Labatt USA Operating Co., LLC v. Friends Beverage Group, LLC
Supreme Court of New York, New York County · N.Y. Sup. Ct., N.Y. Cnty. · New York bar guidance
Verified April 26, 2026
- Citation
- Labatt USA Operating Co., LLC v. Friends Beverage Group, LLC, No. 651590/2022, 2025 WL 4049222 (N.Y. Sup. Ct. N.Y. Cnty. Dec. 30, 2025)
- Decided
- December 30, 2025
Summary
Counsel for defendants Friends Beverage Group, LLC and Fun Wine (USA) LLC twice submitted filings drafted with generative AI that contained hallucinated case citations. By interim order dated March 17, 2025, Justice Nancy M. Bannon struck the defendants' opposition to summary judgment and their cross-motion for partial summary judgment. The order did not name a specific AI product or impose a monetary sanction, but the consequence was severe: with no opposition on the record, the plaintiff's summary judgment motion proceeded unopposed.
- AI tool:
- Unspecified generative AI
What sanction did the court impose?
Defendants' opposition and cross-motion struck on March 17, 2025. On December 30, 2025, the court entered summary judgment for plaintiff Labatt USA Operating Co. on the first and third causes of action, dismissed defendants' counterclaims, and directed entry of judgment of $1,106,281.05 jointly and severally against both defendants, plus statutory interest from March 6, 2023, with leave to submit attorneys' fees within 30 days.
Why does Labatt USA Operating Co., LLC v. Friends Beverage Group, LLC matter for law firms using AI?
Labatt is a useful case study in non-monetary AI sanctions: striking a party’s opposition can be more costly than any fee award. Here, the defendants faced a $1.1 million judgment entered without opposition because their filings, twice prepared with generative AI, contained fabricated citations. For managing partners, the lesson is that an unverified AI-assisted brief is not merely a Rule 11 risk, it can functionally forfeit the client’s substantive defense.
Sources
Further reading
Source PDF is a Westlaw printout mirrored from the Damien Charlotin hallucination database. We are working to add the underlying court docket (PACER, CourtListener, or court website) as a second source.
- Identity of the specific attorney or firm representing defendants who submitted the AI-drafted filings (the December 30, 2025 summary judgment order references the prior interim sanctions order without naming counsel).
- The specific AI tool used (the order describes only "artificial intelligence" generally).