No, that video should not scare anyone away. In fact, the system worked. The coach was dismissed from the lawsuit.
One thing that is never going to change - and we don't want it to change - is that if you are a living, breathing person, you are subject to being sued. You can set yourself up to win a lawsuit with precautionary measures, but you can't keep yourself from getting sued.
That begs the question, what will keep frivilous lawsuits from being filed? Loser pays all costs (attorney fees, lost wages, etc.) for the winner is one idea, and that is done to some extent. Judges being more aggressive about granting summary judgment (motion filed early in most civil lawsuits that decides a case in favor of the party filing the motion) is another, but that risks tossing out some valid claims. If the facts are in any doubt, judges won't decide a case on summary judgment.
Another thing that would help matters is a much more expedited discovery process with fewer arcane rules. The civil system is set up now with some utopian goal of examining every possible speck of evidence in a case and turning over thousands of rocks with nothing under them. As a result, many cases drag on for years, with a high rate of diminishing returns on good evidence after some point in time. Lawyers will fight any reforms because all of this paperwork makes them a lot of money. At some point we need to say we have enough discovery and enough evidence and let's have the trial.
Anyway, the coach in the video got sued and wasn't happy about it. He was dropped from the suit, but still can't figure out why the system didn't work. The only solution he would like as far as I can tell is for coaches to be immune from lawsuits. Is that what we want? What if a coach physically assaults a kid? What if a coach throws a baseball at a kid who isn't looking with the idea of hitting the kid (one of my old high school coaches used to actually do this)?
I don't think anybody would be in favor of saying coaches can't be sued. So that leaves the legislators and legal system to do their best to limit frivilous lawsuits without discouraging valid lawsuits. There is a balance to be found and right now I think most people agree it is tilted to allowing too many bad lawsuits and tying up too much time and resources of litigants. Reforms will have to come through the legislative branch (who are mostly clueless about a courtroom, not to mention the economy) because the trial lawyers will fight it every step of the way.