California Appellate Court Delivers State’s First Published Ruling On AI-Hallucinated Citations In Legal Pleadings, Declares Issue of First Impression and Warns Attorneys with $10K Sanction

“The AI tools created fake legal authority — sometimes referred to as AI ‘hallucinations’ — that were undetected by plaintiff’s counsel because he did not read the cases the AI tools cited,” the court explained.

According to the opinion, Mostafavi told the court he was unaware that AI frequently fabricates or hallucinates legal sources. However, the panel found this lack of knowledge insufficient to excuse the misconduct.

The appeals court determined that using fabricated legal authorities constitutes sanctionable conduct, particularly because it forced the appellate court to “spend excessive time on this otherwise straightforward appeal to attempt to track down fabricated legal authority and then to research the issues presented without plaintiff’s assistance.”

Citing California precedent establishing monetary sanctions for frivolous appeals in the range of $6,000 to $12,500, the panel imposed what it called a “conservative sanction” of $10,000. The court acknowledged Mostafavi’s assertion that the fabricated quotes were unintentional and expressed regret.