Hagan v. Black Diamond Experts, LLC
U.S. District Court, District of Utah · D. Utah · Utah bar guidance
Conduct
Plaintiff's opposition to a motion for judgment on the pleadings cited a D.S.D. case the court could not locate on Westlaw; the defendants had flagged possible AI use.
Consequence
No sanction. Citing counsel's asserted incapacitation, the court declined to pursue the issue at this time, admonished counsel, and warned that future improper AI use may be sanctioned.
Lesson
Here a court set the issue aside because of counsel's circumstances but put a general admonition and a conditional warning on the record.
Verified September 30, 2026
- Citation
- Hagan v. Black Diamond Experts, LLC, No. 4:25-cv-00088-AMA-PK, Memorandum Decision & Order (D. Utah July 23, 2026) (Allen, J.), ECF No. 37
- Decided
- July 23, 2026
Summary
Joseph "Joe" Hagan, 86, sued Black Diamond Experts, LLC and Daniel L. James, alleging that the company made misrepresentations about needed repairs to his home, forged his signature on invoices and charged his credit card, and asserting RICO, mail and wire fraud, and state-law claims. The defendants moved for judgment on the pleadings. Hagan's counsel filed an opposition on November 25, 2025 (ECF No. 24). The defendants' reply noted that the opposition appeared to cite "caselaw potentially produced by artificial intelligence." The court gave an example: the opposition cited "Weatherly v. A.O. Smith Corporation, 841 F. Supp. 2d 913, 920 (D.S.D. 2012)," and the court "has been unable to locate this case as cited on Westlaw, which suggests that this citation may be a hallucination of artificial intelligence." Quoting other decisions, the court observed that citations to non-existent cases "undermine the integrity of court filings and evince a lack of diligence under Federal Rule of Civil Procedure 11(b)." In July 2026 the parties filed a Stipulated Motion to Stay (ECF No. 36) describing what the court called Hagan's counsel's asserted "incapacitation."
- AI tool:
- Suspected AI, tool not identified (the court wrote that its inability to locate the case "suggests that this citation may be a hallucination of artificial intelligence")
- Amount or terms:
- None; the court admonished counsel and warned that sanctions may be imposed if any improper use of AI "is determined to have occurred in the future"
What did the court warn about?
District Judge Ann Marie McIff Allen wrote that the court "takes seriously allegations of the improper use of artificial intelligence," but concluded that, "given the unusual circumstances described in the Stipulated Motion to Stay regarding Mr. Hagan's counsel's asserted 'incapacitation,' further pursuit of this issue at this time would not be fruitful." She added: "Generally, however, the Court admonishes counsel to be vigilant with respect to artificial intelligence. If any improper use of artificial intelligence is determined to have occurred in the future, sanctions may be imposed." On the merits, the court granted the motion for judgment on the pleadings, dismissed the RICO and mail and wire fraud claims without prejudice for failure to plead fraud with particularity under Rule 9(b), declined supplemental jurisdiction over the state-law claims and dismissed them without prejudice, gave Hagan 120 days to file an amended complaint (a period that took the requested 90-day stay into account), and denied the stipulated stay as moot. No show-cause order, monetary sanction, or referral issued.
Why does Hagan v. Black Diamond Experts, LLC matter for law firms using AI?
The court raised the AI issue before reaching the merits, and it treated it cautiously. The defendants had said the opposition appeared to cite “caselaw potentially produced by artificial intelligence.” The court checked one example, Weatherly v. A.O. Smith Corporation, and could not find it on Westlaw, which it said “suggests that this citation may be a hallucination of artificial intelligence.” It quoted other decisions for the proposition that a fake opinion “is not ‘existing law’” and that relying on one “is an abuse of the adversary system.”
The court then stepped back. The parties had filed a stipulated motion to stay describing Hagan’s counsel’s asserted “incapacitation,” and the court concluded that “further pursuit of this issue at this time would not be fruitful.” Instead of pursuing the issue, it admonished counsel “to be vigilant with respect to artificial intelligence” and stated that sanctions may be imposed if improper use is determined to have occurred in the future. The merits ruling was a pleading-standard dismissal without prejudice with 120 days to amend.
Firms documenting compliance may wish to consider that the admonition here is general, in a case that remains open for an amended complaint. The court did not decide whether AI was used; it recorded the concern and deferred it.
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.
- Document coverage plans for an attorney's incapacity. Here the court declined to pursue the citation issue in light of counsel's asserted incapacitation, which the parties raised in a stipulated motion to stay.
- Verify authorities flagged by opposing counsel promptly. The defendants' reply identified the problem, and the court then checked the citation on Westlaw.
- Review future filings in a matter where a court has admonished counsel. The order states that if improper AI use "is determined to have occurred in the future, sanctions may be imposed."
Sources
Primary sources
- The court made no finding of AI use; it said the unlocatable citation "suggests" it "may be" an AI hallucination, and declined to pursue the issue further. The order does not name Hagan's counsel.
- The stipulated motion to stay (ECF No. 36) was not read; the entry describes counsel's circumstances only as the order does ("asserted 'incapacitation'").