Discount chain 99 Cents Only Stores Inc. has been fined $409,490 by the Environmental Protection Agency for selling illegal unregistered or mislabeled pesticides in three household products, the federal agency said Wednesday.
The City of Commerce-based retailer continued to sell the items even after being notified of the violations, the agency said. The fine is the largest contested penalty ever handed down.
"What you don't know really can hurt you. You can't take precautions and you can end up using products in very harmful ways," said Jared Blumenfeld, the agency's regional administrator for the Pacific Southwest "The cost of the product doesn't relate to the magnitude of the problem or the dose of the toxicity of the ingredients."
Nearly 700 of the cleaning and pest control items were sold, according to the agency, which issued a fine after a routine inspection in 2004 turned up problematic products. More violations emerged during subsequent checkups until 2008, the agency said.
The company said Wednesday that it stopped carrying products whose labels had not been corrected. Executives said there were no reports of health problems linked to any of the products.
Although EPA penalties are rarely appealed, 99 Cents Only decided to contest the original penalty, which the agency said was nearly $1 million.
The case eventually landed in front of EPA Administrative Law Judge Susan Biro, who recently declared that there was a "culture of indifference" within the retailer's management and handed down the $409,490 fine.
Of the 166 separate violations, all but two were linked to a household cleaner and sanitizer called Bref Limpieza y Disinfeccion Total con Densicloro, which was imported from Mexico. The product, which translates into Bref Complete Cleaning and Disinfection with Densicloro, featured pesticide claims in Spanish on the label but was not registered with the federal agency.
At least 658 bottles of the product were sold at 99 Cents Only stores in California, Arizona and Nevada. The retailer opened its first store in Los Angeles in 1982 and has since expanded to about 275 locations, mostly in California. A North Hollywood location is set to open Thursday.
The two other products were Farmer's Secret Berry & Produce Cleaner — an unregistered pesticide — and PiC BORIC ACID Roach Killer III, which featured EPA labels that were upside down or inside out.
In an interview, 99 Cents Only President Jeff Gold said the company had adopted stricter measures when buying products from its suppliers to "reduce the chance of these things happening in the future."
"Our customer safety and quality of our product is always first and foremost in our mind, and we would never want to do anything intentionally to compromise that," he said. "In the past we put the bulk of the reliance on the manufacturer and supplier.... Now we've augmented that with additional measures."
The penalty falls under the Federal Insecticide, Fungicide and Rodenticide Act, the law that regulates the sale, distribution and use of pesticides.
Pesticides are present in many antibacterial soaps and similar products, said Ronald Tjeerdema, chair of the UC Davis Department of Environmental Toxicology. Labeling allows consumers with allergies to avoid certain ingredients and also help doctors treat patients who have unexpected reactions to pesticide-laden products.
Other well-known companies have been fined by the EPA.
San Leandro, Calif.-based VF Outdoor Inc., owner of the North Face label, was hit with a $207,500 fine in May after the EPA said that the company made unsubstantiated claims that several of its shoe products could provide "anti-microbial protection" and limit the growth of "disease-causing bacteria."
"We're trying to send a really strong market signal that you can't be lax around things like labeling and that having clear information is critical to public health," Blumenfeld said.
Several analysts said the fine would have little financial effect on 99 Cents Only, but cautioned that future labeling oversights from the company might cause problems.
Wednesday's ruling follows other legal troubles that 99 Cents Only has faced in recent months.
In July, two separate class-action lawsuits were filed against the company in Los Angeles County Superior Court, alleging unfair and deceptive business practices and misleading advertising.
The complaints stemmed from the chain's 2008 decision to raise the top price of its goods to 99.99 cents from 99 cents. At the time, company executives thought it was a clever way to increase sales while staying loyal to the chain's love for the number 99, but the move apparently irked some customers who believed they were being duped.
The company's stock price Wednesday fell 4 cents, or 0.2%, to $17.84.