In the Matter of the Petition by          )
                                                          )
CRAIG A. WILSON                            )
711 Stonebridge Way                       )
              at                                         )
Pleasant Hill, CA 94523-4847            )
                                                           ) P.S. Docket No. DCA 94-153


APPEARANCE FOR PETITIONER:       Kathryn MacRae
NAPS Diablo Valley Br. #503             128 Terranova Drive
                                                           Antioch, CA 94509-5530


APPEARANCE FOR RESPONDENT:  Jane Davis
                                                          Labor Relations Specialist
                                                          United States Postal Service
                                                          1675 7th Street, Room 41 9
                                                          Oakland, CA 94615-9401

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Craig A. Wilson, filed a petition requesting an oral hearing under the Debt Collection Act of 1982, as amended, 5 U.S.C. I 5514(a), to challenge claims asserted against him by the United States Postal Service, Respondent. Respondent advised Appellant on September 16, 1994, that it would Immediately begin deductions from Petitioner's salary to recover debts Petitioner allegedly owed Respondent. The claimed debts arose when shortages were discovered in Petitioner's accountability during audits in June, 1994. Petitioner flied a timely petition from the notice of the Impending deductions.

An oral hearing was held in San Francisco on January 26, 1995.

FINDINGS OF FACT

1. In early 1994, Petitioner managed the Dollar Ranch Station in Walnut Creek, California and was assigned accountability for the unit reserve stock at the station.^1/ At the time the unit reserve accountability was transferred to Petitioner, September 9, 1992, the stock was counted by Petitioner and another employee, and found to be exactly in balance. (Hearing Transcript ('Tr.") pages 65, 67, 75, 124, 216; Respondent's Exhibits ("RX") 10, 11).

2. The accountability for the Dollar Ranch Station vending machines was never formally assigned to Petitioner. Accountability for the vending machines had been assigned to a customer services supervisor in the Walnut Creek Post Office who was not always readily available to remedy problems with the vending machines at the station. In 1993, the customer services supervisor gave the vending machine keys to Petitioner and told him to take over operation of the machines. He asked that Petitioner and another employee at Dollar Ranch do a count of the vending machine stock incident to the transfer to Petitioner. There is no evidence such a count was ever done. Petitioner managed the vending machines until June 10, 1994, when the stock was counted. During that period, the machines were serviced from time to time by a technician. (Tr. 70, 72, 130-132, 197-198, 225).

3. On May 18, 1994, Petitioner called in sick and did not return to work at Dollar Ranch Station thereafter (Tr. 140, 178, 186, 199, 217).

4. On June 1, 1994, Respondent's employees tried to open the safe at the station using the combination that Petitioner had sealed in an envelope, PS Form 3977, in 1990 that was maintained in the safe at the main office. The combination did not work, and there was no other 3977 for the safe on file at the post office. At the direction of the officer in charge of the Walnut Creek Post Office, the customer service supervisor, who was acting as the station manager of Dollar Ranch in Petitioner's absence, called Petitioner at home. The acting manager was a person known to Petitioner. He told Petitioner that the Dollar Ranch clerks were getting low on stamps and that the officer in charge wanted Petitioner to come in, open the safe and sign over his accountability for the unit reserve stock to the acting manager. Petitioner said that he would come in and issue stock to the clerks but that he did not want to sign over the unit reserve to anyone else. When the acting manager told him the accountability was to be signed over, Petitioner declined to come in to the station and asked that the officer in charge call him. Petitioner did not return to the station to open the safe, (Tr. 124-126, 154; RX 4B).

5. On June 6, 1994, an employee called Petitioner at home to advise Petitioner that the safe had been sealed by application of stickers around the door. Petitioner told him to look in Petitioner's desk drawer for stamps. The employee found two coils of 3000 29-cent stamps. Each coil was worth $870. When the employee told Petitioner what he had found, Petitioner stated that there should have been three coils in the drawer. The desk drawer had been found to be locked by the employee on May 18, 1994, but when he opened it on June 6, it was unlocked. There is no evidence regarding availability of keys to the desk. (Tr. 200-201, 202-204, 227; RX 4).

6. In order to gain access to the unit reserve stock, Respondent arranged for a technician to open the safe by drilling into it. It took approximately four days to open the safe in this manner. (Tr. 141-142, 162).

7. When the safe was opened, two of Respondent's employees counted the unit reserve stock on June 7, 1994, and a shortage of $913.36 was disclosed. The two coils found in Petitioner's desk were included in the unit reserve stock counted on June 7, 1994. Petitioner was not specifically notified in advance that the unit reserve stock was to be counted. Petitioner had not listed any designated witnesses in the spaces provided for identifying such persons on the only 3977 on file for the safe. (Tr. 126, 144; RX 4, 4C, 9).

