Mundy v. Clickstop, Inc. (2025)

Case details
Full caption
Douglas County Billy MUNDY and Amber Mundy v. CLICKSTOP, INC
Country
United States
Jurisdiction
Nebraska (NE)
Court
Nebraska Supreme Court
Decided
2025
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.12025 WL 3073933 (Neb.Dist.Ct.) (Trial Order)District Court of Nebraska.Douglas CountyBilly MUNDY and Amber Mundy, Husband and Wife, Plaintiffs,v.CLICKSTOP, INC., d/b/a under a fictitious name, US Cargo Control, an Iowa Corporation, Defendant,andCRETE CARRIER CORPORATION, Defendant Employer, for workers' compensation subrogation only.No. CI 23-6600.October 17, 2025.Editor's Note: This decision contains discussion of citation references that are incorrect or do notactually exist. These invalid citations appeared in the original court opinion and have been preserved aswritten since they are part of the official record. Any links to these invalid citations have been removed.Order for SanctionsMichael R Faz, mfaz@ctagd.com.James E Harris, Harris & Associates, P.C., L.L.O., 13625 California St, 1st Floor, Omaha, NE 68154,jharris@harrislawomaha.com.Daniel P Lenaghan, dlenaghan@mlwdlaw.com.Hon. James M. Masteller, District Judge.*1 THIS MATTER came before the Court on September 10, 2025, for hearing pursuant to the Court's Order to Show Cause filedon September 1, 2025. James E. Harris, counsel for Plaintiffs, appeared. Michael R. Faz, counsel for Defendant Clickstop, Inc. d/b/a US Cargo Control (“Clickstop”), appeared. Daniel P. Lenaghan, counsel for Defendant Employer Crete Carrier Corporation,appeared. The hearing was held on the record. The Court takes judicial notice of all filings in this case.BACKGROUNDOn July 14, 2025, Defendant Clickstop filed a Motion for Summary Judgment and a Brief in Support of Defendant's Motion forSummary Judgment. On July 15, 2025, the Court filed a Summary Judgment Scheduling Order containing briefing deadlinesregarding the Motion.Briefs FiledOn July 28, 2025, Mr. Harris filed the following briefs: 1) Plaintiffs' Opposition MSJ: Conflict of Laws – Punitive Damages;2) Plaintiffs' Opposition to Summary Judgment Based on Circumstantial Evidence; 3) Plaintiffs' Opposition to UCC Statute ofLimitations for Express Warranty Future Performance Exception; 4) Plaintiffs' Opposition MSJ: Apparent Manufacturer andImporter Liability; and 5) Plaintiffs' Combined Spoliation Motion for Sanctions and Opposition MSJ Brief.On August 1, 2025, Defendant's counsel filed 1) a Reply Brief in Support of Defendant's Motion for Summary Judgment, and2) a Brief in Opposition to Plaintiffs' Combined Spoliation Motion for Sanctions.
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.2On August 4, 2025, Mr. Harris filed Plaintiffs' Reply to USCC Opposition to Spoliation Motion. On August 5, 2025, Mr. Harrisfiled Plaintiffs' Supplemental Opposition to UCC Statute of Limitations Defense – Express Warranty for Future PerformanceException Under UCC § 2-725(2).On August 6, 2025, Defendant's counsel filed a letter brief.On August 6, 2025, Mr. Harris filed Plaintiffs' Supplemental Reply to UCC Statute of Limitations – Inapplicability of ExpressWarranty for Future Performance Exception Under UCC § 2-725(2) Where No Limitation or Disclaimer Exists Under Neb.U.C.C. § 2-316.On August 11, 2025, Mr. Harris filed an Addendum to Plaintiffs' Reply Brief Clarifying: 1. The Limited Scope of UCC §2-725,and 2. Neb. Rev. Stat. §25-224 as the Controlling Product Liability Limitations Provision.False Statements of LawThe hearing on Defendant's Motion for Summary Judgment was held on August 4, 2025, and August 5, 2025. During thehearing, Defendant's counsel expressed concerns regarding the validity of the case law cited in Plaintiffs' briefing. The Court,having reviewed said briefing, developed reason to believe that Plaintiffs' briefing contained false statements of law. Below arethe most problematic portions of Plaintiffs' briefing.“Plaintiffs' Opposition MSJ: Apparent Manufacturer and Importer Liability” filed by Plaintiffs on July 28, 2025.Page 5• Mr. Harris writes, “Nebraska law (Stones v. Sears, Roebuck & Co., 251 Neb. 560, 558 N.W.2d 540, 570–71) provides thatwhether a company presented itself as a manufacturer is a classic jury question if the facts support ‘holding out.”’*2 • This appears to be a false statement of law as the Nebraska Supreme Court in Stones did not discuss jury questions andexpressly declined to adopt the apparent manufacturer doctrine. In addition, the pincite provided discusses the Magnuson-MossWarranty Act, not the apparent manufacturer doctrine.