EFD USA, Inc. v. Band Pro Film and Digital, Inc.

What sanction did the court impose?

The court affirmed the judgment, the default judgment, and the order denying a new trial. On its own motion, after issuing an order to show cause, the panel sanctioned Azar $900, payable to the clerk, for relying on fabricated authority in violation of the California Rules of Court. The sanction fell on Azar alone: the court found the errors "caused primarily by Azar's failure to adequately safeguard against AI hallucinations," and declined to sanction co-counsel Mitchell Keiter, who had only formatted and filed the reply. The $900 figure was calibrated against Noland v. Land of the Free, where the same court imposed $10,000 for far more widespread fabrication. The panel was Hanasono, J. (authoring), Edmon, P.J., and Adams, J.

Why does EFD USA, Inc. v. Band Pro Film and Digital, Inc. matter for law firms using AI?

EFD v. Band Pro illustrates the exposure created when fabricated authority survives into an appellate brief. A trial-level slip might be papered over with a corrected filing, but a sanction issued by a Court of Appeal panel, even in an unpublished opinion, lands on Westlaw where malpractice carriers and future panels can find it. The order is also a clean illustration of how the AI failure mode compounds: the fabrications did not come from the original AI-drafted brief, which counsel had cite-checked, but from a second pass that used an AI system to cut the brief under the word limit. No one checked the citations again. For a managing partner, the policy point is that AI-assisted citation must be verified against the cited opinion itself before any brief leaves the firm, and that the verification has to be repeated after any later AI edit, not just the first draft.