When AI Becomes the Opposing Counsel: How Fake Citations Nearly Sank a Real Estate Antitrust Case

By Frances Flynn Thorsen

I've been writing about technology since the early 1970s — long before the Internet, back when a "database" meant a microfiche reader and a steady hand. I've watched every wave of new technology arrive with breathless promises and unexpected consequences. But what happened in a West Palm Beach federal courtroom this past April stopped me cold.

A pro se plaintiff in a real estate antitrust case submitted legal briefs to a federal judge — briefs that cited real court cases. The case names were real. The citations looked legitimate. But the quotes attributed to those cases, and the legal concepts drawn from them, were entirely fabricated. Not by the plaintiff. By artificial intelligence.

The judge was not amused.

The Case: Zea v. NAR

Jorge Zea runs Snap Flat Fee, a Florida discount brokerage that charges sellers a flat listing fee in exchange for limited services. His business model depends on buyer's agents treating his listings fairly — showing them to clients regardless of the commission offered. He filed suit in August 2025 against the National Association of REALTORS®, nine local Realtor associations, and six MLSs, claiming they engaged in a "coordinated scheme" to restrict consumer choice and steer buyers away from his listings.

The legal theory had merit on its face. The problem was in the execution.

The AI Problem: Cases That Existed, Quotes That Didn't

In March 2026, Magistrate Judge William Matthewman of the U.S. District Court for the Southern District of Florida issued a report recommending dismissal of the lawsuit. His recommendation was damning on two fronts.

First, the complaint was "deficiently pled" — it failed to meet the basic legal standards required to survive a motion to dismiss.

Second, and more alarmingly, the magistrate found that Zea had submitted court filings containing what he called "AI-hallucinated law." His exact words, as reported by NAR's own publication, deserve to be quoted in full:

"While the [court] cases Plaintiff relies on do exist, the quotations, and even most of the legal concepts, are fake."

This is a crucial distinction that every real estate professional and educator needs to understand. The AI did not invent case names out of thin air. It cited real cases — cases that actually appear in legal databases. But the quotes it attributed to those cases, and the legal reasoning it drew from them, were entirely fabricated. This makes AI hallucinations in legal contexts far more dangerous than simple errors: they are designed, by the nature of how large language models work, to sound authoritative and verifiable.

Zea filed no objections to the magistrate's report. The deadline to object was April 7, 2026. His silence was treated as acceptance.

The Judge's Warning

On April 14, 2026, U.S. District Court Judge William P. Dimitrouleas adopted the magistrate's recommendation and dismissed the lawsuit without prejudice. He also formally admonished Zea for what the court described as his "improper use of artificial intelligence and concomitant misrepresentations to the Court."

The word "misrepresentations" is not accidental. Submitting fabricated citations to a federal court — even unknowingly, even generated by an AI tool — constitutes a representation to the court that those citations are accurate. Judge Dimitrouleas made clear that if this behavior continued, "severe sanctions may be imposed."

The dismissal was without prejudice, meaning Zea was given until April 27, 2026 to refile a corrected complaint. He subsequently filed an amended complaint. The case continues.

Eleven Florida REALTOR® associations and MLSs were dismissed from the suit, including Beaches MLS, Miami Realtors, Orlando Regional Realtor Association, Stellar MLS, and Northeast Florida Association of REALTORS®, among others.

Why This Matters to Real Estate Professionals

This case is not an isolated incident. Courts across the country are confronting a growing wave of AI-generated legal errors. A February 2026 analysis by Duane Morris documented how AI-hallucinated citations delayed the final disposition of a class action settlement by months. A September 2025 Reuters report found that judges are moving beyond fines to impose more severe consequences for AI errors in court filings. An April 2026 analysis by Helsell Fetterman confirmed that monetary sanctions are now being imposed not only on filing attorneys but on associated local counsel.

For real estate professionals, the lesson is direct and practical:

AI tools are extraordinarily useful for drafting, summarizing, and brainstorming. They are not reliable for legal citations. The model does not "know" whether a quote is accurate. It generates text that is statistically likely to follow the pattern of legal writing. When asked to support a legal argument, it will produce citations that look exactly like real citations — because it has been trained on millions of real citations. The difference between a real quote and a fabricated one is invisible to the model.

If you are working with an attorney on a real estate matter — a commission dispute, a listing agreement challenge, a fair housing complaint — and that attorney is using AI to draft briefs, ask them directly: have these citations been verified against the original source documents? Not against a legal database summary. Against the actual text of the decision.

NAR's Response

NAR issued a statement following the dismissal that is worth reading carefully:

"The National Association of REALTORS® fosters a fair, transparent and competitive real estate marketplace. Steering is a prohibited practice under NAR policy and the REALTOR® Code of Ethics. The Code of Ethics is enforced by state and local REALTOR® associations, and the enforcement of MLS rules are handled by each MLS."

NAR characterized the Zea dismissal as part of "a string of antitrust victories spanning the country," citing similar wins in Michigan, Pennsylvania, Utah, and Texas.

The Bigger Picture

The Zea case sits at the intersection of two of the most consequential forces reshaping real estate right now: the ongoing antitrust litigation challenging the industry's commission and MLS structures, and the rapid adoption of AI tools by professionals who may not fully understand their limitations.

The magistrate's phrase — "AI-hallucinated law" — is going to echo through courtrooms for years. It captures something precise and important: AI does not hallucinate randomly. It hallucinates plausibly. It produces text that sounds like what a real answer would sound like, constructed from patterns in its training data. In legal contexts, that plausibility is exactly what makes it dangerous.

I've been an early adopter of technology my entire career. I am not anti-AI. But I am deeply committed to the principle that technology serves us best when we understand its limits as clearly as we understand its capabilities. The Zea case is a reminder that in high-stakes contexts — courtrooms, real estate contracts, financial disclosures — the human responsibility to verify does not transfer to the machine.

Sources:

• Brooklee Han, "NAR and Florida MLS groups dismissed from Zea lawsuit," HousingWire, April 14, 2026.

• Stacey Moncrieff, "NAR Succeeds in Florida Court, Gaining Dismissal of Antitrust Lawsuit," NAR REALTOR® News, April 14, 2026.

• Brooklee Han, "Antitrust lawsuit against NAR faces dismissal," HousingWire, March 25, 2026.

• "AI Hallucinated Case Citations Prompt Sanctions And Delay Class Action Settlement," Duane Morris Class Action Defense Blog, February 3, 2026.

• "AI Hallucinations Keep Costing Lawyers in Court," Helsell Fetterman, April 24, 2026.

• "Some judges move beyond fines to keep lawyers' AI errors in check," Reuters, September 16, 2025.

Image Credit: Nano Banana

This post is for informational purposes only and does not constitute legal advice. All citations in this post have been verified by navigating to the source URL prior to publication.