Originally Posted by Lux Flyer

Edited my previous post to add this, but UA considers a flight oversold if any cabin is oversold. And if they consider a flight oversold, then yes they should be following their oversale policies they have filed with the DOT which dictate it should be disclosed that it is oversold. Theoretically, if everyone in Y were to refuse the upgrade, then they would have to continue following their VDB/IDB policies, but the chance of that happening is basically 0%.

For your specific example the question is did the gate agent actually follow the oversale policy? Probably not, because it is far easier to just process the upgrade list and relieve the situation that way (and also cause the agent less paperwork). But if the agent was following the requirements for an oversold cabin, then it is very possible the situation which was described for the above SFO-SYD flight could occur if the elites on the upgrade list that were skipped over weren't in the gate area. I don't know all the specifics of that flight or why certain people were upgraded over others, but there is a plausible explanation for how the non-status UPP passengers got upgraded in the oversale situation.