MEDICAL BUYERS GROUP LLC v. PENCE et al

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
ATHENS DIVISION
MEDICAL BUYERS GROUP, LLC d/b/a
INTEGRITY,
Plaintiff,
v.
CANDICE PENCE, et al.,
Defendants.
CIVIL ACTION NO.
3:25-cv-00105-TES
ORDER ON ATTORNEY’S FEES
Before the Court are Motions for Attorney’s Fees by Defendants Candice Pence
(“Candice”), P4 Biologix (“P4”), and Lisa Pence (“Lisa”). [Doc. 54]; [Doc. 55]. Plaintiff
Medical Buyers Group, LLC d/b/a Integrity (“Integrity”) filed Responses to the Motions,
challenging not only the amount of attorney’s fees requested by each Defendant, but
also the recoverability of fees at all in this case. [Doc. 56]; [Doc. 57]. For the following
reasons, the Court GRANTS Defendants’ Motions in part.
BACKGROUND
Defendants previously filed Motions to Dismiss. [Doc. 30]; [Doc. 31]. Integrity
filed Responses. [Doc. 34]; [Doc. 37]. Defendants then filed Replies to the Responses.
[Doc. 40]; [Doc. 41]. In their Replies, Defendants pointed out that some of the cases
Integrity cited in its Responses did not exist. See, e.g., [Doc. 40, p. 2]. Defendants also
mentioned sanctions against counsel for Integrity for citing to hallucinated cases, with
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P4 and Lisa explicitly requesting that the Court impose sanctions. [Doc. 40, p. 2 (“As a
result, the Court should not only dismiss the FAC, but should impose sanctions based
on Integrity’s improper use of fake legal authority.”)]; [Doc. 41, p. 4 n.3 (“If that is the
case, Plaintiff’s conduct is sanctionable.”)].
Because of these allegations, the Court issued an Order to Show Cause, and,
because of the Court’s error, an Amended Order to Show Cause. [Doc. 43]. In it, the
Court found Defendant’s allegations credible, ordered counsel for Integrity to show
cause why he should not be sanctioned, and ordered all counsel who filed an entry of
appearance or whose name appeared on any pleading in the case to attend the show
cause hearing on November 18, 2025. [Id.]. Counsel for Integrity filed a Response in
which he admitted to using hallucinated cases and detailed the steps he had already
taken to remedy the mistake. [Doc. 44]. Those steps included telling Integrity about the
mistake, requesting an amount for attorney’s fees from Defendants’ counsel, verifying
all other case citations in each Response, preparing Amended Responses, changing the
citation verification procedures in his law firm, and completing a continuing legal
education course on “Common AI Mistakes.” [Id. at pp. 11–12]. At the hearing, the
Court informed counsel for Integrity that, because of his ownership of his mistakes, the
only punishment the Court would impose is the payment of attorney’s fees. [Doc. 51].
The Court then issued an Order giving Defendants 14 days to request attorney’s fees
and allowing counsel for Integrity a chance to respond to the requests. [Doc. 52].
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Defendants filed their requests, and Integrity filed its Reponses. [Doc. 54]; [Doc. 55];
[Doc. 56]; [Doc. 57]. The Court now addresses the issue of attorney’s fees and puts this
AI saga to rest.
LEGAL AUTHORITY
A court may issue sanctions under many sources. Relevant to this case, the
authority to issue sanctions can come from Federal Rule of Civil Procedure Rule 11, the
District Court’s inherent authority, and the Court’s local rules. Federal Rule of Civil
Procedure 11 reads, in relevant part:
(b) Representations to the Court. By presenting to the court a pleading,
written motion, or other paper--whether by signing, filing, submitting, or
later advocating it--an attorney or unrepresented party certifies that to the
best of the person's knowledge, information, and belief, formed after an
inquiry reasonable under the circumstances:
. . .
(2) the claims, defenses, and other legal contentions are warranted
by existing law or by a nonfrivolous argument for extending,
modifying, or reversing existing law or for establishing new law;
(c) Sanctions.
(1) In General. If, after notice and a reasonable opportunity to
respond, the court determines that Rule 11(b) has been violated, the
court may impose an appropriate sanction on any attorney, law firm,
or party that violated the rule or is responsible for the violation . . .
