I'm in the "tell him that you know he's said things about you, you don't like it, & that's why you don't want to talk to him anymore" camp. Then block him on FB, don't respond to texts, and be polite and superficial in public.
That's not creating drama, but it *is* telling him that you know, that it's not ok, and that there are consequences to his actions, ie, you want nothing to do with him.
Creating drama would be telling him you know, then responding to his response, & letting it keep going back & forth.
I don't know if I'm delusional, but I believe that telling people when you know they're doing something crappy & then changing your behavior accordingly (like no longer being friends with someone) can make them realize that their behavior is not OK, and may provide the impetus for them to change it. I don't think it always works, but I do believe that if more people called other people (in a civil way) on their bad behavior & there were more consequences to bad behavior, then there'd be less bad behavior.
Was there a resolution to this?