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Attorneys at Morgan & Morgan and Goody Law Group were sanctioned by a federal judge in Wyoming for submitting a court filing that included eight fabricated legal cases generated by AI tools. The lawyers admitted to using ChatGPT and an internal firm tool, MX2.law, to generate citations without verifying their existence. The court imposed fines totaling $5,000 and removed one attorney from the case, citing a violation of Rule 11 regarding the duty to conduct a reasonable inquiry into the law.
Lawyers Rudwin Ayala, T. Michael Morgan (Morgan & Morgan), and Taly Goody (Goody Law Group) were fined a total of $5,000 after their Wyoming federal lawsuit filing against Walmart cited fake cases "hallucinated" by AI. Judge Kelly Rankin sanctioned them, removing Ayala from the case and noting attorneys must verify AI sources. The filing, flagged by Walmart’s legal team, led to its withdrawal and an internal review.
Domain classification, causal taxonomy, severity scores, and national security assessments were LLM-classified and may contain errors.
AI systems that fail to perform reliably or effectively under varying conditions, exposing them to errors and failures that can have significant consequences, especially in critical applications or areas that require moral reasoning.
Also classified as
The AI system generated false and misleading information in the form of fabricated legal precedents, which misled the attorneys and was subsequently submitted to the court.
The primary failure was the AI system's lack of capability and robustness, specifically its tendency to hallucinate and fabricate non-existent legal cases when prompted for research.
AI system
Due to a decision or action made by an AI system
Unintentional
Due to an unexpected outcome from pursuing a goal
Post-deployment
Occurring after the AI model has been trained and deployed
The incident was initiated by the AI system hallucinating non-existent legal cases, which was an unexpected outcome of using the tool for legal research.
Added categories peak at 2: Minor (Epistemic Harm, Direct)
Attorneys in a federal product liability lawsuit were sanctioned for submitting a brief containing eight fabricated legal cases generated by ChatGPT and an in-house AI tool. The incident highlights minor vulnerabilities in federal judicial operations due to unverified AI use, but carries negligible broader national security implications.
The reports describe the AI system as an internal support tool intended to assist lawyers with research and drafting. It acted as an assistant by generating text and citations based on user prompts, which the attorneys were expected to verify and sign off on.
Limited Risk: The AI systems involved are general-purpose chatbots (ChatGPT) and internal drafting assistants, which fall under the Limited Risk category as they do not pose unacceptable or high risks but require transparency and verification of outputs.
The AI tool was used by the attorney to draft a motion in limine and search for supporting case law, acting as a writing and research assistant.
The reports provide highly detailed, consistent, and publicly documented facts regarding the court proceedings, the specific attorneys involved, the exact sanctions imposed, and the AI tools used (ChatGPT and MX2.law). There is no significant disagreement among the sources.
None
Technology
AI Hallucination
The internal AI platform generated entirely fake citations and case names.
Lack of Automated Verification
The AI tool lacked built-in integration to cross-reference real databases.
Data Inputs
Vague User Prompts
Open-ended prompts asked the AI to 'add more case law' to the brief.
Unconstrained AI Search
The AI was allowed to generate citations without database verification.
Human Factors
Blind Reliance on AI
The attorney trusted the AI's output without checking Westlaw or Lexis.
First-Time AI Use
The drafting attorney had never used AI for this type of legal research.
Failure to Read and Verify
Attorneys signed the court filing without reading or verifying the cases.
Process and Methods
Weak Citation Review Process
The firm lacked a formal verification process for AI-generated text.
Unclear Supervisory Roles
Supervising attorneys failed to review the draft before signing.
Management
Inadequate AI Training
The firm did not sufficiently train the attorney on AI safety risks.
Lack of Access Safeguards
The internal tool lacked a mandatory hallucination warning checkbox.
Oversight Gaps at Scale
Large firm resources did not prevent unflagged errors in the filing.
Regulatory Environment
Rule 11 Violation
Attorneys failed their ethical duty to perform a reasonable inquiry.
Unclear AI Jurisdictional Rules
Varying court rules on AI disclosures created compliance confusion.
AI system involved
Identified by automated extraction; can differ from the alleged developers above.
