FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

SEPT 8, 2008

THOMAS K. KAHN

CLERK

Honorable Jane A. Restani, Chief Judge, United States Court of International Trade,

*

sitting by designation.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 06–16606

D.C. Docket No. 06-10061-CV-KMM

JOSEPH CACHIA, 

Plaintiff–Appellant, 

versus

ISLAMORADA, VILLAGE OF ISLANDS,

Defendant–Appellee.

Appeal from the United States District Court

for the Southern District of Florida

(September 8, 2008)

Before TJOFLAT and BLACK, Circuit Judges, and RESTANI, Judge. *

RESTANI, Judge:

Plaintiff-Appellant Joseph Cachia (“Cachia”) appeals an order of the United
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States District Court for the Southern District of Florida granting dismissal in

favor of Defendant-Appellee Islamorada, Village of Islands (“Islamorada”). 

Cachia challenges an Islamorada zoning ordinance on the grounds that its

“formula restaurant” provisions violate the Dormant Commerce Clause. We

reverse and remand to the district court for further proceedings.

BACKGROUND

In January 2002, Islamorada enacted Ordinance 02-02, which prohibits

“formula restaurant[s]” and limits the size of “formula retail” establishments. (See

Ordinance 02-02 §§ 6.4.3–4(a–b), available at R.E. Tab 2 at 22 (“Ordinance

02-02” or “the ordinance”).) The ordinance defines a formula restaurant as: 

[a]n eating place that is one of a chain or group of three (3) or more

existing establishments and which satisfies at least two of the

following three descriptions: (1) has the same or similar name,

tradename, or trademark as others in the chain or group; (2) offers any

of the following characteristics in a style which is distinctive to and

standardized among the chain or group: i. exterior design or

architecture; ii. uniforms, except that a personal identification or

simply logo will not render the clothing a uniform; or iii. has a

standardized menu; or (3) is a fast food restaurant. 

(Id. at § 6.4.1(d).) The ordinance states that “[f]ormula restaurants shall not be

permitted in any zoning district of [Islamorada].” (Id. at § 6.4.3.) 

Cachia is an owner and operator of an independent retail store in

Islamorada. See Cachia v. Islamorada, No. 06-10061, slip op. at 1 (S.D. Fla. Oct.
Cachia’s arguments on appeal address only the district court’s dismissal of the claim 1

arising under the Dormant Commerce Clause. (See Cachia Br. xi, 1.)

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13, 2006). In 2005, Cachia entered into a Letter of Intent to sell his property to a

corporation planning to convert the property into a Starbucks coffee shop. Id. at 2. 

When the corporation was informed by Islamorada that such use would be

prohibited by the ordinance, it notified Cachia that it no longer intended to

purchase the property. Id. 

Cachia brought a complaint against Islamorada before the district court

seeking damages and injunctive relief on the grounds that the ordinance’s formula

restaurant provisions violated the Equal Protection, Due Process, Privileges and

Immunities, and Commerce Clauses of the United States Constitution, as well as

the terms of the Florida Constitution. Id. With respect to the claim arising under 1

the Dormant Commerce Clause, Cachia alleged that the ordinance “effectively

prohibits ‘Formula Restaurants’ in any zoning district within [Islamorada’s]

geographical limits,” (Compl. ¶ 5), “the primary purpose of the Ordinance is

economic protection of small, single unit, locally-owned businesses,” (id.), the

ordinance “directly regulates or discriminates against interstate commerce and

favors in-state economic interests over out-of-state interests,” (id. at ¶ 17), and the

ordinance “does not advance a legitimate local purpose that cannot be adequately
This appeal was consolidated for oral argument with Island Silver & Spice, Inc. v. 2

Islamorada, No. 07-11418, which is disposed of in a separate opinion, filed concurrently with

this opinion. 

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served by reasonable nondiscriminatory alternatives,” (id.). 

On October 13, 2006, the district court granted Islamorada’s Motion to

Dismiss, finding, inter alia, that Cachia failed to state a claim because the

ordinance’s formula restaurant provision does not violate the Dormant Commerce

Clause. Cachia, at 6–8. The district court found that the ordinance has only an

indirect effect on interstate commerce, is supported by a legitimate state interest,

and the burden on interstate commerce does not exceed local benefits. Id. at 8. 

Cachia appeals. 

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JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction over the appeals of final decisions of the district court

pursuant to 28 U.S.C. § 1291. We exercise de novo review over the district

court’s decision to grant a motion to dismiss. Doe v. Pryor, 344 F.3d 1282, 1284

(11th Cir. 2003). 

DISCUSSION

The Dormant Commerce Clause prohibits “regulatory measures designed to

benefit in-state economic interests by burdening out-of-state competitors.” New

Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273 (1988). To determine whether a
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regulation violates the Dormant Commerce Clause, we apply one of two levels of

analysis. See Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S.

573, 578–79 (1986). If a regulation “directly regulates or discriminates against

interstate commerce,” or has the effect of favoring “in-state economic interests,”

the regulation must be shown to “advance[ ] a legitimate local purpose that cannot

be adequately served by reasonable nondiscriminatory alternatives.” Bainbridge

v. Turner, 311 F.3d 1104, 1109 (11th Cir. 2002) (quotations and citations

omitted). If a regulation is directed equally at interstate and local businesses, and

has “only indirect effects on interstate commerce,” we “examine[ ] whether the

State’s interest is legitimate and whether the burden on interstate commerce

clearly exceeds the local benefits.” Brown-Forman, 476 U.S. at 579 (citing Pike v.

Bruce Church, Inc., 397 U.S. 137, 142 (1970)). 

