"Have those reciprocal lawsuits ever been settled?" 

As far as I am aware, the lawsuits- hearings/depos etc- keep getting postponed and so not settled. BG seems to be in no hurry. LBSR be damned if your first priority is to cause Mr. Briscoe grief. If that's the goal- then slower the better.

As for shorting LBSR- I don't know if it was actually done in this specific circumstance- but it has actually been done in the recent past. By whom-?

But I agree- there might be other motivations as well.