Family Dollar fined $42M Over Rodent-Infested Warehouse

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Family Dollar Stores was fined a record $42 million after federal officials said the discount retailer stored food, drugs and other items in unsanitary conditions, including a rodent-infested distribution center.

Family Dollar, a subsidiary of Dollar Tree that has 8,000 stores nationwide, entered into a plea deal Monday, the Justice Department said in a news release. Under the deal, the company pleaded guilty to a misdemeanor count of causing federally-regulated food, drugs, medical devices and cosmetics to become adulterated while held under unsanitary conditions.

The company’s distribution center in West Memphis, Arkansas, shipped products to more than 400 Family Dollar stores in Alabama, Missouri, Mississippi, Louisiana, Arkansas, and Tennessee. Family Dollar admitted it knew of mouse and pest issues with deliveries to stores as early as August 2020.

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By the end of that year, some stores reported receiving rodents and rodent-damaged products from the warehouse. Family Dollar admitted its employees knew by January 2021 that unsanitary conditions at the warehouse contaminated the products, in violation of the Federal Food, Drug and Cosmetic Act, authorities said.

However, even though employees knew of the unclean conditions, the company continued shipping products from the warehouse for another year until inspectors with the U.S. Food and Drug Administration found live, dead and decaying rodents — as well as rodent feces, urine, and odors — and evidence of gnawing and nesting throughout the facility.

Fumigators later exterminated more than 1,200 rodents, authorities said. The company recalled all drugs, medical devices, cosmetics, and human and animal food products in February 2022 that were sold since Jan. 1, 2021, and in the 404 stores that were serviced by the warehouse.

The nearly $41.7 million fine imposed on the chain is the largest-ever monetary criminal penalty in a food safety case, federal authorities 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,” Acting Associate Attorney General Benjamin C. Mizer said in a statement.

“Companies distributing and selling food, drugs, medical devices, and cosmetics must ensure that these products are being held in safe and sanitary conditions,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said in a statement.

Rick Dreiling, Dollar Tree’s chairman and CEO, said in a statement posted to the company’s corporate website that the company is moving forward in its “business transformation, safety procedures and compliance initiatives.

“When I joined Dollar Tree’s Board of Directors in March 2022, I was very disappointed to learn about these unacceptable issues at one of Family Dollar’s facilities,” Dreiling said. “Since that time and even more directly when I assumed the role of CEO, we have 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.”

The company said it added safety and compliance enhancements, including creating new compliance and safety roles, and hiring experienced personnel to strengthen the company’s practices, such as a new chief legal officer, a new chief ethics and compliance officer with senior positions in food safety, product quality and regulatory compliance, and health and safety compliance managers at its distribution centers.

Over the past 18 months, each of Family Dollar’s distribution centers passed an independent, third-party audit, the company said, and became “Good Distribution Practices” certified.