Fora Financial Asset Securitization 2021, LLC v. Teona Ostrov Public Relations, LLC

What did the court warn about?

In a Decision and Order on Motion signed January 24, 2025 (filed January 27, 2025), Justice Lyle E. Frank granted the motion as to the first through thirteenth and the sixteenth affirmative defenses, which were stricken, and denied it as to the fourteenth, fifteenth and eighteenth (the discussion groups the seventeenth with the fourteenth and fifteenth, but the decretal paragraphs do not address it). On the citations, the court stated: "The Court considers these citations and the propositions they stand for stricken from the papers, although this does not change the ultimate outcome on this motion for the reasons given below." It added: "The Court would also like to note that if this continues to be an issue in the future with Defendants' counsel, there would likely be sanctions issued." No sanction was imposed. The court later granted the plaintiff's unopposed motion for summary judgment against both defendants, jointly and severally, for $27,733.27 plus interest (NYSCEF Doc. No. 48, signed May 28, 2025); that decision does not return to the citations.

Why does Fora Financial Asset Securitization 2021, LLC v. Teona Ostrov Public Relations, LLC matter for law firms using AI?

Fora Financial is a commercial contract case in which the citation problem surfaced in a footnote. The plaintiff moved to dismiss the defendants’ eighteen affirmative defenses, and the court’s first footnote records that the “reply papers” it attributes to the defendant had “problems with several citations leading to different or non-existent cases and a quotation that did not appear in any cases cited.” The court did not list the citations or name counsel.

The court’s response was to remove the material rather than sanction it. It considered “these citations and the propositions they stand for stricken from the papers,” noted that this did not change the outcome, and warned that “if this continues to be an issue in the future with Defendants’ counsel, there would likely be sanctions issued.” It then struck fourteen of the defenses and denied the motion as to three others. The order does not mention artificial intelligence; the Charlotin tracker’s AI coding is an inference.

The case ended months later with an unopposed summary judgment of $27,733.27 plus interest against both defendants, and the later decision does not revisit the citations. Firms documenting compliance may wish to consider that, here, the court’s response to defective citations was to strike them and record a warning directed at counsel, and that the warning appears in the written decision itself.