AI hallucinatory citations lead to sanctions in Tercero v. Sacramento Logistics
Public reporting confirms that in Tercero v. Sacramento Logistics, Eastern District of California, attorney Sepideh Ardestani faced sanctions (including a $1,500 penalty) and a State Bar referral due to AI-generated, non-existent, misquoted, or unsupported citations in a motion for reconsideration. The events are documented by independent outlets, with a court order date of September 9, 2025. The case highlights the regulatory and professional discipline implications of AI-assisted miscitations in legal filings.
AI-generated citations in a court filing led to sanctions for an attorney in Tercero v. Sacramento Logistics.
Key facts
- What
- Public reporting confirms that in Tercero v.
- Incident date
- Sep 9, 2025
- Who
- Tercero v. Sacramento Logistics, LLC (Eastern District of California)
- Failure mode
- Hallucination
- AI surface
- Chatbot
- Severity
- Medium
What happened
The Eastern District of California case Tercero v. Sacramento Logistics involved the plaintiff's attorney Sepideh Ardestani filing a motion for reconsideration that relied on numerous problematic citations. The court found that two cited authorities did not exist, ten were misquoted, and twelve did not support the cited propositions. The court sanctioned Ardestani with a $1,500 monetary penalty and referred the matter to the State Bar of California, noting the conduct in part as AI-assisted. The primary court order issuing sanctions is dated September 9, 2025.
What broke inside the model
- 01 · TriggerA user asks for a fact, a citation, or a figure.
- 02 · Model stepThe model writes a fluent, confident answer.
- 03 · Control gapNothing ties the claim back to a real source.
- 04 · FailureA fabricated fact ships as if it were verified.
- 05 · ConsequenceThe false claim reaches a customer, a court, or the public.
Confidence holds, and even spikes, as the claim detaches from any source.
The incident centers on AI-generated content being used in a legal filing to support propositions, with multiple cited authorities either nonexistent, misquoted, or misaligned with the propositions. This reflects a production AI failure in the context of legal citation generation.
What it cost
Sources
- PressAI Hallucinations in Court Filings and Orders: A 2025 Review of Sanctions Across the Courts and Rule Proposalssternekessler.com
- PressLegal AI Governance Tracker: Tercero v. Sacramento Logisticslegalaigovernance.com
Cite this entry
https://failureindex.ai/failures/hallucinatory-citations-lead-sanctions-tercero-sacramenAI Failure Index. "AI hallucinatory citations lead to sanctions in Tercero v. Sacramento Logistics" (FI-0272). Realm Labs. https://failureindex.ai/failures/hallucinatory-citations-lead-sanctions-tercero-sacramen (indexed Jun 5, 2026).Data fields CC-BY 4.0, prose citation permitted. Incident ID FI-0272. Full dataset at /data.
Note from Realm Labs, the Index steward
How Realm would have caught this
- Prism
- OmniGuard
- AI Detection & Response (AIDR)
A runtime layer that watches the model's internal state can flag the moment a model commits to a claim it has no support for, and hold or reroute the response before it reaches a user. Realm reads those signals in real time rather than grading the transcript after the fact.