In the Matter of the Petition by

JESSE BOYKIN
        at
Petaluma, CA

P.S. Docket No. DCA 09-471

APPEARANCE FOR PETITIONER:
Linda L. Donnelly
NAPS Representative

APPEARANCE FOR RESPONDENT: 
Jevron Velez
Labor Relations Representative
United States Postal Service

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

           Petitioner, Jesse Boykin, filed a timely Petition for Hearing after receiving a Notice of Involuntary Administrative Salary Offsets from Respondent, United States Postal Service.  The Notice stated Respondent’s intention to withhold $28,382.68 from Petitioner’s salary to recover shortages that Respondent claimed were Petitioner’s responsibility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

            A hearing was held in Petaluma, California,[1] and the parties submitted written briefs.  The following findings of fact are based on the entire record.

FINDINGS OF FACT

            1.  Petitioner was the accountable custodian of the unit reserve for the Mill Valley, California Post Office (Hearing Transcript, pages (“Tr.”) 9, 31, 43, 71).  The unit reserve held the post office’s supply of stamps until they were issued to the floor stock for sale by retail associates to customers.  All of the retail associates sold from the common floor stock (Tr. 28, 37), and the floor stock was accountable to the office rather than to any individual (Tr. 11-12, 28, 37).  (Handbook PO 209, §§11-15.2, 12-3.2, 12-8.1, 12-9).

            2.  The Mill Valley Post Office employed a computer system known as POS ONE to account for and manage the stock (stamps) in the office.  All transactions related to the unit reserve were required to be entered into the POS ONE system by the unit reserve custodian.  The system kept a running record of the overall accountability of the unit reserve, including calculations of all transfers of stock into and out of the unit reserve.

            3.  On August 30, 2005, Petitioner prepared a PS Form 17, Stamp Requisition/Stamp Return, for obsolete (nonsalable) stock and sent it and the stamps listed on it to the Stamp Destruction Office.  The shipment included 1420 55-cent Billy Mitchell stamps (value $781.00).  (Petitioner’s Exhibit (“Pet. Exh.”) 4B).  This shipment out of the unit reserve was recorded in the POS ONE system, reducing the unit reserve accountability (Pet. Exh. 5S).

            4.  Also on August 30, 2005, Petitioner prepared additional Forms 17 and shipped obsolete stock in the amount of $7,985.69 for destruction.  This stock had been returned by a contract postal unit that had closed, known as “All Wrapped Up.”  The “All Wrapped Up” stock remained in the accountability of the unit reserve until the Stamp Destruction Committee counted the stock and confirmed the amount of the shipment.  This did not occur until October 5, 2005.  (Pet. Exh. 4C-4E; Tr. 76-77, 80).

            5.  On the Forms 17 accompanying the “All Wrapped Up” shipment, Petitioner had made a few calculation errors that were corrected by the Stamp Destruction Committee in the process of accepting the shipment.  Petitioner had overstated the amount of stock actually sent by $281.66.  (Pet. Exh. 4C-4E). 

            6.  On August 31, 2005, Petitioner and D. Boyd conducted an audit of the retail floor stock of the Mill Valley Post Office in conjunction with the transfer of office responsibility from Petitioner to a successor (Tr. 9, 31, 34, 60).  The floor stock audit showed a shortage of $9,717.60 (Respondent’s Exhibit (“Resp. Exh.”) A, pp. 13-18).  Petitioner signed the system-generated POS ONE Inventory Audit Report of the count (Tr. 11; Resp. Exh. A, p.13).

            7.  On September 1, 2005, Petitioner and J. Mills audited the Mill Valley unit reserve, also in conjunction with transfer of responsibility for the office and specifically for transfer of responsibility for the unit reserve to a successor custodian (Tr. 9, 43, 60).  They counted the stamps on hand for the purpose of comparison with the POS ONE accountability, i.e., the quantity of stamps the system reflected should have been physically in the unit reserve.  Once they completed the count, they entered the results by type and number of stamps into the POS ONE system.  They then caused the system to print out a POS ONE Inventory Audit Report of the audit results.  The Report listed separately each type of stamp that was carried in the POS ONE inventory for the unit reserve and on the same line listed the quantity of each type of stamp that was found by the physical count.  (Resp. Exh. A, pp. 7-11; Tr. 44).

            8.  The itemized POS ONE Report reflected that the unit reserve system accountability as of the September 1, 2005 count included 1420 nonsalable 55-cent Billy Mitchell stamps (Resp. Exh. A, pp. 9, 10).

            9.  A header on the Report compared the total system accountability with the stamps counted in the audit.  This header identified the system accountability, i.e., the total value of stamps that should have been found in the unit reserve, to be $332,620.29.  It listed the audit total from the physical count to be $312,188.82.  (Resp. Exh. A, pp. 7-11).  The system recorded the difference, $20,431.47, as a shortage attributable to Petitioner as the stock custodian (Resp. Exh. A, p. 12; Tr. 43-44).  Petitioner signed the system-generated Report of the count (Tr. 11, 45; Resp. Exh. A, p. 7).

