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Public trackerEvidence checked Jul 23, 2026 · Latest decision Jul 21, 2026Public incidents are risk signals, not usage-adjusted rates
Evidence-linked corpus record: this page is generated from the structured public record and has a publication-readiness score of 90/100. It passed the source, context, and standalone-summary checks used for public indexing; individual legal editorial review is not represented.
Versant Funding v. Teras Breakbulk Ocean Navigation Enterprises
S.D. Florida · May 20, 2025
FL / federalEditorial impact: mediumfake citationscontracttrial
Direct answer
What happened in this matter?
Fabricated: Case Law | Defense cited a non-existent case to argue privilege assignments must be clear and unmistakable; Plaintiff could not find it on Westlaw/Lexis, the Court also could not locate it, and defense later withdrew and admitted AI use. Outcome: Joint and several liability for Plaintiff’s attorneys' fees and costs incurred in addressing the hallucinated citation; CLE requirement on AI ethics; Monetary fines.
- Why the court cared
- The Court distinguished this case from more egregious incidents (O’Brien v. Flick, Thomas v. Pangburn) because the attorneys admitted their error and did not lie or attempt to cover it up. However, the delay in correction and failure to check the citation in the first place were serious enough to warrant monetary penalties and educational obligations
- Why it matters now
- Local counsel who signs without checking is jointly liable; require both drafting and signing counsel to verify citations.
Why this matter is tracked
Fabricated: Case Law | Defense cited a non-existent case to argue privilege assignments must be clear and unmistakable; Plaintiff could not find it on Westlaw/Lexis, the Court also could not locate it, and defense later withdrew and admitted AI use. Outcome: Joint and several liability for Plaintiff’s attorneys' fees and costs incurred in addressing the hallucinated citation; CLE requirement on AI ethics; Monetary fines.
AI Use
First Counsel, who had not previously used AI for legal work, used an unspecified AI tool to assist with drafting a response. He failed to verify the citation before submission. Second Counsel, as local counsel, filed the response without checking the content or accuracy, even though he signed the document.Second Counsel then said that he had initiated "procedural safeguards to prevent this error from happening again by ensuring he, and local counsel, undertake a comprehensive review of all citations and arguments filed with this and every court prior to submission to ensure their provenance can be traced to professional non-AI sources."
Hallucination Details
The hallucinated case was cited as controlling Delaware authority on privilege assignments. When challenged by Plaintiff, Defendants initially filed a bare withdrawal without explanation. Only upon court order did they disclose the AI origin and acknowledge the error. Counsel personally apologized to the court and opposing counsel.
Ruling/Sanction
Judge William Matthewman imposed a multi-part sanction:Attorneys’ fees and costs incurred by Plaintiff in rebutting the hallucinated citation—jointly payable by CounselRequired CLE on AI ethics within 30 days, with proof of completion due by June 20, 2025Monetary fines: $1,000 (First Counsel) and $500 (Second Counsel), payable to the Court registryThe Court emphasized that the submission of hallucinated citations—particularly when filed and signed by two attorneys—constitutes reckless disregard for procedural and ethical obligations. Though no bad faith was found, the conduct was sanctionable under Rule 11, § 1927, the Court’s inherent authority, and local professional responsibility rules.
Key Judicial Reasoning
The Court distinguished this case from more egregious incidents (O’Brien v. Flick, Thomas v. Pangburn) because the attorneys admitted their error and did not lie or attempt to cover it up. However, the delay in correction and failure to check the citation in the first place were serious enough to warrant monetary penalties and educational obligations.
Operational lesson
Local counsel who signs without checking is jointly liable; require both drafting and signing counsel to verify citations.
Record details
FloridaSingle-state evidence scope
CourtS.D. Florida
Jurisdictionfederal
Circuit11th Circuit
DateMay 20, 2025
UN
AI toolUnidentified
Party typeLawyer
OutcomeJoint and several liability for Plaintiff’s attorneys' fees and costs incurred in addressing the hallucinated citation; CLE requirement on AI ethics; Monetary fines
Known amount$1,500
Professional sanctionNo
Attribution boundary
What the record establishes about AI use
not established
The current record does not establish a specific AI tool. Do not infer AI use beyond the source.
Procedural posture
Joint and several liability for Plaintiff’s attorneys' fees and costs incurred in addressing the hallucinated citation; CLE requirement on AI ethics; Monetary fines
Correction behavior
Correction behavior is not separately verified in the current record.
Tracked discrepancy record
1 citation, quotation, or authority issues are recorded in the source dataset.
- Fabricated: Case Law | Defense cited a non-existent case to argue privilege assignments must be clear and unmistakable; Plaintiff could not find it on Westlaw/Lexis, the Court also could not locate it, and defense later withdrew and admitted AI use.
Questions this record answers
- What happened in Versant Funding v. Teras Breakbulk Ocean Navigation Enterprises?
- Fabricated: Case Law | Defense cited a non-existent case to argue privilege assignments must be clear and unmistakable; Plaintiff could not find it on Westlaw/Lexis, the Court also could not locate it, and defense later withdrew and admitted AI use. Outcome: Joint and several liability for Plaintiff’s attorneys' fees and costs incurred in addressing the hallucinated citation; CLE requirement on AI ethics; Monetary fines.
- Why does Versant Funding v. Teras Breakbulk Ocean Navigation Enterprises matter for legal AI risk?
- Local counsel who signs without checking is jointly liable; require both drafting and signing counsel to verify citations.
- What does the public record establish about Versant Funding v. Teras Breakbulk Ocean Navigation Enterprises?
- The record summarizes the outcome described in the linked public source. The recorded document is hosted in the upstream publisher archive. This page is not a substitute for the complete docket, subsequent history, or jurisdiction-specific advice.
- Which source supports this Versant Funding v. Teras Breakbulk Ocean Navigation Enterprises summary?
- The recorded source is Damien Charlotin case archive. It is classified as publisher document archive; review the linked material and subsequent docket history before relying on this summary.
Related matters
Related by court, jurisdiction, tool, or classified failure pattern. Similarity does not imply the same facts or outcome.