I can also give an anecdote about how such a situation happens. I was on a DFW-BOS flight last year when my wife and I were both on the upgrade waitlist; I was #1 and she was #2. At the very last moment *after* we had boarded and taken our Y seats, I got notification on my phone that my seat had been changed to 5D. A deadheading flight attendant was to take my seat instead. I politely informed the FA who informed me of my upgrade that I'd rather sit with my wife. At that point they were minutes from needing to close the door so rather than find the #3 person on the list, they simply gave the deadheading FA "my" F seat.