The lawsuit explicitly says between April-May 1965. He was touring the west coast from the beginning of April through the 24th. Flew from Seattle to TCOTU on the 26th, toured the UK until May 10th or so (all the while being filmed constantly for 'dont look back'), spent the next few weeks in Portugal and then went back to do a show at the BBC in TCOTU on June 1st. He was not in New York once during that time period.
It's not to say that nothing ever happened between them, but it's quite clear that it wasn't between April and May 1965 at the chelsea hotel.
Blonde on Blonde on the other hand, they really invented a sound for that album. I recommend you give the Bootleg Series 12 a spin. Listen how every song Dylan wrote sounded like Sooner or Later One of Us Must Know before the producer and the band changed it.
keep intending to check out some of the bootleg series.