Family Dollar to pay over $41M in fines due to poor conditions at distribution center

Family Dollar has agreed to pay over $41 million in fines after pleading guilty to holding food, drugs, medical devices, and cosmetics under unsanitary conditions at its West Memphis, Ark., distribution center.

The fine is the largest-ever monetary criminal penalty in a food safety case, according to the U.S. Department of Justice.

Family Dollar was facing a pair of lawsuits — a multidistrict lawsuit claiming the Arkansas distribution center was infested with rats that may have affected products delivered to stores in six states and another lawsuit by two shoppers.

Family Dollar admitted that the center shipped FDA-regulated products to more than 400 stores across six states. The unsanitary conditions included rat infestation.

According to the plea agreement, the company started receiving reports in August 2020 of mouse and pest issues with deliveries to stores. By the end of 2020 stores reported receiving rodents and rodent-damaged products from the distribution center.

Family Dollar also admitted that by no later than January 2021 some employees were aware that unsanitary conditions caused products at the center to become compromised in violation of the Federal Food, Drug and Cosmetic Act.

The plea agreement also reveals it was not until January 2022 when an FDA inspection found live rodents, dead and decaying rodents, and other unsanitary conditions before Family Dollar acted. The facility was fumigated and on Feb. 18, 2022, and the retailer voluntarily recalled all drugs, medical devices, cosmetics, and food products sold since Jan. 1, 2021.

“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 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.”

In addition to the fine, Family Dollar and owner Dollar Tree must meet robust corporate compliance and reporting requirements for the next three years.

Last week, a lawsuit was filed in a federal court in Miami by two shoppers complaining that Family Dollar sold personal care products and over-the-counter medicines which were stored at high temperatures or in humid conditions.

Gregg Morrison and Kenneth Johnson are accusing Family Dollar of selling tainted products like anti-perspirant and caffeine pills at stores in Florida and Georgia. 

The lawsuit refers to a 2022 U.S. Food and Drug Administration (FDA) report that revealed rat infestations and improper temperature controls at the Arkansas distribution facility, and that Family Dollar continued to stock products which were not safe beginning as early as May 2022. 

Both Morrison and Johnson, who are seeking compensatory and punitive damages, want to represent a nationwide class of Family Dollar customers in addition to statewide classes of shoppers in Georgia and Florida. 

Dollar Tree said in a statement it is committed to providing safe and effective products and to complying with all applicable laws and regulations, including product storage.