I don’t think anyone here–including the OP–understands what really occurred. It sounds like the truck was originally brought to the shop because of engine noise and low/no oil pressure, which means the engine was already worn out. Perhaps the low/no oil pressure was a false reading due to a defective oil pressure sending unit, but because of the fact that this was noted on the original work order, a reasonable judge is going to assume that the engine was already ruined before the shop touched it.
Also, I agree that a reasonable person, if concerned about the dipstick reading after an oil change, would have checked the oil level before driving the vehicle home, which I used to always do when having oil changes done in the past (now I do them myself at home). The time to notice if there is too little oil, or way too much, or evidence of a leak is before you drive the vehicle home, and risk serious engine damage.
At this point, even if we accept the fact that the engine was in good condition prior to the owner draining out most of the oil due to this incorrect dipstick tube, I am not sure what percentage of liability can reasonably be assigned to the shop.
This is, of course, a legal question, not a technical question, but I can’t imagine that a reasonable judge would buy the argument that since the owner felt the engine was already ruined that made it ok to drive the vehicle with low/no oil pressure and knocking noises based on a faulty dipstick reading, and therefore this is 100% the shop’s fault. A reasonable judge might apportion liability, and hold the shop to be 10% responsible or maybe even 25% responsible, but either way, you’re not getting a huge financial recovery, or another engine installed for free. A lawsuit, even if it results in a judgment against the shop, is unlikely to yield much more than emotional satisfaction.