In the Matter of the Petition by:

LINDA R. SHIRES,
3307 Willow Lane Drive,
Montgomery, AL 36109-3531

P.S. Docket No. DCA-137

07/16/92

Thompson, Joan B.

APPEARANCE FOR PETITIONER: John L. Capell, III, Esq., 57 Adams Avenue,
Post Office Box 2069, Montgomery, AL 36102-2069

APPEARANCE FOR RESPONDENT: Fred G. Ott, United States Postal Service,
6701 Winton Blount Boulevard, Montgomery, AL 36119-9401

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

By a timely-filed Petition, Petitioner Linda R. Shires requested an oral hearing on a Notice of Involuntary Administrative Salary Offset issued under section 5 of the Debt Collection Act, 5 U.S.C. § 5514. The Notice and earlier letters indicated that an audit of the main stock of the Montgomery, Alabama, Post Office, revealed a shortage of $5,151 in stamp stock for which Petitioner was accountable. The notice also indicated that 15% of Petitioner's pay ($165) would be deducted from Petitioner's paycheck each pay period. The filing of the Petition has suspended that action.

In the Petition, Petitioner alleged there had been no actual financial loss to the Postal Service and the missing stamp stock could be discovered if a thorough search of records was made. She alleged she had inadequate time to perform her work and blamed her supervisors for not cooperating with her requests for help and for a more secure working place. In an Amended Petition, Petitioner sought attorney fees and expenses.

In Answer, Respondent reasserted that Petitioner was responsible for the stamp stock shortage and that she had failed to exercise reasonable controls, setting up conditions which resulted in the loss. Respondent also contended there was no authority to award attorney fees and expenses.

An oral hearing was held in Montgomery, Alabama, on June 23, 1992. Respondent called the following Postal Service employees in Montgomery as witnesses: Carll Smith, Area Manager; John A. Mitchell, Sr., Director of Finance; and Joseph Randall Reaves, a distribution window clerk at the General Mail Facility (GMF) in Montgomery.

Petitioner called the following witnesses: Petitioner; Wayne Shires, Petitioner's husband and a retired employee of the Postal Service in Montgomery; Bobby Lee Taunton, a certified public accountant (CPA); and the following Postal Service employees who serve, or have served, in Montgomery: Whit Traylor, A. J. Hardwick, Charles Pinson, and Howard Rinker. In addition, the parties stipulated that Petitioner's pre-hearing summaries of testimony to be elicited from the following Postal Service employees would be accepted as their testimony (with several corrections and a qualification noted in the transcript): Johnny Pritchett, Ron Roseberry, Dean Nichols, Kim Benton, Claude Nix, Judy Wells, Carrie Springer, Thelma Butler, Harry Burkett, Kelvin Webb, and all but a paragraph of the summary for Howard Rinker.

The following Findings of Fact and Conclusions of Law are made from the entire record of this proceeding including, among other evidence, all documents presented with the Petition, Answer, and pre-hearing matters; observations of the Administrative Judge of the demeanor of the witnesses at the hearing; their testimony; the stipulated testimony; exhibits presented at the hearing; and relevant portions of Postal Service handbooks and manuals.

FINDINGS OF FACT

1. Petitioner, Linda R. Shires, has worked for the Postal Service for eleven years. Prior to the events leading to this proceeding, she had no problems with her supervisors and had received top job ratings. In September 1990 she was promoted to her position as Supervisor, Delivery and Collections at the Montgomery GMF. Her immediate supervisor was the Area Manager Carll Smith. His second-level supervisor was the MSC Manager/Postmaster for Montgomery (hereafter the Postmaster), R. Carl Johnson.

2. The announcement for Petitioner's present position had not described accountability for the main stock as a duty. When she applied, however, she was aware that would be one of her duties, although she was not aware of the full "ramifications" of the position. She received no special training for main stock responsibilities, but she had served briefly as an officer-in-charge in another, much smaller facility which followed similar stamp accountability procedures. The workload and amount of stock accountability, however, were not comparable to the GMF position, being substantially less in that other office.

