FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, David L. Mitchell, filed a timely Petition requesting an oral hearing under the Debt Collection Act of 1982, as amended, 5 U.S.C. §5514(a), after receiving a Notice of Involuntary Administrative Salary Offsets on or about October 2, 1997. The Notice advised Petitioner that he was indebted to the Postal Service in the amount of $450.00, resulting from his failure to turn in obsolete Migratory-Bird Hunting and Conservation Stamps ("bird stamps") in February 1995, as he had been directed to do. A hearing was held in Dallas, Texas, on November 19, 1997.

FINDINGS OF FACT

1. At the time this Petition was filed, Petitioner was a supervisor of customer services at the Richland Station, Dallas, Texas. He had initially served in that position until the Fall of 1993, at which time he was terminated. He contested the termination and was reinstated to his position in May 1994. (Transcript pages (Tr.) 12, 13).

2. One of Petitioner's responsibilities as a customer services supervisor was as custodian of the unit reserve stock. Also included within Petitioner's duties was responsibility for a "vacant stock," which was stamp stock previously assigned to a window clerk who had left the station and which had been sealed when the clerk left. During the time Petitioner was away from the Richland Station, two other supervisors had acted as custodians of the unit reserve and the vacant stock.⁽¹⁾ (Tr. 12, 33, 37, 78)

3. Migratory-Bird Hunting and Conservation Stamps are special (non-postage) stamps that are issued by the Department of the Interior and are sold at certain post offices. In general, bird stamps for a particular season are to be requisitioned prior to July 1 of each year and are made available for sale for a limited time through the window clerks at the post office. At the close of Postal Quarter II each year (approximately the end of February) unsold stamps are required to be returned to the main stock at the post office, and in Postal Quarter III the unsold stamps are required to be sent to the Postal Service Management Sectional Center for destruction. (Handbook F-1, Post Office Accounting Procedures (April 1991 edition),⁽²⁾ Sections 450, 460).

4. The Postal Service pays the Interior Department only for stamps actually sold. However, the number of stamps to be paid for is determined by subtracting the number of stamps returned for destruction from the total number of stamps issued for sale. Therefore, the assumption made is that any stamps not returned for destruction have been sold, and the amount remitted to the Interior Department would include the value of all stamps not returned, even if they have not actually been sold. (Tr. 19, 65).

5. When the unit reserve was reassigned to Petitioner in May 1994, the sealed, vacant stock contained a sheet of thirty 1992-1993 bird stamps. By that time, the period for returning the 1992-1993 stamps for destruction had expired. Since the stamps had not been returned for destruction, the stamps would have been previously reported as sold and the Postal Service would have paid their face value ($450) to the Interior Department. Petitioner was not aware of the presence of the bird stamps in the vacant stock when the unit reserve was reassigned to him, and records related to the unit reserve would not have shown the presence of the bird stamps in the vacant stock. (Tr. 21, 30, 88).

6. In February 1995, the Dallas Customer Service and Sales office issued a memorandum on the subject of Obsolete Bird Stamps to various postmasters and station managers, including the manager of the Richland Station. The memorandum stated that obsolete bird stamps (i.e., those for sale prior to 1994-1995) were to be collected and forwarded to the Philatelic Outlet at the Downtown Station for sale to collectors. Petitioner's supervisor received the memorandum and passed it on to Petitioner. In response, Petitioner collected obsolete bird stamps held by the window clerks under his supervision and forwarded those stamps as directed by the memorandum. He did not, however, check the sealed, vacant stock and, therefore, the bird stamps that were in that stock were not sent to the Philatelic Outlet. (Tr. 17, 21, 100; Answer, Exhibits 3, 4).

7. In June 1996, the contents of the vacant stock were "absorbed" -- i.e., distributed to other clerks. At that time, Petitioner discovered the sheet of 1992-1993 bird stamps and notified his supervisor. (Tr. 17, 27, 73, 90). No action was taken regarding the stamps until August 25, 1997, when Petitioner's supervisor issued Petitioner a letter of demand. Petitioner requested reconsideration of the letter of demand, which request was denied. A Notice of Involuntary Administrative Salary Offsets was issued on September 29, 1997, and received by Petitioner on October 2, 1997, precipitating his Petition.⁽³⁾ (Attachments to the Petition).

