written and the undisputed facts of this
case, the Airlines cannot prevail." Id., ¶16. Southwest
petitioned for this court's review.
II
¶15 In this case we are called upon to review the court of
appeals' determination that the circuit court properly granted
summary judgment to DOR. We review a grant of summary judgment
independently of the decisions rendered by the circuit court and
court of appeals, applying the same methodology as the circuit
court. Shugarts v. Mohr, 2018 WI 27, ¶17, 380 Wis. 2d 512, 909
N.W.2d 402. Summary judgment is appropriate where there is no
genuine issue as to any material fact and the moving party is
entitled to judgment as a matter of law. Id.¶16 In our review, we are required to interpret Wis. Stat.
§ 70.11(42)(a)2.a. Statutory interpretation presents a question
of law we likewise review independently of the determinations of
the circuit court and court of appeals. Horizon Bank, Nat'l
Ass'n v. Marshalls Point Retreat LLC, 2018 WI 19, ¶28, 380
Wis. 2d 60, 908 N.W.2d 797.
6
No. 2019AP818
III
¶17 Southwest claims it is entitled to the hub facility
exemption provided in Wis. Stat. § 70.11(42). Pursuant to this
exemption, "Property owned by an air carrier company that
operates a hub facility in this state, if the property is used
in the operation of the air carrier company[,]" is exempted from
general property taxes. § 70.11(42)(b).
¶18 There is no dispute that Southwest is an "air carrier
company," which is defined by statute as "any person engaged in
the business of transportation in aircraft of persons or
property for hire on regularly scheduled flights." Wis. Stat.
§ 70.11(42)(a)1. The dispute focuses on whether Southwest
operates a "hub facility" in Wisconsin.
¶19 As relevant here, a "hub facility" is defined as
follows:
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 department of
revenue, or transported cargo to nonstop destinations,
as defined by rule by the department of revenue.
Wis. Stat. § 70.11(42)(a)2.a.5
5The statute includes an additional definition for a hub
facility, which Southwest does not claim it meets and thus is
not relevant here. That additional definition is:
An airport or any combination of airports in this
state from which an air carrier company cumulatively
operated at least 20 common carrier departing flights
each weekday in the prior year, if the air carrier
(continued)
7
No. 2019AP818
¶20 Southwest concedes that it did not operate at least 45
departing flights on six days for the 2013 property tax
assessment.6 The record further does not support an assertion
that Southwest operated 45 departing flights each weekday for
the 2014 property tax assessment. Indeed, Southwest concedes
the point by making no argument that it did so and asserts only
that it scheduled an average of 46.28 departing flights each
weekday during this period. Despite these concessions,
Southwest argues that it should still be entitled to the hub
facility exemption.7
company's headquarters, as defined by rule by the
department of revenue, is in this state.
Wis. Stat. § 70.11(42)(a)2.b.
6 Southwest concedes that there were three weekdays on which
it scheduled more than 45 flights but flew fewer than 45
flights, and three weekdays on which it both scheduled and flew
fewer than 45 flights. The days on which Southwest scheduled
more than 45 flights but flew fewer were October 29 and 30,
2012, on which Hurricane Sandy forced the cancellation of many
flights across the country, and December 20, 2012, on which
there was 2.16 inches of rain or melted snow and 2.8 inches of
snow, ice pellets, or hail on the ground. The days on which
Southwest both scheduled and flew fewer than 45 flights were
November 22, 2012 (Thanksgiving), November 23, 2012 (Black
Friday), and December 25, 2012 (Christmas).
7 For purposes of our discussion, we assume without deciding
that Southwest and AirTran can combine their flight totals for
the subject years. We further assume without deciding that an
air carrier company may retroactively claim the hub facility
exemption through the data adjustment procedure provided by Wis.
Stat. § 76.075.
8
No. 2019AP818
¶21 Specifically, it contends that we should read the
statute in a "strict but reasonable" manner, and that under such
a reading we should forgive Southwest for the days it did not
meet the 45-departing-flight threshold due to holidays and
weather. It further contends that it is entitled to the
exemption if it averaged 45 departing flights per weekday in the
subject year.
¶22 In evaluating Southwest's arguments, we must interpret
Wis. Stat. § 70.11(42)(a)2.a. As a starting point, statutory
interpretation begins with the language of the statute. State
ex rel. Kalal v. Circuit Court for Dane Cnty., 2004 WI 58, ¶45,
271 Wis. 2d 633, 681 N.W.2d 110. If the meaning of the statute
is plain, we need not inquire further. Id.¶23 "Statutory language is given its common, ordinary, and
accepted meaning, except that technical or specially-defined
words or phrases are given their technical or special
definitional meaning." Id. We also interpret statutory
language "in the context in which it is used; not in isolation
but as part of a whole; in relation to the language of
surrounding or closely-related statutes; and reasonably, to
avoid absurd or unreasonable results." Id., ¶46.
