Considering they were only lending to one person at a time, it does seem like the lawsuit is uncalled for.
Not sure what the legal standing is loaning ebooks based on "well someone else isn't using their book".
(Yes, yes, they may have loaned more copies of a particular work than they had, but those loans have expired now.)
If 1000 users come on a shopping portal and buy things they are all buying one at a time, but 1000 transactions are still done.
Mr. Kahle is now claiming that they kept that up during the emergency period, but expanding the pool of physical books to include those being held my libraries around the country. That doesn't seem to quite line up with what I remember, which was the term "unlimited," but we'll see how that shakes out in court.