Family Dollar to pay $41.7 million fine over rodent-infested warehouse

Discount retailer Family Dollar has agreed to a $41.7 million fine related to a warehouse inspection in 2022 that found a massive rodent infestation. 

Record food safety violation fine 

The U.S. Food and Drug Administration (FDA) and the U.S. Department of Justice (DOJ) announced the agreement with Family Dollar via a press statement yesterday. According to FDA, it was the largest criminal penalty ever connected to a food safety violation. (FDA quoted the fine amount as $41.675 million.) 

The company’s guilty plea was entered in a federal court in Little Rock, Ark., the state where the warehouse is located. 

According to the plea deal documents, company officials were aware of rodent infestation problems at the warehouse, but continued shipping products out of it to 404 stores in Alabama, Missouri, Mississippi, Louisiana, Arkansas and Tennessee. 

That stopped in 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.” 

According to the plea agreement, a subsequent fumigation of the facility resulted in the reported extermination of 1,270 rodents. Company officials were aware of the problem by the end of 2020 at the latest, the plea agreement stated. 

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A wide variety of products were shipped from the warehouse, including some dietary supplements. The company issued a wide-ranging recall on Feb. 18, 2022. The recall pertained to all drugs, medical devices, cosmetics, and human and animal food products sold since Jan. 1, 2021, in the stores supplied by the warehouse. 

“U.S. consumers rely on the FDA to ensure that their food is safe and wholesome,” said Special Agent in Charge Charles L. Grinstead of FDA’s Office of Criminal Investigations (FDA-OCI) Kansas City Field Office. “When companies put themselves above the law and distribute food that has been held under extremely insanitary conditions, putting the public’s health at risk, we will see that they are brought to justice.”  

Company chairman pledges change 

“Having reached full resolution with the DOJ, we are continuing to move forward on our business transformation, safety procedures and compliance initiatives,” said Dollar Tree chairman and CEO Rick Dreiling in a statement posted on the company’s website.  

“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,” he added. “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.” 

Slack compliance culture 

A report published online by Time magazine last year documented a culture of noncompliance with federal regulations on the part of Dollar Tree Inc., the parent company of the Family Dollar chain. According to the article, since 2017 the Family Dollar chain has been assessed $5.3 million in fines by the Occupational Safety and Health Administration (OSHA) related to workplace safety violations.  In addition, OSHA levied $14 million in fines on the Dollar Tree discount chain, which is operated by the same parent company. 

One of the sources for the Time article was David Michaels, a former OSHA administrator who’s now a professor of public health at George Washington University. He said the fines against Dollar Tree Inc. were among the highest ever levied by OSHA but are of little consequence compared to the company’s overall revenue. (Dollar Tree reported $29.7 billion in annual revenue in its fiscal 2023).  

Dollar Tree issued a statement to Time about the OSHA situation, saying that “any issues identified by OSHA are taken very seriously and remediated quickly and thoroughly.” 

But Michaels said that at least one discount store official told him that it was cheaper to have OSHA inspectors issue fines for violations than it was to hire an industrial consultant to help the company comply with the law.