P.S. Docket No. DCA 10-190
February 11, 2011
In the Matter of the Petition by
ZEOLA H. BRADY
at
Chesapeake, VA
P.S. Docket No. DCA 10-190
APPEARANCE FOR PETITIONER:
Albert E. Lum
Scialla Associates, Inc.
APPEARANCE FOR RESPONDENT:
Mera E. Cole
Manager, Labor Relations
United States Postal Service
FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982
Petitioner, Zeola Brady, timely filed a Petition for hearing under the Debt Collection Act after having received a Notice of Involuntary Administrative Salary Offsets from Respondent, United States Postal Service. The Notice asserted Respondent’s intention to offset $32,195.37 from Petitioner’s salary to recover a stamp stock shortage in a unit reserve account for which Petitioner was accountable custodian.
I presided at a hearing in Chesapeake, Virginia, in which eleven witnesses testified, including Petitioner. Following the hearing, I allowed the parties a period of time in which to file written arguments. Petitioner did so, but Respondent did not. As explained below, I rule in favor of Respondent, but not in the full amount it seeks.
FINDINGS OF FACT
1. From 2006 until October of 2009, Petitioner served as supervisor of customer service at the Chesapeake, Virginia Main Post Office (Chesapeake MPO). She also served as the facility’s accountable unit reserve custodian until June 11, 2009. Petitioner’s immediate supervisor, Mr. Maguire, was the manager of customer service of the facility, with overall responsibility for that post office. Mr. Maguire’s immediate manager was Mr. Carlton, the Chesapeake Postmaster, who was domiciled in the same building. (Hearing Transcript (Tr.) 11-12, 29-30, 105, 190).
2. During the time in question, Ms. Smith was the manager of Deep Creek Station, another post office in Chesapeake, Virginia. In that position, Ms. Smith occupied the same level of management as Mr. Maguire and, like Mr. Maguire, she reported directly to Postmaster Carlton (Tr. 28, 31, 174). Ms. Smith also performed special assignments for the postmaster from time to time (Tr. 155-57).
3. In January, 2010, following Mr. Maguire’s promotion and transfer, Ms. Smith replaced Mr. Maguire as manager of the Chesapeake MPO (Tr. 28, 111, 154, 175).
4. During the entire time that Petitioner served as unit reserve custodian, she did not report to Ms. Smith, who was not in her line of supervision (Tr. 28-31, 174).
5. The Chesapeake MPO’s unit reserve was kept in a locked cage which only was accessible with the use of a key. Only Petitioner retained the key while she was unit reserve custodian. (Tr. 55-56, 125-26, 165, 173, 194, 196, 247).
6. On March 26, 2009, Petitioner went on sick leave, not returning until July 13, 2009 (Tr. 158, 191).
7. After she went home from work on March 26, 2009, Petitioner called Ms. Smith by telephone to tell her about the medical problem she had developed (Tr. 158, 210-11, 243). Ms. Smith drove Petitioner to a medical appointment shortly thereafter. At that time, Petitioner asked Ms. Smith to transfer stock as needed from the Chesapeake MPO’s unit reserve to its retail unit while she was absent from work (Tr. 159-60, 163, 171-72, 211, 243-45; but cf., Tr. 194-97, 210).[1]
8. The lead retail clerk, known as the lead sales and service associate (SSA), called Ms. Smith by telephone to request stamps whenever the retail function of the Chesapeake MPO needed stamp stock to be issued from the unit reserve while Petitioner was on sick leave (Tr. 138, 169, 245). She did so because on or prior to March 26, 2009, Petitioner had asked the lead SSA to call Ms. Smith for this purpose when Petitioner was out (Tr. 141, 149, 152-53, 169, 245, 250; but see Tr. 197, 217).
