What would you do if you found out they said this:?

I would probably be polite and cordial when I came into contact with her, but not go out of my way to come into contact with her or to be overly friendly. If she used the N word in my hearing, I suppose I would give her the benefit of the doubt and ume she didn't know how offensive it is (strewth, I suppose it's possible) and I would have a quiet word with her.