Judge Sammartino Dismisses Imperial Valley Computer Manufacturing Lawsuit

• A federal judge dismissed all claims by Imperial Valley Computer Manufacturing (IVCM) against the City of Imperial regarding its $10 billion data center project.
• Judge Janis Sammartino ruled that IVCM failed to exhaust administrative remedies, such as appealing to the city's planning commission, before claiming a denial of due process.
• The court found IVCM did not provide sufficiently similar comparators to support its claim of unequal treatment by the city.
• Retaliation claims were largely dismissed, with the judge noting that while the city's lawsuit against the county could have a chilling effect, IVCM did not prove retaliatory intent.
• The ruling emphasizes the need for developers to fully pursue administrative appeals and present strong evidence for claims of discrimination or retaliation in land use disputes.

Developers must navigate the full administrative ladder, including internal appeals to municipal bodies, before a court will entertain claims of procedural unfairness.

Imperial Valley Computer Manufacturing (IVCM) initiated plans for a substantial data center project, encompassing three interconnected facilities across 194 acres in southeastern California's Imperial Valley. This ambitious undertaking, valued at an estimated $10 billion, was projected to generate 1,688 construction jobs and 100 permanent positions within the region. The proposed site spanned areas within the City of Imperial, Imperial County, and El Centro, near the U.S.-Mexico border.

However, the developer encountered significant resistance from the City of Imperial. IVCM alleged that the city deliberately obstructed its progress by insisting on its own discretionary review processes and failing to adhere to established deadlines. Specifically, in July 2025, the city's Community Development Director, Othon Mora, denied IVCM's initial site plan, citing requirements for an environmental assessment and a zoning change. A subsequent application was also rejected, leading to its withdrawal by the company. Following City Manager Dennis Morita's assertion that a public review process was mandatory, IVCM relocated the project to county land, claiming the city then launched a concerted effort to undermine the data center's development.

U.S. District Judge Janis Sammartino recently dismissed all claims brought by IVCM against the City of Imperial and its officials, though she did grant the company an opportunity to amend its complaint. The developer had accused the city of denying it a fair process, treating it unfairly compared to other developers, and retaliating against its efforts. Judge Sammartino found IVCM's due process claim to be without merit because the company failed to utilize available administrative remedies.

The court highlighted that IVCM possessed a clear pathway to challenge the city's decisions, including appealing to the city's planning commission and subsequently seeking judicial review in state court, but chose not to pursue these avenues. Judge Sammartino emphasized that a developer cannot abandon its application and then assert a denial of due process. Furthermore, the judge rejected IVCM's argument that a missed 15-day deadline by the city automatically constituted approval, noting that the city's zoning code grants the planning director discretionary authority over site plan applications, thereby precluding a constitutional right to automatic approval.

Regarding the claim of unequal treatment, Judge Sammartino also found IVCM's arguments unconvincing. The developer had compared its data center project to disparate industrial developments such as warehouses, food banks, and fertilizer manufacturers, rather than other data centers. The court deemed it rational for the city to treat a 675,000 square foot data center differently than a 289,000 square foot warehouse. While acknowledging the possibility that more comparable projects might exist within the city, the judge noted that IVCM had not presented such evidence in its initial complaint, allowing for an amendment on this specific point.

IVCM's allegations of retaliation centered on various city actions, including its review processes, public statements, and a lawsuit filed by the city against Imperial County in December 2025. This lawsuit aimed to invalidate the county's grading permit for IVCM's project, which the developer characterized as a sham. Judge Sammartino determined that the city's review process, alleged interference with a water agreement, and public statements were not severe enough to deter an ordinary person from exercising their First Amendment rights, thus failing to establish a chilling effect.

However, the judge did acknowledge that the city's lawsuit against Imperial County could potentially have a chilling effect on a developer's First Amendment activities. Despite this, IVCM still needed to demonstrate that the city initiated the lawsuit with retaliatory intent. A California Superior Court had previously ruled in the city's favor in September, concluding that the county's grading permit was not a ministerial approval that officials were obligated to issue automatically. Judge Sammartino, while not needing to concur with the state court's findings on the merits, concluded that the city had probable cause to file its lawsuit, given its success in the state court proceedings.

This ruling in the Imperial Valley Computer Manufacturing lawsuit dismissal underscores a critical principle in land use and development law: the necessity for developers to exhaust all available administrative remedies before seeking judicial intervention. The court's firm stance that IVCM could not bypass the city's planning commission appeal process and then claim a denial of due process sets a clear precedent. Developers must navigate the full administrative ladder, including internal appeals to municipal bodies, before a court will entertain claims of procedural unfairness.

Furthermore, the decision highlights the high evidentiary bar for proving claims of unequal treatment and retaliation against municipalities. For allegations of disparate treatment, developers must present clear evidence of genuinely similar comparators, rather than broadly analogous projects. In the context of retaliation, even if a city's actions, such as filing a lawsuit, could be seen as having a chilling effect, the developer must still definitively prove that the city acted with an improper, retaliatory motive. The court's finding that the City of Imperial had probable cause to sue, given its success in state court, demonstrates the difficulty in overcoming the presumption of legitimate governmental action.

This ruling emphasizes the critical need for developers to exhaust all administrative remedies, such as appealing to a city's planning commission, before pursuing judicial review for land use decisions, particularly regarding due process claims. It also illustrates the high evidentiary bar for proving retaliation and unequal treatment, requiring clear evidence of similar comparators and improper motive, even when a city's actions may seem obstructive.

Source: Original reporting via Courthouse News Service