• Mr. Harris writes, “Restatement (Third) of Torts §20 and 15 U.S.C. § 2052(a)(11) establish strict liability where importerscontrol design, QC, or labeling—even if physical manufacturing is delegated.”• This appears to be a false statement of law as Restatement (Third) of Torts: Products Liability § 20 simply provides the“Definition of ‘One Who Sells or Otherwise Distributes”’ and 15 U.S.C. §2052(a)(11) defines “manufacturer” as “any personwho manufactures or imports a consumer product.”• Mr. Harris writes, “Nebraska's functional test is explicit: ‘For purposes of imposing strict liability in tort, a manufacturer hasbeen defined as one who designs, produces, makes, fabricates … If the seller actively participates in … production, preparation,or processing … he may be treated as a manufacturer…’ Rahmig v. Mosley Mach. Co., 226 Neb. 423, 442 N.W.2d 33, 45.”• This appears to be a false statement of law as this alleged direct quotation does not exist in the provided case.“Plaintiffs' Opposition to UCC Statute of Limitations for Express WarrantyFuture Performance Exception” filed by Plaintiffs on July 28, 2025.
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.3Page 2• Mr. Harris writes, “USCC's claim that the cause accrued at tender is squarely contradicted by Nebraska authority recognizingthat such warranties for future performance are governed by the discovery rule, especially for latent defects (ControlledEnvironments Constr., Inc. v. Key Indus., 2018 WL 1911384 (D. Neb.); Lewy v. Remington Arms Co., 836 F.2d 1104, 1112;Hogan v. Norfleet, 191 Neb. 123).”• Controlled Environments Constr., Inc. v. Key Indus., 2018 WL 1911384 (D. Neb.) is not the correct case citation. The citation“2018 WL 1911384” leads the Court to Legal Resource Index, “TITLE: GRASSROOTS CHALLENGES TO THE EFFECTSOF PRISON SPRAWL ON MENTAL HEALTH SERVICES FOR INCARCERATED PEOPLE. (Special Issue: The Geographyof Confinement).” The Court was able to locate a case, Controlled Env'ts Const., Inc. v. Key Indus. Refrigeration Co., 266 Neb.927, 938, 670 N.W.2d 771, 781 (2003) which stated that “[w]hen a warranty extends to future performance, as it does here,the statute of limitations is tolled and the cause of action does not begin to accrue until the breach of that warranty is or shouldhave been discovered.” Id.• This appears to be a false statement of law as Lewy v. Remington Arms Co., 836 F.2d 1104 (8th Cir. 1988) does not stand forthe proposed proposition as it discusses punitive damages, evidentiary rulings, and trial errors, not the discovery rule.• This appears to be a false statement of law as Hogan v. Norfleet, 191 Neb. 123 does not appear to exist. The Court was ableto locate Hogan v. Norfleet, 113 So. 2d 437, 438 (Fla. Dist. Ct. App. 1959), but this case involved specific performance of acontract under Florida law.• Mr. Harris writes, “Plaintiff gave commercial notice of breach as soon as practicable upon discovering the failure, per industryand UCC standards (Schiavone Construction Co. v. Time Equipment Rental, Inc., 205 Neb. 442, 287 N.W.2d 814).”*3 • This appears to be a false statement of law as Schiavone Construction Co. v. Time Equipment Rental, Inc., 205 Neb. 442,287 N.W.2d 814 does not appear to exist. The Court was able to locate Schiavone Const. Co. v. Time, Inc., 847 F.2d 1069, 1072(3d Cir. 1988), but this was a defamation case.Page 4• Mr. Harris writes, “Such warranties require actual use and exposure; they cannot be confirmed (or breached) until a failureoccurs, rendering the discovery rule for accrual mandatory (Controlled Environments, Lewy, Hogan).”• This appears to be a false statement of law as Hogan v. Norfleet, 191 Neb. 123 does not appear to exist and Lewy v. RemingtonArms Co., 836 F.2d 1104 (8th Cir. 1988) does not discuss the discovery rule.• Mr. Harris writes, “Nebraska law and UCC § 2-313 make clear that no formal ‘warranty’ or duration language is required;reliance is presumed where product descriptions form the basis of the deal (Freeman v. Hoffman-La Roche, Inc., 260 Neb. 552,618 N.W.2d 827; Cipollone v. Liggett Group, Inc., 505 U.S. 504).”• This appears to be a false statement of law as Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 525 (1992) does not mentionNebraska law or UCC § 2-313. Rather, it references New Jersey statute, N.J.Stat.Ann. § 12A:2–313(1)(a) (West 1962) whichprovides a claim for breach of an express warranty.• This appears to be a false statement of law as although Freeman v. Hoffman-La Roche, Inc., 260 Neb. 552, 574–75, 618N.W.2d 827, 844 (2000) references a claim of express warranty under Neb. U.C.C. § 2–313 (Reissue 1992), the reference doesnot include the proposition that reliance is presumed where product descriptions form the basis of the deal.