9. Ms. Smith agreed to Petitioner’s request to issue stamps from the unit reserve during Petitioner’s absence despite knowing that only the custodian should have access to the unit reserve. Neither Petitioner nor Ms. Smith informed Mr. Maguire or Mr. Carlton that Ms. Smith was accessing the Chesapeake MPO unit reserve (Tr. 160-62). Neither Mr. Maguire nor Mr. Carlton was aware or suspected at the time that Ms. Smith was accessing the unit reserve during Petitioner’s absence (Tr. 34, 37, 148, 161-62, 221, 240, 251).[2] When Ms. Smith first accessed the unit reserve, she found it in an unorganized condition (Tr.167; but see Tr. 206-08).
10. Whenever she received a call for additional stamp stock from the lead SSA, Ms. Smith called Petitioner, drove to her house, and Petitioner gave the key to the lock of the unit reserve cage to her. Ms. Smith then drove to the Chesapeake MPO, accessed the unit reserve, and transferred stock to the lead SSA. She then returned the key to Petitioner at her house. This occurred on a number of occasions between March 26, 2009, and June 10, 2009. (Petitioner’s Exhibit (Pet. Ex.) 6 et seq.; Tr. 141, 144-48, 165, 173, 242).
11. Ms. Smith did not direct or instruct Petitioner, as a manager, to provide the key (Tr. 173, 216, 247; but see Tr. 194-6). Providing her key to Ms. Smith was Petitioner’s idea (Tr. 247, 251). Petitioner was aware that she should not have provided her key to anyone (Tr. 196).
12. Petitioner previously had divulged her password and logon identification for Respondent’s inventory accounting system, known as POS, to Ms. Smith for the purpose of inputting unit reserve transactions into the system. This initially occurred in 2008, on another occasion when Petitioner was absent from work. (Tr. 163-65, 193, 215). Ms. Smith utilized Petitioner’s confidential information to input unit reserve transactions into the POS system when she accessed the unit reserve on Petitioner’s behalf (Pet. Ex. 6; Tr. 144-45, 163-68).
13. At the time that Ms. Smith accessed the unit reserve during Petitioner’s absence, the duration of Petitioner’s unavailability was unknown, and there was considerable confusion among her management at the Chesapeake MPO as to the severity of her condition. For a considerable period of time, Mr. Carlton and Mr. Maguire did not undertake efforts to discover her condition or determine how long Petitioner would be off work. Similarly, Petitioner made no effort to contact her managers. (Tr. 13, 42, 196, 233, 236).
14. On June 10, 2009, the Chesapeake MPO’s unit reserve account was audited by three counters – Mr. Maguire, a financial specialist from Respondent’s district finance office, and Petitioner’s previously designated witness for that purpose (Tr. 16, 18, 49, 52, 193, 209-10). Access to the unit reserve for the count was obtained with Petitioner’s key, which Petitioner had given to her designated representative for the audit (Tr. 36-37).
15. The audit revealed a $36,260.78 shortage. The audit counted $822,572.08 of stock compared with a system count of $858,832.86. All three counters agreed with the count, and signed the appropriate paperwork, including PS Form 3294-P. (Pet. Exs. 1, 11-12; Tr. 19, 23, 52-53, 58, 127). Previous audits of the Chesapeake MPO unit reserve while Petitioner was custodian did not reveal shortages (Respondent’s Exhibit (Resp. Ex.) 11; Tr. 32-33).
16. Because the unit reserve was disorganized, the audit lasted approximately 12 hours, and was meticulously conducted (Tr. 16-17, 34, 53-54, 130, 134-35).
17. The June 10, 2009 audit was conducted because a district financial report generated about the Chesapeake MPO’s unit reserve revealed excess accountability -- too much inventory and too high an inventory of obsolete stamps that should have been transmitted to Respondent’s stamp distribution office (SDO) for destruction (Tr. 18, 36, 50).
18. The audit revealed, as expected, a large quantity of stamps that should have been transmitted by Petitioner to Respondent’s SDO for destruction. Those stamps were in varying stages of preparation for transmission to the SDO. All such stamps found during the audit were counted. (Pet. Ex. 1; Tr. 56-57, 72-75, 79, 206-07).
