Authorship dispute after author was removed without their knowledge My supervisor, two other students (C and G) and I were invited to write a paper for a journal. The paper was about a project in which we were all involved.

(C) though, never engaged into any writing activity, even after multiple messages from us. When I asked (C) if he still wanted to be an author, clearly expecting either no answer or an honest "no", (C) replied saying he knew he didn't do much for the paper, but volunteering to proof read and review the final draft. I sent the document to him but we never heard back. 

It was decided that (C) didn't do enough to be granted authorship and we submitted without him, but due to a misunderstanding no-one notified him that he had been removed.

Because of this, (C) is now accusing us of having plagiarized his work and of scientific misconduct and fraud, and requests that the article is retracted.

(G) and I still agree that (C) should not have been granted authorship and can produce all the evidence we have to show that (C) didn't contribute to anything substantial in the paper and is not worth authorship (emails, previous publications, etc). (C) continues to threaten to report us to the university for fraud (it is not clear if he plans to report the supervisor as well).

I am confident of my good standing but at the same time I am afraid this dispute could spiral out of control.

What could I do to defend myself in case (C) reports us? Should I get in touch with the editors and explain the situation?
You have described a situation very similar to the one described here—unfortunately, you and your colleagues have mishandled the situation and are at fault through lack of communication, even though it was an oversight.

Since you did not communicate with co-author C that you were going to remove him as an author, he is entirely within his rights to raise a complaint against you. If he can provide sufficient evidence that the editors at the journal or the administrators at the university decide that you did not treat him fairly, you can be subject to sanctions. The paper certainly could be retracted, and you could be subjected to administrative punishment from the university as a result.