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Northwest Airlines, Inc. v. Metropolitan Airports Commission

December 16, 2003

NORTHWEST AIRLINES, INC., APPELLANT,
v.
METROPOLITAN AIRPORTS COMMISSION, RESPONDENT.



Minge, Judge, dissenting Ramsey County District Court File No. 62-C2-02-011974

Considered and decided by Randall, Presiding Judge, Minge, Judge, and Poritsky, Judge.*fn1

SYLLABUS BY THE COURT

1. A justiciable controversy must exist before the courts have jurisdiction to render a declaratory judgment.

2. The exhaustion of administrative remedies is required under Minn. Stat. §á473.608, subd. 17(6) (2000).

3. The exhaustion of administrative remedies is not required if there is a direct challenge to the validity or the constitutionality of a statute or ordinance.

The opinion of the court was delivered by: Randall, Judge

Affirmed

OPINION

Appellant contests the district court's dismissal of its declaratory judgment action, in which appellant sought a determination that Ordinance 87, enacted and enforced by respondent, violated Minn. Stat. § 473.651 (2002) and is beyond respondent's authority under Minn. Stat. § 473.651. Appellant argues that it is challenging the validity of a legislative act, and thus the doctrine of exhaustion does not apply and the district court is not deprived of subject matter jurisdiction. We affirm.

FACTS

In 1943, the Minnesota Legislature created the Metropolitan Airports Commission (respondent) to promote safe and efficient air travel throughout the state of Minnesota. 1943 Minn. Laws ch. 500, § 1. Respondent owns and operates the Minneapolis-St. Paul International Airport (MSP) as well as a system of six reliever airports in the Minneapolis-St. Paul metropolitan area. The reliever airports generally serve smaller corporate and private aircraft. They are designated as "reliever airports" because they relieve traffic and congestion from MSP, which is dedicated primarily to commercial airline operators such as Northwest Airlines (appellant).

Pursuant to Minn. Stat. § 473.651 (2002), respondent is specifically empowered to determine the charges for tenants at the airports that it operates. Under Minn. Stat. §á473.608, subd. 13(b) (2002), respondent can use funds received from any source to pay the costs of operating, maintaining, and improving any of the properties. Additionally, respondent has the power to adopt ordinances pursuant to Minn. Stat. § 473.608, subd. 17 (2002).

Due to a growing disparity between reliever airports' revenues and expenses, respondent's Board of Commissioners adopted Ordinance 87 on September 21, 1998. This ordinance established rates at reliever airports for tenants who have signed leases that contain "rental adjustment" clauses that allow respondent to amend rent unilaterally. The ordinance imposed a yearly rent increase for the approximately 800 reliever-airport tenants who have the "rental adjustment" provisions in their leases. In 2007, the yearly rent increases cease, and the rents are adjusted according to the Consumer Price Index for the Minneapolis-St. Paul area. In determining the rates for Ordinance 87, respondent sought input from many sources, including appellant and other MSP tenants. Appellant chose not to participate in the hearings.

Ordinance 87 became effective on January 1, 1999. By October 2002, appellant began to express its dissatisfaction with the level of subsidization received by the reliever airports. Appellant complained that since the inception of Ordinance 87, the reliever airports have been operated each year at multi-million dollar deficits. Because rates charged to reliever-airport tenants do not cover the total operating costs of the reliever airports, revenues arising out of MSP operations are used to subsidize the costs of operating the reliever airports. Thus, appellant claimed that this deficiency results in tenants and users at MSP paying much higher rents and fees to subsidize operations of reliever airports.

To correct the situation, appellant sought a declaration in district court that Ordinance 87 is invalid because it does not comply with Minn. Stat. § 473.651. This statute requires that rental rates must be "established with due regard to the value of the property and improvements used and the expense of operation to the corporation." Appellant argued that it is in direct competition with reliever-airport tenants, and that subsidization of reliever airports puts appellant at a "competitive disadvantage." The district court determined that appellant did not exhaust the administrative remedy provided by Minn. Stat. § 473.608, subd. 17(6), and thus the court dismissed the case for lack of subject matter jurisdiction. This appeal followed.

ISSUE

Did the district court commit reversible error by dismissing appellant's case for lack of subject matter jurisdiction because appellant did not ...


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