The district court correctly determined that the formula restaurant provision

does not facially discriminate against interstate commerce. See Cachia, at 7. The

district court also found that the ordinance equally targets restaurants “regardless

of their state of citizenship or the locations of their other stores,” and that any

effect on interstate commerce is therefore “indirect.” Id. at 8. Cachia challenges

the district court’s approach, arguing that the provision should instead be subject

to elevated scrutiny because it favors in-state interests by eliminating the
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economic advantages of operating a national chain restaurant. 

Cachia’s argument relies on Hunt v. Washington State Apple Advertising

Commission, 432 U.S. 333 (1977), which applied elevated scrutiny to a North

Carolina statute requiring the use of a USDA grading system for apples sold

within the state because the regulation had “the practical effect of . . .

discriminating against” growers from Washington, who routinely applied a

superior grading system. Id. at 350. Hunt found that the requirement

impermissibly “rais[ed] the costs of doing business in the North Carolina market

for Washington apple growers and dealers, while leaving those of their North

Carolina counterparts unaffected.” Id. at 351. In the instant case, the ordinance’s

formula retail provision does not simply raise the costs of operating a formula

restaurant in Islamorada, but entirely prohibits such restaurants from opening. 

(See Ordinance 02-02 § 6.4.3.) Although the ordinance also prohibits formula

restaurants that originate from within the state of Florida, the regulation serves as

an explicit barrier to the presence of national chain restaurants, thus preventing the

entry of such businesses into competition with independent local restaurants. 

Islamorada asserts that the ordinance is not subject to elevated scrutiny

because it does not prevent all out-of-state restaurants from entering the local

market, and targets only those meeting the “formula restaurant” definition set forth
The Maryland statute challenged in Exxon provided “that a producer or refiner of 3

petroleum products (1) may not operate any retail service station within the State, and (2) must

extend all ‘voluntary allowances’ uniformly to all service stations it supplies.” Exxon, 437 U.S.

at 119–20. In particular, Exxon targeted “vertical organization in the petroleum industry,” and

did not “discriminate against interstate petroleum producers and refiners in favor of locally based

competitors because . . . there were no such local producers or refiners to be favored.” Lewis v.

BT Inv. Managers, Inc., 447 U.S. 27, 41, 40–41 (1980). 

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by the regulation. Islamorada points to Exxon Corp. v. Governor of Maryland,

437 U.S. 117 (1978), which held that the fact that the burden of a regulation fell

onto a subset of out-of-state retailers “[did] not, by itself, establish a claim of

discrimination against interstate commerce.” Exxon, 437 U.S. at 126. Exxon

found that, where in-state companies would “have no competitive advantage over

out-of-state [companies],” the elevated scrutiny approach used in Hunt did not

apply. Id. 3

Although Exxon rejected the notion “that the Commerce Clause protects [a]

particular structure or methods of operation in a retail market,” id. at 127, the

ordinance’s complete prohibition of chain restaurants sharing certain

characteristics amounts to more than the regulation of methods of operation, and

serves to exclude national chain restaurants from competition in the local market. 

While the ordinance does not facially discriminate between in-state and

out-of-state interests, its prohibition of restaurants operating under the same name,

trademark, menu, or style is not evenhanded in effect, and disproportionately
The ordinance states the main purposes for its enactment, including the preservation of 4

the “unique and natural characteristics of the community”; encouragement of “small scale uses,

water-oriented activities, a nationally significant natural environment, quiet shorelines and

passive relaxation opportunities”; maintenance of “a small town community”; and avoidance of

“‘auto-urban’ development influences” and the threat of “the potential proliferation of ‘formula’

restaurants and retail establishments . . . [which] diminish the unique character of the Village by

offering standardization of architecture, interior design and decor, . . . [and] are more likely to

(continued...)

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targets restaurants operating in interstate commerce. (See Ordinance 02-02

§ 6.4.3; Compl. ¶ 5.) The ordinance’s prohibition therefore imposes more than an

indirect burden on interstate restaurant operations, and has the practical effect of

discriminating against interstate commerce. Accordingly, the elevated scrutiny

test applies. See Hunt, 432 U.S. at 353. 

Under the elevated scrutiny test, the burden is on the local government to

show both that the regulation is supported by a legitimate local purpose and that

there are no reasonable nondiscriminatory alternatives adequate to serve that

purpose. Id.; Bainbridge, 311 F.3d at 1109. Cachia’s complaint alleges that “the

primary purpose of the Ordinance is economic protection of small, single unit,

locally-owned businesses,” (Compl. ¶ 5), which is not a legitimate local purpose,

and that the ordinance “does not advance a legitimate local purpose that cannot be

adequately served by reasonable nondiscriminatory alternatives,” (id. at ¶ 17). 

Although the district court noted that “[t]he Ordinance itself articulates the

Village’s interests in enacting [it],” Cachia, at 8, the district court did not fully

4
(...continued) 4

increase the traffic congestion on the already overcrowded streets and increase litter, garbage and

rubbish offsite.” (Ordinance 02-02 at Preamble.) 

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consider, and could not consider on the record at this stage: 1) whether the

ordinance’s stated interests constitute a legitimate local purpose; 2) whether the

prohibition of formula restaurants adequately serves such purpose; or 3) whether

Islamorada could demonstrate the unavailability of nondiscriminatory alternatives,

such as zoning ordinances or building codes, to fulfill the same needs. See id. 

The complaint adequately states a claim for relief, and further proceedings are

necessary to develop a record upon which these issues may be properly considered

by the district court. 

CONCLUSION

Accordingly, we REVERSE the district court’s grant of dismissal in favor

of Islamorada and REMAND for further proceedings consistent with this opinion.