Dollar General operates 19,000 stores across America. And many of them are ripping off their impoverished customers.
Now comes former Ohio Attorney General Marc Dann. Dann has filed a class action lawsuit in federal court in Manhattan claiming that Dollar General regularly charges its customers
a higher price at the register than the price of merchandise advertised on the shelves at the time of sale.
How did that case come in your door?
“One of the lawyers in New Jersey who regularly refers cases to us had a client who was very upset,” Dann told Corporate Crime Reporter in an interview last week. “He consistently was shopping at Dollar General. When he got home he would find that he was overcharged. We first got to work on that case. Since then, we have cases in New York, and Oklahoma.”
“This conduct is systemic and company wide.”
Have there been any successful cases against Dollar General on this issue?
“No. The closest related case was involving the sale of expired motor oil. That case was resolved several years ago. But related to this over charging? No.”
“However, there have been about a half a dozen state Attorneys General actions against Dollar General that have resulted in some sort of a civil finding against them.”
We interviewed the chief enforcement officer in North Carolina. His name is Chad Parker. He seemed to believe that the issue with most of these stores was lack of staffing. The staff was so overworked that they didn’t have the time to change the pricing every day.
“That’s part of it. But there is technology that could easily resolve that issue. For $70,000 a store, they could outfit those stores with electronic shelf signs that would be synced to the current pricing at the register. They have 19,000 stores so that’s not a small number to correct.”
“With more staffing, it would be likely to happen less often. Why would they do that if they could pay fewer people and make more money by stealing a quarter or fifty cents or a dollar from millions of people and not have any corporate consequences? It seems to me that’s a conscious corporate strategy on their part.”
What’s the outlook of your case?
“The challenge in a case like this is certifying the class. Identifying the people who were beat out of the 25 or 50 cents can be challenging. People pay in different ways. We have governmental reports of when certain items were overpriced. But even the period of time they were overpriced per store is something we would have to prove up as part of the case. That is what has deterred plaintiffs’ lawyers in the past.”
“We think we have come up with a pretty good process for identifying that. Through discovery, we have been able to obtain all kinds of data about the store pricing. Through public record requests and subpoenas, we have obtained the governmental audits that have been done. I literally have probably a couple of thousand audits that are not subject to any kind of protective order.”
“Using those as a baseline, and comparing it to the sales data, I think we are going to be able to get the class certified. The challenge is to get the money to the right people, the people who have been harmed. There is no perfect system for doing that. But we have a good strategy in place and an expert who is going to support us on that.”
How much is being stolen from customers every year by overcharging?
“It has to be hundreds of millions of dollars a year. We are focusing on the stores where there have been governmental or internal audits where those stores have failed. In those cases, the fail rate is 10 percent to 25 percent – consistently.”
“Let’s assume it’s 15 percent to 20 percent of the time where people are being overcharged. Multiply that by 19,000 stores. And there are hundreds of millions of individual items sold on a daily basis. Just based on probabilities, you are going to get into the hundreds of millions of dollars.”
Will you be seeking to depose Dollar General executives about this?
“We already have. Some of that information is subject to a protective order. But we have begun. We are just about to start our depositions. But I can tell you that in the documents we have reviewed, the corporation has admitted this is a problem.”
What is Dollar General’s defense?
“Their defense is that since we can’t figure out who it is they stole from, we shouldn’t be allowed to get our class certified. We should have to bring these cases 50 cents at a time. I’m willing to do that if I have to. But I’m hoping to find a way that’s a little more efficient and that’s going to have a greater impact. Hopefully the results will be not just in dollars to their customers, but injunctive relief that will cause changes in their behavior.”
“If they would add a full time worker just working on the signs, they could make great progress in reconciling the prices on the shelf with the prices at the register.”
Of the fifty plus current Attorneys General, what’s your sense about the numbers of them who are strong enforcers against corporate crime and wrongdoing?
“It’s diminishing in the fifteen years since I’ve left. Most AGs don’t have criminal prosecution authority. But enforcement against corporate wrongdoing generally has declined precipitously. And here’s why. The offices have become much more partisan in the years since I left.”
“The Democratic and Republican Attorneys General Associations have become much more active in electing Attorneys General and in laundering corporate money into AG campaigns.”
The corporate money is flowing both ways?
“Yes. Now I think the Biden administration is starting to recognize that you can use consumer protection as a strong political argument to side with people. It’s the first time I’ve seen it in politics for a long time. But it has never translated directly into votes in the way that these hot button issues like abortion or gay rights have.”
Why is that?
“People misunderstand what AGs do. To this day, most people think the Attorney General is a criminal law enforcement officer. The message people want to hear from their Attorney General is how tough they are on crime. In Ohio we ran the crime lab. We had that role. We had the Bureau of Criminal Investigation, which is our state investigatory police force. The political tendency would be to focus on those issues instead of taking on corporations.”
“The Biden folks aren’t stupid. The Consumer Financial Protection Bureau is not going after bank junk fees just in a vacuum. They think that is going to help them get elected.”
Has any store implemented these electronic signs?
“There are companies out there with electronic pricing signs. I have to believe that is how it’s going to work in the future. Last time I was at a Dollar General store, I saw a number of shelf labels that had dates that were two or three weeks old lying on the counter when I was checking out. The same guy who is unpacking the box has to stop unpacking the box and walk to the register to check you out. I’ve never seen more than one or two staff people in a Dollar General.”
“Other stores actually take that responsibility seriously. The standards setting agency says that a two percent discrepancy rate is an acceptable failure rate. Anything above that is not.”
When you depose Dollar General executives, will those documents be public?
“No. They are claiming confidentiality. So they are not public at this point. Nor are the documents we get in discovery. But the documents we have gotten from public records requests are public. But for the discovery documents, there are protective orders.”
Should pre-trial discovery documents be public – as a deterrent against corporate wrongdoing?
“We are in a position where we can’t fight every single battle. Courts so routinely issue them. There is a form protective order that the courts implement without looking at them. There are some judges who take exception to that. There’s a federal judge in Ohio, James Gwin, who would almost reflexively not issue protective orders in cases. There are some exceptional judges who would consider those arguments.”
“Most judges on the federal bench are people who came out of corporate law firms, even the ones sadly nominated by Biden. As aggressive as Biden has been on consumer protection, very few of the judges he has nominated have any consumer protection experience at all.”
Corporate crime enforcement under Biden is down even compared to Trump. The corporate money is flowing across the political boundaries.
“We could do a whole separate interview on the corporate control of the United States Justice Department and the revolving door there. I just wrote an article in the Cleveland Plain Dealer. We have this huge political corruption case in Ohio where First Energy bribed the legislature for a subsidy of one billion dollars. And the only people not indicted are the First Energy executives.”
What’s your explanation for that?
“Corporations have lawyers who yesterday were working next to the guy who is making the decision about whether to prosecute them. First Energy ran in right at the beginning and entered into a deferred prosecution agreement, as all major corporations do now, using the relationships and influence of the lawyers for the corporations, who a week ago worked in the Justice Department. They think that should satisfy the hunger of Americans who see people who commit crimes to be held accountable.”
“This is part of the reason we have Trump. You have a much better chance of being convicted if you protested at the Capitol building than if you bribe a public official. The Trump supporters are right. There is a huge discrepancy in the administration of justice in this country. And it’s most pronounced at the federal level. At the state level, there is a little more accountability for the prosecutors, but they lack the resources to go after any kind of complicated corporate crime.”
[For the complete q/a format interview with Marc Dann, 38 Corporate Crime Reporter 6(13), February 5 2024, print edition only.]