¶24 Tax exemption statutes are strictly construed against
granting an exemption. Covenant Healthcare Sys., Inc. v. City
of Wauwatosa, 2011 WI 80, ¶22, 336 Wis. 2d 522, 800 N.W.2d 906;
Wis. Stat. § 70.109. The burden is on the party seeking the
exemption to prove its entitlement and any ambiguity is resolved
in favor of taxation. Columbus Park Hous. Corp. v. City of
9
No. 2019AP818
Kenosha, 2003 WI 143, ¶11, 267 Wis. 2d 59, 671 N.W.2d 633;
§ 70.109. Thus, taxation is the rule and exemption is the
exception. Columbus Park Hous. Corp., 267 Wis. 2d 59, ¶11.
¶25 Although we are to apply a strict construction, this
does not mean that we need apply the narrowest possible
construction or an unreasonable construction. Covenant
Healthcare Sys., Inc., 336 Wis. 2d 522, ¶32 (citing Columbia
Hosp. Ass'n v. City of Milwaukee, 35 Wis. 2d 660, 668, 151
N.W.2d 750 (1967)). We therefore apply a "strict but
reasonable" interpretation to a tax exemption statute. Covenant
Healthcare Sys., Inc., 336 Wis. 2d 522, ¶22.
¶26 "The party claiming the exemption must show the
property is clearly within the terms of the exception and any
doubts are resolved in favor of taxability." Kickers of Wis.,
Inc. v. City of Milwaukee, 197 Wis. 2d 675, 680, 541 N.W.2d 193(Ct. App. 1995) (citation omitted). In other words, all
presumptions are against tax exemption, and an exemption should
not be extended by implication. Id. (citation omitted).
¶27 Guided by these principles, we are unpersuaded by
either of Southwest's arguments. Reading a statute "strictly
but reasonably" still does not allow us to read language into
the statute that is not present. Both of Southwest's arguments
10
No. 2019AP818
impermissibly ask us to read language into Wis. Stat.
§ 70.11(42)(a)2.a.8
¶28 Initially, we must reject Southwest's argument that it
is entitled to the hub facility exemption for 2013 because it
substantially complied with the hub facility statute by flying
the requisite number of flights each weekday with the exception
of bad weather days and holidays. Wisconsin Stat.
§ 70.11(42)(a)2.a. requires that, in order to be entitled to the
hub facility exemption, an air carrier company must "operate[]
at least 45 common carrier departing flights each weekday"
during the subject year. The unambiguous plain language of the
statute does not provide any exceptions for bad weather or
holidays.
¶29 It would be error for us to read into the statute an
exception that the legislature has not set forth. Dawson v.
Town of Jackson, 2011 WI 77, ¶42, 336 Wis. 2d 318, 801
N.W.2d 316 ("We decline to read into the statute words the
legislature did not see fit to write."). While this principle
DOR additionally argues that the voluntary payment
8
doctrine prevents Southwest from receiving a refund of its
previously paid property taxes. "The voluntary payment doctrine
places upon a party who wishes to challenge the validity or
legality of a bill for payment the obligation to make the
challenge either before voluntarily making payment, or at the
time of voluntarily making payment." Putnam v. Time Warner
Cable of Se. Wis., Ltd. P'Ship, 2002 WI 108, ¶13, 255
Wis. 2d 447, 649 N.W.2d 626. Because Southwest is not entitled
to the hub facility exemption under the plain language of the
statute, we need not address the applicability of the voluntary
payment doctrine.
11
No. 2019AP818
is applicable in all cases, its import is heightened in a tax
exemption case, as precedent indicates that tax exemptions are
to be strictly construed and not extended by implication. See
Covenant Healthcare Sys., Inc., 336 Wis. 2d 522, ¶22; Kickers of
Wis., Inc., 197 Wis. 2d at 680. The strict construction with
which we interpret tax exemption statutes further means that we
cannot disregard Southwest's days of noncompliance as de
minimis.
¶30 The legislature's choice of language in Wis. Stat.
