backing off under the guise of "no grounds for a defamation suit" just means that they didn't feel confident that they would win in court, not that nothing slimy or wrong was said. one of the hardest parts of defamation to prove is that it was an intentional, malicious lie on the speaker. if sarah z got all her false information from gio "in good faith," then yes there would be no grounds to sue sarah z. doesn't mean that what she said was true! again, im seeing shockingly childish understandings of how the law works lmao