LOS ANGELES – A California federal judge on July 9 refused to dismiss a lawsuit filed by Smithfield Foods Inc. and its insurers against the US government. Smithfield is seeking to recover $326 million in losses caused by a fire on July 4, 2009, at its Patrick Cudahy Inc. pork processing plant in Cudahy, Wisc.

According to Law360, US District Judge Consuelo Marshall said Smithfield has successfully pled that the government may be held liable under the Federal Tort Claims Act for the actions of US Marine Corps reservist Joshua Popp who started the fire by firing a military-issued flare during a Fourth of July celebration in 2009.

In 2007, Popp was stationed at Camp Wilson on the Twentynine Palms US Marine Corps Base in San Bernardino, Calif., when he stole a live M125 green star cluster flare.
Two years later, Popp took the flare to his parents' house in Cudahy, Wis., near the 1.5-million-sq.-ft. pork processing facility operated by Smithfield subsidiary Patrick Cudahy Inc. On July 4, Popp gave the flare to his brother Kurtis who launched it outside their parents' house. It landed on the roof of the pork processing facility, exploded and started a fire that caused serious damage. Joshua and Kurtis Popp were subsequently sentenced in related criminal cases.

Smithfield filed insurance claims for property damage and losses due to interruptions in business caused by the fire with various insurance companies, all of whom join Smithfield as plaintiffs.

The insurers paid Smithfield a total of $208 million under their respective policies. The company also suffered uninsured losses of $118 million, according to the complaint.

Judge Marshall rejected the government's argument that the Navy could not be held responsible for Popp's actions because the government didn't owe a duty of care to Smithfield. The government also argued that the lawsuit fails to state a viable claim because Popp was not in the military at the time the time he started the fire and the lawsuit doesn't allege that additional security measures at Twentynine Palms would have prevented the theft of the flare.

Smithfield's attorney Todd B. Denenberg disputed the government's claim following Monday's hearing saying the Navy failed to follow its own policies designed to ensure that munitions like the flare were accounted for when they left the base. He said he was pleased with Judge Marshall's ruling.

The ruling allows Smithfield to commence discovery in the case, Denenberg said following the hearing. Smithfield is interested in settling the case through private mediation, according to Denenberg.