This is a term used to describe anything that you find bad, inappropriate, upsetting, or just plain dumb.
It can also mean "the sauce of a lame man".
Boss: "I know it's your day off, but if you're not at the office in 20 minuts, you're fired!"
Worker: "Damn it! That's total Lame Sauce!"
Sierra: "Geeze Jack, your such a douche cookie
Jack: "You know what Sierra, your Lame sauce!"