Case D-51 · AI Sanctions Case Tracker

Wadsworth v. Walmart Inc.

U.S. District Court for the District of Wyoming, No. 2:23-cv-118-KHR, sanctions order February 24, 2025 (Judge Kelly Rankin), 348 F.R.D. 489

The case

Wadsworth v. Walmart Inc., No. 2:23-cv-118-KHR (D. Wyo. Feb. 24, 2025) (Judge Kelly Rankin), reported at 348 F.R.D. 489. Primary sanctions order: https://archive.org/download/gov.uscourts.wyd.64014/gov.uscourts.wyd.64014.181.0.pdf ; coverage: https://news.bloomberglaw.com/artificial-intelligence/morgan-morgan-lawyers-fined-for-hallucinated-ai-citations

What happened

Plaintiffs' counsel filed a motion in limine containing AI-hallucinated cases. In their own February 10, 2025 response, counsel admitted: "Our internal artificial intelligence platform 'hallucinated' the cases in question while assisting our attorney in drafting the motion in limine." Notably, this was the firm's internal AI platform, not a public chatbot.

The rule and the sanction

Rule 11 / inherent authority. Rudwin Ayala's pro hac vice admission was revoked and he was fined $3,000; T. Michael Morgan and Taly Goody were each fined $1,000. Morgan & Morgan itself was spared after the firm demonstrated it had implemented AI-verification measures, a firm's compliance program can mitigate institutional exposure even when individual lawyers are sanctioned.

How it could have been avoided

"Our own internal AI" is not a defense, a firm-built tool hallucinates just like a public one, and the verification duty is identical. Admitting AI use does not excuse unverified citations; candor about the tool plus unverified output still draws sanctions. The mitigation lesson is real: firms should implement and document AI-verification policies before the sanctions motion arrives, Morgan & Morgan's program is why the firm itself walked away clean.

---

Sources