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.4Page 5• Mr. Harris writes, “Plaintiff provided timely notice per Neb. Rev. Stat. § 2-607(3)(a); see also Schiavone Construction Co.”• This appears to be a false statement of law as Schiavone Construction Co. v. Time Equipment Rental, Inc., 205 Neb. 442,287 N.W.2d 814 does not appear to exist.• Mr. Harris writes, “No ‘magic words' or formal warranty documentation is required; Cipollone and Nebraska law presumereliance on described product attributes shown at sale.”• This appears to be a false statement of law as Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 525 (1992) does not contain thisproposition of law.“Plaintiffs' Combined Spoliation Motion for Sanctions and Opposition MSJ Brief” filed by Plaintiffs on July 28, 2025.Page 3• Mr. Harris writes, “In re Ex Parte Application of Levi Strauss & Co., No. 18-mc-80123-JSC (N.D. Cal. Aug. 15, 2018):‘[W]hen a website operator has the power to control the accessibility of data in the Wayback Machine, its removal may constitutespoliation.”’• This appears to be a false statement of law as In re Levi Strauss & Co., No. 18-MC-80123-JSC, 2018 WL 3872790 (N.D. Cal.Aug. 15, 2018), does not contain this specific quote or even the word “spoliation.”• Mr. Harris writes, “Under Panhandle Coop. Ass'n v. Whirlpool Corp., 250 Neb. 667, 675 (1996), and Lewy v. Remington ArmsCo., 836 F.2d 1104, 1112 (8th Cir. 1988), sanctions—including exclusion of exclusion or [sic] measurement defenses and denialof summary judgment—are warranted where negligent spoliation substantially prejudices the opposing party.”*4 • This appears to be a false statement of law as Panhandle Coop. Ass'n v. Whirlpool Corp., 250 Neb. 667, 675 (1996)does not appear to exist.On August 1, 2025, counsel for Defendant Clickstop filed a “Reply Brief in Support of Defendant's Motion for SummaryJudgment.” In the brief, defense counsel pointed out “significant issues” with Plaintiffs' brief. First, defense counsel notedthat Plaintiffs incorrectly cite to Controlled Env'ts Const., Inc.1 In addition, defense counsel pointed out that Lewy2 doesnot address the future performance exception or warranties and is based on Missouri substantive law. Further, defense counselpointed out that Hogan v. Norfleet3 could not be located except for a 1959 Florida case and Schiavone4 could not be located.In addition to raising concerns in its brief, defense counsel raised concerns with incorrect quotations and citations in Plaintiffs'briefs at the hearing held on August 4, 2025. Defense counsel asserted that there were quotations where no quotations actuallyexisted as well as citations to cases that could not be found. In response, Mr. Harris thereafter filed two additional reply briefs.“Plaintiffs' Reply to USCC Opposition to Spoliation Motion” filed by Plaintiffs on August 4, 2025.In this filing, Mr. Harris states as follows:III. PLAINTIFF'S RESPONSE TO DEFENDANT'S MISQUOTE ALLEGATION ANDLEVI STRAUSS CITATION
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.5On page 3 of its Reply Brief, Defendant contends:“As a preliminary note, Plaintiff's motion should be viewed with great skepticism. Forexample, on page 3 Plaintiffs quote In re Levi Strauss & Co., No. 18-mc-80123-JSC (N.D.Cal. Aug. 15, 2018). The quote cited cannot be located by Defendant. This happens severaltimes throughout their Motion, which is addressed in the footnotes.”A. THE CASE EXISTS AND IS ATTACHEDPlaintiff clarifies that In re Ex Parte Application of Levi Strauss & Co., No. 18-mc-80123-JSC, 2018 WL 6615645 (N.D. Cal. Aug. 15, 2018), is a genuine, published district courtopinion and is attached for the Court's convenience. This order is directly relevant to theissues of Internet Archive (Wayback Machine) evidence and digital preservation in thismatter.B. ADMISSION AND CLARIFICATION REGARDING THE QUOTATIONFORMATTINGPlaintiff acknowledges that the following sentence was presented as a direct quote: “When awebsite operator has the power to control the accessibility of data in the Wayback Machine,its removal may constitute spoliation.”This statement is a fair and accurate summary of the effect and holding of the LeviStrauss order but is not a verbatim quotation from the opinion. The inclusion of quotationmarks was a scrivener's error. It should have been bracketed or otherwise identified asa paraphrase, consistent with how other authorities were cited within the same section.Importantly, this isolated formatting error stands in contrast to Plaintiff's handling of thesubsequent two authorities, Gatto and Allied Signal, which were properly paraphrased orsummarized without quotation marks, as they were not direct language from the opinions.This demonstrates Plaintiff's standard practice of careful attribution and citation formatting.