groo:
Without knowing anything other than what is posted here, my comment would be; If the air caused him brain damage ad they were sure this shop was at fault then why didn't they bother to try and notify the diving public about this until now?
Let's assume the suit is legitimate. How many other people could have been hurt in the meantime. I wholeheartedly agree that this entire thing is very odd.
From the shop owner's comment, it is pretty clear that the story is not news to him, because he commented on it as if he remembered what happened; the filing of the lawsuit may have been news to him. We don't know how much the accident was publicized at the time it happened, or whether it was reported to local health authorities, or to the shop owner's certification agency, etc.
If you cannot reach an agreement to settle a lawsuit, it is not unusual for the injured person's lawyer to wait as long as possible to file a lawsuit (how long you can wait is determined by the statute of limitations), where the injured person has a condition that has not stabilized, or that may be getting worse, or where the evidence of long-term effects is not yet clear. With brain damage, you have the question of whether the person will recover 100% of their normal function in a year or two or three - if you wait three years, you know whether (and how much) brain function has been lost or recovered, instead of guessing about it.
If the injured man had his tank filled and immediately dove in the pool where this accident happened, and the dive owner (or somebody) discovered at the time that the air was "malodorous," you would not expect a lot of other people to have suffered the same problem, because any tanks that had just been filled at the same time would still be there to be checked and emptied if they were also filled with bad air. (That may also be why the shop owner knows it was the air he sold to the injured diver, although that is speculative interpretation of limited facts.)
Say what you want about a diver's responsibility for his own safety, if the air was "malodorous" coming out of the regulator, it was malodorous going into the tank, and it should have been noticed then and there. The person who is best equipped to assure the safety of the air going into the tank is the person who fills it, not some diver relying on a "sniff" test.
Some of us do not have a very good sense of smell (myself included), and sniffing air on a boat where the wind is blowing and a thousand other smells are in the air is not the best way to check for air quality. I'm not saying it isn't a good idea to sniff anyway, but I think you're kidding yourself if you think it is a reliable test for bad air, when half of the things that can mess you up have no odor, anyway.