## Facts

- In May 1982, members of the Reed family traveled west on Interstate 10 near Lafayette, Louisiana in a Chevrolet Monza.
- The driver stopped on the right shoulder with emergency lights flashing to adjust a passenger’s seat.
- A Pontiac Trans Am driven by Brent Boudreaux struck the Reed vehicle from the rear, seriously injuring the occupants.
- Shortly before the collision, Gerard Meche drove a pickup truck at high speed on the highway shoulder, passing traffic; Boudreaux followed Meche onto the shoulder and matched the high speed (at times exceeding 90 mph).
- The Reeds sued Boudreaux and Meche, their insurers, and others in federal court under diversity jurisdiction; Louisiana negligence law governed the substantive claims.
- At trial, Boudreaux introduced evidence of his limited insurance coverage ($5,000); over objection, the court allowed the plaintiffs to introduce evidence of Meche’s much higher liability limits ($500,000).
- The jury found both drivers negligent, allocated fault 70% to Boudreaux and 30% to Meche, and awarded $450,000 in damages.
- Meche and his insurer appealed, challenging admission of the insurance-limits evidence and the denial of a directed verdict on Meche’s liability.

## Issues

1. Whether Federal Rule of Evidence 411 barred admission of the amount of Meche’s liability insurance, and whether admitting policy limits was prejudicial error requiring a new trial.
2. Whether the evidence was sufficient to permit a jury to find Meche negligent and a legal cause of the accident, even though Meche’s vehicle did not physically strike the Reed vehicle.

## Decision

- The court reversed the judgment and remanded for a new trial because admitting evidence of Meche’s liability policy limits was improper and prejudicial.
- The court affirmed the denial of a directed verdict for Meche, holding the evidence permitted a reasonable finding that Meche’s conduct contributed to the collision.
- The new trial was to proceed without the improper insurance-limits evidence, with both drivers remaining potential tortfeasors.

## Legal Principles

- In federal diversity cases, the Federal Rules of Evidence govern admissibility, even when state law would allow related financial-responsibility proof.
- Under Federal Rule of Evidence 411, liability insurance evidence may not be admitted to prove negligence or wrongful conduct; policy limits are especially likely to skew findings on fault and damages.
- When insurance-limits evidence has minimal legitimate probative value and a substantial risk of influencing liability or damages determinations, it should be excluded; an instruction to disregard may not cure the prejudice.
- A defendant may be found negligent and a legal cause of a plaintiff’s injury without physical impact if the defendant’s conduct foreseeably induces or materially contributes to another driver’s negligent act that causes the collision.

## Conclusion

The court ordered a new trial because disclosure of Meche’s $500,000 liability limits violated Rule 411 and created unacceptable risk that the jury’s fault allocation and damages award rested on insurance resources rather than the merits, while also holding that sufficient evidence supported submitting Meche’s negligence and causation to the jury.


Reed v. Gen. Motors Corp., 773 F.2d 660 (5th Cir. 1985)