*5 C. THE ACTUAL LANGUAGE AND RATIONALE FROM THE ORDERThe Levi Strauss (2018) order includes, among other relevant language: “The WaybackMachine FAQ's state that an individual or other entity can request that a site beexcluded from the Wayback Machine. (Id. at 5:10-12; see also https://archive.org/about/faqs.php#The_Wayback_Machine (last visited August 14, 2018).)” (Order p.3).Further:“For the reasons described above, the Court GRANTS the 1782 application with thefollowing conditions:1. The Subpoena is limited to seeking documents from Internet Archive in thethree categories previously indicated: (1) whether New Yorker requested that thewww.newyorker.de website be excluded from the Wayback Machine, (2) whether NewYorker requested that the history for the www.newyorker.cr and www.newyorker.sk websitebe excluded from the Wayback Machine; and (3) copies of any such website history that stillexists even though it has been hidden from public view.”
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.6(Conclusion p.6).The court's rationale is that the ability to control and potentially remove or restrict accessto relevant archived website data during litigation justifies targeted discovery—preciselybecause such actions raise concerns about digital preservation and potential spoliation.D. WHY PLAINTIFF'S SUMMARY WAS FAIRAlthough not a verbatim quote, Plaintiff's summary accurately reflects the holding: if a partyhas the ability to control access to relevant archival website data and arranges for its removalafter litigation is foreseeable, that conduct is properly the subject of discovery and mayimplicate spoliation principles. The reasoning and outcome of the order support exactly thatinterpretation.E. SCOPE AND PURPOSE OF PLAINTIFF'S MOTIONPlaintiff's pending motion does not seek a spoliation or adverse inference jury instruction atthis time. Nebraska law, as set out in State v. Devlin, 639 N.W.2d 631, 649 (Neb. 2002), limitssuch instructions to cases of intentional or bad faith destruction, with limiting instructionsavailable for negligent loss. Plaintiff's briefing and proposed instructions are clear on thisdistinction. Now, Plaintiff seeks only leave for limited third-party and digital discoveryrelated to recent changes in Defendant's Wayback Machine records and disclosures, asprompted by Defendant's July 14, 2025, expert disclosure and detailed in Plaintiff's affidavit.The issue of any jury instruction will be properly resolved, if necessary, at pretrial, trial, orjury instruction conference.F. PROFESSIONAL RESPONSIBILITY AND RELIEF REQUESTEDPlaintiff's counsel takes full responsibility for correcting this inadvertent mistake and hasnow clarified the record. The substantive legal argument remains fully supported by theattached authority. Genuine issues of material fact prevent summary judgment. The reliefrequested at this stage is leave for the discovery necessary to ensure the factual record iscomplete and preserved for future stages.(Id., pp. 5-8).“Plaintiffs' Supplemental Opposition to UCC Statute of Limitations Defense – Express Warrantyfor Future Performance Exception Under UCC § 2-725(2)” filed by Plaintiffs on August 5, 2025.*6 In this filing, Mr. Harris states as follows:CRITICAL CITATION ERRORS REQUIRING IMMEDIATE CORRECTIONYour Honor, I respectfully bring to the Court's attention errors in case citations brought tomy attention yesterday, contained in Plaintiffs' Opposition to UCC Statute of Limitationsbrief filed July 28, 2025. After thorough verification, I must correct the following citationson page 2:
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.71. CORRECTED CITATION:INCORRECT: “Controlled Environments Constr., Inc. v. Key Indus., 2018 WL 1911384(D. Neb.)”CORRECT: Controlled Environments Construction, Inc. v. Key Industrial Refrigeration Co.,266 Neb. 927, 670 N.W.2d 771 (2003)Court: Nebraska Supreme Court (NOT D. Neb.)Year: 2003 (NOT 2018)Relevance: This case actually supports Plaintiffs' argument - warranties promising goodswill be “free from defects” for a specified period explicitly extend to future performanceunder Nebraska law.2. CITATION TO BE REMOVED:“Hogan v. Norfleet, 191 Neb. 123” - This Nebraska case does not exist. Only Hogan v.Norfleet, 113 So.2d 437 (Fla. Dist. Ct. App. 1959) exists - a Florida case about gas franchises,unrelated to warranty law.3. VERIFIED CITATION:Lewy v. Remington Arms Co., 836 F.2d 1104 (8th Cir. 1988) - Accurate but deals withdocument retention, not future performance warranties.CONCLUSIONThese corrections strengthen rather than weaken Plaintiffs' position. I respectfully requestthe Court's understanding regarding these citation errors and confirmation that the correctedauthorities support Plaintiffs' opposition to summary judgment.