All I heard about loociano was that he was personally worried about the threat of being sued, rather than him actually being sued. If anything, I would assume he'd receive a cease and desist takedown notice before stricter legal actions were taken, if any legal actions were even taken at all. That's not to say that he wasn't sued - I could easily be wrong - but perhaps we should be careful not to spread misinformation about how this issue was handled.
Ultimately, as Penguin-keeper has pointed out, the reason Tamatown was taken down was that it just wasn't profitable. It costs money to run the servers that were keeping the sites alive, and since it had been years since those versions had released they no longer stood to profit off using Tamatown as a means to generate more attention for their products. Furthermore, with newer versions on the horizon, Bandai could seek profit from closing Tamatown and reestablishing an online presence in the form of Dream Town when the next version released, potentially accruing additional views from those who were nostalgic for the days of Tamatown.
This isn't a case of Bandai wanting to "forget" about its past as though it doesn't exist - we've seen from their endless stream of rereleases that Bandai are no stranger to going back to the basic ideas which resonated with people in order to draw in fans who are familiar with the franchise for a second helping. Bandai is well aware of Tamatown's existence and intends to keep the assets in their intellectual property because although they do not currently stand to profit from running Tamatown, Bandai may decide that they can't take the risk of other people profiting from it, nor can they take the risk of allowing people to personally host the site when they could stand to profit off bringing the site back in the future. This is why they may choose to issue cease and desists to those attempting to host the site. That being said, they may also decide that such a move would not be profitable for them unless they actually did intend on rereleasing Tamatown, which at this stage seems to not be the case, so it seems most likely to me that they won't make the threat of legal action, at least not right now.
Even if there are legal issues involved, the cause to preserve and document the remaining pieces of Tamatown - and to recover those that are lost - must continue. It's important media remains accessible to those who wish to use it; we cannot allow pieces of history to be lost to time simply due to the fact that nobody ever cared enough to preserve them. What is being done here will always be necessary.
It's as Alex Grigoriou says;
