The device must have got pretty hot for that to happen - 1150mAh battery = 4.255Wh = about 2 watts per hour or maybe a 30C rise above ambient. Did he complain of it getting hot? Did it operate normally in those 2 hours?

Still, the ATT customer service sounds very sucky... I don't think the same would have happened if he'd got it from an Apple store, but I realize this isn't exactly convenient for a lot of people.

Hugo