(Id., pp. 4-5).Show Cause HearingOn September 1, 2025, the Court issued an Order to Show Cause in which it directed Mr. Harris to appear before the Courton September 10, 2025, and show cause why the Court should not impose sanctions on him for repeatedly including falsestatements of law in his court filings. The Court noted in its Order that the legal errors and false case law in Plaintiffs' filings wereconsistent with problems other courts have observed when attorneys utilized generative artificial intelligence to produce courtfilings without adequately checking the assertions and citations within those filings. Consequently, the Court indicated that ithad grave concerns regarding the extent to which it could rely on the authorities listed in Plaintiffs' motions and briefs. The Courtspecified in its Order that Mr. Harris would be afforded the opportunity at the hearing to adduce evidence regarding, among otherthings, 1) whether he utilized generative artificial intelligence in court filings without verifying the results produced therefrom,2) whether he engaged in bad faith conduct, and 3) the appropriate sanction(s), if any, to be imposed on him by the Court.
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.8During the hearing held on September 10, 2025, Mr. Harris adduced evidence and presented the Court with oral and writtenargument. Specifically, Mr. Harris offered Exhibit 70, “Plaintiffs Counsel's Response to Order,” which was received intoevidence by the Court. Mr. Harris separately filed this same document with the Clerk of Court on September 10, 2025. Mr.Harris also offered Exhibit 71, a privilege log, which was received into evidence by the Court. Finally, Mr. Harris offered Exhibit72, a thumb drive containing his legal research and supporting materials which the Court treats as protected work product. TheCourt received Exhibit 72 into evidence under seal for purposes of appellate review.*7 Mr. Harris then supplied the Court with oral argument. Mr. Harris advised he had met with his clients in person to advisethem of the Court's Order to Show Cause. Mr. Harris further advised the Court that he takes full responsibility for the errors inhis court filings, and that this will never happen again. Mr. Harris stated he had utilized generative artificial intelligence (“AI”)in his court filings, and that the AI-generated content went beyond his established parameters and protocols to include, withouthis knowledge or intent, nonexistent cases and quotes that are commonly referred to as “hallucinations.” Mr. Harris relatedthat he has previously attended several trainings regarding the use of AI. Mr. Harris stated that this experience has reinforcedhis commitment to rigorous manual verification and the necessity of maintaining strict protocols to ensure the accuracy andreliability of his court filings.Upon inquiry from the Court, Mr. Harris stated he had utilized AI in preparing Exhibit 70, “Plaintiffs Counsel's Response toOrder.” Mr. Harris advised that he had manually verified the contents of the Response to the best of his ability. On page 10 ofthe Response, Mr. Harris wrote the following:Restatement (Third) of Torts: Products Liability—Key Provisions Section 1 sets outthe general rule for strict liability in product cases: “One who sells or otherwise distributesdefective products is subject to liability for harm to persons or property caused by the defect.”— Restatement (Third) of Torts: Products Liability § 1 (1998), at 5.(Response, p. 10). Although similar, the above quote appears to be hallucinated. See Restatement (Third) of Torts: Prod. Liab. §1 (1998) (“One engaged in the business of selling or otherwise distributing products who sells or distributes a defective productis subject to liability for harm to persons or property caused by the defect.”).At the conclusion of the hearing, the Court took the matter under advisement. Having reviewed the evidence and consideredMr. Harris' oral and written arguments, and being now fully advised in the premises, the Court now finds and orders as follows.ANALYSISShow Cause ProcedureNeb. Rev. Stat. § 25-2122 (Reissue 2016) provides that “[c]ontempts committed in the presence of the court may be punishedsummarily; in other cases the party upon being brought before the court, shall be notified of the accusation against him, andhave a