The instructor should remove the dogs with problems and set up private lessons with the owners(or refer them to someone that can help). But that probably won't happen.
I'd keep going but do my own thing, and be diligent in not allowing any negative experience be had by my puppy. After the classes end, I'd be giving the instructor or whoever owns the place a detailed critique of the classes....maybe they can make some changes if things turn out bad. And if it is good with progress you can share that too.
First nights are always stressful for the fearful pups...they shouldn't be pushed past their threshold and not be placed close to the other dogs until they feel more confident.
Socializing doesn't mean playing with the other dogs, it means experiences.
If you want your dog to play with other dogs, set up a playdate with a confident stable temperamented dog.