Then they can do it if there is such an option in the contracts because these passangers accept all these rules while they are buying ticket. Still there is a lack of justice. How they choose the bumped passenger ? They should ask to whole passengers first, to see whether or not there are someones voluntarily will accept the offer. If there is noone accepts the offer, then they have to make a draw to choose a random passanger. Passangers with babies, passangers with healt problems, passangers quite elder should not be included into the draw.
So as you see, this is not such an easy problem to solve when it comes to choose someones you wish and kick them out of the plane.