## Facts

- Islamorada, Florida enacted Ordinance 02-02 in 2002, prohibiting “formula restaurants” and restricting “formula retail” through limits on street-level frontage and total square footage.
- The ordinance defined “formula retail” as retail activity required by contract or other arrangement to maintain standardized features such as merchandise/services, trademarks, logos, decor, architecture, layout, or uniforms.
- Island Silver & Spice, Inc. operated an independent retail store in Islamorada.
- Island Silver contracted to sell its property to a developer intending to convert the existing building into a Walgreens in the same footprint.
- The Walgreens project could not satisfy the ordinance’s formula retail restrictions; after unsuccessful local administrative efforts, the developer withdrew from the purchase.
- Island Silver sued, alleging constitutional and state-law violations, including that the formula retail provisions violated the Dormant Commerce Clause.
- The record indicated Islamorada already had several chain businesses and did not similarly restrict large non-chain retailers with comparable physical impacts.
- The district court invalidated the formula retail provisions under the Dormant Commerce Clause and granted injunctive and monetary relief; Islamorada appealed.

## Issues

1. Whether Islamorada’s formula retail restrictions discriminated against interstate commerce in purpose or effect, or otherwise imposed an unconstitutional burden on interstate commerce under the Dormant Commerce Clause.
2. If the ordinance burdened interstate commerce, whether Islamorada proved legitimate local interests that could not be served by reasonable nondiscriminatory alternatives.

## Decision

- The Eleventh Circuit affirmed the district court’s judgment.
- The court held the formula retail provisions violated the Dormant Commerce Clause because they operated in a protectionist manner by targeting chain/formula businesses associated with interstate commerce while leaving comparable non-formula businesses less constrained.
- The court accepted that aesthetics, community character, environmental protection, and traffic concerns can be legitimate interests, but concluded Islamorada failed to show the ordinance’s discriminatory approach was necessary.
- The court upheld the injunction and damages awarded to Island Silver, without needing to resolve other constitutional theories.

## Legal Principles

- State and local laws that facially discriminate against interstate commerce are presumptively invalid and must be justified by a legitimate local purpose that cannot be served by reasonable nondiscriminatory alternatives.
- A facially neutral regulation may still violate the Dormant Commerce Clause if it has a discriminatory purpose or effect, including functional favoritism for local economic interests.
- Economic protectionism is not a legitimate local purpose under the Dormant Commerce Clause.
- Land-use goals (aesthetics, environmental protection, traffic control) generally must be pursued through evenhanded, impact-based measures (e.g., size, design, parking, trip generation) rather than by singling out business models tied to interstate commerce.
- When less discriminatory alternatives can reasonably achieve the stated objectives, a regulation that targets interstate commerce-linked enterprises cannot stand.

## Conclusion

The Eleventh Circuit held that Islamorada’s restrictions on “formula retail” were unconstitutional because, in practical operation, they protected local and non-chain businesses from interstate chain competition without a sufficient showing that neutral, impact-based zoning tools could not achieve the municipality’s stated goals.


Island Silver & Spice, Inc. v. Islamorada, 542 F.3d 844 (11th Cir. 2008)