I had a quasi-similar situation with LX: my flight got cancelled due to a strike and, although I had a business upgrade ticket I was refused rebooking with a seat in business (lots of empty seats) because none was available for booking in J. Mind you, next day at the airport, a very nice LX agent decided that this was stupid and she put me at in C after all. Thus, it seems to me a new practice of more than one airline.