Island Silver & Spice, Inc. v. Islamorada

In January 2002, Islamorada (defendant) enacted Ordinance 02-02 (the ordinance), which restricted formula retail establishments to limited street-level frontage and total square footage. Formula retail establishments were defined as retail sales establishments that were required to maintain standardized services or merchandise, trademark, logo, service mark, décor, uniforms, or other elements typical of chain retail stores. The ordinance was enacted to preserve Islamorada’s small-town characteristics, protect the natural environment, and prevent traffic increases. Island Silver (plaintiff) had owned an independent retail store in Islamorada. In June 2002, Island Silver contracted to sell its property to a developer who intended to convert the Island Silver store into a Walgreens drug store. The ordinance prevented the developer from establishing a Walgreens, so the developer protested the ordinance’s restrictions through the local administrative process. The developer was unsuccessful and withdrew from the purchase. Island Silver then brought a complaint against Islamorada in district court. Island Silver argued that the ordinance’s formula retail provisions were unconstitutional. Island Silver argued that Islamorada did not have any historical features or other features that distinguished it as a small town. Island Silver argued that the ordinance served no purpose because Islamorada was home to several preexisting formula retail stores and the ordinance did not restrict large nonchain businesses and there were preexisting regulations in place designed to protect nature and the environment. The district court found that the ordinance violated the Dormant Commerce Clause. The district court invalidated the ordinance and granted injunctive and monetary relief in favor of Island Silver. Islamorada appealed.