U.S. Supreme Court cites second rephrasing of contracts

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U.S. Supreme Court cites second rephrasing of contracts

In a recent U.S. Supreme Court decision, the majority and dissenters both cited Restatement of the Law Second, Contracts § 353 to discuss whether damages for emotional distress were recoverable in the private actions to enforce federal anti-discrimination laws enacted under the United States Spending Clause. Constitution.

In Cummings vs Premier Rehab Keller, No. 20-219 (April 28, 2022), a patient who was legally blind and deaf and who communicated primarily in American Sign Language sued a physiotherapy service provider, alleging that he discriminated against her because of her disability in violation of the Rehabilitation Act and the Affordable Care Act when she refused his request to provide an interpreter at her appointments and instead told him she could communicate with the therapist using written notes, reading on the lips or gestures. Noting that the patient had decided to seek and obtain care from another provider, the U.S. District Court for the Northern District of Texas dismissed her complaint, finding that the only injuries she alleged were “humiliation , frustration and emotional distress”, and that moral damages were not recoverable in private actions to enforce the laws in question. The United States Court of Appeals for the Fifth Circuit upheld.

The Supreme Court also upheld. In a majority opinion written by Chief Justice John G. Roberts, Jr., the Court noted that the Rehabilitation Act and Affordable Care Act, as well as Title VI of the Civil Rights and Title IX of the Education Amendments, were four statutes that Congress enacted pursuant to the Expenses Clause to prohibit recipients of federal financial assistance, including the physiotherapy service provider at issue, from discriminating based on protected grounds such as disability. Although none of the four statutes expressly grants victims of discrimination a private right of action to sue recipients of federal funds, the Supreme Court and later Congress had both recognized an implied right of action. under the laws. In determining whether damages for emotional distress were available in such an implied action, the Court held that the statutes conditioned an offer of federal funding on a promise by the recipient not to discriminate, in what essentially amounted to a contract between the government and the recipient. . Therefore, if a potential funding recipient would have been aware that they could be held liable for damages related to emotional distress when they were engaged in the process of deciding whether or not to accept federal dollars, then a victim of discrimination could potentially recover these damages from the beneficiary. The Court pointed out that “[i]It is a Hornbook law that “emotional distress is generally not compensable in contract” and that “[i]It follows that such damages are not recoverable under the expense clause laws” discussed here.

Chief Justice Roberts acknowledged that Restatement of the Law Second, Contracts § 353 set forth a special rule that compensation for emotional distress was potentially available in contract cases where “”the contract or breach is of such a nature that serious emotional disturbance was a particularly serious ‘probable outcome’, but reasoned by analogy to punitive damages – which were not allowed under the anti-discrimination laws in question and were generally not allowed in contract cases – that damages for emotional distress were not normally available in breach of contract suits. The Court also pointed out that Section 353 did not reflect the consensus rule among US courts; so that a “strong minority” of courts followed section 353, most states rejected the exception provided in section 35 3″ by limiting the award of damages for emotional distress to a narrow and idiosyncratic group of cases, rather than making them available in general wherever a violation would have been likely to inflict emotional harm.

Associate Justice Stephen G. Breyer dissented, arguing that he would argue “that victims of intentional violations of these anti-discrimination laws are entitled to compensatory damages for emotional suffering.” Unlike the majority, which held that Restatement of the Law Second, Contracts § 353 sets out a rare exception to the general rule that damages for emotional distress were not available in contract actions, Judge Breyer considered section 353 as evidence that such damages were traditionally available in appropriate cases, and concluded that “the law of contract is sufficiently clear to warn potential recipients of funding that intentional discrimination may expose them to potential liability for suffering emotional”.

Judge Breyer also cited Restatement of the Law Second, Contracts § 355 and Restatement of the Law Second, Torts § 908 in reasoning that the majority’s comparison to punitive damages was inappropriate, as the restatements clarified that the contract law did not preclude the award of punitive damages. in a contract action ‘” if such an award would be appropriate under tort law.’ Judge Breyer explained that, unlike punitive damages, which were designed to punish tort claims, “damages for emotional distress can and do serve the central purpose of contract law to compensate the injured party for expected losses, at least where the contract obtained primarily non-pecuniary benefits and contemplated primarily non-pecuniary damages”. Noting that one of the fundamental purposes of anti-discrimination laws was “to uphold ‘human dignity and not mere economics'”, Judge Breyer concluded that the majority decision “does not entitle victims of discrimination to obtain damages only if they can prove that they have suffered economic harm, even though the main harm caused by discrimination is rarely economic.

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