8. Paragraph 132 of the F-1 Handbook provides that when postal funds and accountable paper are consigned to employees, the employees are strictly accountable for any losses unless evidence establishes that they exercised reasonable care in the exercise of their duties.

DECISION

Respondent argues that it suffered a loss when Petitioner failed to examine the vacant stock before turning in the obsolete bird stamps for sale by the philatelic office. Respondent argues that this failure constituted negligence by Petitioner and cost Respondent the opportunity to recapture all or part of the loss that had occurred when the stamps were not turned in as initially required.

Petitioner questions whether there was a loss at all, arguing that the obsolete stamps can now be sent for destruction and appropriate accounting entries made to eliminate any loss. Petitioner also argues that the loss, if there is one, is attributable to the fact that the vacant stock was allowed to remain sealed for an excessive amount of time and was sealed when he received it in 1994. Therefore, he argues that his failure to examine it for obsolete bird stamps was not negligence on his part.

Having examined the record, I conclude that the Postal Service has not sustained its burden of proving that there was a loss attributable to Petitioner. The record does not show, and Respondent has not alleged, that Petitioner was the supervisor in charge when the expiring 1992-1993 bird stamps were not turned in for destruction, a failure that would have occurred in early 1993 and that would have first caused a loss to occur (see Findings 1, 3, 5). The alleged loss charged to Petitioner relates only to the February 1995 failure to forward the already obsolete stamps to the philatelic office for possible sale to collectors.

Initially, I note that the amount of the alleged loss is speculative. It is not clear from the record either that all obsolete stamps turned in to the philatelic center would necessarily have been sold, or that the stamps, since they had expired and had no apparent value except as collectibles, would necessarily have been sold at their face value. More important, however, is the fact that although Respondent's witness repeatedly referred to the February 1995 events as a "one-time" opportunity to obtain some value from the obsolete bird stamps, there is nothing in the record that indicates that the Postal Service, in order to mitigate the loss, could not now send the newly discovered sheet of stamps to a philatelic outlet for sale to collectors, if it chose to do so.⁽⁴⁾

In addition, I conclude that Petitioner's failure to examine the vacant stock in response to the February 1995 memorandum did not constitute a failure to exercise reasonable care. The vacant stock was sealed when he received it, and he had taken no action with regard to that stock in the time it had been in his custody. He had not been directed to unseal the stock and "absorb" it prior to June 1996. Further, the record does not indicate that he had any other reason to examine the stock prior to that time.⁽⁵⁾ When Petitioner received the February 1995 memorandum, he took appropriate action to retrieve obsolete bird stamps from the window clerks under his supervision. There is no evidence that he made a conscious decision not to examine the vacant stock, but instead it appears that examining that particular stock never occurred to him at the time. It would have been advisable to have examined the vacant stock for bird stamps, but I cannot conclude that his failure to do so under these circumstances represented negligent behavior or a failure to exercise reasonable care.

Accordingly, I conclude that Petitioner may not be held liable for the loss. The Petition is sustained.

David I. Brochstein
Administrative Judge

1. It is unclear whether the vacant stock existed during the entire period of time that the other two supervisors acted as custodians. However, the sealed, vacant stock was part of the responsibility assigned to Petitioner when he resumed his position in May 1994.

2. A new version of the F-1 Handbook was published in November 1996. However, unless otherwise indicated, references in this decision will be to the 1991 edition, which was in effect at the times relevant to this matter.

3. The Notice stated that deductions from Petitioner's pay would begin on September 30, 1997. Although this would have been in violation of the provisions of the Debt Collection Act requiring a 30-day notice before deductions could start, there is no evidence that any deductions have actually been made.

4. I note, further, that the memorandum that initiated the process in February 1995, did not describe it as a one-time opportunity.

5. Petitioner's supervisor stated that Petitioner was obligated to break the seal, audit the vacant stock, and reseal the stock at least once every four months, the same schedule as required for the credits of active window clerks (Tr. 26). However, Respondent did not provide any directive that required such action by Petitioner, and the evidence does not show that Petitioner was specifically directed to do so by his supervisor. Further, although the Richland Station maintained records of audits performed (Tr. 15, 30), there is no evidence that Petitioner's failure to perform regular audits of the vacant stock, if that was a requirement, was ever brought to his attention by his supervisor during the two years he had custody of the vacant stock before it was absorbed.