Creditors Adjustment Bureau, Inc. v. All Season Power LLC
U.S. District Court, Central District of California · C.D. Cal. · California bar guidance
Verified April 26, 2026
- Citation
- Creditors Adjustment Bureau, Inc. v. All Season Power LLC, No. 2:25-cv-09888 (C.D. Cal. Feb. 13, 2026)
- Decided
- February 13, 2026
Summary
Both sides filed briefs containing the same nonexistent case along with three phantom quotes attributed to real decisions. Plaintiff's counsel conceded in a declaration that "some legal research relied upon artificial intelligence and resulted in these phantom quotes." Defense counsel admitted citing the same fabricated authority but said the error was inadvertent and not AI-related. Magistrate Judge Stephanie Christensen described the episode as an "asynchronous Thelma and Louise," with defense counsel having "merely followed Plaintiff's counsel over the cliff."
- AI tool:
- Unspecified generative AI
What sanction did the court impose?
No monetary sanctions imposed and no party requested them. The court issued a formal warning that further reliance on synthetic citations would warrant sanctions, and reminded counsel that Rule 11 requires attorneys to read and confirm the existence and validity of authorities they cite.
Why does Creditors Adjustment Bureau, Inc. v. All Season Power LLC matter for law firms using AI?
The case is a useful counterexample for managing partners weighing whether AI-citation discipline is a “their problem” issue. Both sides of a routine commercial dispute filed the same fabricated authority, and the court declined to sanction only because neither party asked. The next panel will not be so forgiving, and the order’s Rule 11 framing puts firms on notice that the duty to confirm a case exists is not delegable to a research tool.