3. In addition to supplying stock to six window clerks at the GMF, Petitioner's main stock duties included filling orders, distributing, and receiving stock from eight unit reserve stocks, 32 clerks and relief clerks at the finance units, and two contract stations in Montgomery. Her primary duties, however, were to ensure the delivery and collection of mail, including express mail for the entire area. Additional duties were assigned by the Area Manager and Petitioner's workload greatly increased due to rate changes, promotion of retail sales, and later phasing out of some of the retail sales, etc. With the many demands on her time, Petitioner was constantly interrupted while performing main stock work, making it difficult to perform that work. Other witnesses who had held the position or were aware of her responsibilities confirmed that it would be very difficult to perform the main stock duties without additional help in view of her many other assigned responsibilities. She also assisted other employees by finding solutions to problems which may have led to their being accountable for apparent, but not real, financial losses of Respondent.

4. The main stock in the Montgomery GMF was kept within a locked cage area inside another locked area - the vault. Only Petitioner, as main stock custodian, was entitled to access to the cage; the GMF window clerks had access to the vault where their accountable stock was kept. Petitioner and several of her predecessors had unsuccessfully sought help from the Area Manager to have minor rearrangements in the physical layout at the GMF made. These would have made the vault area more secure and less accessible to other persons. They also requested additional personnel to help answer phones, verify stock counts, etc. The Area Manager denied all such requests. To perform necessary stock count verifications, Petitioner would have to pull a window clerk from his duties.

5. The records of Petitioner's accountable stock balanced with the stock on hand until she discovered during a self audit that the main stock was short 900 booklets at $5.80 each of 29-cent wood duck stamps. On February 7, 1992, her supervisor issued a letter demanding she reimburse the Postal Service for the actual monetary shortage shown in the main stock of $5,151. The parties are in agreement that although that amount is less than the total value of the 900 booklets, the 900 booklets of wood duck stamps constitute the missing stock.

6. Many times Petitioner thereafter orally requested her supervisor to have stamp records from the various units within Montgomery furnished to her so she could try to find the shortage, but she was denied the records. She was, however, permitted on-clock time to go to the Green Lantern Station where she expected an error may have occurred. She spent one day and two hours there.

7. Insisting that the missing stamps could be found if all records were examined to show a paper trail, Petitioner by letter dated February 14, 1992, to the Postmaster, with a copy to the Area Manager, requested certain records and an audit of all the Montgomery units by the Postal Inspection Service (hereafter I.S.).

8. By letter dated February 24, 1992, the Area Manager responded, indicating among other matters, that the reserve stock of all the stations in Montgomery had been counted, but only one station was out of balance with an unrelated shortage of 25-cent stock. He noted that although another station, Green Lantern, had previously been over about $1,400, according to "Rule #1" the unit "as a whole" was in balance. He also noted that every financial unit in Montgomery had been counted for a reason unrelated to the main stock shortage, but discrepancies found in those units did not demonstrate any relationship to the missing 900 books. He described "Rule #1" as:

"a simple accounting procedure of debits and credits. Specifically, if a certain amount of stock was shipped from the main stock without being reduced from the inventory, when this stock was received by the unit it was shipped to, the entire city would reflect an overage of that amount."

The only document he furnished was a copy of an inventory tape of a count of the main stock dated February 6, 1992, because he concluded it was the only document which related to her shortage since "all other units and reserve stocks in the city of Montgomery have been found to have no relationship with your shortage."

9. By letter of March 6, 1992, to the Postmaster, Petitioner reiterated her request for records and an I.S. audit. She also commented about statements in the Area Manager's letter. On March 9, 1992, she again requested an audit and also requested a waiver of her indebtedness. All of her requests were denied by the Postmaster in a letter dated March 18, 1992. He specifically stated that additional records would be furnished only pursuant to section 352.6 of the Administrative Support Manual and at the applicable rate provided therein. That provision pertained to information sought by the public under the Freedom of Information Act.

10. By letter of April 10, 1992, Petitioner made a third written request for records and for an I.S. audit. She listed specific records and the reasons therefor. She also objected to paying for the records under the provisions cited by the Postmaster and asserted her understanding that records should be made available without cost under the Debt Collection Act.

11. On April 15, 1992, the Postmaster issued the Notice required under section 5 of the Debt Collection Act and the implementing regulations, 39 C.F.R. Part 961, before Respondent could withhold a portion of Petitioner's wages for the alleged indebtedness due to the missing stamp stock. The Notice enclosed information concerning the employee's rights. Paragraph 1 of the "Debtor's Rights and Responsibilities" stated that before a requested hearing was held, the employee could request copies of "any postal records which you have not previously received, by contacting in writing, Carll Smith, Area Manager . . . You will receive any requested records within 5 calendar days of the date your request is received by the Postal Service."

