I was recently corresponding with a new German teacher in South Carolina (schöne Grüße, Frau Becker!), and she asked for advice about planning for a class with both German 2 and 3 students in it. Multilevel classes are pretty common in upper level world languages, so I thought I'd put my reflections here in case they can help anyone else.The combination of two levels is tough for teachers. Administrators don't seem to understand how much more work it is for the teacher and how the students are shortchanged. They just look at numbers. As I was told, just be grateful we're letting you do this level at all. At my school it was a 3/4 split. (And one year I did a 4/5 split, though we only had German 5 that one year!)
When facing a multilevel class, first of all, be kind to yourself. This isn't easy and you won't be able to give the students the same learning experience as if they were separate classes. You are one person and can only do what you can do.
The upper level students (I'll call them German 4 here for clarity since that was my experience) should be seniors and, at least theoretically, more mature, so focus on the German 3 students, and give the German 4 students more independent work.
You may be able to have your German 4 students play the role of conversation partner or assistant teacher. Give them a note card with a speaking question that they ask of the German 3 students one on one or in small groups.
This isn't what you'd do if you had separate sections, but it is using the language and does benefit them. If parents complain, explain that it isn't under your control and ask them to take their concerns to administration. Overall, focus your energy on German 3, where you likely have more students, and do what you can about German 4, but don't expect yourself to be two people.