Sanctions Issued in Case Where Lawyers Cited ChatGPT-Hallucinated Precedents

From today's opinion in Mata v. Avianca, Inc., by Judge Kevin Castel (S.D.N.Y.), which stems from an incident blogged about here last month (and see this follow-up):

In researching and drafting court submissions, good lawyers appropriately obtain assistance from junior lawyers, law students, contract lawyers, legal encyclopedias and databases such as Westlaw and LexisNexis. Technological advances are commonplace and there is nothing inherently improper about using a reliable artificial intelligence tool for assistance. But existing rules impose a gatekeeping role on attorneys to ensure the accuracy of their filings.

Peter LoDuca, Steven A. Schwartz and the law firm of Levidow, Levidow & Oberman P.C. (the "Levidow Firm") (collectively, "Respondents") abandoned their responsibilities when they submitted non-existent judicial opinions with fake quotes and citations created by the artificial intelligence tool ChatGPT, then continued to stand by the fake opinions after judicial orders called their existence into question.

Many harms flow from the submission of fake opinions. The opposing party wastes time and money in exposing the deception. The Court's time is taken from other important endeavors. The client may be deprived of arguments based on authentic judicial precedents. There is potential harm to the reputation of judges and courts whose names are falsely invoked as authors of the bogus opinions and to the reputation of a party attributed with fictional conduct. It promotes cynicism about the legal profession and the American judicial system. And a future litigant may be tempted to defy a judicial ruling by disingenuously claiming doubt about its authenticity.

The narrative leading to sanctions against Respondents includes the filing of the March 1, 2023 submission that first cited the fake cases. But if the matter had ended with Respondents coming clean about their actions shortly after they received the defendant's March 15 brief questioning the existence of the cases, or after they reviewed the Court's Orders of April 11 and 12 requiring production of the cases, the record now would look quite different. Instead, the individual Respondents doubled down and did not begin to dribble out the truth until May 25, after the Court issued an Order to Show Cause why one of the individual Respondents ought not be sanctioned.

For reasons explained and considering the conduct of each individual Respondent separately, the Court finds bad faith on the part of the individual Respondents based upon acts of conscious avoidance and false and misleading statements to the Court.

Sanctions will therefore be imposed on the individual Respondents [and, as usual in such cases, on their law firm]…. The sanctions are "limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated." Rule 11(c)(4)….

Some excerpts from the court's analysis:

Here, Respondents advocated for the fake cases and legal arguments contained in the Affirmation in Opposition after being informed by their adversary's submission that their citations were non-existent and could not be found. Mr. Schwartz understood that the Court had not been able to locate the fake cases. Mr. LoDuca, the only attorney of record, consciously avoided learning the facts by neither reading the Avianca submission when received nor after receiving the Court's Orders of April 11 and 12….

The Court concludes that Mr. LoDuca acted with subjective bad faith in violating Rule 11 in the following respects:

[a.] Mr. LoDuca violated Rule 11 in not reading a single case cited in his March 1 Affirmation in Opposition and taking no other steps on his own to check whether any aspect of the assertions of law were warranted by existing law. An inadequate or inattentive "inquiry" may be unreasonable under the circumstances. But signing and filing that affirmation after making no "inquiry" was an act of subjective bad faith. This is especially so because he knew of Mr. Schwartz's lack of familiarity with federal law, the Montreal Convention and bankruptcy stays, and the limitations of research tools made available by the law firm with which he and Mr. Schwartz were associated.

[b.] Mr. LoDuca violated Rule 11 in swearing to the truth of the April 25 Affidavit with no basis for doing so. While an inadequate inquiry may not suggest bad faith, the absence of any inquiry supports a finding of bad faith. Mr. Schwartz walked into his office, presented him with an affidavit that he had never seen in draft form, and Mr. LoDuca read it and signed it under oath. A cursory review of his own affidavit would have revealed that (1) "Zicherman v. Korean Air Lines Co., Ltd., 516 F.3d 1237 (11th Cir. 2008)" could not be found, (2) many of the cases were excerpts and not full cases and (3) reading only the opening passages of, for example, "Varghese", would have revealed that it was internally inconsistent and nonsensical.

[c.] Further, the Court directed Mr. LoDuca to submit the April 25 Affidavit and Mr. LoDuca lied to the Court when seeking an extension, claiming that he, Mr. LoDuca, was going on vacation when, in truth and in fact, Mr. Schwartz, the true author of the April 25 Affidavit, was the one going on vacation. This is evidence of Mr. LoDuca's bad faith.

The Court concludes that Mr. Schwartz acted with subjective bad faith in violating Rule 11 in the following respects:

[a.] Mr. Schwartz violated Rule 11 in connection with the April 25 Affidavit because, as he testified at the hearing, when he looked for "Varghese" he "couldn't find it," yet did not reveal this in the April 25 Affidavit. He also offered no explanation for his inability to find "Zicherman". Poor and sloppy research would merely have been objectively unreasonable. But Mr. Schwartz was aware of facts that alerted him to the high probability that "Varghese" and "Zicherman" did not exist and consciously avoided confirming that fact.

[b.] Mr. Schwartz's subjective bad faith is further supported by the untruthful assertion that ChatGPT was merely a "supplement" to his research, his conflicting accounts about his queries to ChatGPT as to whether "Varghese" is a "real" case, and the failure to disclose reliance on ChatGPT in the April 25 Affidavit….

The Court has considered the specific circumstances of this case. The Levidow Firm has arranged for outside counsel to conduct a mandatory Continuing Legal Education program on technological competence and artificial intelligence programs. The Levidow Firm also intends to hold mandatory training for all lawyers and staff on notarization practices. Imposing a sanction of further and additional mandatory education would be redundant.

Counsel for Avianca has not sought the reimbursement of attorneys' fees or expenses. Ordering the payment of opposing counsel's fees and expenses is not warranted.

In considering the need for specific deterrence, the Court has weighed the significant publicity generated by Respondents' actions. The Court credits the sincerity of Respondents when they described their embarrassment and remorse. The fake cases were not submitted for any respondent's financial gain and were not done out of personal animus. Respondents do not have a history of disciplinary violations and there is a low likelihood that they will repeat the actions described herein.

There is a salutary purpose of placing the most directly affected persons on notice of Respondents' conduct. The Court will require Respondents to inform their client and the judges whose names were wrongfully invoked of the sanctions imposed. The Court will not require an apology from Respondents because a compelled apology is not a sincere apology. Any decision to apologize is left to Respondents.

The Court concludes that a penalty of $5,000 paid into the Registry of the Court is sufficient but not more than necessary to advance the goals of specific and general deterrence….