(2) Motion for Sanctions. A motion for sanctions must be made
separately from any other motion and must describe the specific
conduct that allegedly violates Rule 11(b). The motion must be
served under Rule 5, but it must not be filed or be presented to the
court if the challenged paper, claim, defense, contention, or denial is
withdrawn or appropriately corrected within 21 days after service or
within another time the court sets . . .
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(3) On the Court's Initiative. On its own, the court may order an
attorney, law firm, or party to show cause why conduct specifically
described in the order has not violated Rule 11(b).
(4) Nature of a Sanction. A sanction imposed under this rule must
be limited to what suffices to deter repetition of the conduct or
comparable conduct by others similarly situated. The sanction may
include . . . if imposed on motion and warranted for effective
deterrence, an order directing payment to the movant of part or all
of the reasonable attorney's fees and other expenses directly
resulting from the violation.
(5) Limitations on Monetary Sanctions. The court must not impose
a monetary sanction:
. . .
(B) on its own, unless it issued the show-cause order under
Rule 11(c)(3) before voluntary dismissal or settlement of the
claims made by or against the party that is, or whose
attorneys are, to be sanctioned.
(6) Requirements for an Order. An order imposing a sanction must
describe the sanctioned conduct and explain the basis for the
sanction.
Fed. R. Civ. P. 11(b)–(c). If Rule 11’s requirements are not met, a Court still has inherent
authority to impose sanctions upon a finding of bad faith. See In re Mroz, 65 F.3d 1567,
1575 (11th Cir. 1995) (stating that Rule 11 “does not displace a court’s inherent power to
impose sanctions for a parties’ bad faith conduct”).
“The Court’s inherent power is derived from the Court’s need ‘to manage its
own affairs so as to achieve the orderly and expeditious disposition of cases.’” Versant
Funding, LLC v. Teras Breakbulk Ocean Navigation Enters., LLC, No. 17-cv-81140, 2025 WL
1440351, at *3 (S.D. Fla. May 20, 2025) (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 43
(1991)) (alterations accepted). “A court’s ‘inherent power extends to a full range of
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litigation abuses’ and ‘must continue to exist to fill in the interstices.’” Id. (quoting
Chambers, 501 U.S. at 46). The prerequisite for exercising its inherent authority to impose
sanctions is a finding of bad faith. McDonald v. Cooper Tire & Rubber Co., 186 F. App’x.
930, 931 (11th Cir. 2006). “A finding of bad faith is warranted where an attorney
knowingly or recklessly raises a frivolous argument . . . .” Johnson v. Dunn, 762 F. Supp.
3d 1241, 1252 (N.D. Ala. 2025) (quoting Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir.
1998)) (internal quotations omitted). Furthermore, if there is no evidence of subjective
bad faith, the bad faith requirement may still be met if the attorney’s conduct is “so
egregious that it could only be committed in bad faith.” Id. (quoting Purchasing Power,
LLC v. Bluestern Brands, Inc., 851 F.3d 1218, 1224–25 (11th Cir. 2017)).
Finally, the Court has power to sanction (although not necessarily award
attorney’s fees) under its local rules. Local Rule 83.2.1(B) states that “[d]iscipline for
misconduct defined in these rules may consist of . . . monetary sanctions . . . or any
other sanction the Court may deem appropriate.” LR83.2.1(B), MDGa.
DISCUSSION
Integrity’s Responses are substantively almost identical, so the Court addresses
both simultaneously. Compare [Doc. 56]; [Doc. 57]. Broadly speaking, in its Responses
Integrity argues that the Court cannot impose sanctions under Rule 11 in this case. [Doc.
56, p. 2]. Upon consideration, the Court agrees. Defendants did not file separate
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motions for sanctions, which is required to issue sanctions under Rule 11(c)(2).1 Fed. R.
