"According to our records there was an overbooking in First class on flight LH588."
I had always thought that LH did not overbook their first class cabin. IIRC this was also confirmed by others on this board. Isn't this also why the senator booking guarantee does not include first class?
This incident seems very unusual; something out of the ordinary must have happened in the background.
BTW, I can only second everyones complaints about non-LH ground staff

Even in Berlin the LH Sen priority check-in is sometimes handled by globe ground people some of whom have great difficulties with more complex problems.