SW Legal studies in Business

Local Ordinance Against Chain Restaurants May Violate Commerce Clause
Description

Appeals court held that the district court must accept a challenge to a local ordinance that prohibits the operation of chain restaurants in a town. Since the ordinance discriminates against interstate commerce, an elevated scrutiny of the ordinance is in order.

Topic Constitutional Law
Key Words

Commerce Clause; Scrutiny; Legitimate Local Purpose

C A S E   S U M M A R Y
Facts

Islamorada, Florida enacted an ordinance prohibiting “formula restaurants” (chain restaurants) from operating in that jurisdiction. Cachia owned an independent retail store in Islamorada. He entered into an agreement to sell his property to a company that would convert it into a Starbucks. When Islamorada told Starbucks it could not operate in the town, Starbucks called off the deal with Cachia, who sued Islamorade for violation of the Commerce Clause and other parts of the Constitution, as the ordinance discriminates against interstate commerce. The district court dismissed his suit. He appealed.

Decision

Reversed and remanded. Because the ordinance completely prohibited chain restaurants, it disproportionally targeted restaurants operating in interstate commerce. In such cases an elevated scrutiny test applies. The trial court must consider several factors: 1) whether the ordinance furthers a legitimate local purpose, 2) whether the prohibition of chain restaurants serves such a purpose, and 3) whether a nondiscriminatory alternative, such as zoning ordinances, could achieve the same objective.

Citation

Cachia v. Islamorada, 542 F.3d 839 (11th Cir., 2008)

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