Fay v. Warren Hospitality Suites, Inc.
U.S. District Court, Eastern District of Michigan, Southern Division · E.D. Mich. · Michigan bar guidance
Conduct
Plaintiff's counsel used generative AI to draft motions in limine and responses with apparently fabricated quotations and misstated holdings.
Consequence
$10,000 fine jointly against the attorney and his firm; client protected from the cost; no grievance referral.
Lesson
The firm pays alongside the responsible lawyer even when the firm's head never signed, and the court can wall the client off from the sanction.
Verified September 28, 2026
- Citation
- Fay v. Warren Hospitality Suites, Inc., No. 4:19-cv-10902-FKB-EAS, Order Resolving Show Cause Order and Imposing Monetary Sanctions (E.D. Mich. Sept. 9, 2026) (Behm, J.), ECF No. 232
- Decided
- September 9, 2026
Summary
In a case filed in 2019 that has since settled, the court identified likely instances in at least eight of the plaintiff's briefs, motions in limine and responses, of "attributing apparently fictitious quotations to court decisions" and misrepresenting holdings, "possibly in reliance on AI-generated content," and ordered plaintiff's counsel to cite-check their own submissions and to show cause under Rule 11(b)(2) and (c) or the court's inherent power. Counsel acknowledged "that generative AI was used in the drafting of the Motions in Limine and Responses identified by this Court," identified at least eleven citations that did not support the proposition cited, and stated that "Attorney Schroeder takes full responsibility for the content within those filings." The head of the firm, Mr. McKeen, had not signed any of the filings at issue.
- AI tool:
- Generative AI (counsel acknowledged it was used to draft the motions in limine and responses; tool not named)
- Sanction amount:
- $10,000 fine, jointly against plaintiff's attorney Schroeder and McKeen & Associates, P.C., payable to the court Clerk; plaintiff may not bear any part of it, including through her settlement
What sanction did the court impose?
Judge F. Kay Behm imposed a $10,000 fine "jointly against Mr. Schroeder and McKeen & Associates, P.C., payable to the court Clerk," holding the firm responsible "no matter the original author." The order provides that the plaintiff is not responsible for the penalty and that counsel may not reduce her settlement recovery on account of it. The defendant had asked that counsel be required to self-report to the Michigan Attorney Grievance Commission; the court stated that it does not plan to make any referral. It noted that absent the tone and tenor of counsel's response the sanction would have been higher, and credited his completion of courses on the ethical use of AI.
Why does Fay v. Warren Hospitality Suites, Inc. matter for law firms using AI?
Fay turns on firm liability. Mr. McKeen, the head of the firm, did not sign any of the filings, and the plaintiff’s response did not mention his role. The court held the firm jointly responsible anyway, quoting the principle that “[a]bsent exceptional circumstances, a law firm must be held jointly responsible for a violation committed by its partner, associate, or employee,” and imposed the $10,000 fine against Attorney Schroeder, who took full responsibility for the filings, and McKeen & Associates, P.C. together.
The client-protection terms are the order’s distinctive feature. The court directed that the named plaintiff “shall not be responsible for paying this penalty” and that counsel “are prohibited from reducing her award of damages from the settlement in this matter, in any way, on the basis of the penalties above,” and made any clause in counsel’s agreement with the plaintiff permitting deductions from her award inapplicable to the sanctions. The court also explained why it would not refer counsel to the Michigan Attorney Grievance Commission: it has not, in the past, made such referrals for Rule 11 violations, even when it imposed monetary sanctions.
Firms documenting compliance may wish to consider that a court can reach the firm’s balance sheet directly, without any finding against the partner in charge, and can prevent the sanction from being passed through to the client.
Implications for your firm
Operational steps a firm reading this case may wish to consider documenting. Strategic and rule-application calls belong to your firm's attorneys.
- Consider firm-level exposure. The court held the firm jointly liable although its head had not signed the filings, because 'making this kind of misconduct unprofitable for law firms is necessary to deter its recurrence.'
- Review fee agreements and settlement-disbursement practices so that sanctions for counsel's conduct are never deducted from a client's recovery; the court expressly barred it here.
- Document a candid response to a show-cause order. The court said the sanction would have been higher absent the tone and tenor of counsel's response.