Court Throws Out Claim of Emotional Distress for Cutting Retiree Health Benefits

February 5, 2008 ( - While allowing retirees to move forward with their lawsuit seeking reimbursement of health care expenses incurred after their employer benefits were cut off, a federal judge has thrown out plaintiffs' claim for emotional damages.

U.S. District Judge Patrick J. Duggan of the U.S. District Court for the Eastern District of Michigan ruled that applicable case law does not allow for plaintiffs suing over retiree benefits to also collect for emotional distress caused by a benefits reduction or cutoff.

“It is certainly reasonable to conclude that in any breach of contract case the party who is to receive payment may suffer some adverse emotional consequences if the payment is not made as promised,” Duggan wrote. “It is not unreasonable to conclude that the failure to receive the payment may present some degree of ‘anxiety,’ depending most likely on the creditor’s need for the money. However, this Court does not believe that the fact that nonpayment may possibly cause some ‘hardship’ and thus some ‘concern’ on the part of the creditor will obligate the breaching party to pay damages for emotional distress in a breach of contract case….”

Duggan referred to a case from the 6 th  U.S. Circuit Court of Appeals in which the appellate judges ruled that, “It is apparent that the district court applied a standard that is consistent with the guiding principles in this context, that mental distress damages are available in breach of contract actions only if serious emotional harm was a particular likely result.”

The case involved retirees of Case Corp. who sought repayment of out-of-pocket expenses and emotional distress damages after Case stopped providing them with free retiree health benefits.

Duggan ruled that while emotional distress damages are not available in cases filed under the Employee Retirement Income Security Act (ERISA), they are available under the Labor Management Relations Act (LMRA). Under the LMRA, courts have the authority to fashion remedies that place plaintiffs in the position they would have attained had there been no breach of a collective bargaining agreement, the court said.

The case is Yolton v. El Paso Tennessee Pipeline Co., E.D. Mich., No. 02-75164, 1/31/08.