A Legal Labyrinth
A review of some of the legal issues facing the Walt Disney Company
Thursday, June 30, 2005
by Alex Stroup, editor
This month's Company Update focuses on some of the legal cases involving Disney. June was a busy month for the Walt Disney Company in courtrooms around the country: Los Angeles, Sacramento, Philadelphia, and Delaware.
How is Indy like a Bus?
It has been a busy month in the courts for Disney. The case that received the greatest attention was a ruling on June 17 that amusement park rides could be held to safety standards required of public common carriers.
The ruling results from a lawsuit (Gomez v. Walt Disney Company) filed by the family of Cristina Moreno. The suit alleges that riding Disneyland's Indiana Jones Adventure in June 2000 caused brain injuries to Moreno that later caused her death. In September 2000, a wrongful death civil lawsuit was filed. As part of the suit, it was necessary to lay out the basis on which Disney should be held accountable, and the standards were invoked. An interesting additional cause, however, was included. The plaintiffs claimed that Indiana Jones Adventure should be held to the same, increased, safety responsibilities as common carriers.
The court hearing the case rejected this cause of action, the Court of Appeals overturned, and the California Supreme Court upheld the Court of Appeals (in a split 5-4 ruling), allowing that in this case, Disney could be sued as a common carrier.
Before going into further detail on this decision and what it means for Disney and amusement parks in general, it is important to clear up a misconception. This ruling does not mean that Disney and Indiana Jones Adventure have been found liable for Cristina Moreno's death. All it means is that the Moreno lawsuit can proceed and present this particular theory as to why Disney is responsible. A future jury could still find that Disney is not liable and meet all the requirements placed on a common carrier.
So, what is a public common carrier? In California, the definition derives from two sections of the California Civil Code. Section 2168 defines a common carrier as:
Every one who offers to the public to carry persons, property, or messages, excepting only telegraphic messages, is a common carrier of whatever he thus offers to carry.
Section 2068 defines a contract of carriages as:
The contract of carriage is a contract for the conveyance of property, persons, or messages, from one place to another.
That's it. The whole ruling is about whether those two sentences apply to amusement parks in general and Indiana Jones Adventure in particular. Disney argued that they do not on the following two points: 1) That the passengers are not carried "from one place to another" since the entire ride takes place in a small geographic location and the passenger is very nearly returned to the same location as where they began; and 2) transportation is not the intent of the passengers but rather simply a byproduct of seeking thrills.
Reading the courts decision (link; highly recommended, as it really is in pretty plain English), it is hard to dispute that the majority's ruling is at least consistent with previous decisions. The decision bluntly points out that while many other states have exempted amusement park rides from common carrier status, this has not been true in California, where the term has been defined broadly for a very long time.
Over the decades, common carrier status has been extended to elevators, escalators, mule train excursion, sightseeing helicopter rides, and scenic railroads. All of which, in some way or another, contradict the elements of Disney's claims that they do not provide common carriage. An earlier decision in 1962 involving Disneyland's Surrey with a Fringe on Top placed it in the common carrier category. In 1995, a federal case (Neubauer v. Disneyland) held that Pirates of the Caribbean met California's definition of common carrier.
Disney and the dissenting justices essentially argue that despite what case law may exist (though they also feel that the case law is less than compelling) it is beyond reasonableness to suggest that the legislature ever intended to extend the common carrier statutes to Disney (the dissenting opinion by Justice Ming Chin is included in the PDF linked above).
Regardless, it is now a matter of law that Indiana Jones Adventure is a common carrier. What does this mean for the amusement and theme park industry of California?
First of all, the decision only applies to "roller coaster or similar amusement park ride[s]." The court explicitly offered no opinion on other types of rides. So it could be the case that if Star Tours were reprogrammed to completely reproduce the Indiana Jones Adventure experience that it would fall into a different category of liability. On the other hand, Star Tours does physically move in spacejust not very far.
For ride operators, the problem with being classed as a common carrier is that it significantly increases the burden of responsibility beyond simple product liability. Section 2100 of the California Civil Code defines some of them that could be detrimental to ride operators:
2100 A carrier of persons for reward must use the utmost care and diligence for their safe carriage, must provide everything necessary for that purpose, and must exercise to that end a reasonable degree of skill.
2101 A carrier of persons for reward is bound to provide vehicles safe and fit for the purposes to which they are put, and is not excused for default in this respect by any degree of care.
2104 A carrier of persons for reward must travel at a reasonable rate of speed, and without any unreasonable delay, or deviation from his proper route.
