Sanctions for misconduct; “Frivolous” appeal; FedRAppP 38; Frivolous as filed; Frivolous as argued; Misrepresentation of law; The court’s inherent authority; Bad faith or conduct tantamount to it; BDT Prods, Inc v Lexmark Int’l, Inc; First Bank of Marietta v Hartford Underwriters Ins Co; Objections to the show cause order; Sixth Circuit Local Rule 46; The attorney-client & work-product privilege; Whether the order was invalid because it allegedly came from ex parte communications; Whether the order was void because the clerk signed it

Holding that sanctions on plaintiff’s attorneys were appropriate under Rule 38 and its inherent authority, the court concluded “that appellees should be fully compensated for being forced to litigate this appeal.” It further awarded them double costs, and it imposed a $15,000 fine on each attorney “because (1) the misconduct was spread across three cases instead of just one and (2) smaller fines have plainly been inadequate[.]” The decision concerned the misconduct of plaintiff’s attorneys, appellant-Irion and Egli, in their briefing before the court, which “repeatedly misrepresented the record, cited non-existent cases, and cited cases for propositions of law that they did not even discuss, much less support.” Discussing Rule 38, the court noted an “appeal can be frivolous as filed, frivolous as argued, or both.” It rejected “any suggestion that Rule 38 does not recognize frivolous-as-argued appeals.” And it determined that plaintiff’s appeal was “frivolous as argued because Irion and Egli submitted fake cases, and inventing case law is a misrepresentation of law.” It noted that citing “even a single fake case can be sanctionable because ‘no brief, pleading, motion, or any other paper filed in any court should contain any citations—whether provided by generative AI or any other source—that’ a lawyer has not personally ‘read and verified.’” The court also imposed sanctions under its inherent authority, which “are appropriate only when the litigant has acted in bad faith or ‘willfully abuse[d] judicial processes.’” Applying the three-prong BDT test, the court found that inherent authority sanctions were appropriate here. It had concluded that plaintiff’s appeal was “meritless, and any reasonable attorney should know that a case is meritless if the only authority on which he can rely is a figment of imagination.” The court further concluded “that Irion and Egli have acted with an improper purpose because they have ‘used the court system to try to force a result that [they] could not obtain under the applicable law.’” In addition, “when given an opportunity to explain how such citations appeared in their briefing, [they] failed to provide an explanation and instead argued that the court’s show cause order was void and invalid.” It rejected those objections to the show cause order, holding among other things that the order did not violate Local Rule 46 or the work-product or attorney-client-privilege doctrines, and that its “orders are not invalid simply because the clerk signed them.”