Even if Bay's agent was to file a law suit, it would have been pretty difficult to prove that the Sox doctors haven't made reasonably accurate judgments given the Sox past decisions on Nomar, Lowe, Pedro and Damon.
I'm sure Jacksonsian is going to make some weak arguemnt now about how the Sox would have been better had they re-signed Damon. But the fact remains that they wouldn't have had a spot for him with Drew, Ellsbury and Manny/Bay in the outfield, all of which have been much more productive than Damon (if you include offense AND defense).