i would continue to shop there. Yes, this one employee made a mistake and handled it badly, but if your other experiences there have been fine, I would continue to shop there.
One of my favorite shops almost didn't become my fav. The first time I visited there, the employees ignored me and the owner actually got "on to me" because my kids were touching the fabrics. I didn't visit there again for a while because of it. Then, I went back with my kids at a few years later and the owner and staff were amazing. I go there frequently now and love the shop. I don't know why that first visit was so negative, but I sure am glad I gave them another try.
That said, I don't understand why they have a limit to how many cuts they will make when there are people waiting - a cut of 1 yd vs. 5 yds vs. 1/6 of a yard all takes the same basic amount of time...I would actually argue that the smaller yardage takes LESS time since you don't have to keep flipping the bolt over to pull out the extra yardage to cut! Anyway.... my 2 cents!
If you didn't get your money back, you need to. And if you haven't used the fabric yet, then I would return it all if they don't refund the money from the overcharge.