March 05, 2012 11:37am PT by Eriq Gardner
Moviegoer Files Class Action Lawsuit Over High Cost Of Food and Drinks At Theaters
Six dollars for a box of gummy worms at the movie theater seems like highway robbery, but is it actually unlawful?
On behalf of all others who find the prices of movie theater concessions to be outrageous, Michigan resident Joshua Thompson has filed a class action lawsuit against his local AMC theater. He's suing because the movie house denied him the ability to bring his own soda and candy into the local AMC in an alleged violation of Michigan's Consumer Protection Act.
The plaintiff is a 20-something security technician in Livonia, Michigan, who according to the Detroit Free Press, was tired of movie theaters taking advantage of him. So he's suing.
Both AMC and the the National Association of Theatre Owners declined the paper's request for comment.
Although Thompson's lawsuit is winning sympathy from like-minded theatergoers who are being asked in a recession to pay big markups on wholesale prices, some legal experts doubt the plaintiffs stand much chance of buttering up a judge.
"It's a loser," said Gary Victor, an Eastern Michigan University business law professor, citing Supreme Court precedent that has given businesses an out from consumer protection liability in well-regulated industries.
(Here's the decision that observers believe gutted Michigan's consumer protection law.)
If the plaintiffs manage to get around this, they'll force AMC to face a law that prohibits "charging the consumer a price that is grossly in excess of the price at which similar property or services are sold."
Exactly how much do movie theaters make on concessions? According to one Morningstar equity analyst, of every dollar spent on candy and soda in movie theaters, 85% is pure profit. Another review of the business of selling popcorn reveals that $30 worth of raw popcorn is worth as much as $3,000 to movie theaters.
Unfortunately, the economics of allowing consumers to bring their own gummy bears into the theater aren't quite so simple. If this lawsuit ever did get to trial, AMC would certainly bring their own experts that could testify that charging high prices is actually in the consumers' best interest.
As hard as that is to believe, researchers at the Stanford Graduate School of Business and the University of California, Santa Cruz, concluded in 2009 that "by charging high prices on concessions, exhibition houses are able to keep ticket prices lower, which allows more people to enjoy the silver-screen experience."
Is that any comfort to a family of six who paid nearly $100 for seats to see Dr. Seuss' The Lorax last weekend? Probably not. That's not even counting the concessions.