Zayo: Markley Group seeks $80 million in data center litigation with Zayo

Aug 02, 2023 | Posted by Abdul-Rahman Oladimeji

The Markley Group has filed a $80 million lawsuit against networking company Zayo Group over a data center lease in a Boston carrier hotel. The filing is a response to the case raised by zColo in April 2023, in which it was alleged that the Markley Group had engaged in a years-long campaign of letter-writing harassment and demanded $70 million in an invoice last year, even though monthly lease payments had been agreed to be $63,708. Three months later, the Markley Group filed a lawsuit against zColo's former parent company, Zayo, and its current parent company, DataBank, alleging they are to blame.

The dispute involves a 9,000-square-foot tenancy at the One Summer Street data center in Boston, Massachusetts, owned by Markley. The corporation leases approximately 0.5MW of the 30MW capacity of the facility. Zayo inked the lease in 2014. Six years later, however, the lease was transferred to zColo, and Zayo quickly sold zColo to DataBank, placing Markley Group in close competition with one of its tenants. The disagreement concerns whether the decision to decline the lease (and subsequently sell the company) violated the lease's terms.

The counter filings allege that Zayo did this purposefully and "concocted a scheme to sell its lease to DataBank... profiting from a colocation arrangement that exploits Markley's investment for defendants' unlawful gain." Markley asserts that the lease did not permit such a transfer and was permitted to charge additional rent as it saw fit, "based on Markley's estimate of the value, including late fees and interest, that Zayo has extracted from its sale of the lease." In addition, the counterclaims demand that the lease transfer be declared invalid and that Zayo vacate the property without permission to extend the lease.