Please don't dispense legal advice when you don't have a clue. Extortion? Do you even know what that means? If the guy doesn't have enough money to settle a $4-$5k case, what makes you think he can counter sue? You do know when you lose a case, you also have to pay the other side legal fees incurred not to mention have to pay filing fees for such a frivolous lawsuit that will be thrown out the first second a judge reads it.
I don't care about the Pokémon Company. They sound petty here, but the guys been running unofficial events for 5 years at this cafe and has been charging money for tickets, even if it's to pay for DJ/Events. He's using Pokémon to not only promote his cafe venue, but trying to gain fame from their brand. Just saying I'll cancel it, doesn't mean anything.
I hope he eventually reaches an agreement where he doesn't have to pay, but he's in the wrong here on multiple points.