Madison, the victim, told her story online and was met with the vitriolic, violent hatred you'd expect from a woman pointing out the misogyny of the internet's favorite tech boy. She shared her story mostly to warn other women what to expect from working there as well as a step in her own healing process.
She never wanted to sue them since they are much wealthier than her and she kind of just wanted to move past that part of her life. Linus Media Group isn't going to sue her for defamation because even if they can win, as they claim (which I personally have my own doubts, but I'm an outside observer with no legal education), it's still a very bad look.
Since no parties are bringing litigation to a court, the litigation happens in the court of public opinion.
I'm no defender of AI and it just blatantly making up fake stories is ridiculous. However, in the long term, as long as it does eventually get better, I don't see this period of low to no trust lasting.
Remember how bad autocorrect was when it first rolled out? people would always be complaining about it and cracking jokes about how dumb it is. then it slowly got better and better and now for the most part, everyone just trusts their phones to fix any spelling mistakes they make, as long as it's close enough.