I'm willing to bet that there's more to the story than the short bit that's shown. For things like this, you shouldn't judge the situation based only off of what little you see.
Students "Occupy" protest.
Police break up demonstration, taking down tents and whatnot.
Students resist, One is arrested.
The group you see sitting + others demand the release of the student, since they were a peaceful protest.
Either ordered to sit or choosing to, the students are pepper sprayed.
You saw the students.
They were all passive.
They were all peaceful.
Even DURING the pepper spraying, they remained calm, arms interlocked, and screamed where they sat.
This was an unnecessary use of non-lethal force. I don't know whether the cop wanted them to leave, or stop screaming, but they were breaking NO laws by sitting there.