            10.  On the POS ONE Report, the sum of the values of the individual stamps shown on each line under the column headings “System Quantity” and “Physical Count” should equal, respectively, the “Accountability” and “Audit Total” reflected in the Report header (Tr. 38-39 (Boyd)), but in this case, without explanation, they did not.  When the values of all of the individual stamp types listed separately in the body of the Report are added, the total value reflected (the sum of the products of the number of each type of stamps or items multiplied by the value of each) equals $318,669.28, and the value of the stamps physically counted, calculated line-item-by-line-item, equals $313,093.82.  Using these figures, the audit shortage of the unit reserve would be $5,575.46.  (Pet. Exh. 1, 2).

            11.  On September 1, 2005, after the audit of the unit reserve was posted, i.e., entered into the POS ONE system, additional stamps in the amount of $2,048.07 were found in the unit reserve.  These were in a box with three undated and unsigned Forms 17 prepared for shipment of the stamps for destruction.  These stamps had not been counted in the audit.  (Resp. Exh. A, pp. 2, 19-21).

            12.  On November 9, 2005, the successor custodian and the postmaster counted the unit reserve.  The POS ONE Report of the count reflected a $2,206.81 overage.  (Pet. Exh. 9A-9E, 30; Tr. 19).

            13.  On March 3, 2006, the Mill Valley Postmaster issued Petitioner a letter of debt determination based on the shortages reported in the unit reserve and retail floor stock and based on the $281.66 difference in stock submitted for destruction for “All Wrapped Up” on August 30, 2005 (Findings 4, 5; Pet. Exh. 24; Resp. Exh. B).

            14.  Respondent gave credit against Petitioner’s alleged floor stock shortage for the $2,206.81 overage identified in the November 9, 2005 audit.  (Finding 12; Pet. Exh. 28, 29, 30; Tr. 19).

            15.  On September 21, 2009, Respondent issued Petitioner a Notice of Involuntary Administrative Salary Offsets demanding payment of $28,382.68.  Respondent calculated the debt by adding the August 31, 2005 floor stock shortage (Finding 6) and the September 1, 2005 unit reserve shortage (Findings 7, 9), plus $281.66 for overstated “All Wrapped Up” stock submitted for destruction on August 30, 2005 (Findings 4-5).  The Notice stated that the amount would be collected by involuntary deductions from Petitioner’s salary of $142.00 per pay period for approximately 200 pay periods.  (Pet. Exh. 33; Resp. Exh. B).

            16.  Petitioner filed a timely request for hearing  under the Debt Collection Act, which was docketed on October 5, 2009.

            17.  Respondent began making deductions from Petitioner’s salary of $142 per pay period on October 30, 2009 (Pet. Exh. 32).

            18.  In managing the unit reserve while custodian, on many occasions Petitioner did not follow established procedures when counting stock and when issuing stock from the unit reserve to the retail floor stock.  He sometimes issued stock to the floor without using the required Form 17 to reflect the transfer.  He counted stock without a required second counter and on occasion improperly adjusted count figures to reflect a count within the allowed tolerances.  (Resp. Exh. A; MSPB Decision).

DECISION

            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.  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.  See Phil Kennelty-Cohen, P.S. Docket No. 04-46, July 14, 2004.

Retail Floor Stock Shortage

Although Respondent showed a shortage in the retail floor stock, it did not show that Petitioner was accountable for the floor stock.  See Danny J. Smith, P.S. Docket No. DCA 09-90, September 3, 2009.  Respondent argues that Petitioner is liable for the floor stock shortage because he mismanaged transactions between the unit reserve and the floor stock (Finding 18) and because his misconduct may have masked the occurrence of shortages in the floor stock.  However, Respondent did not show that Petitioner’s improper conduct caused the shortage in the retail floor stock.  The Debt Collection Act is only a vehicle for recovering losses, not a means to punish poor job performance, and, under the circumstances of this case, Petitioner’s mismanagement is not a basis for holding him liable for the floor stock shortage.  See Dale May, P. S. Docket No. DCA 02-381, November 7, 2002; Alvetta S. Callis, P. S. Docket No. DCA 02-125, June 6, 2002; Albertha Johnson, P.S. Docket No. DCA 04-71, August 23, 2004; Karen Higuera-Richard, P.S. Docket No. DCA 00-104, June 20, 2000.  Petitioner did not have exclusive access to the retail floor stock, and Respondent has shown no reason in this case to depart from the above Debt Collection Act decisions and from its general practice of not holding any individual liable for losses to the retail floor stock (Finding 1).

