Sanctions on Lawyers for Filing Motion Containing AI-Hallucinated Cases

From Judge Kelly Rankin’s Order on Sanctions and Other Disciplinary Action filed yesterday in Wadsworth v. Walmart Inc. (D. Wyo.):

Legal research has improved over time, going from the use of digest books to online databases like Lexis and Westlaw. Litigators are beginning to make the jump from those databases into the world of Artificial Intelligence (“AI”). When done right, AI can be incredibly beneficial for attorneys and the public. Legal advocates will likely be able to quickly furnish on-point research and draft motions, which may save costs for the clients. Courts will be able to efficiently analyze briefs and make correct rulings, which may speed up the judicial process for litigants. Overall, technological advances have greatly accelerated our world, and AI will likely be no exception.

However, the current state of AI has its shortcomings. The legal profession has been cautious to make a head-first dive partly because of a concept referred to as “AI Hallucinations.” A hallucination occurs when an AI database generates fake sources of information…. The instant case is simply the latest reminder to not blindly rely on AI platforms’ citations regardless of profession.

While technology continues to evolve, one thing remains the same––checking and verifying the source. Before the digital age, attorneys had to manually cross-reference case citations through books’ pocket parts to make sure the cite was still “good law.” Nowadays, that process has been simplified through databases’ signals. Yet one still cannot run a natural language or “Boolean” search through a database and immediately cite the highlighted excerpt that appears under a case. The researcher must still read the case to ensure the excerpt is existing law to support their propositions and arguments. After all, the excerpt could very well be a losing party’s arguments, the court explaining an overruled case, dicta, etc. As attorneys transition to the world of AI, the duty to check their sources and make a reasonable inquiry into existing law remains unchanged….

Mr. Ayala apparently drafted the Motions in Limine and uploaded the brief onto “MX2.law” to add case law. This website appears to be an in-house database launched by Mr. Ayala and Mr. Morgan’s firm, Morgan & Morgan. When Mr. Ayala uploaded the brief, he made the following inquiries:

• “add to this Motion in Limine Federal Case law from Wyoming setting forth requirements for motions in limine”
• “add more case law regarding motions in limine”
• “Add a paragraph to this motion in limine that evidence or commentary regarding an improperly discarded cigarette starting the fire must be precluded because there is no actual evidence of this, and that amounts to an impermissible stacking of inferences and pure Include case law from federal court in Wyoming to support exclusion of this type of evidence.”
• Similar requests to add more case

Mr. Ayala further states that this was his first time ever using AI in such a way.

These search inquiries apparently generated the fake cases. Without verifying their accuracy, Mr. Ayala included the fake cases in the Motions in Limine. He first learned the cases were questionable when the Court entered the Order to Show Cause….

Respondents took remedial steps after the issuance of the Order to Show Cause. Per Mr. Morgan’s Response, Respondents have already taken the following steps to remediate the situation:

• Promptly withdrawing the Motions in Limine;
• Being honest and forthcoming about the use of AI;
• Paying opposing counsels’ fees for defending the Motions in Limine; and
• Implementing policies,   safeguards,   and   training   to   prevent another occurrence in the future (and providing proof of such measures).

The Court appreciates Respondents’ remedial steps, transparency, and apologetic sentiments. Hopefully situations like this do not become common for the judiciary, but should they occur again, the Court recommends attorneys should––at the very least––follow these steps to remediate the situation prior to the issuance of any sanction….

Fed. R. Civ. P. 11(b) provides in relevant part:

By presenting to the court a pleading, written motion, or other paper … an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances … the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law…

At its core, an attorney who signs a legal document certifies that they have “read the document, [have] conducted a reasonable inquiry into the facts and the law and [are] satisfied that the document is well grounded in both, and is acting without any improper motive.” A failure to comply with such obligations may result in a sanction….

As set forth in more detail below, the Court finds the Respondents violated their obligation under Rule 11(b), and sanctions are warranted.

The court sanctioned the author of the motion (Ayala) $3000, and also sanctioned the other lawyers who signed it (Morgan and Goody) $1000 each, noting that “[a] finding of subjective bad faith is not required to impose sanctions.” It also withdrew Ayala’s permission to participate in the case pro hac vice (i.e., as a lawyer who is not a member of the court’s bar and is admitted just for this case, in association with a bar member). It noted that, “Because of Mr. Ayala’s oversight, Respondents’ clients essentially lost their opportunity to file meritorious motions in limine, as they withdrew their Motions. Without belaboring the point, society has an interest in attorneys’ ethical conduct, and Mr. Ayala’s conduct fell short of that standard.”

There’s more in the opinion, including why the court sanctioned the nondrafters; but I just wanted to offer an excerpt, because the whole opinion is nearly 5000 words long.

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