A Sioux Falls consulting firm is alleging a former employee misappropriated client information to benefit a competing data center project, igniting a legal battle that touches on a significant economic development effort in South Dakota. A1 Development filed a lawsuit on February 19, 2026, against Kyle Peters, a Watertown city councilor, accusing him and his business partner of improperly soliciting clients while Peters was still employed by A1. The dispute centers around confidential information related to potential data center locations and clients in the region, a rapidly growing sector for the state.
The lawsuit, which seeks unspecified damages, claims Peters leveraged his position at A1 to gain access to proprietary data and relationships, then used that knowledge to pursue similar projects with Gemini Family Office. Gemini is currently seeking approvals to build a large-scale data center northeast of Sioux Falls. This data center project has develop into a focal point of economic development discussions in the area, promising significant investment and job creation. The core of the legal claim revolves around the alleged theft of trade secrets and breach of fiduciary duty.
A1 Development and the Brandon Data Center Project
A1 Development is currently coordinating the advancement of a proposed hyperscale data center west of Brandon, South Dakota. The firm’s role involves site selection, permitting, and coordination with local and state officials. The lawsuit alleges that Peters was intimately involved in these efforts while at A1, giving him access to sensitive information about potential sites and client preferences. According to court documents, one client A1 was working with was considering land valued at $170 million in South Dakota for data center development. The Argus Leader reported on the filing of the lawsuit on February 27, 2026.
Peters’ Role and Connection to Governor Noem
Kyle Peters’ background includes prior service in the South Dakota Governor’s Office of Economic Development under Governor Kristi Noem, who is likewise his mother-in-law. He joined A1 Development in May 2021. The Dakota Scout details Peters’ involvement with Gemini Family Office and his representation of the company before the South Dakota Legislature. Gemini is actively pursuing a site in northeastern Sioux Falls for its data center project. The connection to Governor Noem adds another layer of scrutiny to the case, given the state’s active promotion of data center development.
Legal Response and Dispute of Allegations
Steve Landon, an attorney representing Kyle Peters, has disputed the accusations made in the lawsuit. Details of the defense strategy have not been publicly released, but Landon has indicated that Peters intends to vigorously defend himself against the claims. The legal proceedings are expected to involve discovery, depositions, and potentially a trial. The outcome of the case could have significant implications for the competitive landscape of data center development in South Dakota and the protection of trade secrets in the consulting industry.
Stakeholders in the Data Center Debate
The lawsuit impacts several key stakeholders. A1 Development seeks to protect its business interests and reputation. Gemini Family Office is pursuing a major investment in Sioux Falls and could face delays or complications due to the legal dispute. The city of Sioux Falls and the state of South Dakota are both keen to attract data center investment, and the lawsuit could potentially deter future projects. Local landowners and potential employees are also affected, as the data center projects promise economic benefits to the region.
Timeline of Key Events
- May 2021: Kyle Peters joins A1 Development.
- February 19, 2026: A1 Development files a lawsuit against Kyle Peters and his business partner.
- February 27, 2026: News of the lawsuit becomes public.
The broader context of this legal dispute is the increasing demand for data center capacity driven by cloud computing, artificial intelligence, and the growth of data-intensive applications. South Dakota has been actively marketing itself as a favorable location for data centers, citing its low energy costs, favorable tax climate, and central location. The competition for these projects is fierce, and the lawsuit highlights the lengths to which companies will go to secure a competitive advantage. The ongoing development of a hyperscale data center near Sioux Falls is a testament to the state’s growing appeal in this sector, as reported by SiouxFalls.Business.
The next scheduled event in the case is a hearing date yet to be determined. Further updates will be provided as they become available. This legal battle over data center clients underscores the high stakes involved in attracting these major investments to South Dakota.
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