Benjamin v. Costco Wholesale Corp.
U.S. District Court, Eastern District of New York · E.D.N.Y. · New York bar guidance
Verified May 15, 2026
- Citation
- Benjamin v. Costco Wholesale Corp., No. 24-CV-7399 (LGD), 2025 WL 1195925 (E.D.N.Y. Apr. 24, 2025)
- Decided
- April 24, 2025
Summary
Plaintiff's counsel Hovsepyan filed a reply brief containing seven case citations, five of which did not exist. After Magistrate Judge Lee G. Dunst issued an order to show cause, Hovsepyan admitted the citations had been generated by ChatOn, a generative AI mobile-app chatbot she had not previously used, and conceded she had not verified the cases before filing. The court found Rule 11 violations but credited her candor, remorse, and voluntary completion of AI-focused CLE coursework as mitigating factors that lowered the penalty relative to comparable cases.
- AI tool:
- ChatOn
- Sanction amount:
- $1,000
What sanction did the court impose?
$1,000 monetary sanction imposed on counsel personally, payable to the Clerk of Court within fourteen days. Counsel was ordered to serve the sanctions order on her client, file proof of service, and identify the AI ethics CLE courses she had completed. Public reprimand. The court declined to refer the matter to bar disciplinary authorities, citing counsel's candor with the court and first-time-offender status.
Why does Benjamin v. Costco Wholesale Corp. matter for law firms using AI?
Benjamin is the first reported sanctions order in the dataset to identify ChatOn, a consumer chatbot wrapper marketed through mobile app stores, as the source of fabricated citations. The case underscores that the risk surface for small firms is not limited to ChatGPT or purpose-built legal tools: any general-purpose generative app a lawyer or staffer reaches for under deadline pressure can produce filing-grade hallucinations, and courts are treating the choice of tool as immaterial to the Rule 11 analysis. For managing partners, the practical takeaway is that an enforced verification step, paired with mandatory AI-use CLE for any timekeeper drafting briefs, is the cheapest available insurance against a Rule 11 sanctions hearing. Benjamin also illustrates the leniency calculus a magistrate judge applied when an attorney came clean quickly: candor, a single instance of unverified AI use, and documented remediation through CLE produced a $1,000 fine and no bar referral, materially less severe than outcomes in cases where counsel doubled down on fabricated citations.