The court discovered the fabrications while preparing for oral argument and questioned Ghiorso on the record. Ghiorso maintained an existing no-AI drafting policy in his office but acknowledged that staff members had used the technology despite the prohibition. The exact filing date remains unspecified, but the court applied a precedent-setting formula derived from Ringo v. Colquhoun Design Studio, LLC (2025), calculating sanctions at roughly $500 to $1,000 per AI error. A potential minimum sanction would have reached $16,500; the court reduced the award to $10,000.
The decision arrives amid escalating judicial scrutiny of AI misuse in legal practice. Oregon has seen rising sanctions for AI errors, including federal penalties exceeding $100,000 in Green Building Initiative v. Peacock (2025). The Ghiorso case is now cited as a benchmark formula in federal rulings and underscores a critical vulnerability: even offices with explicit anti-AI policies remain exposed to hallucinations that evade quick verification. Attorneys should treat this as a floor, not a ceiling, for potential exposure and should implement verifiable controls over generative AI use by all staff members.