It doesn’t matter whether it was overbooked or not. If the man had paid for his seat, gotten to the airport on time, checked in with no problem and was even sitting in that seat, the airline was completely wrong in trying to take it away from him. It would be like buying an article of clothing at a department store and then, once you were out on the street with your paid-for bag of clothing, having the store manager come out and rip it out of your hands.
That said, while this flight may not have been overbooked (which gives the airline even less reason to do this), I read that something like 480,000 flights a year are overbooked, and 45,000 passengers a year - across all the airlines - “involuntarily” surrender their seats. I think in most cases they weren’t already sitting on the plane, however, and generally were simply told when they got to check in that they would have to be rebooked on another flight.
Airlines need to overbook because of no-shows and also because of passengers from connecting flights that don’t turn up in time because of weather delays or some other problem. But perhaps their algorithm needs tweaking, and certainly the processes for handling this need review. Dao did us all a favor by drawing attention to it, IMHO.