Discount retail giant Family Dollar has agreed to a staggering $41.6 million penalty after admitting to storing a range of products, including food, drugs, cosmetics, and medical devices, in a rat-infested warehouse in Arkansas. Court documents reveal the disturbing conditions and the company’s subsequent plea agreement.
In a plea agreement finalized in the Eastern District of Arkansas, Family Dollar Stores, a subsidiary of Dollar Tree, accepted a misdemeanor charge for the distribution of adulterated products regulated by the Food and Drug Administration (FDA). The charge stems from the company’s actions of holding these FDA-regulated items under unsanitary conditions. By entering this plea, Family Dollar acknowledged shipping products from their distribution center in Arkansas until January 2022, despite alarming evidence uncovered by the FDA.
The FDA’s inspection of the Arkansas facility exposed a horrifying scene: live rodents scurrying around, deceased and decaying rodents, widespread rodent droppings and urine, and clear signs of gnawing and nesting throughout the warehouse. A subsequent fumigation effort resulted in the extermination of a staggering 1,270 rodents, underscoring the severity of the infestation.
Dollar Tree Chairman and CEO Rick Dreiling addressed the issue in a news release, stating, “Having reached full resolution with the DOJ, we are continuing to move forward on our business transformation, safety procedures and compliance initiatives.” He expressed disappointment upon learning of the situation shortly after joining Dollar Tree’s Board in March 2022 and emphasized the company’s commitment to preventing future occurrences through enhanced policies, procedures, and facility improvements.
Employee Awareness and Prolonged Problem
Disturbingly, reports of pest issues linked to the Arkansas distribution center surfaced long before the 2022 FDA inspection. As early as August 2020, select Family Dollar stores receiving shipments from the facility reported problems with mice and pests in their deliveries. The warehouse served over 400 Family Dollar locations spanning across Alabama, Missouri, Mississippi, Louisiana, Arkansas, and Tennessee.
By late 2020, some stores had even reported receiving actual rodents and rodent-damaged goods directly from the distribution center. Adding to the severity, Family Dollar admitted in court documents that certain employees were aware of the unacceptable conditions at the warehouse no later than January 2021. Despite this internal knowledge, the company continued to ship products, exacerbating the contamination issue and putting consumers at potential risk.
U.S. Attorney Jonathan D. Ross condemned the company’s actions, stating, “Consumers trust that products purchased from retail stores such as Family Dollar are safe. It is incomprehensible that Family Dollar knew about the rodent and pest issues at its distribution center in Arkansas but continued to ship products.”
Voluntary Recall and Financial Fallout
Faced with mounting evidence and regulatory pressure, Family Dollar initiated a voluntary recall on February 18, 2022, of all drugs, medical devices, cosmetics, and human and animal food products sold since January 1, 2021, at the 404 stores supplied by the Arkansas facility.
The company acknowledged the significant health risks associated with rodent infestations, stating in a news release that “There are numerous hazards associated with rodents including the potential presence of Salmonella,” and alerted consumers to the potential risk of illness from using or consuming the recalled products due to possible Salmonella contamination. At the time of the recall, Family Dollar stated they were unaware of any consumer complaints or reported illnesses related to the warehouse conditions.
During its fourth-quarter earnings report in March 2022, Dollar Tree disclosed that the extensive product recall stemming from the rodent infestation had cost the company $34 million, highlighting the considerable financial repercussions of the incident.
Reimagined Distribution Center and Future Operations
Looking ahead, Dollar Tree announced plans to reopen a significantly upgraded distribution center in West Memphis, Arkansas. This “fully reimagined and refreshed distribution center” is slated to commence operations by the fall of 2024, representing an investment exceeding $100 million. The company projects that the modernized facility will generate over 300 new employment opportunities for the Arkansas workforce.
Dollar Tree emphasized that the rebuilt distribution center will prioritize safety, sanitation, and regulatory compliance, aiming to establish it as a benchmark for excellence across the entire Dollar Tree and Family Dollar network. Family Dollar currently operates over 8,000 stores across 49 states and became part of the Dollar Tree organization in 2015.
