I'm in the LOOT Space Station theatres, and when I attempt to sit down the sit option is greyed out, and then the notification says "You can't sit down here because all seats are occupied, too close to another item or too close to the wall." The theatre only have like 10 people in here...
[MVP Terms and Conditions][MVP Program][My YouTube Channel]
[Welcoming Committee][ Motivated, Vigilant, Passionate]
[My Power Shall Be Absolute! #Vergil]
I can confirm that I also have the same error, it won't let me sit in any chairs and I get the same message as the OP.
I checked it today, and the problem is still there.
Hope this helps