reasonable time to make his defense.” Id. Regardless, this Court's power to punish for contempt is not dependent uponstatute. This power “is incident to every tribunal from its very constitution and may be generally exercised only by that tribunalwhose order has been violated or proceedings interfered with.” In re Contempt of Potter, 207 Neb. 769, 773, 301 N.W.2d 560,562 (1981); see In re Dunn, 85 Neb. 606, 124 N.W. 120 (1909) (discussing the inherent power of courts to punish for contempt).As the Nebraska Supreme Court has explained, “[t]he distinction between direct contempt and indirect, or constructive, contemptis: The actions which constitute the former occur in the presence of the court so that the court has personal knowledge of thefacts and has no need to inform itself of them by using witnesses or other evidence; the events constituting the latter occuroutside the presence of the court and the court must inform itself of the facts through the use of witnesses or other evidence.”Potter, 207 Neb. at 773, 301 N.W.2d at 562. “Direct contempt may be punished summarily.” Id., 207 Neb. at 773, 301 N.W.2d
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.9at 562. “Indirect or constructive contempt requires some notice of the facts allegedly constituting the contempt and a hearingor opportunity to be heard.” Id. The Supreme Court has held that “before punishment for indirect contempt may be imposed,there must be an accusation in some form, notice, and an opportunity for defense.” Id., Neb. at 774, 301 N.W.2d at 563.*8 The Nebraska Supreme Court has recognized a form of hybrid contempt in which “the charge of contempt arose from eventsoccurring in the presence of the court which it is claimed should be excused by matters taking place outside the courtroom.”Id. The contempt here arose from court filings by Mr. Harris containing false statements of law, including case citations thatwere entirely fictional. Given these documents were filed with the Court, there was no need for the Court to further informitself through witnesses or other evidence. As such, the contempt arose from events occurring in the presence of the Court.However, Mr. Harris' use of AI and his efforts to manually verify the AI-generated content occurred outside of the courtroom,and it is this behavior that Mr. Harris seeks to excuse or mitigate. Accordingly, the Court construes this matter as a hybrid ofdirect and indirect contempt.This Court afforded Mr. Harris the process available in a hybrid contempt proceeding. The Court did not proceed summarily. TheCourt entered an Order to Show Cause which specifically informed Mr. Harris of the facts allegedly constituting the contempt.The Court scheduled the matter for hearing and gave Mr. Harris adequate time to prepare. At the hearing, Mr. Harris was givenan opportunity to adduce evidence and present argument regarding his state of mind, any excuse he wished the Court to consider,as well as potential sanctions.Court's FindingsHaving reviewed the evidence before the Court and considered Mr. Harris' oral and written arguments, the Court finds that Mr.Harris did not knowingly or intentionally include false statements of law in his court filings. The Court finds that Mr. Harrisdid not deliberately attempt to perpetrate a fraud upon the Court. The Court further finds that Mr. Harris is sincerely remorsefulfor the false statements of law contained in his court filings.However, the Court also finds that Mr. Harris clearly failed to sufficiently and manually verify for accuracy the AI-generatedcontent he included in his court filings. Mr. Harris understood the necessity for such verification as he is knowledgeableregarding the potential risks associated with the use of AI in the preparation of court filings. Indeed, it is “general knowledgein the legal community that AI can hallucinate and make up cases. AI hallucination has been reported on extensively in media(not just in the legal context, but at large) and the subject of many seminars and continuing legal education trainings offeredby bar associations, articles written in legal journals, and numerous well reported instances of courts sanctioning attorneys.”United States v. McGee, No. 1:24-CR-112-TFM, 2025 WL 2888065, at *3 (S.D. Ala. Oct. 10, 2025). The fact that Mr. Harrisdid not knowingly include false statements of law in his court filings does not excuse his failure to verify for accuracy thecitations therein. After a careful review of the matter, the Court determines that Mr. Harris' conduct was tantamount to badfaith. Ultimately, the Court finds that Mr. Harris has failed to show cause why the Court should