New York, NY — A federal judge ordered substantial sanctions against the owners and attorneys tied to New York City sushi restaurants Sushi Katsuei Park Slope and Sushi Katsuei West Village after finding repeated discovery violations and improper use of generative AI in a labor law class action.
In a May 19 opinion and order, U.S. District Judge Katherine Polk Failla largely granted a sanctions motion filed by workers suing the restaurants for alleged labor law violations involving tipped employees. The lawsuit was brought by named plaintiffs Rupan Chakma, Suloy Tripora, Tapan Kanti Tanchangya, Tiyanit Kaewpan, and Pramita Chakma on behalf of themselves and similarly situated workers.
The case targets Sushi Katsuei, Inc., Royal Katsuei, Inc., owners Aye Aye Swe and Aung Ko Win, and related restaurant operations in Brooklyn and Manhattan.
Court Orders More Than $50,000 in Sanctions
Judge Failla ordered the defendants to pay nearly $47,000 in attorneys’ fees connected to what the court described as multiple instances of discovery misconduct.
The court also awarded plaintiffs’ counsel $781.88 in litigation costs.
In a separate penalty tied directly to defense counsel’s conduct, the judge ordered attorneys representing the defendants to pay an additional $1,710 in attorneys’ fees and imposed a separate $1,000 monetary sanction over the use of improper legal authority and generative AI in court filings.
Key Points
• A federal judge sanctioned Sushi Katsuei defendants and attorneys in a labor law class action
• The court ordered more than $50,000 in fees and penalties tied to discovery misconduct
• Defense counsel also faced sanctions for improper use of generative AI and legal authority
The sanctions followed earlier litigation in which the court certified a class and subclass of tipped food-service employees who worked at the restaurants dating back to September 2017.
According to the ruling, the certified class includes tipped restaurant workers excluding sushi chefs at the defendants’ locations, while a subclass specifically covers employees at the Park Slope restaurant who participated in the company’s tip-pooling system.
Discovery Delays Triggered Court Action
Judge Failla said the sanctions motion stemmed from conduct occurring after the February 2025 class certification decision.
One major issue involved delays in producing class lists and payroll records that plaintiffs argued were required for notifying workers and advancing the case.
The court found defendants failed to timely provide key information despite court-ordered deadlines connected to class member identification and payroll documentation.
Federal judges can impose sanctions when parties fail to comply with discovery obligations or engage in litigation conduct that unnecessarily delays proceedings or increases legal costs.
AI Use Draws Additional Penalties
The ruling also highlights growing judicial scrutiny surrounding generative artificial intelligence in legal filings.
Judge Failla specifically sanctioned defense counsel over the use of improper authority and generative AI, though the excerpted filing does not detail the exact nature of the AI-generated material involved.
Courts across the country have increasingly warned attorneys that AI-generated legal research and citations must be independently verified after multiple high-profile cases involving fabricated or inaccurate case citations generated by artificial intelligence tools.
The opinion signals continued intolerance by federal courts toward attorneys who submit inaccurate or unsupported materials generated through AI systems without proper review.
Current Status
The labor law class action against Sushi Katsuei and related defendants remains active in the Southern District of New York. Defendants and their counsel must now pay court-ordered sanctions and attorneys’ fees as litigation over the wage-and-hour claims continues.
New York labor lawsuit, Sushi Katsuei, federal sanctions, generative AI legal filing