On the surface, that doesn't seem unreasonable. Isn't the purpose of an amusement park to provide thrills without a real increase in personal risk? But as Justice Chin says in his dissent, the utmost care and diligence clause could be very onerous, that thrill rides require certain designs and that each could ride can be less long, less high, less fast, or less bumpy. Thus, it is likely that most such rides will fail the utmost-care test
The majority, however, disagrees with Chin's interpretation, saying that, The degree of care and diligence which they must exercise is only such as can reasonably be exercised consistent with the character and mode of conveyance
A lot of legal wiggle room can be found in the word reasonably and with this ruling what is reasonable
will be determined by a jury.
Justice Chin further raises the specter of new odd requirements for amusement parks. The statute is full of minor and major requirements for common carriers, many of which don't make sense for amusement parks. Only time will tell if this comes true:
For example, we can now expect to see someone who had to wait in line for a ride on the Indiana Jones attraction suing Disney for failing to provide a sufficient number of vehicles to accommodate all the passengers who can be reasonably expected to require carriage at any one time (Section 2184).
Only time will tell how judges and juries will interpret utmost care in considering thrill rides, and until then you probably needn't worry that your favorite roller coaster will be closing down or putting in a 12mph speed limit.
Meanwhile, expect to see Disney and the industry as a whole seeking legislative relief. All it would take is a simple amendment to the existing statue that specifically exempts amusement park rides from the common carrier category. Several other states already have such explicit declarations.
External safety inspections shot down
A Philadelphia federal court threw out a portion of a lawsuit by Environmental Tectonics Corporation (ETC) against Disney. ETC, through a subsidiary called Entertainment Technology Corporation, designed and did much of the development of the ride system behind Epcot's Mission: Space attraction.
The suit (link), in addition to requesting financial compensation and release to design similar rides for other companies, also seeks access to perform safety inspections on Mission: Space. Disney requested summary dismissal of several components of the suit, including the part that requested access for safety reviews, and Judge Herbert Hutton granted the motion (link) because ETC did not contest.
The timing of this ruling wasn't good for Disney, coming just four days after 4-year-old Daudi Bamuwamye died after riding Mission: Space. Apparently the ruling says nothing about whether ETC should perform inspections to maximize the ride's safety. In an editorial, safety activist Kathy Fackler (link) notes an apparent contradiction on this issue. She notes that in the Philadelphia court, Disney claimed that inspections by ETC were unnecessary since the ride is certified by the Florida Department of Agriculture and Consumer Servicesand yet in Florida, Disney defends its exemption from inspection by state agencies saying they don't have the expertise to perform them.
No Happy Meals for Roger Rabbit
In another case decided yesterday (June 29), Disney and the other watchful movie studios avoided a serious loss in a case claiming Disney had bilked Who Framed Roger Rabbit creator Gary Wolf out of millions of dollars. While the jury found that Disney shorted Wolf at least $180,000, it rejected his claim that a percentage of gross receiptsshould include the value of promotional deals. If he had prevailed, such promotional deals (like the McDonald's Happy Meal toys for Disney's family movies) would have to be included in calculating money owed.
Roy Disney asks Michael Eisner to stay on
The lawsuit filed by former Disney board members Roy Disney and Stanley Gold are proceeding quickly. When the suit was filed on May 9, Disney quickly responded with a motion to dismiss the suit. After hearing arguments on June 3, Judge William Chandler promised a quick ruling and was true to his word, ruling just three days later that the case could proceed. The trial, which will be decided by the judge without a jury, will begin on August 10 and hopefully be completed before the scheduled resignation by Michael Eisner on September 30, when he is replaced by Robert Iger.
If the Disney-Gold suit prevails, this transfer of power will be enjoined until a new Board of Directors election can be held. If the existing board is reelected, then presumably the transfer would happen as expected. If a new board is elected, a new CEO search would be conducted.
Ironically, if Roy Disney wins, it would have the effect of keeping Michael Eisner in office even longer than currently scheduled.
You can't beat this with a stick
When you think of entertainment giants battling copyright and trademark infringement, you probably think first of the ongoing battles over digital copying of music and movies.
But what about piñatas? On June 19, the Los Angeles Times reported (link) on a sting operation by Disney, Viacom and three other companies against illegal piñatas that use unlicensed likeness of characters owned by these companies. Several companies in located in Downtown Los Angeles, considered the unofficial piñata district. Similar suits in the past, against some of the same stores, have resulted in out-of-court settlements.
This item is included simply because I find the idea of an unofficial piñata district amusing.
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