I'm not affiliated with The Cadets (or any other corps) but I was involved in the activity around the time in question. I don't think this was an isolated incident, and certainly not limited to The Cadets. I don't mean this as a justification by any means, but it was a different time and the organizations simply weren't governed by the same standards of today. Similarly, insurance: Today, most organizations would be pretty well covered if something happened. Did they have that in 1982, beyond what was legally mandated (i.e. vehicles and the like?) I'd be surprised. Those corps didn't have million dollar budgets back in the day. Many didn't even have professional management.
If the corps had a staff of attorneys, they could probably find their way out of this jam. But their current insurance carrier isn't going to pick that up and defending a suit would probably run well into the 6 figures, at least.
Knowing all this, rather than settle for something that would allow the corps to live on, the plaintiff opted to tank it. It's unfortunate but perhaps inevitable (given everything else that's come out, does anyone think this was an isolated incident?)