Admissibility of high-low agreements in multi-defendant litigation.

• Author: Forte, Michael L.
• Position: Florida

This article explores courts' evolving attitudes toward admitting high-low agreements at trial and suggests factors for predicting whether agreements will be admissible in future cases. A high-low agreement insures against litigation risk. (1) It sets a minimum floor the defendant must pay, even in the event of a defense verdict. Conversely, it sets a maximum ceiling for which the defendant could be responsible. If the judgment against the signing defendant falls between the floor and ceiling, the defendant pays the judgment.

In lawsuits with multiple defendants, complications arise when only one defendant signs an agreement and the other defendant(s) does not. The nonsigning defendant will want to tell the jury about the agreement, as a way to suggest the jury cannot trust evidence proffered by the plaintiff or the signing defendant because those parties have an artificial incentive to place maximum blame on the nonsigner. That is, the plaintiff is motivated to shift blame to the nonsigner so as to maximize damages against the noncapped defendant, and the signing defendant is motivated to support this effort to increase the likelihood of a judgment against the signer equal to or less than the agreement's floor.

Conversely, the plaintiff and signing defendant likely will object to the agreement's disclosure. They will argue the agreement has not unfairly manipulated the trial process. The plaintiff will argue the nonsigner always was the main target. And the signing defendant will argue it always intended to shift blame to the nonsigning defendant, even before the high-low agreement. The signer also will argue that disclosure of the agreement will suggest to the jury the signer believes it is at least partly to blame for the plaintiff's damages, and that this result is unfairly prejudicial.

The earliest appellate decision analyzing admissibility appears to have employed a mechanical approach. In 27th Avenue Gulf Service Center v. Smellie, 510 So. 2d 996 (Fla. 3d DCA 1987), a car accident plaintiff sued three defendants. The plaintiff and one of the defendants entered into a high-low agreement with a floor of $100,000 and ceiling of $300,000. Counsel for the nonsigning defendant referenced the agreement multiple times in his opening statement and closing argument, and received a defense verdict. On appeal, the plaintiff argued the high-low agreement should not have been disclosed to the jury. The appellate court agreed and remanded the case for a new trial on liability.

At the outset, the appellate court acknowledged that Mary Carter agreements are admissible. (2) Such agreements require the signing defendant to continue defending himself or herself in the case, and also provide that the signing defendant's liability will be reduced in proportion to an increase in the nonsigner's liability. (3) In other words, the signing defendant is kept in the lawsuit to assist the plaintiff in increasing the nonsigner's damages. The court went on to explain the agreement at issue was not a Mary Carter agreement because it did not contain a liability shifting provision, (4) and, therefore, was not admissible.

Later, the Florida Supreme Court articulated a more nuanced approach. In Dosdorian v. Carsten, 624 So. 2d 241 (Fla. 1993), the Court prospectively abolished Mary Carter agreements, and also "any [other] agreement which requires the settling defendant to remain in the litigation, regardless of whether there is a specified financial incentive to do so." (5) A high-low agreement falls into neither of these two categories. It is not a Mary Carter agreement because it does not reduce the signing defendant's liability in proportion to the increased liability of the nonsigning defendant. Nor does a high-low agreement require the signing defendant to remain in the...