Catering manager John Howe said he felt "betrayed and let down" by LRGS after his civil case claiming against the school was dismissed at Lancaster County Court on Monday.
Mr Howe, 54, of Fulmar Crescent, Heysham, argued that the injury he suffered breaking up a fight could have been prevented if the school had carried out risk assessments and provided staff with training in restraining pupils. One pupil should also have had a teacher supervising him in the dining hall, it was claimed.
Mr Howe snapped a tendon and broke a finger as he pulled on the boy's collar to restrain him from another pupil.
"He was red in the face and clearly out of control, and I realised he could cause serious damage to the other child," Mr Howe told the court.
"I thought it necessary to physically restrain the boy."
The boy, a third year pupil, was excluded from school for two
days after the incident, which
happened in December 2005. LRGS deputy head Ian White-house said he had been placed on detention for previous bad behaviour. But he added: "We didn't think it was necessary at that time for the boy to have individual support during break times."
Mr Adam Weitzman, on behalf of LRGS governing body, said: "Never before had any pupil had to be physically restrained.
"There was not a real risk that a member of staff would be injured in this way."
But Mr Richard Burns, representing Mr Howe, said: "You don't have to wait until the worst happens before you anticipate a risk.
"The school failed to carry out an assessment, and if that had been done the probability is that this would have been avoided."
District Judge Forrester said while he had "great sympathy" for Mr Howe, there was no duty for the school to make a risk assessment because the chances of an incident occurring were a "remote possibility".
There was also no basis for Mr Howe to have training in restraint or for the boy to have been
supervised. The judge dismissed the case and ordered costs of £9,487 be paid to the school.
Mr Howe's case was fought on a no-win, no-fee basis and he does not have to pay the costs out of his own pocket.
Afterwards, Mr Howe said he felt let down and would be reconsidering his position as catering manager.
"They said I was a valued and respected member of staff yet I have been shot in the foot," he said. "Now I will just do the job I am paid to do. This has destroyed goodwill and loyalty to the school and if a fight breaks out between kids in the dining hall now they can kill each other for all I care.
"If something happens I will leave the room and will instruct my staff to do the same."
Head Andrew Jarman said: "Lancaster Royal Grammar School considers the welfare of its staff and pupils as its highest priority. The school will always take seriously any injury to a member of staff in the workplace and will take necessary steps to try and prevent this wherever possible."