AI-Generated Fake Case Law Leads To Sanctions In Wage Suit

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The owner of a Missouri-based technology business that was ordered to pay an ex-employee roughly $311,000 in unpaid wages, damages and legal costs was sanctioned Tuesday by an appellate court for briefing "deficiencies," including submitting fake cases generated by artificial intelligence.

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The ruling was the first time the appellate court has had to weigh in on the "impact of fictitious cases being submitted to our court," the opinion said. (

In a ruling Tuesday, a three-judge panel of the Missouri Court of Appeals Eastern Division rejected Jonathan R. Karlen's appeal of a 2022 order levying the $311,000 penalty against him and two companies associated with him, Indigo Three Limited and The Karlen Group, in a wage fight with Molly Kruse.

It was the first time the appellate court has had to weigh in on the "impact of fictitious cases being submitted to our court," the opinion said.

"Due to numerous fatal briefing deficiencies under the Rules of Appellate Procedure that prevent us from engaging in meaningful review, including the submission of fictitious cases generated by artificial intelligence, we dismiss the appeal," Judge Kurt S. Odenwald wrote for the panel. "Given the frivolousness of the appeal, we also award damages to respondent [Kruse]."

The appellate court ordered Karlen to pay Kruse $10,000 "in damages for filing a frivolous appeal."

At issue in the case is a yearslong wage dispute between the parties.

In a court filing, Kruse said she was hired by Indigo Three Limited, which operates as Indigo Three Strategies, in 2015 as its chief creative officer. She worked for the business, which identifies itself on its LinkedIn page as a builder of websites and applications, until 2019, according to the filing.

After she was terminated, the company refused to pay her wages from 2018 and 2019, she said. Karlen is "the only known owner, officer and director of" Indigo Three Strategies and The Karlen Group, according to her filing.

Kruse had filed a petition in 2021 seeking damages, and the following year a state judge ruled against Karlen and the two companies. The judge ordered Karlen and the companies to pay Kruse $72,936.42 for unpaid wages, $145,872.84 in damages and roughly $92,000 in attorney fees and legal costs.

Karlen then mounted his appeal, "acting pro se purportedly on behalf of all defendants named in the original action," the appellate court's decision said.

In its decision, the appeals court took Karlen to task for inadequate and problematic filings. Multiple issues arose during the appeal, the opinion said, including untimely filings, numerous deadline extensions and claims by Kruse that Karlen had failed to make certain required filings.

"Particularly concerning to this court is that appellant submitted an appellate brief in which the overwhelming majority of the citations are not only inaccurate but entirely fictitious," the opinion said. "Only two out of the twenty-four case citations in appellant's brief are genuine."

The panel said Karlen "offers citations that have potentially real case names — presumably the product of algorithmic serendipity — but do not stand for the propositions asserted." He also "erroneously" cited Missouri statutes and rules, the opinion said.

"Throughout the appellate brief, appellant's cited statutory and rule authorities do not state what appellant claims," the ruling said. "For instance, some statutes and rules concern a completely different legal matter than what appellant purports, while others misstate the substance of the law."

The appeals court also took aim at a reply brief in which Karlen "apologized for submitting fictitious cases and explained that he hired an online 'consultant' purporting to be an attorney licensed in California to prepare the appellate brief."

"Appellant stated he did not know that the individual would use 'artificial intelligence hallucinations' and denied any intention to mislead the court or waste respondent's time researching fictitious precedent," the opinion said. "Appellant's apology notwithstanding, the deed had been done, and this court must wrestle with the results."

The "bogus citations" in Karlen's filing represent "a flagrant violation of the duties of candor appellant owes to this court," the panel said.

"We regret that appellant has given us our first opportunity to consider the impact of fictitious cases being submitted to our court, an issue which has gained national attention in the rising availability of generative A.I.," Judge Odenwald wrote for the panel.

In its ruling, the panel referred to the Mata v. Avianca case in New York federal court, in which a judge last year reprimanded attorneys for submitting a brief prepared by artificial intelligence that cited nonexistent case law.

"To protect the integrity of the justice system, courts around the country have been considering and/or enacting local rules specifically geared towards prohibiting or disclosing the use of generative A.I. in court filings," the Missouri appellate court said Tuesday.

Karlen's "fictitious citations alerted us and respondents to the probability of generative A.I.'s involvement even prior to appellant's disclosure after the fact," the panel said.

"We urge all parties practicing before this court, barred and self-represented alike, to be cognizant that we are aware of the issue and will not permit fraud on this court in violation of our rules," the appeals court said.

Judges Odenwald, Michael E. Gardner and Renée D. Hardin-Tammons were on the panel for the Missouri Court of Appeals Eastern District.

Karlen, who confirmed to Law360 that he is a candidate for a state legislature seat in Missouri, declined to comment Tuesday about the decision.

Counsel for Kruse didn't immediately respond to a request for comment.

Karlen is representing himself.

Kruse is represented by Bridget L. Halquist of Summers Compton Wells LLC.

The case is Kruse v. Karlen et al., case number ED111172, in the Missouri Court of Appeals Eastern District.

--Additional reporting by Ryan Boysen. Editing by Alanna Weissman.

Correction: A prior version of this story incorrectly identified the state in which Karlen is a candidate for public office. The error has been corrected.

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