US | United States District Court for the Southern District of Florida
Docket: 9:17-cv-81140-WPD • first instance
2025-05-20
Versant Funding LLC v. Teras Breakbulk Ocean Navigation Enterprises, LLC — order imposing sanctions due to submission of hallucinated case
Unknown / Not Disclosed no human verificationfake case citationinsufficient supervision / local counsel verification failure
I. Executive Summary
The court found that defense counsel filed a response containing a wholly fabricated case citation that could not be located, and counsel later admitted the citation resulted from using an AI tool without verification.
The court emphasized Rule 11’s reasonable-inquiry requirement and the responsibilities of both pro hac vice and local counsel to verify filings.
It imposed fees-and-costs shifting, mandatory AI ethics CLE, and monetary fines.
II. Conduct Analysis
Pro hac vice counsel used an AI tool for legal research and inserted a hallucinated case citation into a filed response; local counsel signed and filed the response without checking the cited authority’s existence or accuracy.
III. Legal Foundations
Fed. R. Civ. P. 11(b)
S.D. Fla. Local Rule 4(b)(3) (pro hac vice and local counsel responsibilities)
IV. Key Facts
1) A filed response cited a case (with a Delaware citation) that multiple attorneys and the court could not locate.
2) After the issue was raised, counsel withdrew the citation and explained that an AI tool had been used and the citation was not verified.
3) The court treated the hallucinated citation as a serious misrepresentation and assessed sanctions against both pro hac vice and local counsel.
V. Consequences & Sanction
1) The court ordered counsel to reimburse the opposing party’s fees and costs caused by addressing the hallucinated citation.
2) The court required both attorneys to complete an AI ethics CLE and imposed separate fines payable to the court registry.