We had a similar situation at a dealership in Phoenix. This customer said that if he had to pay the bill (which he had agreed to prior) he would post negative reviews all over the internet. They refused and the customer posted the reviews. The dealership had such a strong service department and so many loyal customers, it didn't have any effect.
Not only am I glad that the dealer decided to sue, I hope that he wins. People believe that you can say anything about anyone, on the internet without repercussions.