Title: Southwest Airlines Co. v. State Department of Revenue

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2021 WI 54 
 
SUPREME 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(2020 – unpublished) 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 54 
 
NOTICE 
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, 
 
     v. 
 
State of Wisconsin Department of Revenue, 
 
          Defendant-Respondent. 
 
 
 
FILED 
 
JUN 8, 2021 
 
Sheila T. Reiff 
Clerk of Supreme Court 
 
 
 
 
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review of an unpublished opinion of the court of appeals 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  
                     
1 Southwest Airlines Co. v. DOR, No. 2019AP818, unpublished 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   
 
2 
 
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. 
                     
2 All references to the Wisconsin Statutes are to the 2017-
18 version unless otherwise indicated. 
No. 
2019AP818   
 
3 
 
¶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 
                     
3 Wisconsin 
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) 
No. 
2019AP818   
 
4 
 
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.   
No. 
2019AP818   
 
5 
 
"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. 
No. 
2019AP818   
 
6 
 
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. 
No. 
2019AP818   
 
7 
 
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 
                     
5 The 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) 
No. 
2019AP818   
 
8 
 
¶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. 
No. 
2019AP818   
 
9 
 
¶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 
No. 
2019AP818   
 
10 
 
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 
No. 
2019AP818   
 
11 
 
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 
                     
8 DOR 
additionally 
argues 
that 
the 
voluntary 
payment 
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. 
No. 
2019AP818   
 
12 
 
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. 
No. 
2019AP818   
 
13 
 
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 
No. 
2019AP818   
 
14 
 
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., 
                     
10 Whether 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. 
No. 
2019AP818   
 
15 
 
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. 
                     
11 To 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. 
No. 
2019AP818   
 
 
 
1