I’d venture to guess it depends … personally, I had a complete full box that somehow ended up soaking wet one year, I reported it to my Rep as all books took some water on … Diamond, in that case, did require the books be returned … probably so they could file an insurance claim with UPS as much as anything else …
If it’s a book or three here and there, Diamond will simply tell you to destroy them …
Now, I would also venture to guess, that if a Retailer is a chronic reporter of damage, beyond the norm, there might be some actions Diamond would take … I don’t know as I have never fell into that category …