December 7, 2012

In the Matter of the Petition by
CHENIKA SQUALLS

P.S. Docket No. DCA 12-197

APPEARANCE FOR PETITIONER
Albert E. Lum

APPEARANCE FOR RESPONDENT
Crystal Simmons-Washington

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Chenika Squalls challenges an assessment issued by Respondent, United States Postal Service seeking to offset from Petitioner's salary a $2,867.40 shortage discovered in a unit reserve account for which Petitioner was the accountable custodian.  Following a September 13, 2012 hearing and post-hearing briefing, I rule in favor of Respondent.

FINDINGS OF FACT

1. Petitioner became unit reserve custodian of the Coyle, Missouri Post Office in March or April of 2010.  At that time, Petitioner counted the unit reserve stock, which was balanced.  (Hearing Transcript (Tr.) 111, 118-19; Exhibit (Ex.) D).
2. Petitioner received financial and stamp stock management training prior to July, 2010 (Tr. 29-35, 39, 88, 110, 115; Ex. D).
3.On July 15, 2010, Petitioner reported a count of the retail stock via the Point of Sale (POS) terminal, which showed the stock to be exactly in balance.  That count did not actually take place.  Petitioner merely inserted figures into the system to yield a balanced result.  (Tr. 11-14, 17, 35-36, 57-61, 64-65, 68, 116-17; Exs. D, M).
4. Petitioner's supervisor instructed her to count the unit reserve on July 20 (Tr. 117).  Petitioner reported in the POS system that the account was in balance.  This later proved to be inaccurate.  (Tr. 44, 66; Exs. D, O).
5.Petitioner was out of the office from July 21-29 (Tr. 79).  Nobody accessed the unit reserve during this period (Tr. 80-81, 93-94).
6. The Coyle Postmaster and a retail clerk conducted a retail stock count on July 21.  This count revealed a $3,056.78 overage (Tr. 18-19, 79-80, 117; Ex. D). 
7. The July 21 retail count included an inventory of two types of Polar Bear stamps.  Item 787200, with a $28 per item price (coils of 100 28-cent stamps) was found to be $616 over expected quantities (46 expected, 68 counted).  Item 113100, with a $0.28 per item price was found to be $28.28 over expected quantities (70 expected, 171 counted).  (Exs. D(8), L).
8. On July 30, the day Petitioner arrived back at work, a special agent from the Office of Inspector General, a financial specialist, and Petitioner again counted the unit reserve.  The count revealed a $2,867.40 shortage.  The unit reserve count was signed by Petitioner, was properly performed, and was accurate.  (Tr. 19-22, 37, 45, 62-63, 67-68, 71, 83-84, 126; Ex. D).  Respondent issued Petitioner a letter of demand on the same day, seeking recovery of the $2,867.40 unit reserve shortage (Tr. 83; Ex. B).
9. The $2,867.40 unit reserve shortage on July 30 consisted of two items -- $2,800 for 100 missing Item 787200 Polar Bear stamp coils, and $132 for 300 missing Bob Hope stamps (Item 464600).  These shortages were reduced by three small overages of other stamp inventory, to yield the net $2,867.40 shortage assessed.  (Tr. 46, 113; Ex. K).  The single Polar Bear stamp, Item 113100, was balanced in the July 30 unit reserve count (3,600 expected, 3,600 counted) (Ex. K).
10. Aside from being the same stamp type (Item 787200), there was no other correlation between the 100 coil, $2,800 shortage of Polar Bear stamps uncovered in the July 30 unit reserve count, and the 22 coil, $616 overage of Polar Bear stamps uncovered in the July 21 retail count (Tr. 28, 38, 40-42, 45-46, 52, 96, 105-06; Exs. K, L).   No potentially offsetting correlation between the $132 shortage for 300 missing Bob Hope stamps (Item 464600) uncovered in the July 30 unit reserve count, and the count for that item in the July 21 retail count (a 240 stamp, $105.50 shortage) is apparent (Exs. K, L).
11. Following issuance of a Notice of Involuntary Administrative Salary Offsets and a series of communications between the parties attempting to resolve the matter, Petitioner filed a Debt Collection Act Petition which the parties agree was timely (Tr. 5; Exs. A, B, I).

DECISION

To recover in this case, Respondent bears the burden of showing that Petitioner was the accountable custodian of the Coyle Post Office's unit reserve, and that a stock shortage representing an actual loss existed after a properly conducted count of that account.  Respondent is not required to prove any specific misdeed or act of negligence by Petitioner.  If Respondent satisfies its initial burden, Petitioner can be held personally liable for the unit reserve shortage unless circumstances are shown that should alleviate or offset that debt.  Petitioner bears the burden to demonstrate such exonerating circumstances.  See Zeola H. Brady, P.S. Docket No. DCA 10-190 (February 11, 2011).

The parties do not dispute that Petitioner was accountable custodian for the Coyle Post Office's unit reserve during the time in question (Finding 1).  Nor do the parties dispute that the July 30 unit reserve count that forms the basis for Respondent's debt assessment was properly conducted (Finding 8). 
Accordingly, Respondent has satisfied its initial burden of showing that Petitioner is responsible for the $2,867.40 unit reserve shortage identified on July 30.  The burden therefore shifts to Petitioner to demonstrate that she should not be held liable.  Despite presenting a variety of arguments, I conclude that she has not done so.

First, Petitioner argues that she was insufficiently trained to serve as a unit reserve custodian, and therefore, should be excused from liability for any shortages that might have been prevented with proper training.  In considering such arguments, we have held that accepting accountability where a unit reserve custodian believed that she was not properly trained to perform her job is done at her own risk.  See Margaret Sage, P.S. Docket No. DCA 10-184 (December 21, 2010).  Even if a lack of training might provide a valid excuse in an appropriate case (an issue I do not reach here), I have found that sufficient training was provided to Petitioner in advance of the accountable shortage at issue (Finding 2).  Petitioner's training excuse is rejected.