Civ. P. 11(c)(2) (“A motion for sanctions must be made separately . . . .”). And, because
Defendants didn’t make a separate motion for sanctions under Rule 11, they necessarily
could not have allowed Plaintiff the requisite 21-day safe harbor provision to cure the
conduct that ran afoul of Rule 11. Fed. R. Civ. P. 11(c)(2); see also Huggins v. Leuder,
Larkin & Hunter, LLC, 39 F.4th 1342, 1346 (11th Cir. 2022) (“[H]e can draft a sanctions
motion and serve it. . . [b]ut he cannot file that motion just yet. Instead, service of the
motion notifies the opposing party of the possible violation and starts the 21-day safe
harbor clock.”). So, the Court cannot impose sanctions under Rule 11(c)(2).
That leaves 11(c)(3), which allows a court to issue a show cause order and
sanction a party “on its own.” Fed. R. Civ. P. 11(c)(3). However, Defendants Lisa and P4
requested the Court to sanction counsel for Integrity, so the Court is not acting sua
sponte here. See Perdum v. Wells Fargo Bank, N.A., No. 1:17-cv-972-SCJ, 2020 WL 1467252,
at *1 n.3 (N.D. Ga. Jan. 6, 2020) (denying a request to impose sanctions under Rule
11(c)(3) because the Court is not acting sua sponte); Ruhlen v. Holiday Haven Homeowners,
Inc., 28 F.4th 226, 228 (11th Cir. 2022) (defining “motion” and stating that acting sua
sponte is not granting or denying “anyone else’s request”); Aldabe v. Terracon
Consultants, Inc., No. 3:22-cv-326-MMH-MCR, 2022 WL 2643589, at *1 n.1 (M.D. Fla. July
1 To be clear, Defendants did file separate motions for attorney’s fees. [Doc. 54]; [Doc. 55]. However, those
Motions were in response to the Court’s Order sua sponte finding that sanctions were warranted. [Doc.
52]. They are not separate motions for sanctions as required by Rule 11(c)(2).
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8, 2022) (“If the Court acted on Plaintiff’s requests, the Court would not be acting sua
sponte.”). Therefore, the Court cannot impose sanctions under Rule 11(c)(3). That means,
as Integrity argues, the Court cannot impose sanctions under Rule 11 at all.
But, “the Court still has the inherent authority to impose sanctions on a party
even when the Court would otherwise be prohibited from doing so under Rule 11.”
Lechter v. Aprio, LLP, 622 F. Supp. 3d 1297, 1309 (N.D. Ga. 2022) (citing In re Mroz, 65
F.3d 1567, 1575 (11th Cir. 1995)). As stated previously, this requires a showing of bad
faith. McDonald, 186 F. App’x. at 931. The Court recognizes counsel for Integrity’s
sincerity in his apology and his thorough efforts to rectify the situation. The Court also
recognizes that this was not intentional. However, courts have found that citing to
hallucinated cases constitutes bad faith, even when unintentional. See United States v.
McGee, No. 1:24-cv-112-TFM, 2025 WL 2888065, at *8 (S.D. Ala. Oct. 10, 2025) (“Given
the broad attention given to the problem with AI generated cases . . . no attorney can
claim ignorance . . . Accordingly, this misconduct is tantamount to bad faith and
sanctionable under the Court’s inherent authority.”); Johnson, 762 F. Supp. 3d at 1252
(“A finding of bad faith is warranted where an attorney knowingly or recklessly raises a
frivolous argument . . . .”) (quoting Barnes, 158 F.3d at 1214) (internal quotations
omitted); Benjamin v. Costco Wholesale Corp., 779 F. Supp. 3d 341, 350 (E.D.N.Y. 2025)
(finding bad faith despite sincere apologies and actions such as taking CLE courses on
AI). This Court—like it said it would in the November 18, 2025, hearing—follows suit
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and imposes sanctions in the form of attorney’s fees under its inherent authority.
Imposing sanctions must comport with due process requirements. In re Engle
Cases, 283 F. Supp. 3d 1174, 1203 (M.D. Fla. 2017). What does due process look like here?
