Sounds like AC violated their tariffs somewhat similarly to a previous case involving a screw-up with a already boarded passenger at DCA and (probably) and Air Marshall.

http://www.cta-otc.gc.ca/rulings-dec...-A-2006_e.html

"...the Agency notes that Air Canada's policy on denied boarding clearly provides that a passenger holding a boarding card or a passenger who has already boarded an aircraft should not, in any circumstances, be denied boarding in cases where a flight is oversold."