Lorillard Tobacco Co. cleared to continue suit vs. security firm over warehouse heist of cigarettes worth millions

By Scott Holland | Jun 4, 2015

A lawsuit alleging a security firm actually paved the way for a burglary will proceed following a judge’s refusal to dismiss the complaint.

Greensboro, N.C.-based Lorillard Tobacco is suing Tyco Integrated Security, which is headquartered in the U.S. in Boca Raton, Fla., in federal court in Chicago, accusing the security company of failing to adequately protect a cigarette warehouse in East Peoria. According to court documents, Federal Warehouse Company owned the facility in question. The suit alleges Tyco negligently maintained confidential information, failed to inform Lorillard of the compromised data and neglected to increase security measures.

“As a result,” the suit asserts, “burglars exploited the documented vulnerabilities and stole millions of dollars’ worth of Lorillard’s cigarettes.”

U.S. District Judge Manish Shah on June 2 rejected Tyco’s motion to dismiss the lawsuit. Shah noted part of Tyco’s contract to provide security for Lorillard involved risk assessment and analyzing vulnerabilities at the warehouse, including the preparation of diagrams and descriptions of the warehouse’s weaknesses.

To perform those assessments, Tyco was given access to the warehouse, with the understanding the resulting information “would be closely protected, would be kept in strict confidence and would be used solely to prepare a bid or proposal for the sale of additional security equipment and the provision of additional security services.”

Yet on Jan. 24, 2010, burglars cut through a roof at an unmonitored location, lowered themselves into an unmonitored interior site and bypassed the security system before stealing cigarettes. Shah’s ruling notes “the same burglars broke into other warehouses monitored by Tyco —both before and after the burglary in this case — in each case avoiding or disabling Tyco’s security system.”

Lorillard directly accused Tyco of loosely protecting its information about the warehouse such that thieves were able to use the data to plot and execute the robbery.

In its motion, Tyco asserted Lorillard it owed no tort-law duty to the tobacco outfit, citing a 1979 decision stipulating “there can be no recovery in tort for negligence unless the defendant has breached a duty owed to the plaintiff.”

However, Shah cited multiple cases in which a court ruled a defendant hired to provide security did in fact owe tort duty to plaintiffs, including American Centennial Insurance Company v. Wells Fargo Alarm Services, 1986, in which a jewelry store was robbed, and a Scott & Fetzer Company v. Montgomery Ward & Company, also 1986, in which a warehouse was damaged in a fire.

Shah also rejected Tyco’s claim that Lorillard should be limited in its quest for damages under the language of the security contract. That contract, the judge said, was between Tyco and Federal Warehouse, and Lorillard cannot be limited by a contract to which it was not a party.

“The parties argued as though ‘failure to safeguard confidential information,’ ‘failure to warn’ and ‘failure to otherwise protect and monitor’ were separate legal claims,” Shah wrote. “More accurately, they are variations on a general negligence claim, all of which survive the motion to dismiss.”

Tyco is represented in the action by attorneys from the firm of Shook, Hardy & Bacon LLP, with offices in Chicago and Kansas City, Mo., and attorney Marcelline DeFalco, of the firm of Mulherin, Rehfeldt & Varchetto, P.C., of Wheaton.

Lorillard Tobacco is represented by attorneys from the firm of Senak Keegan Gleason Smth & Michaud, Ltd., of Chicago.

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