Family Dollar Stores pleaded guilty Monday to holding food, drugs, cosmetics and other items under "insanitary" conditions at a now-closed, rodent-infested distribution center in West Memphis, Arkansas, federal prosecutors said.
The company, which is a subsidiary of Dollar Tree Inc., faced one misdemeanor count of causing FDA-regulated products to become adulterated while being held under insanitary conditions at the facility, the U.S. Department of Justice said in a news release.
The company entered into a plea deal that includes a sentence of a fine and forfeiture amount totaling $41.675 million, the largest-ever monetary criminal penalty in a food safety case, the department said.
"When consumers go to the store, they have the right to expect that the food and drugs on the shelves have been kept in clean, uncontaminated conditions," said Acting Associate Attorney General Benjamin C. Mizer. "When companies violate that trust and the laws designed to keep consumers safe, the public should rest assured: The Justice Department will hold those companies accountable."
The plea agreement also requires Family Dollar and Dollar Tree to meet robust corporate compliance and reporting requirements for the next three years, the DOJ said.
In pleading guilty, the company admitted that its Arkansas distribution center shipped FDA-regulated products to more than 400 Family Dollar stores in Alabama, Missouri, Mississippi, Louisiana, Arkansas, and Tennessee. The company began receiving reports in August 2020 of mouse and pest issues with deliveries to stores. Family Dollar admitted that by January 2021, some of its employees were aware that the unsanitary conditions caused FDA-regulated products held at the warehouse to become contaminated, the DOJ said.
According to the plea agreement, the company continued to ship FDA-regulated products from the warehouse until January 2022, when an FDA inspection revealed live rodents, dead and decaying rodents, rodent feces, urine, and odors and evidence of gnawing and nesting throughout the facility.
When the facility was finally fumigated, it resulted in the reported extermination of 1,270 rodents.
Hundreds of medications recalled at Family Dollar stores in 23 states
The long list of items were stored outside of their labeled temperature requirements by Family Dollar.
A company spokesperson said it cooperated extensively with the DOJ's investigation.
"In 2022, Family Dollar issued a voluntary recall of product that allowed customers to return goods for a full refund without proof of purchase. While we are not aware of any consumer becoming ill due to conditions at the distribution center, 14 consumer class actions were brought against the company, and we have reached a tentative settlement in those cases without any admission of liability or wrongdoing," the spokesperson said in an email. "We look forward to putting the litigation behind us so that we can focus on our business of providing affordable products to our customers, with quality and safety at the heart of what we do."
Dollar Tree Chairman and CEO Rick Dreiling, in a news release, said the company is moving forward with its "business transformation, safety procedures and compliance initiatives."
Since joining Dollar Tree's Board of Directors in March 2022, Dreiling said the board has "worked diligently to help Family Dollar resolve this historical matter and significantly enhance our policies, procedures and physical facilities to ensure it is not repeated."
Dollar Tree also recently announced that Family Dollar plans to return operations to West Memphis with a fully reimagined and refreshed distribution center. The new facility, which is expected to staff 300 new jobs, is expected to be open by fall 2024.
Family Dollar, Dollar Tree agree with feds to fix unsafe conditions
Facing workplace safety violations, Dollar Tree reached a settlement with the Department of Labor to address long-standing safety issues for workers.
