John L. Smith - June 15th, 2025 at 2:00 AM
Switch’s Tahoe Reno 1 data center inside the Tahoe-Reno Industrial Center in Sparks on Nov. 17, 2024. (David Calvert/The Nevada Independent)
Facts are in dispute, but one look inside Judge Jason Woodbury’s courtroom gave a clear picture of the rising stakes in the battle of rivals in Nevada’s lucrative and competitive data center service industry.
Assembled for a scheduled two-day preliminary injunction hearing at the Carson City courthouse, attorneys and their assistants for Switch Ltd. and Tract Management Company and other parties filled nearly every seat in Department 1. Data center investment giant DigitalBridge is named in the Tract litigation along with its CEO Marc Ganzi and Switch founder and CEO Rob Roy. It was an impressive sight and one that I expect isn’t common at the Carson courthouse.
DigitalBridge, which manages more than $88 billion in infrastructure assets, has a major stake in Switch, and in December 2022 took the company private in an $11 billion deal. Since then, there’s been talk of Switch going public in a $40 billion initial public offering.
One possible clue to the bigger picture is in the emerging data center trade press, where, on May 19, it was reported that investment management firm 26North “is in advanced talks” to acquire DigitalBridge. And there’s no doubt that Switch is a pearl in the DigitalBridge investment portfolio.
In that scenario, questions about the progress of developments and a snarled litigation over a road easement are likely to further complicate the next chapter for DigitalBridge and Switch. It’s not doing Tract any favors, either. It plans to prepare hundreds of acres in the area for future data center development.
This legal battle is approaching the end of its second year. Tract purchased property inside and outside the Tahoe-Reno Industrial Center in August 2023. In October, Switch filed a lawsuit in an attempt to enforce its restrictive covenant at the industrial site that prevents a competing multiple tenant data center, known as a colocation center, from being built. In March 2024, a judge denied in part Switch’s motion for a preliminary injunction, and last month Judge Woodbury denied its motion to dismiss Tract’s counterclaim that includes allegations that Switch has attempted to interfere with its rival’s development efforts.
Did I mention the stakes were getting high?
Thus, the gathering of legal minds. I’ve seen fewer lawyers at a state bar association convention. With hundreds of exhibits and assistants on their computers, as the hearing commenced May 22 it was hard not to ponder all the billable hours piling up.
The scene made it harder to imagine this dispute is over something as simple as a right-of-way issue on undeveloped land in and adjacent to the sprawling Tahoe Reno Industrial Center in Storey County. Switch’s presence at both ends of Nevada has been widely celebrated, its political generosity is easy to track, and it benefits from generous state tax set asides.
Which leads us back to that two-day hearing before Judge Woodbury, in which advocates for both sides discussed road rights-of-way, rocky hills and the need for substantial infrastructure in an area to support the data center boom in a place known for its wild horses and tire-busting terrain. I would call the testimony dry, but to hear experienced engineers describe roads and terrain with precision was a reminder of just how much planning is going into the industrial center.
Roy has been the face of Switch since he founded it in Las Vegas in 2000. He was the man of the hour during Day 1 of the hearing. Several hours, in fact. Roy’s remarkable rise has been well chronicled. In testimony, he described a deep friendship with industrial park founder Roger Norman and his family and estimated he’s bought $150 million in property from them in the past 12 years.
To hear Roy tell it, Tract’s development strategy and the movement of the road easement on its own property poses a serious threat to Switch’s ambitious next phase of development in Northern Nevada. In his testimony, he said the company’s original 1,400-acre campus is 100 percent sold. All 16 buildings are under construction and, “It will take four years by the time the final one gets finished.” He estimated that 3,000 construction workers will work nonstop for the next four years to finish the projects in the pipeline.
Switch attorney Joshua Hamilton accused Tract of moving a road easement on its Peru Shelf land “to the worst possible area of the property or rocky hillside” and reducing the road’s width to an unworkable size incapable of accommodating the infrastructure essential to the development.
Moving the easement and reducing the road to 20-feet wide potentially raises the issue of whether it will be accessible to emergency vehicles. Given the steepness of some of the terrain, that paints a daunting picture.
In testimony, Roy described the necessity of the original easement in dire terms.
“Right now, how it currently stands with a 20-foot easement you would never develop the property,” he said. “We would never get the permitting.”
So, it’s all or nothing, right?
Under cross-examination by attorney Michael Dockterman, Tract’s supposed intransigence was portrayed in a different light. Dockterman showed Roy a document included in the appraisal packet provided by his friend Norman that provided for cooperation on the easement issue.
On Day 2, it was Tract President Matt Spencer’s turn to give testimony. He repeatedly stated that Tract was willing to cooperate with Switch.
“I would like to offer to work with Switch, but they keep suing me,” he said. “So as soon as they stop suing me, I will be happy to work with them.”
At one point in his own testimony, Roy said, “This is just untenable. We have to get this solved so we can move forward and build out our project.”
Presuming these fine executives were being sincere in their testimony, it sounds like both sides need to get that damn road built — and pronto.
It appears Tract senses Switch has overstated its ability to deliver on its development promises.
In his testimony, Roy asserted that if the easement issue were resolved immediately, and presuming a work crew was ready, it would take nine months to build the road and bring what he described as temporary power to a property that figures to use a tremendous amount of it. The collocation units themselves would take at least 16 months to construct.
If Switch is right, then Tract has spent millions of dollars essentially just to hamstring a potential rival. If Tract is correct, Switch has followed a business model that includes undermining rivals through litigation and has made development promises that it’s going to have a hard time keeping.
With another hearing scheduled for June 27, as this case creeps forward, the delays caused by the litigation leave both sides with something to lose. Whether it’s Switch’s latest dramatic expansion or an effort to prepare it for its next chapter for potential investors, by Roy’s own acknowledgment Nevada’s data center success story is under a demanding deadline. With energy costs rising nationally and Trump administration policies threatening to end renewable energy tax credits, the stress on the system only figures to increase.
If Nevada data center darling Switch can’t deliver, then what does that mean to the value of the DigitalBridge investment?
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.
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