In the Matter of the Petition by

JOHN FLYNN
5057 44th Street

           at

Woodside, NY 11377-7319

P. S. Docket No. DCA 00-91

APPEARANCE FOR PETITIONER:     Joel Schreck
                                                         350 West 31st Street, 3rd Floor
                                                         New York, NY 10001-2726

APPEARANCE FOR RESPONDENT: Geraldine O. Rowe, Esq.
                                                         New York Metro Law Office
                                                         United States Postal Service
                                                         380 West 33rd Street, Room 4516
                                                         New York, NY 10199-9003

Petitioner, John Flynn, filed a timely Petition after receiving a Notice of Involuntary Administrative Salary Offsets from his supervisor on February 28, 2000. This Notice stated the Postal Service's intention to withhold $3,204.89 from Petitioner's salary to recover for a shortage in his flexible credit account discovered by an audit on October 19, 1996.

A hearing was held in New York City on September 14, 2000. The Postal Service presented testimony from Luis Figueroa, who performed an audit in November 1996, and a sworn, written statement from Petitioner's supervisor, Loretta Murphy. Petitioner testified in his own behalf. The following findings of fact are based on the entire record, including observation of the witnesses and their demeanor.

1. Petitioner has worked for the Postal Service since 1985, and has been a window clerk since early 1995. At the time relevant to this case, October/November 1996, he had been a window clerk at the Old Chelsea Station in New York City since June 1996. (Tr. 33).⁽¹⁾

2. On June 21, 1996, Petitioner was issued a stamp credit account at the Old Chelsea Station and signed a PS Form 3369, accepting responsibility for it. On October 19, 1996, Petitioner's supervisor, Loretta Murphy, performed a quarterly audit of Petitioner's account and found it to be $3,204.89 short. The results of the count were recorded on a PS Form 3294, Cash and Stamp Stock Count and Summary. At Petitioner's request, Ms. Murphy performed a second count, also on October 19, 1996. The result was the same, and Petitioner signed the second PS Form 3294, indicating agreement with the accuracy of the count. (PS Ex. 1; Answer, Tabs 4b, 4c, and 4d).

3. As a result of this shortage, Ms. Murphy intended that Petitioner would not continue to work as a window clerk. However, Ms. Murphy became ill shortly thereafter and apparently this intention was not carried out. On November 23, 1996, Mr. Figueroa, another clerk at Old Chelsea, told Ms. Murphy that Petitioner was still

working at the window. Either Ms. Murphy, or some other supervisor, directed Mr. Figueroa to conduct another audit of Petitioner's account. Mr. Figueroa did so, and found a shortage of $3,200.59. This is essentially the same shortage that Ms. Murphy found on October 19, 1996, as Petitioner's account was not balanced by placing the $3,204.89 shortage into a "suspense" account after the October 19 audit. Petitioner signed the PS Form 3294 completed by Mr. Figueroa, indicating his agreement with the accuracy of the count. (Tr. 11-12, 16-17, 31, 37-38; PS Ex. 1; Answer, Tab 4f).

4. Petitioner's audit history shows that, while working as a window clerk at another post office before moving to Old Chelsea, he had shortages of $1,558.26 on August 23, 1995, and $2,332.77 on April 2, 1996. (Answer, Tabs 1a and 2a).

5. Postal Service Handbook F-1, Post Office Accounting Procedures, states that "Supervisory Personnel" will "conduct examinations of stamp credits," and also describes how the "supervisor" and "the employee" will actually conduct the physical count of stamp stock. (Handbook F-1, §429.1 and §429.14).

The standard for determining an employee’s liability in a case such as this provides that employees to whom postal funds and accountable paper are consigned "are held strictly accountable for any loss unless evidence establishes that they followed the postal procedures established when performing their duties." Handbook F-1, Post Office Accounting Procedures (November 1996), §141.

Respondent’s burden of proof in a case of unexplained shortage is to show that a loss occurred from an account for which the employee is accountable. Respondent is not required to prove any specific dereliction, or act of negligence, by Petitioner. When a properly conducted inventory, or audit, shows a stock shortage relative to a previously established balance, this constitutes proof of loss unless other evidence raises sufficient doubt about the accuracy of the inventory or the previously established balance, or otherwise suggests that there may have been no actual loss. If Respondent proves a loss, the burden then shifts to the employee to show that he or she followed established procedures, or to present other evidence that would warrant relieving the employee of liability.

In this instance, the audits conducted on October 19, 1996 establish a loss. The only issues raised by Petitioner are that he was denied the opportunity to cross-examine Ms. Murphy, and that Mr. Figueroa was not authorized to conduct audits of other window clerks. Petitioner was aware, well before the hearing date, that Ms. Murphy's serious illness would prevent her from attending the hearing and that her sworn, written statement would be accepted. Petitioner's objection to the admission of the statement (PS Ex. 1) was overruled at the hearing, but Petitioner was advised that his objection would be considered in determining the weight to be given the statement and any contradictory evidence. Petitioner also, of course, had the opportunity to present evidence to contradict anything contained in the statement. In fact, even though Petitioner himself testified, he presented nothing to contradict any material assertion made in Ms. Murphy's statement.

As to the question of whether it was proper for Mr. Figueroa to conduct the audit on November 23, 1996, I do not read the F-1 Handbook as invalidating an audit conducted by a non-supervisor at the direction of a supervisor. Even if Petitioner's argument were correct, this would not invalidate the October 19, 1996 audits conducted by Ms. Murphy, and it is those audits that Respondent is using as a basis for the alleged liability of $3,204.89. All that Mr. Figueroa's audit did was confirm the accuracy, within $4.30, of the two counts done by Ms. Murphy. As Mr. Figueroa's count was done later, however, Petitioner is entitled to the benefit of smaller shortage shown on that count, i.e., $3,200.59.

As Petitioner presented no evidence at all to demonstrate that he followed established procedures in managing his account, and the evidence shows that he had two large shortages on two preceding audits, he cannot be relieved of liability under the standard quoted from the F-1 Handbook.

The Petition is denied. Respondent may collect $3,200.59 from Petitioner's salary.

Bruce R. Houston
Chief Administrative Law Judge

¹ References to the hearing transcript are "Tr._." References to documents attached to Respondent's Answer will be "Answer, Tab _.," and references to the document admitted at the hearing (Ms. Murphy's sworn declaration) will be "PS Ex. 1."