They are suing the newspaper because they are supposedly incorrectly saying the man is a JW.
They aren't suing the man himself. Just the newspaper and the writers of the article.
This is the main issue that causes many forms of media to pause before they get involved in writing or reporting things about the Jehovah's Witnesses and the Watchtower Society.
Years ago I was regularly appearing on a Montreal tv show as their "resident abuse specialist" (their term for me - not mine) I asked them about doing a show on cults and explained my connection to the subject. They wouldn't touch it. Their main concern was that I might at some point or a caller (it was a TV call-in talk show) might mention the JWs or the WTS. Their major concren was lawsuits by the WTS. I don't know if they had run up against the issue before they they weren't touching it.
I suspect this is one of the reasons why so many programs, like Oprah and Dr. Phil are reluctant to deal with personal issues of people in cults. Even though Oprah has probably more money than the WTS (and her income is increasing while the WTS' money is decreasing) she has been pretty reluctant to deal with the issue.
News programs like Dateline, Sunday, etc that did exposee pieces on the sexual abuse problem within the WTS was different becasue they were able to get hold of legal documents to support what they were saying on the show. They documented everything they said very carefully. So they didn't get sued.
A newspaper though is publishing the news. In this case the neighbors said the accused was a JW. It might be hard for the WTS to win on this. The most they might be able to get is a retraction. It isn't like they are claiming that he is a JW. They are reporting what other people said.