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Incident Tracker / United States (federal)

Lacey v. State Farm General Insurance Co., No. 2:24-cv-05205-FMO-MAA (C.D. Cal.), Order of Special Master (Ellis George LLP and K&L Gates LLP)

·US District Court, Central District of California (Special Master Michael R. Wilner, US Magistrate Judge, ret.)·US-FEDSanctions

In the Central District of California, Special Master Michael Wilner found that Ellis George and K&L Gates lawyers acted in a manner tantamount to bad faith by filing, then re-filing, a privilege brief built on undisclosed AI research with fabricated citations. He struck the briefs, denied the discovery relief sought and ordered the firms to pay $31,100.

Analysis
Ellis George and K&L Gates: the $31,100 AI-research sanction, and the re-filing that made it worse
Court
US District Court, Central District of California (Special Master Michael R. Wilner, US Magistrate Judge, ret.)
Date
2025-05-06
Who used the AI
Lawyer
AI tool
CoCounsel, Westlaw Precision and Google Gemini (per counsel's sworn declaration)
Conduct
A ten-page supplemental brief on privilege contained about nine incorrect citations out of 27, including at least two authorities that do not exist and quotations attributed to the cited opinions that were not in them. An Ellis George partner generated the research outline with AI tools; K&L Gates lawyers incorporated it without cite-checking. After the Special Master queried two citations, K&L Gates re-filed the brief with the two removed but the other AI errors intact and without disclosing AI use.
Outcome
Sanctions
Penalty
US$31,100
Regulatory outcome
No separate regulatory disposition recorded
Status
Verified against listed sources
Last checked
2026-09-04

What was fabricated or misused

  • People v. Superior Court, 25 Cal.4th 703, 725 (2001) — parenthetical was put in quotation marks but should not have been quoted and should have referred to n. 7
  • Wellpoint Health Networks, Inc. v. Superior Court, 59 Cal.App.4th 110, 119 (1997) — pincite should have been page 123, not 119
  • Aetna Cas. & Surety Co. v. Superior Court, 153 Cal.App.3d 467, 476 (1984) — non-existent quote about using privilege as both a sword and a shield
  • Zurich American Ins. Co. v. Superior Court, 155 Cal.App.4th 1485, 1503 (2007) — pincite should have been 1504 and the quotation needed revision
  • Costco, supra, 47 Cal.4th at 739 — parenthetical should not have been in quotation marks
  • Davis v. City of Santa Ana, 51 Cal.App.5th 1094, 1115 (2020) — inaccurate citation to a case that appears not to exist
  • National Steel Products Co. v. Superior Court, 164 Cal.App.3d 476, 489 (1985) — quotation about internal memoranda and claims-file materials did not exist in the opinion; the pincite should have been 477
  • Lipton v. Superior Court, 48 Cal.App.4th 1599, 1619 (1996) — inaccurate quote; the correct quotation concerned the burden to show privilege
  • Booth v. Allstate Ins. Co., 198 Cal.App.3d 1357, 1366 (1989) — inaccurate quote to a case that appears not to exist
  • Nei v. Travelers Home and Marine Ins. Co., 326 F.R.D. 652 (2018) — missing pincite; it should have been 658

What the court said

“Plaintiff’s supplemental brief contained numerous false, inaccurate, and misleading legal citations and quotations.”
US District Court, Central District of California (Special Master Michael R. Wilner, US Magistrate Judge, ret.), p. 2
“approximately nine of the 27 legal citations in the ten-page brief were incorrect in some way.”
US District Court, Central District of California (Special Master Michael R. Wilner, US Magistrate Judge, ret.), p. 2
“No attorney or staff member at either firm apparently cite-checked or otherwise reviewed that research before filing the brief with the Special Master.”
US District Court, Central District of California (Special Master Michael R. Wilner, US Magistrate Judge, ret.), p. 3
“Directly put, Plaintiff’s use of AI affirmatively misled me.”
US District Court, Central District of California (Special Master Michael R. Wilner, US Magistrate Judge, ret.), p. 10

Timeline

  1. The Special Master directed supplemental briefing on in camera review of disputed privilege materials.
  2. Plaintiff filed the AI-derived supplemental brief; the Special Master flagged National Steel and Booth the same day.
  3. The Special Master issued an order to show cause and requested AI-use disclosures.
  4. Plaintiff's lawyers filed sworn declarations explaining the AI outline and citation failures.
  5. The Special Master signed sanctions striking the briefs and awarding $31,100.
  6. The sanctions order was filed on the federal docket.

Why this case matters

Lacey is a paid-legal-AI record as well as a sanctions record. The tools named in sworn declarations included CoCounsel, Westlaw Precision and Google Gemini, so the case does not fit the simpler pattern of a lawyer pasting ChatGPT into a brief. What made it worse was the second filing: after the Special Master flagged two authorities, the brief was re-filed without disclosure and with other AI errors still present. That makes Lacey a useful contrast with Sullivan & Cromwell Prince Global, where disclosure and correction came before the merits ruling.

Practice note

A lawyer who sends AI-derived research to another firm should label it as such and identify what has not been checked. The receiving team should run an independent cite check before filing, not after the tribunal asks. If the tribunal flags one false authority, the response should audit the whole brief and disclose AI use, not remove only the flagged citations.

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Cite this record

SafeLegalAI Global Legal AI Incident Tracker, “Lacey v. State Farm General Insurance Co., No. 2:24-cv-05205-FMO-MAA (C.D. Cal.), Order of Special Master (Ellis George LLP and K&L Gates LLP)”, safelegalai.com/tracker/lacey-v-state-farm (accessed 2026-10-07). Data: CC BY 4.0.

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