Wanted to get some feedback from everyone on strategy when confronted with a possible verbal/physical altercation.

Last night I went out with a few friends (guys and girls) to a local sports bar to watch our hometown hockey team in the NHL playoffs. Our team wins so we decide to go out to a couple of more bars and celebrate.

Once we get to the final bar of the night, I sit down with a couple of my friends at the bar. At one point I get up to go to the bathroom, and when I return a middle aged woman takes my seat. No big deal. Ill stand.

As I squeeze in between her on my right and my friend on my left she starts purposely elbowing me claiming I am "pushing her". I tell her to relax and to stop trying to be a bitch. After a few words between my friends and I and her and her husband, they get up and leave.

Thought all conflict was avoided.

After telling my friend "Man, that lady was a huge bitch", a mid 20's guy comes up and starts saying how you shouldnt call anyone a bitch, blah blah. Then he says "Maybe your a bitch, maybe I should knock you out right now". So now my adrenaline is pumping and I am shaking like a leaf and I turn back to the bar. I was so worried about getting in a physical altercation with this guy and looking like a idiot/getting thrown out. However, I feel very Beta for not getting back in this guys face and standing my ground.

How would have you guys handled the situation? Fought and looked like a jackass in front of everyone or turned back to the bar?