Unit Reserve Shortage

            Although he signed the POS ONE Report of the count at the time it was conducted (Finding 9), Petitioner challenges the accuracy of the unit reserve audit as reported in the POS ONE system.[2]  A thorough review of the individual stamps listed in the POS ONE inventory and counted in the audit raises serious doubt about the accuracy of the amounts listed in the Report’s header as the “Accountability” and “Audit Total” (and the resulting “Difference”), which are the figures Respondent relies on to establish the debt.  Taking the individual stamps listed in the system inventory and those listed as counted, multiplying the value of each item times the number of each listed or counted, and adding the results does not equal the figures stated in the Report header for the “Accountability” and for the “Audit Total” of the stock counted (Finding 10).  One of Respondent’s witnesses, experienced in conducting audits, testified that these figures should match, but Petitioner has demonstrated that they did not (Finding 10), and Respondent has not explained the discrepancy.  Accordingly, Respondent has not proved the amount it claims as a loss due to the audit, and the record establishes that the shortage disclosed by the audit was at most $5,575.46 (Finding 10).[3]

              Petitioner testified without contradiction that the $7,985.69 in stock from the contract station, “All Wrapped Up,” was included in the POS ONE unit reserve accountability but that the stock was not counted in the audit because it had been sent to the Stamp Destruction Committee two days earlier (Findings 4, 5).  The POS ONE Report does not explain the treatment of any stock that was in transit at the time of the count, and Respondent has offered no evidence in this regard.  Accordingly, Respondent has not demonstrated that the audit accurately accounted for this stock and has not overcome Petitioner’s argument that he is entitled to credit for this previously-shipped stock.  This would completely eliminate any shortage for which Petitioner might be held liable.[4]

            Other evidence in the record further undercuts Respondent’s argument that it suffered a loss.  After the audit was posted to POS ONE, a box containing stock in the amount of $2,048.07 was discovered (Finding 11).  Although the record does not reflect conclusively that the value of those stamps was included in the unit reserve system accountability, Respondent concedes the stock was found in the unit reserve (Finding 11).  Respondent has not contradicted in any way Petitioner’s argument that that stock should have been counted in the audit.  Adding that stock to that counted and posted in the audit would also reduce any shortage.  See Beverly Wilson, P.S. Docket No. DCA 08-100, June 10, 2008.

            Subsequent to the audit, Respondent gave Petitioner credit against the floor stock shortage for the $2,206.81 overage discovered in the unit reserve after Petitioner turned it over to a successor custodian (Findings 12, 14).  Petitioner is entitled to that conceded credit against the unit reserve shortage, which would also reduce any loss.

            Finally, the POS ONE accountability on September 1 reflected nonsalable stock of 1420 55-cent Billy Mitchell stamps.  These stamps apparently were retained in the POS ONE accountability in error.  That they are exactly the same number of Billy Mitchell stamps that were shipped out of the inventory just two days before (Findings 3, 8) strongly suggests that through an unexplained error they were retained in the system accountability.  Correcting this error would further reduce the claimed loss.

Conclusion

            Respondent bases its claim against Petitioner on the “Accountability” and “Audit Total” entries in the POS ONE Inventory Audit Report header (Finding 9).  Petitioner has offered evidence that raises significant doubt about the accuracy of both of those figures.  Furthermore, giving Petitioner credit for the adjustments discussed above strongly suggests that there was no actual loss.  See Phil Kennelty-Cohen, P.S. Docket No. 04-46, July 14, 2004.  Accordingly, Respondent has failed to demonstrate it incurred a loss in the amount claimed or in any other specific amount supported by the record.

            The Petition is granted.  Respondent may not withhold from Petitioner’s salary on account of the alleged debts.  Respondent must promptly refund to Petitioner any amounts that it has collected.

Norman D. Menegat
Administrative Judge

[1] The hearing was conducted by the undersigned Administrative Judge via speaker telephone from Arlington, Virginia.  All other participants, including the court reporter, were present at the hearing site.

[2] The significance of his signature on the POS ONE Inventory Audit Report is not evident from the form itself. 

[3] Petitioner based his challenge to the accuracy of the POS ONE Report on his Exhibits 1 and 2, which are spreadsheets reflecting the item-by-item figures in the body of the Report that show that their sums do not equal the amounts listed in the Report’s header.  In confirming Petitioner’s calculation of this adjusted shortage, I have checked the items and quantities in Petitioner’s Exhibits 1 and 2 against those in the POS ONE Inventory Audit Report for the unit reserve.  The POS ONE Report does not include the denominations of the individual items, but a number of the denominations were self evident and others could be confirmed from other documents in the record.  However, for some of the items, I have relied on Petitioner’s representations as to the item denominations.  Respondent has not challenged the accuracy of Petitioner’s spreadsheets, which were provided to Respondent approximately five months before the hearing and which were admitted into the record without objection.

[4] Under these circumstances, the $281.66 overstatement of the “All Wrapped Up” stock sent to the Stamp Destruction Office (Findings 4, 5) does not create a shortage in an account for which Petitioner is accountable.