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Product or Improvement?

By David P. Wilson, Esq.

The cinema industry, in part, is made up of companies that manufacture, sell and install products and equipment that add to the moviegoing experience. The industry serves the public, and that brings with it legal duties owed to the moviegoing public. Perhaps in no area of the law is this more apparent than the area of products liability. The recent case of Simmons v. Rave Motion Pictures Pensacola, L.L.C., et al., raises some interesting issues in the area of strict products liability in the cinema industry.

Mr. Simmons went to see a movie in a movie theatre. While at the movie, a weld in the base of his seat failed, causing the seat to break and resulting in significant physical injuries to Mr. Simmons. In 2008, Mr. Simmons sued the theatre, the seat distributor, the contractor and the seat manufacturer, alleging negligence and strict products liability.

Before the trial, the defendants (contractor and distributor) filed a motion for summary judgment on the issue of strict liability on the basis that the seats in the theatre were permanent improvements to real estate and therefore not “products” for purposes of strict liability. The trial court granted the motion for summary judgment on the grounds of strict products liability in favor of the distributor and the contractor, holding that the seating was a permanent improvement to real estate and not a “product,” and therefore strict products liability is not applicable. The plaintiff appealed the trial court’s ruling to the appellate court.

The appellate court recognized that strict products liability does not apply to structural improvements to real estate in Florida and in several other jurisdictions. In appealing the trial court’s decision, the plaintiff relied upon the court’s holding in Pamperin v. Interlake Companies, Inc., 634 So. 2d 1137 (Fla. 1st DCA 1994). In the Pamperin case, the court ruled that a storage rack bolted to the floor was not a structural improvement because the storage rack could be disassembled and resold.

The evidence in the summary judgment hearing in Simmons was clearly that the general contractor was purchasing a seating system and not simply individual seats to be installed in the theatre. A seating system is bolted to the floor and becomes a permanent structural improvement to the real estate.

The appellate court in Simmons, in making its ruling, relied on the holding of the court in Plaza v. Fisher Development, Inc., 971 So. 2d 918 (Fla. 3d DCA 2007). In the Plaza case, the court was able to distinguish the Pamperin case in holding that a conveyor belt in a Pottery Barn which transported goods between floors was a structural improvement and not a product. The appellate court in Simmons noted that the court in Plaza was unpersuaded by the notion that the determination of whether the subject storage rack system is a “product” should be governed by whether it can be disassembled and then resold. The court noted that if that were the case, practically anything affixed to real property would constitute a “product” for purposes of strict products liability.

Conveniently, in the Plaza case, there was no evidence that the conveyor belt could be disassembled and resold. Likewise, the appellate court in Simmons found that although the plaintiff had presented evidence that the seat bottom could be removed, there was no evidence that the entire seating system could be disassembled and resold. The seats were sold and installed as a seating system and not individually, and could not be removed and resold individually.

The final reasoning by the appellate court in Simmons seemed to rely upon the Plaza court’s holding that the conveyor belt was “an integral part of Pottery Barn’s operation, in that the subject conveyor allowed items sold to customers to travel easily from the second floor storage area to the first floor retail area, and the conveyor system is affixed to the real property, thereby adding value to the property.” The Simmons court likewise found that there is evidence that the seating system is an integral part of the movie theatre’s operation, as it was installed as part of the construction of the theatre and that the entire seating system was bolted to the floor. Based upon the above reasoning, the appellate court in Simmons ruled that the seating system was the manufactured item purchased and installed by the general contractor in the theatre, the seating system is a structural improvement to real estate and, therefore, strict products liability does not apply.

What does all this mean? It means that there is an important exception to strict products liability for structural improvements to real estate. It means further that Florida courts are moving away from an objective test, which is whether the manufactured item can be disassembled and then resold, thus making it a product. The new test seems to be a more subjective test, which is whether the manufactured item in question is an integral part of the theatre’s operation and whether it is affixed to the real property, thereby adding value to the property. The cinema industry brings wonderful experiences to the moviegoing public through the use of technology, equipment and other manufactured items. With the great privilege of being a part of the cinema industry comes an inherent liability which is always present. It is important that all of the constituent companies in our industry be aware of all of these potential liabilities and limitations on those liabilities. The court’s ruling in the Simmons case is, at least for now, a victory for dealers and general contractors involved in the cinema industry in the area of strict products liability. However, the Simmons case has been in the system since 2008 and it is possible that the ruling of the appellate court in Simmons could be appealed to a higher appellate court. At this time, that remains to be seen. It also raises a question as to whether the result would have been different had Mr. Simmons been sitting in one of today’s luxury seats rather than more conventional seating. In the meantime, from a legal perspective, this is an interesting case and, if nothing else, it reminds us of the legal duties owed to the moviegoing public for the privilege of being in this wonderful industry of ours.

David P. Wilson is the general counsel for the International Cinema Technology Association and a partner in the Omaha, Nebraska law firm of Walentine, O’Toole, McQuillan & Gordon, LLP. Mr. Wilson would like to recognize the contributions of his colleague and associate, Jonathan Brown, in researching and writing this article. For any questions or further discussion on this case, you may contact David Wilson at dwilson@womglaw.com