not impose sanctions on himfor having repeatedly included false statements of law in his court filings.Sanctions ImposedThe conduct of Mr. Harris significantly interfered with the Court's administration of core judicial functions and its exerciseof judicial powers. Mr. Harris' failure to have adequate safeguards in place for using AI when drafting court filings and hisfailure to manually verify the AI-generated content therein obstructed the Court's business by delaying the summary judgmentproceedings and the scheduled jury trial in this case. In addition, this show cause proceeding has consumed an inordinate amountof the Court's time that could have been devoted to the multitude of the other cases pending before it.The Nebraska Supreme Court has previously noted that “[t]here is a well– recognized duty imposed upon the judge or judges tosee that the respect and integrity of the courts are maintained, and unpleasant as it may be, we cannot evade or flinch from the
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.10discharge of that duty.” In re Dunn, 85 Neb. 606, 124 N.W. 120, 130 (1909). The Court finds it necessary in this case to imposesanctions on Mr. Harris. The Court finds there is a direct relationship between Mr. Harris' conduct and the sanctions imposed.The Court further finds that the sanctions imposed on Mr. Harris are not excessive and are the sanctions minimally necessaryto deter, alleviate, and counteract such conduct. The Court's sanctions are as follows.1. Court Filings Stricken*9 The Court strikes any Plaintiffs' motions filed on or after July 28, 2025, that have not yet been ruled upon by the Court.Plaintiffs may refile said motions and said motions will be deemed timely filed if the previously stricken motions were timelyfiled in accordance with the deadlines contained in the Third Amended Scheduling Order filed on May 14, 2025. In addition,the Court strikes Plaintiffs' briefs filed on or after July 28, 2025, pertaining to any Plaintiffs' motions that have not yet beenruled upon by the Court.The Motion for Summary Judgment filed by Defendant Clickstop on July 14, 2025, is now scheduled for hearing at 1:30 p.m.on Tuesday, November 25, 2025. The Court has reserved three (3) hours of court time for this hearing. The record on themotion shall not be reopened; the parties are confined to the evidence previously offered into evidence regarding said motion.Not less than ten (10) days before the hearing on the motion, Plaintiffs shall file with the Clerk and serve on all parties of recordits Brief in Opposition. If counsel have a scheduling conflict on this date and time, counsel shall coordinate with the Court'sBailiff to secure a new date and time for this hearing.2. Generative AI Certification RequirementThere is nothing fundamentally improper in counsel utilizing AI to draft court filings. However, problems arise when counseldo not manually verify for accuracy the AI-generated content in said filings. Henceforth, all pleadings, motions, and briefs filedin this case by Mr. Harris shall contain a written certification stating a) that no generative artificial intelligence program wasused in drafting the document, or b) that to the extent such a program was used, Mr. Harris manually verified the accuracy ofall generated text, including all citations, quotations, and legal authority.3. Monetary SanctionCourts have routinely and increasingly issued monetary sanctions for providing false and misleading statements of law to thecourt. As a Federal Magistrate Judge recently observed,Monetary sanctions ranging from $2,000 to $6,000 have been imposed in similar contextsin the past few years. See, e.g. Mid Cent. Operating Eng'rs Health & Welfare Fund v.HoosierVac LLC, 2025 WL 1511211 (S.D. Ind. May 28, 2025) ($6,000 sanction); Gauthierv. Goodyear Tire & Rubber Co., 2024 WL 4882651 (E.D. Tex. Nov. 25, 2024) ($2,000sanction); Mortazavi v. Booz Allen Hamilton, Inc., 2024 WL 4308032 (C.D. Cal. Sept.26, 2024) ($2,500 sanction); Mata v. Avianca, Inc., 678 F. Supp. 3d 443 (S.D.N.Y. 2023)($5,000 sanction). Given the distressing number of cases calling out similar conduct sincethe opinions cited above were issued, it is clear that the imposition of modest sanctions hasfailed to act as a deterrent.Davis v. Marion Cnty. Superior Ct. Juv. Det. Ctr., No. 1:24-CV-01918-JRS-MJD, 2025 WL 2502308, at *4 (S.D. Ind. Sept.2, 2025) (recommending the imposition of a $7,500 sanction); see also United States v. McGee, No. 1:24-CR-112-TFM, 2025WL 2888065, at *1 (S.D. Ala. Oct. 10, 2025) ($5,000 sanction); Wadsworth v. Walmart Inc., 348 F.R.D. 489, 498 (D. Wyo.2025) ($3,000 sanction).
