In re Nupeutics Natural, Inc.; Gladstone v. Peatross
The case
In re Nupeutics Natural, Inc.; Gladstone v. Peatross, Adv. No. 24-90036-JBM (Bankr. S.D. Cal.), order entered December 5, 2025, 2025 WL 3546838. Copy of primary document: `~/workspace/goals/ai-sanctions-case-monitoring/files/sources/D-116-nupeutics-natural.pdf`. Source URL: https://www.damiencharlotin.com/documents/1164/Gladstone_-_Nupeutics_USA_5_December_2025.pdf
What happened
Attorney Deepalie Milie Joshi used generative AI to prepare a motion and failed to verify any of the citations the tool produced. The filing included nonexistent authorities (including a nonexistent In re Verdi) and other inaccurate citations. She then made misleading representations to the court about her client's declaration.
The rule and the sanction
The court found violations of Federal Rule of Bankruptcy Procedure 9011 and of its inherent power. Sanctions imposed: a $950 fine; eight hours of continuing legal education (four hours on AI and four on practice management, with at least four hours taken in person); notice of the order to her client; loss of authority to file other persons' electronic /s/ signatures through December 31, 2027; compliance with the district's General Order 210; and referral to the district's Standing Committee on Discipline.
How it could have been avoided
(a) Verify every AI-generated citation against a primary source before filing; nonexistent cases like In re Verdi are caught by a single database search. (b) Do not rely on AI-generated drafts as authority without reading the underlying decisions yourself. (c) Never make representations to a court about client declarations or citations you have not personally checked.