The value-store chain Family Dollar was fined $41.7 million, the largest-ever financial criminal penalty in a food safety case, for distributing food, drugs, medical devices and cosmetics from a rat-infested warehouse, the U.S. Justice Department said.
On Tuesday, Family Dollar pleaded guilty in federal court in Little Rock, Ark., to one misdemeanor count of holding products in unsanitary conditions, causing them to become adulterated. The $41.675 million penalty is estimated to be the value of the products that were tainted when stored in unsanitary conditions, according to the plea agreement.
The distribution center in West Memphis, Ark., according to court documents, serviced 404 Family Dollar stores in six states: Alabama, Missouri, Mississippi, Louisiana, Arkansas and Tennessee.
Family Dollar is a subsidiary of Dollar Tree, a rapidly growing retail giant that operates more than 16,000 stores across the United States and Canada.
Family Dollar temporarily closed stores in 2022 because of the infestation. The stores were closed for a few weeks but have all reopened since, said Kristin Tetreault, a spokeswoman for Dollar Tree.
The rats had “established a presence” at the warehouse in July 2021, according to the plea agreement. The rats used an abandoned conveyor system to run freely throughout the facility.
An employee filed a complaint with the Occupational Safety and Health Administration, and in August 2021, one of the company’s regional regulatory compliance specialists said the rodent problem was “very noticeable.”
In 2022, inspectors from the Food and Drug Administration observed “live rodents, dead rodents in varying states of decay, rodent feces and urine, and evidence of gnawing, nesting, and rodent odors throughout the facility, in addition to dead birds and bird droppings,” according to the plea agreement in the case.
“It is incomprehensible that Family Dollar knew about the rodent and pest issues at its distribution center in Arkansas but continued to ship products that were unsafe and” unsanitary, said a statement from Jonathan D. Ross, the U.S. attorney for the Eastern District of Arkansas. “Knowingly selling these types of products not only places the public’s health at risk but erodes the trust consumers have in the products they purchase.”
As many as 1,270 rodents were exterminated when the warehouse was fumigated in January 2022, federal officials said.
On Feb. 18, 2022, the company voluntarily recalled all drugs, medical devices, cosmetics and human and animal food products sold since Jan. 1, 2021, in the 404 stores that had been serviced by the infested warehouse, the Department of Justice said.
The plea agreement reached on Tuesday requires Family Dollar and Dollar Tree to meet “robust” corporate compliance and reporting requirements for the next three years. If the company fails to meet the requirements, that time could be extended.
Dollar Tree said in a statement that it had “significantly enhanced” its compliance and safety programs by hiring experienced personnel, providing safety trainings and satisfying a third-party audit.
Rick Dreiling, the chairman and chief executive officer of Dollar Tree and a member of its board of directors since March 2022, said the company had “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.”
Before the Family Dollar case, the Mexican restaurant chain Chipotle had been issued the largest fine in a food-safety case when it was ordered to pay $25 million for its role in an outbreak of food-borne illness that sickened more than 1,100 people between 2015 and 2018.