12. Despite that paragraph, by letter dated the next day, April 16, 1992, the Postmaster denied Petitioner's requests in her letter of April 10, 1992, stating that records would be furnished only at cost in accordance with the Administrative Support Manual. He noted that the I.S. had been informed of the loss and it was up to the I.S. whether or not to investigate. He refused to request a special I.S. audit to assist her "in re-creating records that [she] should have had in [her] possession had proper procedures been followed."

13. In this Petition, filed April 30, 1992, requesting an oral hearing, Petitioner also requested a preliminary supplemental oral hearing on her requests for records. During a telephone conference with the presiding Administrative Judge the parties agreed that the statutory decision time be tolled for several weeks while the parties attempted to resolve their differences. During another telephone conference on June 3, 1992, Petitioner advised she had not yet received promised records. Respondent's representative indicated the documents should have been sent from another office but he would have copies sent to Petitioner.

14. Because Petitioner had still not received all the documents requested, on June 12, 1992, Petitioner filed a motion to compel production of certain documents or, alternatively to grant sanctions, i.e., to have the demand against Petitioner dropped because of the Postal Service's failure to submit requested documents. During a telephone conference on June 16, 1992, the written motion and an oral request for postponement of the hearing were denied based on Respondent's representation that all records requested by Petitioner would be furnished. In a conference call on June 19, 1992, a Friday, Respondent's representative advised that such records had been sent to Petitioner, and Petitioner's attorney advised that a large box of records had been received in his office that morning.

15. At the beginning and close of the hearing on Tuesday, June 23, 1992, Petitioner renewed her motion to dismiss the demand because of her inability to obtain all requested records from Respondent. Alternatively, she requested that her accounting records be accepted to show that the missing stamps were sent to the Green Lantern Station and Respondent did not suffer any financial loss. The motion to dismiss was denied at the beginning of the hearing and taken under advisement at the close of the hearing. A ruling on the alternative motion was postponed depending on the proof and was taken under advisement at the close of the hearing.

16. The evidence is persuasive that some records of stamp transactions within, and to and from the Green Lantern Station and other units, including the main stock, either had not been made appropriately by the Green Lantern Manager or were otherwise misplaced and were missing from the records finally furnished Petitioner on June 19, 1992. Early in January 1992, Respondent demoted the Manager of the Green Lantern Station because of his gross mismanagement of that office from July 1991 when he took over until his removal from that position. He did not follow prescribed procedures and, according to the Finance Manager, "had numerous problems doing anything." (Tr. 87).

17. After much searching of records and in lieu of any other reasonable explanation for the loss, Petitioner admitted at the hearing that she and one of the window clerks verifying the transaction probably made a mistake on October 10, 1991, and shipped 2,700 books of wood duck stamps to Green Lantern instead of the 1,800 books shown on the main stock records. It was likely it happened because of a rush demand from the Green Lantern Manager as that is how he usually made his requests. This is the most likely explanation for the missing stamps. It is supported by evidence that the Green Lantern Manager had asked for instructions from Finance in November and/or December 1991 about what to do about 900 extra books of wood duck stamps he had found in his Station. 18. Petitioner's explanation is also supported by testimony of Mr. Shires concerning his investigation of the Green Lantern records and conversations with that Manager and also by an audit of the available records performed by Petitioner's CPA. The testimony of those two witnesses shows that there were discrepancies in Green Lantern's records concerning the number of wood duck stamps in that office between October 10, 1991, and January 1992. They showed that the amount of time between orders of the wood duck stamps from Green Lantern in October 1991 to January 1992 would not be normal considering normal ordering patterns for stamps unless there was additional stock not accounted for on Green Lantern's records. They also showed, particularly through the audit by the CPA, that there were many other unexplained discrepancies and errors in the Green Lantern records such as nine instances when the closing balance of one day differed from the opening balance of the next day and differences between records of Green Lantern showing returns to the main stock and the main stock records.