8. On June 10, 1994, two employees of Respondent counted the vending machine accountability and found it to be short by $998.13 (Tr. 144, 209; RX 4E).

9. Postal Service rules require that stamps be stored in a safe or vault where, as at Dollar Ranch Station, safes are available:

"Give postage stamps and nonpostal stamps the best possible protection (see Subchapter 140). Keep high denominations (Express Mail books, coils, etc.) in the safest place if storage facilities offer different levels of security." (Joint Exhibit 2, Handbook F-1, Post Office Accounting Procedures, April 1991, Section 431.32; see Handbook F-1, Sections 142, 433.21; Financial Management Manuel 342.3).

10. Employees who are assigned responsibility for postal funds and accountable paper "are held strictly accountable for any loss unless evidence establishes they exercised reasonable care in the performance of their duties." (Handbook F-1, Section 132).

11. Chapter 6 of Postal Service Handbook PO-102, Retail Vending Operational and Marketing Program (Joint Exhibit 3), provides guidance regarding management of vending machine credits. Section 653.12 provides:

".12 Other Causes. Servicing personnel do not have complete personal control at all times for the assigned credit, therefore, shortages must be assumed to be the result of machine malfunction unless the following can be determined as the cause:

a. Fire, theft, robbery, errors in examination procedures, errors on Forms 17, customer refunds, acceptance of bogus and/or foreign coin-like and bill-like objects, or any other procedural errors.

b. It can be established that the loss was the direct result of negligence on the part of the servicing personnel.

C. Theft, embezzlement, etc., by the servicing person (sufficient evidence to prefer charges)."

12. The postmaster is to verify the accountability of non-bargaining employees at least once each postal fiscal year (Financial Management Manual 345.2; see Tr. 160). There is no evidence in the record of when Petitioner's accountability had been last verified before June, 1994.

13. Section 433.23 of Handbook F-1 provides,

"An employee must be granted the opportunity to be present whenever his financial accountability is inventoried or audited. If not available, there must be a witness of his choice present. Each employee assigned a stamp credit should furnish the installation head two names of postal employees (in order of precedence) whom the employee chooses to witness the audit or inventory when absent. Enter the names of the selected witnesses on the Form 3977. In the absence of chosen witnesses the union steward will suffice."

14. Before 1994, Petitioner had received training regarding finance, issuing stock from the main stock to clerks, and security for stamp stock at a station. He had been advised of persons in the Walnut Creek Post Office who could help If he had problems and that the F-1 Handbook that was maintained at Dollar Ranch Station provided guidance on financial matters. Petitioner never told his superiors that he did not understand the financial procedures at the station or that he needed additional training in that regard. He had managed the station off and on for about three years, and in a 1992 application for promotion stated that he fully understood the financial operations of a station. (Tr. 24, 31, 33, 43, 44, 48, 49, 55, 57, 113, 171, 173-175, 185; RX 6, 14).

15. Petitioner had received a number of commendations in 1993 and before recognizing his excellent performance (Patitioner's Exhibits 4, 5).

16. On September 16, 1994, the officer in charge of the Walnut Creek Post Office executed two PS Forms 3239, Payroll Deduction Authorization to Liquidate Postal Service Indebtedness, reflecting that involuntary deductions would be made from Petitioner's salary commencing October 1, 1994, to satisfy Postal Service claims of $913.36 for the unit reserve stock shortage and $998.13 for the vending machine shortage (RX 3). Petitioner filed his petition in response to his receipt of copies of those forms.

DECISION

Petitioner did not receive a Notice of involuntary Administrative Salary Offsets Under the Debt Collection Act, which is the document that normally advises an employee of the availability of the hearing procedures under the Postal Service Debt Collection Act regulations before salary deductions may be made. 39 C.F.R. §§ 961.3(e), 961.4. However, because Respondent through the Forms 3239 notified Petitioner of its Immediate intention to Implement an involuntary withholding from his salary to collect the two alleged shortages and because Respondent has not objected to the petition on jurisdictional grounds, this case will be decided.

Respondent argues that it has shown the existence of shortages in two accountabilities for which Petitioner was responsible and that he did not exercise reasonable care in managing the credits. Specifically, Respondent points to Petitioner's storage of two coils of stamps from the unit reserve stock in a desk drawer when Postal Service regulations require that they be placed in a safe or vault. It asserts that Petitioner had sufficient training and experience to manage those accountabilities.

Petitioner argues that he never formally assumed responsibility for the vending machine accountability and therefore is not liable for any loss occurring in it. He contends that he received inadequate training for managing the financial operation of the station, and he contends the tax financial management practices in the Walnut Creek Post Office contributed to any loss, pointing specifically to the failure of the Walnut Creek Postmaster to assure that Petitioner's credits were audited at least once a year.

Finally, Petitioner argues that the June 1994 counts that disclosed the shortages are invalid because, contrary to Postal Service regulations, he was not given an opportunity to witness the counts or to have his designated witness present. Respondent argues that the regulations do not require that Petitioner, as a non-bargaining unit employee, be given an opportunity to witness or to have present a witness at the audit of his accountability.

Unit Reserve Stock

Petitioner was accountable for the unit reserve stock at the Dollar Ranch Station. Respondent demonstrated that a shortage of $913.36 occurred in the unit reserve stock as of June 7, 1994. Petitioner challenges the June 7 count on the basis that he was not advised that a count would occur and given the opportunity to be present or to have a witness present. The broad language of section 433.23 of the F-1 Handbook supports Petitioner's argument that he is entitled to be represented at any count of the unit reserve stock. However, the location of section 433.23 in the F-1 Handbook following a description of bargaining unit employees' accountability and the final sentence of the section providing that a union steward may fill in as a witness, which would be inappropriate for a count of a supervisor's accountability, support Respondent's position. However, I do not need to resolve the scope of protection, if any, section 433.23 provides to supervisors, because Petitioner waived any right he might have had to witness the count. When told to come in to the post office to open the safe and transfer the unit reserve to another employee, Petitioner refused. Petitioner has not demonstrated that he had a right to refuse the instruction because it did not come from the officer in charge personally. He knew the employee who instructed him to come in and knew that the instruction was conveyed on behalf of the officer in charge. Additionally, Petitioner must have known that once the safe was opened the stock would be counted. His unexplained, intentional avoidance of the post office is a sufficient waiver of his right to be present at the count. There was no evidence that he had designated any other employee to witness the count in his absence.

Therefore, Respondent has demonstrated a loss of $913.36 and is entitled to recover it from Petitioner unless the evidence demonstrates that Petitioner exercised reasonable care in management of the unit reserve stock. The evidence in this case demonstrates to the contrary. Storage of coils of stamps worth $870 each in a desk drawer, whether locked or unlocked, violates Postal Service regulations regarding security of the stock. Although the only evidence regarding the storage of the coils is the statement Petitioner made to a follow employee, that statement was that three coils were left in the drawer, and only two were ever recovered. Therefore, Petitioner admits that one coil was lost from the desk. The value of one coil, $870, is very near the total shortage in the unit reserve stock. The evidence showed that Petitioner had adequate training and experience to manage the unit reserve stock, and he was aware of resources available to help in the event he encountered problems. He did not show that his storage of the stamp coils in a desk drawer resulted from inadequate training.

The many commendations Petitioner received for his past performance do not excuse the improper storage of valuable stamp coils. Likewise, even If Petitioner had shown that the postmaster had failed to audit the unit reserve stock within a year, that would not have had any bearing on Petitioner's failure to secure the stamp stock.

For his failure to exercise reasonable care in securing the unit reserve stock, Petitioner is liable for the shortage of $913.36.

Vending Machines

Petitioner correctly argues that he was never formally assigned accountability for the vending machines. However, Petitioner accepted the keys to the vending machines in 1993 under circumstances that could only be seen as a transfer of responsibility, and he managed the vending machines from 1993 until the audit in June 1994. The employee who gave Petitioner the keys asked that Petitioner and another employee at Dollar Ranch perform a count of the vending machine accountability. There is no evidence Petitioner ever did so. His failure to perform the count that could have ascertained any preexisting shortages should not absolve him of liability for shortages appearing while he had sole responsibility for the vending machines, especially since as the manager of the station it would have been his duty to see that the transfer of responsibility was accomplished according to Postal Service requirements.

At the hearing, Petitioner invoked his right under the Fifth Amendment of the Constitution and declined to testify, and so there is no statement from him that he exercised reasonable care in managing the vending machines. He offered no other evidence on that point. However, the standard of proof necessary to find an employee liable for a loss to a vending machine credit differs from that applicable to other losses. Section 653.12 of Handbook PO-102 (Finding 11) raises a presumption that losses to vending machine credits stem from machine malfunctions unless it is shown that the loss resulted from another cause, such as employee negligence, theft or embezzlement. Therefore, that Petitioner has not alleged that he exercised reasonable care in managing the vending machines does not lead to the conclusion under this standard that he is liable for the loss. Respondent has not made the showing required by Section 653.1 of the PO-102 Handbook that the loss resulted from Petitioner's negligence, theft or embezzlement, and, consequently, Petitioner is not liable for the loss to the vending machine accountability.

Accordingly, the petition is sustained with respect to the vending machine loss. However, it is denied with respect to the unit reserve stock loss, and Respondent may collect $913.36 by offset from Petitioner's salary.

Norman D. Menegat
Administrative Judge

1/ The unit reserve stock includes all stamps and stamped paper received by the station that have not been consigned to a window clerk. Glossary, Handbook F-1, Post Office Accounting Procedures, April 1991.