California city fends off data center developer’s sabotage claims

A developer said the city illegally took several actions to prevent its data center plans for 194 acres in California's Imperial Valley. A federal judge wasn't convinced by the claims.(CN) — A federal judge on Monday threw out a developer’s lawsuit, in which it claimed the city of Imperial impeded its plan for three contiguous data centers on 194 acres in southeastern California.U.S. District Judge Janis Sammartino dismissed every claim brought by Imperial Valley Computer Manufacturing, known as IVCM, against the city and its officials. The judge, however, granted the company leave to amend its complaint.The company accused the city of denying it a fair process, treating it worse than similar developers and retaliating against it.The land spans the city of Imperial, Imperial County and El Centro, near the U.S.-Mexico border. The company said the city got in the way of its plans by insisting on its own discretionary review and ignoring deadlines.The developer also claimed the $10 billion projectwould have brought 1,688 construction jobs and 100 permanent jobs to the Imperial Valley.The city’s community development director, Ohtan Mora, denied the company’s first site plan in July 2025 and said it needed an environmental assessment and a zoning change. He rejected a second application, and the company withdrew it the next day.After City Manager Dennis Morita told the company a public review process was necessary, it moved the project to county land. The developer says the city then “launched a coordinated campaign to sabotage the data center.”Sammartino found the company’s fair-process claim fell apart, because it had a way to challenge the city’s decision and didn’t use it. It could have appealed to the city’s planning commission and then sought judicial review in state court.“IVCM may not abandon its application and then claim it was denied due process,” the George Bush appointee wrote.IVCM argued the city missed a 15-day deadline to act, so its plans were automatically approved. Sammartino said that did not give the company a constitutional right to approval, because the city’s zoning code gives the planning director discretion over site plan applications.The company said the city treated its plans differently from other industrial projects. Sammartino disagreed. She noted the company pointed to developments like warehouses, food banks and fertilizer makers — not other data centers.“The court finds it rational that defendants would decide to treat a 675,000 square foot data center differently than a 289,000 square foot warehouse,” she wrote.She said the company could amend that claim.“It is possible that sufficiently similar comparators exist in the city,” she wrote. “But IVCM has not alleged them here.”The company’s retaliation claims involved several actions, including the city’s review process, public statements and a lawsuit the city filed against Imperial County in December 2025. The city had asked a judge to undo the county’s grading permit for the project. The company called the lawsuit a sham.Sammartino found the company’s claims about the city’s review process, interference with a water agreement and public statements did not sufficiently prove those actions would discourage an ordinary person from exercising their First Amendment rights.Sammartino did find the lawsuit could have had a chilling effect, but said the company still needed to show the city filed it in retaliation.A California Superior Court granted the city’s petition in September, finding the county’s grading permit was not a ministerial approval that officials had to issue automatically. Sammartino said she did not need to agree with the merits of that ruling. As the city had prevailed in state court, she found it had probable cause to bring the lawsuit.She added that the First Amendment also protects the right to take a complaint to court, shielding the city’s lawsuit from the company’s retaliation claim.IVCM claimed Councilmember Katherine Burnworth and the local nonprofit Comite Civico del Valle shared an aim: to create “leverage necessary for CCV to demand a settlement.”“Although improper, this motive is not retaliation,” Sammartino wrote.She also noted the company’s complaint spends 35 paragraphs on the Imperial Irrigation District’s actions.“However, IID is not a defendant in this lawsuit,” she wrote.Sammartino found some parts of the company’s claims plausible, but ultimately dismissed all the claims, including the company’s claim seeking to hold the city liable for its officials’ conduct.The company must amend its claims within 30 days.Representatives for IVCM and the city of Imperial didn’t immediately respond to requests for comment.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads