Court Opinion

ID: 4693586
Source: CourtListenerOpinion
Date Created: 2021-06-08 13:21:35.939452+00
Date Added: 2024-06-11T08:05:23.699587
License: Public Domain

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                                        (2020 – unpublished)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,                             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