To me, the most important factor in this case is that after the protests, etc the Bakery first asked the University to simply retract it's claims that it was racist and had a history of racism. The University refused, despite having no proof of it's claims, which shows bad faith at least. Another fact that goes to bad faith are the lies they made on the stand, refusing to take responsibility for their actions. If you're reading was correct, and it was an honest mistake, then the University could have and should have corrected it's statement, and should not have lied on the stand.

Another point you make here doesn't make sense: this isn't about "national debate". This is, roughly, about one agent harming another agent with a set of lies designed to harm. If this case involved a newspaper editor getting sued for libel because he called a politician a liar, then yes, you might have a point. But it isn't.