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Case Highlights

1. Judge imposes fines on three attorneys for submitting AI-generated fake cases in a Walmart lawsuit.
2. The lawyers admitted to using AI without verifying the generated cases' authenticity.
3. The case underscores the importance of attorneys' due diligence when using AI technology.

By Samuel A. Lopez – USA Herald

In a stunning courtroom twist that stresses the perils of unchecked technology, a federal judge in Wyoming has fined three lawyers for submitting motions laced with fabricated case law conjured up by artificial intelligence. The sanctions, handed down on February 24, 2025, in a personal injury lawsuit against retail giant Walmart, spotlight the growing pains of integrating AI into legal practice—and serve as a stark warning to attorneys dabbling in cutting-edge tools without due diligence.

Rudwin Ayala, T. Michael Morgan, and Taly Goody are representing plaintiffs in a lawsuit against Walmart. The case involves allegations that Walmart sold a defective hoverboard that caught fire and destroyed the plaintiffs' home. On January 22, 2025, the three attorneys submitted Motions in Limine referencing nine cases, eight of which were found to be nonexistent.

Ayala drafted the motions under the supervision of Morgan, who only suggested excluding a term used during a deposition and had no further involvement in the drafting process. Goody, the local counsel, was entirely uninvolved in drafting the motions. Neither Morgan nor Goody received a copy of the motions before they were filed, yet all three attorneys e-signed them prior to submission.

Ayala used "MX2.law," an in-house database created by his and Morgan's firm, to add case law to his motions. He instructed the database to: (1)“add to this Motion in Limine Federal Case law from Wyoming setting forth requirements for motions in limine;” (2) “add more case law regarding motions in limine;” and (3) “[a]dd a paragraph to this motion in limine that evidence or commentary regarding an improperly discarded cigarette starting the fire must be precluded. . . Include case law.”

Ayala told the court “that this was his first time ever using AI in such a way.” Judge Kelly H. Rankin determined that these search inquiries on MX2.law “apparently generated the fake cases.” Ayala did not verify the accuracy of these cases before including the cases in the motions. “Ayala admits that the cases are non-existent and his reliance on the AI platform was misplaced.”

After Judge Rankin issued an Order to Show Cause, the three attorneys withdrew the motions, were honest about the use of AI, paId opposing counsels’ fees for defending the motions, and implemented “policies, safeguards, and training to prevent another occurrence in the future.”

Judge Rankin revoked Ayala’s pro hac vice status and imposed a $3,000 fine, resulting in Ayala's removal as counsel of record. “[T]he Court finds this sanction is the least severe punishment to deter future misconduct.”

Although Morgan’s pro hac vice admission remained intact, Judge Rankin imposed a $1,000 fine on him for not meeting his obligations under Federal Rules of Civil Procedure Rule 11(b). Similarly, Goody was fined $1,000 for her non-compliance with Rule 11(b).

Judge Rankin noted that “[w]hen done right, AI can be incredibly beneficial for attorneys and the public. . . Overall, technological advances have greatly accelerated our world, and AI will likely be no exception. . . As attorneys transition to the world of AI, the duty to check their sources and make a reasonable inquiry into existing law remains unchanged.”

For the plaintiffs in Wadsworth v. Walmart Inc., the sanctions shift the battlefield. With Ayala sidelined, Morgan and Goody must regroup, likely tapping new counsel to fill the void. The case marches on, its core question—did Walmart sell a firetrap hoverboard? — still unanswered.

Meanwhile, the legal profession grapples with AI’s double-edged sword. Tools like MX2.law promise efficiency, but the Wadsworth fiasco proves they can also breed chaos. Judge Rankin’s ruling sets a precedent: embrace innovation, but verify relentlessly.

Additional Reading

Wadsworth v. Walmart Inc et al (Case No. 2:2023cv00118)

Order on Sanctions in Wadsworth v. Walmart Inc et al