Unreported / Non-Citable
Background
Imperial Valley Computer Manufacturing, LLC (IVCM) purchased 194 acres across the City of Imperial, the County of Imperial, and El Centro intending to construct three contiguous data centers. IVCM alleged that during the permit application process, the City and other defendants obstructed the project by insisting on discretionary review and ignoring statutory deadlines. After IVCM relocated the proposed project to County land, it alleged defendants launched a coordinated campaign to sabotage the data center, and this litigation followed. Its due process and equal protection claims concerned the City application process; its First Amendment claim concerned actions involving the County.
IVCM met the City's Community Development Director in September 2024; the director confirmed a data center was a permitted use in the contemplated industrial zone. IVCM submitted its first site plan application in March 2025, but the director requested revised plans and zoning clarification because data centers and substations were not listed uses. The director denied the application in July 2025, determining an environmental assessment and zoning amendment were necessary. A second application on industrial land was rejected twenty-nine days later, and IVCM withdrew it the next day.
Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6) and requested judicial notice of the City's zoning code, a related state court petition, and a superior court minute order. IVCM did not oppose the request. The court granted judicial notice, finding the exhibits were municipal ordinances and related state court proceedings.
The Court’s Holding
The court dismissed IVCM's procedural due process claim with leave to amend on multiple independent grounds. Because IVCM withdrew its application rather than appealing the director's decision to the Planning Commission or seeking Superior Court review, an adequate remedy for error was available. The zoning code also vested the planning director with significant discretion to approve, deny, or modify applications, so IVCM failed to allege a protected property interest in site plan approval. The court rejected the argument that the director's failure to act within fifteen days created automatic approval, holding that deemed-approved language in an otherwise discretionary scheme does not create a constitutionally protected interest, and it found vested rights inapplicable because IVCM did not allege reliance on any purported automatic approval. The court therefore did not reach deprivation or the adequacy of process.
The court dismissed the class-of-one equal protection claim with leave to amend. Although IVCM plausibly alleged intentional conduct by City Manager Morita and Director Mora, it failed to identify sufficiently similar comparators: its proposed 675,000 to 785,000 square foot data center was more than twice the size of the largest approved comparator and differed materially in power requirements, water use, and battery storage hazards. The court found a rational basis for treating the large data center differently from smaller industrial uses such as warehouses and distributors.
The court dismissed the First Amendment retaliation claim with leave to amend. IVCM adequately alleged protected activity and that the City's petition against the County could chill a person of ordinary firmness, but the other alleged acts—the site plan process, the El Centro water agreement, and public statements—did not. As to the petition, IVCM failed to allege retaliatory motive: the Superior Court had granted the City's petition, establishing probable cause, and the Noerr-Pennington doctrine bars Section 1983 liability for non-sham petitioning. The court also dismissed the Monell claim because IVCM failed to allege any underlying constitutional violation.
Key Takeaways
- A developer that withdraws its application instead of pursuing available administrative appeals and judicial review cannot state a procedural due process claim.
- A discretionary permitting scheme defeats any protected property interest in site plan approval, and deemed-approved deadline language does not change that result.
- Class-of-one equal protection claims require comparators similar in all material respects; differences in project size, power, water, and hazards defeat the claim.
- Government petitioning supported by probable cause is protected by the Noerr-Pennington doctrine and cannot support a Section 1983 retaliation claim.
- A municipality cannot be liable under Monell absent an underlying constitutional violation.
Why It Matters
The ruling reinforces the high bar for developers challenging local zoning decisions in federal court, emphasizing that available administrative and judicial remedies must be pursued and that discretionary permitting schemes do not create constitutionally protected property interests, even when agencies miss statutory deadlines.
It also clarifies the intersection of First Amendment retaliation and government litigation: a municipality's non-sham state-court petition is protected petitioning activity, and probable cause for that petition defeats any claim that it was motivated by retaliation.