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.11Having considered the range of monetary sanctions imposed by courts in similar cases, the Court finds it appropriate to imposea monetary sanction on Mr. Harris in the amount of $2,000. The Court reaches this figure by considering, among other things,1) the number of false statements of law in Mr. Harris' filings; 2) Mr. Harris' access to legal research resources; and 3) the factthat attorneys have been on notice of generative AI's issues in hallucinating cases for some time. A mitigating factor warrantinga sanction on the lower end of the range is the candor and remorse exhibited by Mr. Harris and observed by the Court at theshow cause hearing. Therefore, it is ordered that Mr. Harris is sanctioned two thousand dollars ($2,000.00) in the form of a fine.Mr. Harris shall satisfy this obligation by paying two thousand dollars ($2,000.00) into the Clerk of the District Court in thiscase by no later than the close of business on November 25, 2025.4. Report to Counsel for Discipline*10 It is the obligation of a judge to report to the appropriate disciplinary authority any known misconduct under the NebraskaRules of Professional Conduct. See Neb. Rev. Code of Judicial Conduct § 5-302.15. The Court may not shy away from thisduty as ignoring known misconduct by a member of the legal profession undermines a judge's responsibility to participate inefforts to ensure public respect for the justice system. See Neb. Rev. Code of Judicial Conduct § 5-302.15, cmt. 1. Accordingly,the Court shall forward a copy of this Order for Sanctions to the Counsel for Discipline for review and investigation.THEREFORE, IT IS ORDERED:1) The Court strikes any Plaintiffs' motions filed on or after July 28, 2025, that have not yet been ruled upon by the Court.Plaintiffs may refile said motions and said motions will be deemed timely filed if the previously stricken motions were timelyfiled in accordance with the deadlines contained in the Third Amended Scheduling Order filed on May 14, 2025. In addition,the Court strikes Plaintiffs' briefs filed on or after July 28, 2025, pertaining to any Plaintiffs' motions that have not yet beenruled upon by the Court.2) Henceforth, all pleadings, motions, and briefs filed in this case by Mr. Harris shall contain a written certification stating a)that no generative artificial intelligence program was used in drafting the document, or b) that to the extent such a program wasused, Mr. Harris manually verified the accuracy of all generated text, including all citations, quotations, and legal authority.3) Mr. Harris is sanctioned two thousand dollars ($2,000.00) in the form of a fine. Mr. Harris shall satisfy this obligation bypaying two thousand dollars ($2,000.00) into the Clerk of the District Court in this case by no later than the close of businesson November 25, 2025.4) The Court shall forward a copy of this Order for Sanctions to the Counsel for Discipline for review and investigationDATED this 17th day of October, 2025.BY THE COURT:<<signature>>Hon. James M. MastellerDistrict Judge
Mundy v. Clickstop, Inc., 2025 WL 3073933 (2025) © 2026 Thomson Reuters. No claim to original U.S. Government Works.12Footnotes1Plaintiffs' counsel cited to Controlled Environments Constr., Inc. v. Key Indus., 2018 WL 1911384 (D. Neb.) whichappears to not exist. Defendant provides the correct citation which is Controlled Environment Construction, Inc. v. KeyIndustrial Refrigeration Co., 266 Neb. 927, 670 N.W.2d 771 (2003).2Defendant is referring to the case Lewy v. Remington Arms Co., 836 F.2d 1104.3Plaintiffs' counsel cited to Hogan v. Norfleet, 191 Neb. 123 which appears to not exist.4Plaintiffs' counsel cited to Schiavone Construction Co. v. Time Equipment Rental, Inc., 205 Neb. 442, 287 N.W.2d 814which appears not to exist.End of Document© 2026 Thomson Reuters. No claim to original U.S. Government Works.
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