Family Dollar Resolves DOJ Investigation at Distribution Center in Arkansas

Company agrees to enter plea of guilty to 1-count misdemeanor violation relating to acts that caused adulterated product

Marian Zboraj

2/27/2024

In 2022, Family Dollar recalled several categories of U.S. FDA-regulated products that were stored and shipped to stores from the Distribution Center 202, in West Memphis, Ark., due to a rodent infestation.

Dollar Tree Inc. has reached a resolution with the Consumer Protection Branch (CPB) of the U.S. Department of Justice’s Civil Division and the U.S. Attorney’s Office for the Eastern District of Arkansas (DOJ) regarding the DOJ’s investigation into the operations at Family Dollar’s distribution center in West Memphis, Ark.

On March 1, 2022, a federal grand jury subpoena was issued to Family Dollar after a FDA investigation discovered a rodent infestation that may have contaminated certain products stored at Family Dollar Distribution Center 202 in West Memphis. Since then, Dollar Tree and Family Dollar have fully cooperated with the DOJ’s investigation.

The company recalled all FDA-regulated products shipped from Distribution Center 202. Examples of these products included dietary supplements, cosmetics, animal foods and over-the-counter medications. The company also decommissioned the site.

Under the terms of its plea agreement with DOJ, Family Dollar Stores LLC, has agreed to enter a plea of guilty to a one-count misdemeanor violation relating to acts that caused product held at the distribution center to become adulterated. It has also agreed to pay $200,000 in fines and a forfeiture money judgment in the amount of $41,475,000 to the United States, which relates to the value of the adulterated FDA-regulated products that were held in Distribution Center 202.

“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. “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.”

Some of these enhancement to strengthen compliance and safety programs include:

Creating new compliance and safety roles, hiring experienced personnel to strengthen the company’s practices, including a new chief legal officer with expertise and experience building and enhancing corporate compliance programs and working in and with the DOJ; a new chief ethics and compliance officer with experience leading compliance at a global retailer; senior positions in food safety, product quality and regulatory compliance, and environmental, health and safety; and a safety, sanitation, and compliance manager in each distribution center.
Developing and implementing risk-based procedures and controls, and continuing to deliver extensive compliance and safety training to associates. This is supported by improved monitoring and auditing activities to test program execution and adherence and promote continuous improvement.
Over the past 18 months, each of the company’s distribution centers has passed an independent, third-party audit and became “Good Distribution Practices” certified, with all distribution centers planning to maintain the certification.

Dollar Tree recently revealed that Family Dollar plans for operations to return to West Memphis, Ark., with a fully reimagined and refreshed distribution center. The new facility, expected to be operational by fall 2024, reflects more than $100 million in current and anticipated future investments. According to Dollar Tree, the facility, which is expected to initially provide more than 300 new jobs for Arkansas workers, is being 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.

In related news, earlier this month, law firms Hagens Berman, Abdalla Law and Grossman Roth Yaffa Cohen filed a class action alleging that Dollar Tree and its Family Dollar subsidiary violated FDA regulations by selling adulterated over-the-counter medicines and personal care items even after an FDA report directly informed the dollar store retailer that these items were being stored improperly.

Chesapeake, Va.-based Dollar Tree operates 16,622 Dollar Tree, Family Dollar and Dollar Tree Canada stores across 48 states and five Canadian provinces as of Oct. 28, 2023. The company is No. 21 on The PG 100, PG’s 2023 list of the top food and consumables retailers in North America.