Its Being Caused by Restarts / Crashes
When the server restarts or crashes all pals are loaded into the palbox area and remain inactive until a player loads them. This causes them not to eat, lose health and become depressed.
Obviously there are other factors, like what you are feeding your pals, beds and whatnot.. but the mass depression on login for the most part is caused by extended periods of pals being unloaded after a crash/restart.
On my server we had been struggling with this, but after upgrading RAM (again..) and switching to one restart a day at 8pm EST we have solved our depression epidemic. As long as Pals are loaded by visiting bases after the restart, pals stay active unless the server runs out of RAM and crashes.
If you can’t upgrade your ram and have clear restart times, make a pact with other members of your server to load each others bases after a restart. A clear indication the server restarted/crashed is when you log in all the pals are huddled around the palbox and fall slightly to the ground.