Ace Business Desk – The lawsuit is the “first of its kind” in the U.S. to seek class-action relief over noise from a data center, attorneys say as AI projects face growing backlash

Two southwest Michigan residents have filed what their attorneys are calling the first class-action lawsuit in the country over noise from a data center, alleging a Dowagiac facility has created a constant nuisance that has disrupted daily life and hurt property values.

The lawsuit, filed in U.S. District Court for the Western District of Michigan, targets Alliance Cloud Services LLC, which owns and operates the Hyperscale Data Center at 415 E. Prairie Ronde St. in Dowagiac. The complaint alleges that roughly 1,300 residential properties within one mile of the facility have been affected by noise from the site, which operates around the clock.

The lawsuit was filed by Liddle Sheets P.C., a Detroit-based class-action law firm that says it focuses on cases involving residents harmed by neighboring environmental polluters. The firm said it is also investigating claims involving water contamination and odors from other data centers across the country.

The lawsuit comes as Michigan has become a hotspot for data center development, driven by growing demand for artificial intelligence, cloud computing, and high-performance computing. More than 15 data centers have been proposed across the state, while at least 19 Michigan communities, including Detroit, have passed or proposed moratoriums as residents raise concerns about electricity demand, water use, noise, transparency, and potential increases in utility bills.

Attorneys for the Dowagiac residents said the lawsuit is the first of its kind in the U.S. to seek class-action relief over noise from a data center.

The plaintiffs allege the facility’s noise is excessive and constant, making it difficult to enjoy their homes and yards.

“My husband and I have been unable to use our yard since this facility began operating,” plaintiff Lindy Valenzuela said in a statement released by her attorneys. “It is impossible to stay outside for longer than 10 minutes at a time before succumbing to headaches. The noise also penetrates the inside of our house even with the windows closed.”

The lawsuit accuses the data center of creating a nuisance and seeks damages for residents who say the noise has interfered with their ability to use and enjoy their property. The allegations have not been tested in court.

The Dowagiac facility provides artificial intelligence and high-performance computing services, including Bitcoin mining, colocation, and hosting, according to the lawsuit. Attorneys said the data center began operating in early 2025 and runs 24 hours a day, seven days a week.

The legal action follows Hyperscale Data Inc.’s announcement that its subsidiary, Alliance Cloud Services, entered into an agreement to purchase 48.5 additional acres near the Dowagiac site, which would more than double its land holdings there to 83 acres. The company said the acquisition would give it room for future development and help meet rising demand for AI and high-performance computing.

Dowagiac residents have pushed back against the expansion, calling for a moratorium on new or expanded data centers. City officials previously said they learned of the land deal from the company’s press release and had not received permit requests or development proposals tied to the expansion.

The lawsuit adds another front to the debate over data centers in Michigan, where projects have drawn bipartisan skepticism from residents and politicians. Critics warn the facilities can consume enormous amounts of electricity and water, strain the power grid, increase costs for ratepayers, and reshape rural communities.

Those concerns have been especially intense in Washtenaw County, where a proposed $7 billion data center in Saline Township, tied to Oracle, OpenAI, and developer Related Digital, would require 1.4 gigawatts of electricity, about as much power as nearly one million homes. State regulators conditionally approved special power contracts for the project in December, despite objections from Attorney General Dana Nessel, environmental advocates, and thousands of residents who called for more scrutiny.

In Dowagiac, attorneys contend residents were left with little recourse but to sue after being shut out of decisions over the data center’s operations.

“These people had no say in the introduction of this large and loud data center into their otherwise peaceful community,” Laura Sheets, lead attorney on the case, said. “This community just wants to be able to enjoy their homes, and they want the data center to deal with the noise and be a better neighbor.”

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