Comment: The “Collateral Source” Rule
In torts, we don’t mitigate damages based on compensation received from unemployment funds, insurance, and the like. We also apply this to contracts…sometimes.
The rule that trumps the collateral source rule is the Golden Rule of Contracts: the plaintiff shall be put in the position that performance would have put him in, and no better.
For this reason, in United Protective Wkrs. v. Ford, the worker’s damages are mitigated by the retirement payments he received after his dismissal. Other courts reject this rule.
We talked about this in class. The key fact is that the school district didn’t really want a better quality teacher or one with more experience, they were simply bound by the collective bargaining agreement to pay the new person more. Therefore, it turns out that the original therapist who breached is indeed liable to the district for $3,000.