“In general, regardless of whether the Court invokes Rule 11, 28 U.S.C. § 1927, or its
inherent authority, it must provide a lawyer (or a party) notice of the possibility of
sanctions, the reasons why the court is contemplating sanctions, and an opportunity to
respond.” Id. at 1204 (citing Amlong & Amlong, P.A. v. Denny's, Inc., 500 F.3d 1230, 1242
(11th Cir. 2007) (“Plainly, an attorney threatened with sanctions under § 1927 is entitled
to a hearing.”)); see also Thomas v. Tenneco Packaging Co., Inc., 293 F.3d 1306, 1321 (11th
Cir. 2002) (a lawyer facing sanctions under a court’s inherent authority “must be
provided with notice and ‘an opportunity to respond orally or in writing, to the
invocation of such sanctions and to justify his actions.’”) (quoting In re Mroz, 65 F.3d at
1575–76). That has occurred here. The Court issued a show cause order informing
counsel for Integrity of his alleged wrongdoing and the possibility of sanctions,
provided him with an opportunity to respond, held a hearing, required the parties to
make their own motions for attorney’s fees, and then allowed counsel for Integrity to
respond to those motions. [Doc. 43]; [Doc. 44]; [Doc. 51]; [Doc. 52]; [Doc. 56]; [Doc. 57].
Counsel for Integrity has had notice and opportunities to respond at each step of the
sanctions process.
With due process satisfied, the Court turns to the issue of the amount of fees
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counsel for Integrity owes each Defendant. P4 and Lisa’s attorneys seek $9,560.83. [Doc.
54, p. 1]. Candice’s attorneys seek $12,028.50. [Doc. 55, p. 1]. In total, Defendants’
attorneys seek $21,589.33 in attorney’s fees.
“When a court uses its inherent authority to award a sanction in the form of
attorney's fees, legal fees awarded ‘must be compensatory rather than punitive’—at
least in civil litigation.” J.C. Penney Corp., Inc. v. Oxford Mall, LLC, 100 F.4th 1340, 1347
(11th Cir. 2024) (citing Goodyear Tire & Rubber Co. v. Haeger, 581 U.S. 101, 108 (2017)).
“Because the purpose of this fee-shifting mechanism is to reimburse the victim, a causal
connection is required between the fees awarded and the sanctioned party's
misconduct.” Id. (citing Goodyear, 581 U.S. at 108–09). In other words, the fees must “not
have incurred ‘but for’” the misconduct. Id. (citing Goodyear, 581 U.S. at 109).
The process for determining the amount of fees awarded is a case-by-case
analysis. As the Eleventh Circuit explained,
the court's fundamental job is to decide whether a legal fee would have
existed even without the sanctioned conduct. This sometimes means
evaluating each specific litigation expense—but not always. The Supreme
Court has been careful to avoid turning judges into auditors: courts
assessing fees need not, and indeed should not, become green-eyeshade
accountants. So rough justice is the aim, not auditing perfection.
Along these lines, a district court may consider its overall sense of the suit
and use estimates in calculating and allocating an attorney's time. It could
decide, for example, that all (or a set percentage) of a particular category of
expenses satisfy the standard. In exceptional cases, the court could even
award all fees incurred after some significant event during the litigation.
Id. (internal citations omitted) (internal quotations omitted). Accordingly, the Court
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reviewed Defendants’ requests and counsel for Integrity’s line-item objections. [Doc. 54-
1]; [Doc. 55-1]; [Doc. 56-1]; [Doc. 57-1]. The Court also considered the “overall sense of
the suit” and its goal in effectuating justice in the form of compensation rather than
punishment. Specifically, the Court considered that this is a case with multiple
Defendants who should be compensated for wasting time researching hallucinated
cases. After all, it should be time consuming to acquire enough confidence in the non-
existence of something to accuse the other party of fabricating it. At the same time,
requiring counsel for Integrity to pay twice for one wrong errs toward punishment
rather than compensation. And—since it is a significant portion of the requested fees—
all counsel for Defendants were present at the show cause hearing, but the Court
imposed that requirement, not counsel for Integrity. To require counsel for Integrity to
pay for the Court’s order also errs toward punishment. With those considerations in
mind, the Court exercises its considerable discretion under its inherent powers and
ORDERS counsel for Integrity to pay $10,000 in attorney’s fees as sanctions for citing
nonexistent cases hallucinated by AI. Counsel will pay $5000 to counsel for P4 and Lisa,
and $5000 to counsel for Candice within 60 days.
SO ORDERED, this 20th day of January, 2026.
S/ Tilman E. Self, III
TILMAN E. SELF, III, JUDGE
UNITED STATES DISTRICT COURT
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