Written below is the update of how it happened.
UPDATE (7/9/12): New reports about the burn incident in Del Mar on July 4th have explained how this tragic incident occurred. It was not a sterno lamp or tiki torch that contributed to the burn injuries, but a "fire pot." A firepot is simply a device, usually a earthenware pot that is filled with a flammable liquid or substance to hold fire.
At the Del Mar home, apparently a fire pot, hanging overhead, fell, and doused the three victims with flammable gel that sticks to the body. According to Fire Marshall Battalion Chief Robert Scott:
These items are described as bombs in a bottle. Refueling the devices while ignited or still hot is dangerous...[The gel]...will stick to the body and clothes and you need an extinguisher or wool blanket to get it out, the stop, drop and roll method won’t work.
According to 10News, fire pots have been linked to numerous serious injuries and a few deaths, and many retailers have stopped selling these products because of the risks they create. Indeed, there have been several lawsuits against gel-filled fire pot manufacturers because of the dangers they present.