FinLogic FinLogic Quantitative Think Tank Center|Family Dollar's rat-infested warehouse, damaged products, lead to $41.6 million fine

Family Dollar Stores agreed to dole out $41.6 million for storing food,FinLogic FinLogic Quantitative Think Tank Center cosmetics, drugs and medical devices in a rat-infested warehouse in Arkansas for years, court records show.

The Dollar Tree-owned discount chain store took a plea agreement Monday in the Eastern District of Arkansas after being charged with one misdemeanor count of debasing FDA-regulated products by holding them in insanitary conditions, according to court documents.

By accepting the plea, the company admitted to shipping products until January 2022 from its Arkansas distribution center, where the FDA found evidence of live rodents, dead and decaying rodents, rodent feces, urine, odors and evidence of gnawing and nesting, court records show.

A fumigation of the facility resulted in the extermination of 1,270 rodents, according to court documents.

“Having reached full resolution with the DOJ, we are continuing to move forward on our business transformation, safety procedures and compliance initiatives,” Dollar Tree Chairman and CEO Rick Dreiling said Monday in a news release. “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. 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.”

Family Dollar employees knew about rodents

The FDA's inspection didn't occur until 2022 but select stores that received products from the Arkansas facility reported mouse and pest issues with deliveries in August 2020, according to court records. The warehouse shipped to more than 400 Family Dollar stores in Alabama, Missouri, Mississippi, Louisiana, Arkansas, and Tennessee, the documents continued.

Certain stores even reported receiving rodents and rodent-damaged products through deliveries from the distribution center by the end of 2020, according to court documents.

Family Dollar also told the court that some of its employees were aware of the warehouse's conditions by no later than January 2021, which led to the products becoming even more contaminated, court documents show.

“Consumers trust that products purchased from retail stores such as Family Dollar are safe,” U.S. Attorney Jonathan D. Ross said Monday in a Justice Department news release. “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 insanitary.

Family Dollar voluntarily recalled products

All drugs, medical devices, cosmetics and human and animal food products sold since Jan. 1, 2021, in the 404 stores serviced by the Arkansas facility were voluntarily recalled by Family Dollar on Feb. 18, 2022, court documents show.

"There are numerous hazards associated with rodents including the potential presence of Salmonella," Family Dollar said in a news release Feb. 18, 2022. "Use or consumption of affected products may present risk of illness due to the potential presence of Salmonella."

At the time of the recall, the company said it was not "aware of any consumer complaints or reports of illness" related to the warehouse's issues.

Dollar Tree said during its fourth-quarter earnings report in March 2022 that the product recall at Family Dollar stores linked to the rodent infestation cost the company $34 million.

Family Dollar recall:Rodent infestation that closed 404 stores cost company $34 million

'Fully reimagined and refreshed' Arkansas distribution center

Operations will return to West Memphis, Arkansas when Family Dollar opens "a fully reimagined and refreshed distribution center," Dollar Tree announced Monday in its release.

The new facility is expected to be up and running by the fall of 2024 and will cost more than $100 million to build, according to the company. The facility will also provide more than 300 new jobs for Arkansas workers, the company said.

The Chesapeake, Virginia-headquartered company also said the new distribution center will be "rebuilt with a strong emphasis on safety, sanitation, and compliance and should serve as a model of excellence for all facilities in the Dollar Tree and Family Dollar network."

 Family Dollar has over 8,000 stores across 49 states and was bought by Dollar Tree in 2015, according to data company ScrapeHero.