Nevada data center giant Switch once again has failed to douse a brushfire litigation with potential rival Tract Capital Management in Storey County’s booming Tahoe-Reno Industrial Center.

Storey County District Judge Jason Woodbury on May 2 denied Switch’s motion to dismiss Tract’s counterclaims in a lawsuit over its attempt to develop land for future use as a colocation data center. If Tract prevails, it could substantially increase competition for data center clients at the industrial park.

Tract purchased property inside and outside the industrial site in August 2023. Two months later, Switch sued Tract claiming it had violated a land covenant at the park. In March 2024, a Storey County judge denied in part Switch’s motion for a preliminary injunction, ruling that Tract’s land and development plan doesn’t violate the park’s colocation rules.

In January, Switch filed a motion to dismiss Tract’s counterclaims that Switch, its founder Rob Roy and DigitalBridge CEO Marc Ganzi have interfered with its development efforts, including its plans to build a public road and right-of-way to its own property. On May 2, a Storey County judge denied Switch’s motion, meaning the case can go forward.

That figures to complicate matters for Switch. Among Tract’s exhibits are court documents from previous litigation involving Switch, which portray Roy and the company in a harsh light.

In denying the company’s efforts to dismiss the Tract counterclaims, Woodbury recounted some of the allegations, including that Switch, Roy, DigitalBridge and Ganzi “each stand to separately gain from suppressing competition from Tract in this District in order to improve the value of an impending public offering of Switch shares.”

Tract accuses Switch of a history of unethical business practices and is especially tough on Roy, claiming his conduct “is often separately motivated by personal animosity.” In its 65-page answer and counterclaim to the lawsuit, Tract attorneys assert “Switch and its CEO Rob Roy are notorious for harassing perceived rivals to deter any entrants who might seek to compete with them in the state of Nevada.”

Among the exhibits in the case are emails from Switch executives that appear to show the company’s efforts to use social media to degrade rivals. While it’s hardly the stuff of a Succession episode, it paints Nevada’s data center darling in a less glowing hue.

Founded in 2000, Switch is among the data center industry’s success stories. In low-tax Nevada, it boasts of zero carbon emissions, power efficiency and low-water consumption. By 2015, it was fully embraced by the state when it landed a tax abatement break for its Las Vegas and Storey County facilities. It pays a 2 percent sales tax and a 75 percent reduction in its property taxes for 15 years.

At the time, Gov. Brian Sandoval heralded the plan as the start of a growing tech-related boom in the state. In his State of the State address, he said, “This will make Nevada the most digitally connected state in the United States of America.”

With an $11 billion acquisition by DigitalBridge and its affiliated IFM investors, Switch has grown from its Tahoe-Reno park and Las Vegas campuses to centers in Austin, Texas, Atlanta and Grand Rapids, Michigan, with more expansion plans in progress.

Nationally, data centers continue to make headlines for their importance to the burgeoning use of artificial intelligence and the digital world generally. They also are being scrutinized for their outsized consumption of power and water. Critics say their rapid growth places undue strain on power grids and diminishing water supplies. For its part, Switch’s website makes it clear the company is power and water smart.

Switch failed in its effort to dismiss the damning counterclaims, but this story is a long way from being finished. And the smoke is building.

John L. Smith is an author and longtime columnist. He was born in Henderson and his family’s Nevada roots go back to 1881. His stories have appeared in New Lines, Time, Readers Digest, Rolling Stone, The Daily Beast, Reuters and Desert Companion, among others.