Family Dollar pleaded guilty to a one count misdemeanor violation after U.S. Food and Drug Administration-regulated products were contaminated at a distribution center in West Memphis, Arkansas, according to a Feb. 26 press release.
The discount store was initially issued a subpoena on March 1, 2022, after the FDA flagged DC 202 as rodent-infested and pointed to other unsanitary conditions the month prior. This led to the planned permanent shuttering of the distribution center, the temporary closure of more than 400 Family Dollar stores as well as a temporary recall of products from the facility.
The subpoena requested information, records and documents around compliance procedures as well as products might have been corrupted at Distribution Center 202 in West Memphis, the release stated.
Under the plea agreement, Dollar Tree Inc. — which owns Family Dollar — will pay $200,000 in fines, according to the press release. An additional $41.5 million in forfeiture money judgment will also be paid to the U.S. which is based on the “value of the adulterated FDA-regulated products that were held in DC 202.”
DC 202 will be replaced with a new “reimagined and refreshed” distribution center slated to be operational in West Memphis by fall 2024, per the release. The more than $100 million investment will focus on “safety, sanitation and compliance.”
“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 in a statement. “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 that since assuming his role as CEO, Family Dollar has worked to enhance its policies, procedures and its facilities to avoid this issue in the future. This includes new compliance and safety roles and developing risk-based procedures and controls. Further, the company’s distribution centers have all passed an independent, third-party audit over the last 18 months, and they have since become Good Distribution Practices certified.
Dollar Tree has been pushing to improve its supply chain operations, and recently expanded its COO role to include supply chain operations. Other initiatives include streamlined deliveries for certain stores and fleet and transportation management systems investments. The company also plans to implement temperature controls across its distribution center network.
