The bottom line is that a coach should have the right to choose who he or she coaches. Having an athletic scholarship or even being a part of a collegiate team is not a right, it is a privelage. A coach is responsible both for the overall success of the program, as well as the character and conduct of the program (how many coaches have been fired because they recruited and retained athletes that broke laws and made their college and program look bad?).
If an athlete doesn't fit with the coaches philosophy, rules, character, style or anything else, then the athlete needs to go. The coach must have the ability to shape the team for success in every aspect of the program. If a coach has a history of arbitrarily getting rid of athletes for no apparent reason, the institution will deal with that. They will deal with that because obviously such consistant negative action will both ruin recruiting/PR and reduce overall success.
If college coaches are legally forced to accept or retain every athlete regardless of character, conduct or anything else, there would be no reason for anyone to coach. You can't be asked to be responsible for the character, conduct and performance of your team, then have one of the means to form and control those aspects taken away.
Just based on the description by the "victim", it is obvious that the "victim" was completely out of line. If a coach tells you to get out of a room, you don't resist and you don't question his or her authority, especially not in front of other teammates. Notice that the athlete resisted and questioned in the presence of the team, and the coach dealt with the situation in the hall. This athlete believes that his version of his own conduct was correct, which shows his character. I think it is reasonable to assume, given the attitude shown here, that this was not the first situation in which the Coach had an issue with this athlete and that the athlete probably conducted himself much worse that he was willing to describe. A coach isn't going to get rid of a viable part of their program without reason. It isn't in their own best interest.
I think it also shows the character of the athlete that he is actually suing. If you are worthy of a scholarship, go out and find another program that will reward you for your talent. Nobody wins in this situation, and it is possible that it sets a presidence that damages collegiate athletics and chases away more good coaches.