Second, Petitioner argues that the July 30 shortage resulted from her following the instructions of her manager.  In an appropriate case, following the direction of a manager that leads to a shortage can provide a valid excuse for the custodian.  See Daniel P. Kelso, P.S. Docket No. DCA 10-328 (March 7, 2011).  However, in this case, Petitioner does not identify those instructions, who gave them to her, how such instructions led to the shortage, or other details concerning this position.  The record is devoid of supporting evidence for any potentially exonerating management directions, and I reject the argument.

Third, Petitioner argues that she reported the unit reserve as balanced on July 20, and because she was not present between then and the July 30 unit reserve count on which the debt at issue is based, any shortage cannot be attributed to her.  I have concluded that the July 20 unit reserve count is unreliable (Finding 4).   Neither that count nor the fictitious July 15 retail count is relevant to this decision.   In any event, I have found that nobody accessed the unit reserve during the period between these unit reserve counts when Petitioner was out of the office (Finding 5), and it is undisputed that the shortage found on July 30 was accurate (Finding 8).  The only relevant inquiry in this regard therefore, is comparison of the shortage revealed in the July 30 unit reserve count against the overage in the July 21 retail count, which comprises Petitioner's next argument.

Petitioner's fourth argument posits that the July 30 unit reserve shortage should be offset by the larger July 21 retail overage.  Retail unit overages may be used to offset a unit reserve shortage where there is a direct causal connection between the two sufficient to demonstrate that Respondent suffered no actual loss.  See Renee Evans, P.S. Docket No. DCA 99-548 (April 5, 2000).
 
Petitioner has offered no evidence to support a conclusion that some type of administrative error resulted in the retail overage at the expense of the unit reserve account.  The unit reserve shortage consisted entirely of two types of missing stamps (Finding 9).  The small portion of the shortage consisting of missing Bob Hope stamps does not correspond to any overage of that item in retail (Finding 10).  The vast majority of the unit reserve shortage consisted of 100 missing coils of Polar Bear stamps (Finding 10).  An overage of 100 such coils was not discovered in the retail count.  Rather, that count showed an excess of only 22 such coils (Finding 10).  The only connection between the two is that the same stamp stock (but obviously of a vastly different amount) was at issue in both counts.  That alone is insufficient in this case to prove to my satisfaction that the overage represents the same stock as the shortage.  See Jeffrey Clark, P.S. Docket No. 11-328 (April 5, 2012); Mark W. Beach, P.S. Docket No. 10-134 (October 1, 2010).  The remainder of the retail overage shows no connection to the unit reserve shortage.   Accordingly, the $616 overage identified in the July 21 retail count for Polar Bear stamp coils may not be offset against the $2,867.40 unit reserve shortage.  No other elements of the retail count overage have any apparent connection to the shortage.

Fifth, Petitioner argues that her accountability should be excused because a retail count was not conducted on July 30, when the unit reserve shortage was identified.  For her position, Petitioner cites Handbook F-101, § 14.2.5, which cites, in pertinent part:
 
If the result of the retail floor stock count exceeds the inventory variance of 0.1 percent since the last count, a count of the unit reserve stamp stock credit must also be completed concurrently (before any unit reserve transactions take place).

However, the referenced section applies to the reverse situation from that here presented – where a retail unit count result exceeding allowable variance  requires a unit reserve count.  In an appropriate case, failure to perform a retail unit count could be an important factor to consider in determining offset or excusability.  See Carmen Villarreal, P.S. Docket No. AO 11-208 (I.D. January 23, 2012).  However, where no evidence has been presented that the unit reserve stock was compromised between the last retail count and the unit reserve count at issue (Finding 5), the failure to have counted the retail unit, even if otherwise required, would amount to harmless error.  See Carmen Villarreal, P.S. Docket No. AO 11-208 (P.S.D. May 31, 2012).

The Petition is denied.  Respondent is permitted to offset $2,867.40 from Petitioner's salary.

Gary E. Shapiro
Administrative Judge

1. Petitioner herself was unable to offer an explanation for the lack of a correlation (Tr. 131-32).
2. Petitioner argues that she was taught to report actual stamp counts inaccurately to equate to expected POS quantities (Tr. 115-16). I find this inherently implausible, and Petitioner's lack of detail and testimonial evasiveness on the point lead me to reject the position, and renders the remainder of her testimony suspect.
3. Petitioner contends that the July 20 unit reserve count should be credited, and urges that Respondent's analysis of that count (Ex. O) should be disregarded because the backup documentation for the analysis performed by Respondent's witness was not introduced and so the results could not be cross-examined. She also argues that the Office of Inspector General's special agent did not find irregularities in the July 20 count. Just as with the July 15 retail count, which Petitioner acknowledged she reported in POS without actually having counted, I find her report of the July 20 unit reserve count, which otherwise is uncorroborated, not to be trustworthy. Further, Respondent's analysis of the July 20 count is consistent with the undisputed July 30 shortage. As the unit reserve was not accessed in the interim, an analysis of the July 20 count performed by Respondent (Ex. O) corroborates the unit reserve shortage at issue. In any event, there is no dispute that the July 30 unit reserve count correctly identified a shortage, rendering the veracity of an earlier unit reserve count irrelevant to my analysis.
4. Petitioner's arguments about an overage of the single Polar Bear stamp in the retail count correlating with a shortage in the unit reserve is misplaced. The single Polar Bear stamp item was balanced in the unit reserve count at issue (Finding 9).