This error means that sendmail is set to "canonify" outbound addresses on the fly.  The problem with this is that LISTSERV, not being an MTA, does not expect errors in the middle of the transmission and thus does not have any way to handle such errors.

The fix for this problem is to disable on-the-fly canonification in sendmail, with FEATURE(nocanonify) in, recompilation of, and a restart of sendmail (or at least sending it a SIGHUP) to pick up the configuration change.