Auto-Resolve conflict - potential bug?

I am playing around with source conflict scenarios. One of my scenario is

User 1:

1. Uses Refactor operation to rename a java class name and
2. Delivers the changes to the stream.

User 2:

1. Adds a method to the pre-refactored class (in the user 2's local WS)
2. Gets into potential structural and content conflict scenario
3. Uses Auto-Resolve to resolve structural conflict

At this point the auto-resolve modifies the File name to match the new name set by user 1 but fails to rename the class in the .java file and I get the following compile error

The public type <class name> must be defined in its own file

Is this a bug? Has anyone tried this scenario?

Thanks in advance.