JACQUELYN “JACKIE” LACEY, et al., Plaintiffs, v. STATE FARM GENERAL INSURANCE CO., Defendant Case No. CV 24-5205 FMO (MAAx); JAMS Case Reference No. 1210040394 United States District Court, C.D. California April 20, 2025 Wilner, Michael R., Special Master NOTICE OF INTENDED SANCTIONS AND FEE ORDERS FRCP 11, 37 1. The district court's order appointing me as Special Master authorizes me to “take all appropriate measures to perform the assigned duties fairly and efficiently.” I possess the Court's authority to “regulate all proceedings” before me pursuant to the Federal Rules of Civil Procedure. This includes the ability to impose “any noncontempt sanction provided by Rule 37” or other authority. (Docket # 70.) * * * 2. The candid declarations received from Plaintiff's lawyers in recent days reveal three uncontestable conclusions about their recent legal submissions: a. Mr. Copeland used several AI tools to outline Plaintiff's supplemental brief on the disputed privilege issues. Those tools resulted in the use of fake or inaccurate legal authorities in that brief. b. Neither the Ellis George nor the K&L Gates law firms properly checked the legitimacy of those authorities before filing the brief on the Court's docket or with me. c. The scope of the inaccurate authorities was considerably higher than that described in my April 15 OSC order. The declarations of Plaintiff's lawyers identified nine problematic citations (out of approximately 27 cited authorities in the brief), including a reference to a second non-existent judicial decision (Davis). 3. I accept the sincerity of the apologies in the lawyer's declarations regarding this conduct. I also accept Mr. Copeland's admission of responsibility for initiating this affair. Further, I note the contentions in the lawyers' submissions that, although they presented false legal authorities to me, the basic principles advanced in the brief (a privilege assertion cannot be used as a sword and a shield, etc.) are likely legitimate. 4. Nevertheless, justice requires a swift, certain, and measured response. It's simply unfathomable for me to consider that attorneys of this caliber would blithely outsource their legal research in such a haphazard and amateurish manner. The bogus filing caused me to have considerable doubts about the accuracy of all of factual and legal contentions that Plaintiff's lawyers advanced in this action — whether attributable to an AI foul-up or not. 5. Further, the lawyers' actions resulted in real expenses to Defendant. The reason for the supplemental briefing was because of Plaintiff's request that I order production of additional materials from the defense, a revised privilege log, and potentially in camera review of those documents. That request, in turn, caused Defendant: (a) to incur attorney's fees in preparing the defense supplemental brief; and (b) to bear the special master's fees for those proceedings pursuant to the original appointment order. * * * *9 6. Therefore, consistent with the provisions of Federal Rules of Civil Procedure 11[1] and 37[2] and the Court's appointment order, I provide notice that I am likely to impose the following non-monetary sanctions and fee shifting awards: a. Striking all three versions of Plaintiff's supplemental brief filed on April 14, 2025. b. Denying — on the merits, and for lack of support — Plaintiff's request for additional discovery relief as set forth in the Plaintiff's letter of April 4, 2025. c. Ordering the Ellis George and K&L Gates firms jointly and severally to pay reasonable attorney's fees that Defendant incurred in the preparation and filing of its supplemental brief (filed April 14). d. Ordering the Ellis George and K&L Gates firms jointly and severally to pay the special master fees incurred that relate to the receipt of the bogus briefs and the OSC proceedings. e. Requiring Mr. Copeland to communicate in writing to Ms. Lacey about the substance and outcome of these proceedings. 7. Defense counsel are directed to file a short declaration with JAMS listing the fees charged to their client as discussed in ¶ 5.c above. Please submit that by noon on April 23. I'll separately get a rough calculation of the special master fees per ¶ 5.d. 8. Pursuant to Federal Rules of Civil Procedure 11(c)(1) and 37(a)(5)(B), Plaintiff and her lawyers will have the opportunity to respond to this notice. That response (NTE five pages — no AI to be used), if any, will be due by 4 p.m. on Friday, April 25. I'll set the matter for a video hearing on Tuesday, April 29, 2025 at 10:30 a.m (PT). 9. If Plaintiff's lawyers do not intend to challenge this tentative outcome, they may promptly inform my case manager. I'll relieve them of the filing obligation and will vacate the video hearing.[3] * * * *10 10. The parties are informed that I personally advised District Judge Olguin on April 18 about the nature of these proceedings and the substance of the lawyers' declarations. (Docket # 70 at ¶ 3.) Footnotes [1] Rule 11(b) states, in relevant part, that when an attorney presents “a pleading, written motion, or other paper” to a court, the attorney “certifies that to the best of that person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances [that the] legal contentions are warranted by existing law.” Rule 11(c)(3-4) states that a court may impose a sanction “limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated.” That may include “nonmonetary directives” or “an order directing payment [ ] of part or all of the reasonable attorney's fees and other expenses directly resulting from the violation.” [2] Rule 37(a)(5)(B) states that a court “must, after giving an opportunity to be heard, require [ ] the attorney filing [an unsuccessful discovery] motion [ ] to pay the party or deponent who opposed the motion its reasonable expenses incurred in opposing the motion, including attorney's fees.” Litigation-related sanctions (for disobeying a court's discovery order, but generally applicable to other circumstances) may include prohibiting a party from “supporting or opposing designated claims or defenses” or “striking pleadings in whole or in part.” Fed. R. Civ. 37(b)(2)(A)(ii-iii). [3] I note that I have long been of the opinion that a fee award under Rule 37 should not be considered a personal sanction on an attorney that is potentially reportable to the State Bar of California pursuant to Business and Professions Code section 6068(o)(3). C.f. Medina v. United Parcel Service, No. C-06-791 JW PVT, 2007 WL 2123699 (N.D. Cal. 2007) (state statute “exempts” discovery-related proceedings from self-reporting obligation).