CHICAGO -- A couple who filed a lawsuit challenging Minnesota's ability to issue bonds for Northwest Airlines yesterday petitioned the state Supreme Court to review the case.
David Knodell, attorney for the Bloomington, Minn., couple who brought the suit against the state, said the appeal was made because a lower court's decision did not clarify whether or not the state has the authority to issue bonds for Northwest.
"We felt that the constitutional issues should be resolved," Mr. Knodell said. He added that he was not sure if the action would stop the state from issuing bonds to finance the construction of Northwest's maintenance facilities in Duluth and Hibbing.
State officials could not be reached for comment yesterday, but Peter Sausen, assistant state finance commissioner, has said that plans to issue up to $350 million of tax-exempt bonds for the facilities are on hold until the suit is resolved.
A Northwest spokesman said yesterday that the carrier is prepared to proceed with the projects after the lawsuit is resolved.
In June, the Minnesota Court of Appeals upheld a district court's ruling to dismiss the case, but did not preclude similar lawsuits in the future. The appeals court also questioned the viability of the law that permits the sale of $620 million of bonds by the state and Minneapolis/St. Paul Airports Commission to assist the carrier.
Appeals Court Judge Gary Crippen wrote that the appeals court opinion stood as a "legal cloud" over all state-sold bonds using that same law.
The suit claims the state law violates a state constitutional ban on "public taxation for a private purpose."
The appeals court upheld the Ramsey District Court's dismissal of the suit in April on grounds that the plaintiffs did not comply with the lower court judge's order to file a $30 million surety bond with the court. Under Minnesota law, a judge can order a plaintiff to file a surety bond if a lawsuit against a government entity could result in costly delays.
Mr. Knodell said his client's petition requests the Supreme Court to reverse the appeals court's decision and remand the case to the district court for a determination on the merits of the suit. The state has 20 days to respond to the petition, he said, and the Supreme Court has 40 days to announce whether it will hear the case.
Of the $620 million that the state and airports commission has agreed to issue for the airline, only $270 million of taxable bonds were sold earlier this year by the airports commission.