§ 70.11(42)(a)2.a. further compels the rejection of this
argument. The use of the terms "operated" and "departing
flight" indicate that an air carrier company must do more than
merely schedule a flight in order for that flight to count
toward the exemption. The flight must actually be "operated"
and must "depart."9 As the circuit court observed, "[a]s anyone
9 This conclusion is further bolstered with a look to
related statutes. For example, there are numerous other
subsections of Wis. Stat. § 70.11 where the word "operate" is
used. The additional instances of the word all suggest that
"operate" means that some specified activity must actually be
done. See, e.g., § 70.11(25) (exempting from property taxation
property operated for the purpose of medical and surgical
research); § 70.11(28) (exempting property owned and operated by
a humane society); § 70.11(29m) (exempting property operated as
a theater if other requirements are met).
Further, other aviation-related statutes indicate that
"operate" must mean more than "schedule." Specifically, Wis.
Stat. § 78.55(5) defines a "general aviation fuel user" as a
person "who is responsible for the operation of an aircraft at
the time general aviation fuel is placed in the fuel supply tank
of the aircraft while the aircraft is within this state." Such
a definition also suggests that "operate" means that an activity
must actually be done.
12
No. 2019AP818
who flies commercial airlines on a regular basis can
unfortunately attest, a scheduled flight is not always a
'departing flight.'"
¶31 Southwest's argument that it is entitled to the
exemption for 2014 because it averaged over 45 flights per
weekday in the subject year is similarly unpersuasive. The hub
facility exemption statute sets as a prerequisite to the
exemption that the air carrier company "operate[]" the minimum
number of flights "each weekday" in the subject year. Southwest
concedes, and the record reflects, that Southwest did not
"operate" 45 flights, or even schedule 45 flights, on some
weekdays in the subject period. Again, we decline to read into
the statute an "average" route to the exemption that is not
present in the plain language.
¶32 The legislature's use of the term "each weekday"
further precludes the application of Southwest's "average"
theory. This court has previously interpreted the word "each"
as synonymous with "every." State ex rel. Pierce v. Kundert, 4
Wis. 2d 392, 395, 90 N.W.2d 628 (1958). Applying this
understanding of the term, the plain language of Wis. Stat.
§ 70.11(42)(a)2.a. does not support aggregating the number of
13
No. 2019AP818
flights for the year and calculating the average——the threshold
must be met each individual weekday.10
¶33 Our conclusion is further buttressed by the
legislature's use of the term "at least," which indicates that
45 flights is an absolute minimum floor. See Racine Educ. Ass'n
v. WERC, 2000 WI App 149, ¶48, 238 Wis. 2d 33, 616 N.W.2d 504(explaining that the words "at least" set a minimum level).
Thus, under the plain language of Wis. Stat. § 70.11(42)(a)2.a.,
10Whether DOR granted the hub facility exemption to other
airlines in the past is irrelevant to our analysis. Southwest
contends that the exemption was extended to some airlines for
the 2002 assessment despite the grounding of flights subsequent
to the September 11, 2001 terrorist attacks. This argument is
made in the context of an argument that DOR's treatment of
Southwest in this case violates the uniformity clause of the
Wisconsin Constitution. The uniformity clause provides that
"[t]he rule of taxation shall be uniform." Wis. Const. art.
VIII, § 1. Southwest contends that because airlines received
the exemption for the 2002 assessment despite being grounded
several days the prior year, that DOR's application of the hub
facility exemption is arbitrary and results in non-uniform
assessments.
We need not address this argument because the record before
us in insufficient, as it does not include the necessary
underlying data. For the same reason, we need not address
Southwest's argument that it is the victim of a due process or
equal protection violation. Further, Southwest's due process
and equal protection arguments are undeveloped, and we generally
do not address undeveloped arguments. State v. Gracia, 2013 WI
15, ¶28 n.13, 345 Wis. 2d 488, 826 N.W.2d 87.
14
No. 2019AP818
operating fewer than 45 flights on any weekday disqualifies an
airline from the hub facility exemption.11
¶34 We thus conclude that Southwest is not entitled to
the hub facility exemption for either the 2013 or 2014 property
tax assessment. The plain language of the statute requires that
an air carrier company operate 45 departing flights on each
weekday without exception, and Southwest admittedly did not meet
this requirement.
¶35 Accordingly, we affirm the decision of the court of
appeals.
By the Court.—The decision of the court of appeals is
affirmed.
11To the extent Southwest argues that the hub facility
exemption is too difficult to obtain, its remedy lies with the
legislature and not this court. As set forth, under the plain
language of the statute the legislature has drafted, Southwest
is not entitled to the exemption.
15
No. 2019AP818
1