19. The only reason given by Respondent's witnesses for not accepting Petitioner's explanation about the missing stamps is that the main stock records did not show transmittal of the missing stock to Green Lantern and the financial records of Green Lantern were in balance as was the Montgomery unit as a whole. They admitted that records could be missing from Green Lantern because of the mismanagement.

20. The evidence tends to show that Petitioner was a good and efficient worker. Other than Petitioner's admitted probable mistake with respect to this missing stock, the only evidence that would show she did not normally exercise reasonable care in performance of her main stock duties is from the Area Manager's testimony and letters that he observed two incidents when Petitioner was not in the cage or vault but the cage door was open and a window clerk was in the vault counting stamps. Other evidence casts considerable doubt about whether the first incident occurred and also raises doubts about the second incident.

CONCLUSIONS OF LAW

1. Postal Service regulations make postmasters accountable for the face value of all postage stock consigned to their offices except when the accountability is reduced by stock sales, shipment to another office, or authorized destruction. Handbook F-1 § 431.1. In turn, employees are accountable to the postmaster for consigned stock (Handbook F-50 § 321) and "are held strictly accountable for any loss unless evidence establishes they exercised reasonable care in the performance of their duties." Handbook F-1 § 132. As further provided in Handbook F-1:

"Postmasters must ensure that all accountable paper received into and dispensed from the Main Stock is controlled. The responsibility for maintaining the Main Stock may only be assigned to a supervisory employee having no access to the office cash records. ..." § 144.2.

"Postmasters may assign responsibility for administering the Main Stock to a supervisory employee who will act as Main Stock custodian. The custodian must neither sell postage to customers nor post the daily financial transactions of the office. The custody of the Main Stock should be a collateral duty except at the SDO. § 431.2.21.

2. A main stock custodian should be held strictly accountable for shortages in the main stock only to the extent there is an actual financial loss to the Postal Service. Leslie H. Eldredge, P.S. Docket No. A0-7 (I.D. August 17, 1990), aff'd (P.S.D. January 25, 1991).

3. Respondent presented a prima facie case of Petitioner's indebtedness by showing that the main stock records had a monetary shortage of $5,151, that the missing stamps could not be accounted for, that there was no relationship to the loss elsewhere in the unit, and that as Petitioner was the main stock custodian she was accountable for any loss of stock from the main stock.

4. Petitioner's renewed motion to dismiss the demand for payment because of Respondent's lack of cooperation in furnishing the records is denied. The alternative motion to accept Petitioner's accounting evidence, however, is granted as reflected in part by the foregoing findings. Moreover, Respondent presented no evidence which would refute such evidence.

5. Respondent's prima facie case which tended to show there was a financial loss for which Petitioner is accountable has been overcome by evidence which casts considerable doubt on whether there was an actual financial loss attributable to Petitioner. Petitioner has persuasively shown that it is more likely than not that the missing stamps were sent to the Green Lantern Station along with other stamps and were not accounted for by that Station. Evidence establishes that the Green Lantern Station was mismanaged during the time in question. There was also evidence that 900 booklets of wood duck stamps in Green Lantern had not been accounted for by that Manager. There were unexplained discrepancies in the stamp inventory count of wood duck stamps in November and December. Appellant's CPA found so many errors and discrepancies in Green Lantern's records and accounting that all of that Station's accounting for the period in question here is unreliable. The weight of the evidence in this regard makes unpersuasive Respondent's reliance on the facts that the financial records of Green Lantern were in balance with Montgomery's Finance Unit and that Green Lantern's records apparently did not show overages of the wood duck stamps.

DECISION

Although Respondent made a prima facie case of Petitioner's indebtedness, that case was overcome by Petitioner's evidence which gave a reasonable explanation about what happened to the missing stamps. Respondent did not satisfactorily overcome Petitioner's evidence and meet its burden of persuasion to show that an actual financial loss occurred due to stamps missing from the main stock. Therefore, the Petition is sustained. Petitioner is not required to repay the amount demanded in the Notice dated April 15, 1992.

Although Petitioner requested attorney fees and expenses, the parties were advised before and at the hearing by the Presiding Judge that the only authority permitting such an award is for a prevailing party under the terms and conditions of the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504 (1988), and implementing regulations (at 39 C.F.R. Part 960). For that reason the request is denied at this time. If Petitioner timely files an EAJA application it will be considered.

Joan B. Thompson
Administrative Judge