19. The morning after the unit reserve audit, on June 11, 2009, before the Chesapeake MPO opened for business, the same auditors counted the retail floor stock. The retail unit audit revealed a $3,253.21 overage, which was applied to offset a portion of the unit reserve shortage because of a direct correlation of the overage stock with missing unit reserve stock (Pet. Exs. 2, 11; Tr. 20-21, 59-60).
20. On June 11, 2009, following these audits, responsibility for the unit reserve account transferred from Petitioner to Mr. Maguire (Resp. Ex. 10; Tr. 21). Shortly before the audit, the postmaster had directed Mr. Maguire to take over as accountable custodian once he found out from Ms. Smith, during a casual conversation, that Petitioner’s continuing absence was due to a serious medical condition (Tr. 235).
21. On July 1, 2009, while Petitioner still was out on sick leave, Respondent issued her a Letter of Demand seeking recovery of the net shortage of $32,195.37 (Resp. Ex. 9).
22. Following receipt of the Letter of Demand, Petitioner and her representative at the time sought from Respondent certain documents related to the unit reserve account. Petitioner was provided access to such documents and reviewed most of them, but she failed to review all such documents. (Pet. Exs. 3-4; Resp. Ex. 8; Tr. 24-26, 39, 96-98, 184, 204; but see Tr. 179-183).
23. During the course of this proceeding, Petitioner’s present representative also requested relevant documents from Respondent, and requested that I compel the production of such documents, which I ordered. Responsive documents were provided by Respondent to Petitioner in advance of the hearing. Accordingly, Petitioner’s document production request filed during this proceeding was satisfied, as Petitioner acknowledged. (Compare November 2, 2010 Order with Tr. 10; see Pet. Ex. 5).
24. On October 1, 2009, the Chesapeake MPO’s unit reserve was audited again, incident to a transfer of accountability from Mr. Maguire to an acting manager. That audit revealed a $5,101.42 overage. The overage stock was found in a container in the safe of the unit reserve. The unit reserve account was organized at the time of this count and the overall accountability had been reduced below $300,000 (from in excess of $800,000 at the time of the June 10, 2009 audit) due to Mr. Maguire’s transmission of stock in the interim to the SDO for destruction. (Pet. Ex. 7; Tr. 38, 45-46, 92-94, 101, 107, 110, 113-14).
25. The $5,101.42 unit reserve overage discovered on October 1, 2009 was not offset against the debt Respondent asserted against Petitioner, as the postmaster declined to exercise his discretion to implement the offset. However, Postmaster Carlton believed and continues to believe that such an offset is appropriate and should be made. He intended to do so following the hearing (Tr. 101, 103, 107-110).[3]
26. On July 16, 2010, Respondent issued Petitioner a Notice of Involuntary Administrative Salary Offsets for $32,195.37 at a rate of 15% of Petitioner’s disposable salary per pay period until the debt would be re-paid, which it calculated at $275.21 per pay period. At that rate, the debt would be re-paid over 117 pay periods, a period of approximately 4 ½ years (Resp. Ex. 2). Petitioner timely filed a Petition for hearing under the Debt Collection Act.
DECISION
To recover, Respondent bears an initial burden to establish that an actual loss exists in the unit reserve, and that Petitioner is accountable as custodian. Respondent is not required to prove any specific misdeed, or act of negligence by Petitioner. Initially, it is sufficient that Respondent prove that a stock shortage exists after a properly conducted inventory or audit of Petitioner’s unit reserve account. See Mark W. Beach, P.S. Docket No. DCA 10-134 (October 1, 2010). If Respondent satisfies that initial burden, Petitioner can be held personally liable for the shortage in the unit reserve that occurred while she was accountable custodian unless circumstances are shown that should alleviate or offset that debt. Petitioner bears the burden to demonstrate such exonerating circumstances. See Robert G. Patterson, P.S. Docket No. DCA 09-117 (October 9, 2009).
Respondent has satisfied its intial burden (Findings 1, 14-16), and this case turns on the circumstances that Petitioner asserts should alleviate or offset the resulting debt. First, Petitioner questions whether an actual loss existed notwithstanding the audit results, arguing that any shortage resulted from stamps that may have been sent for destruction but not recorded as such sufficient to reduce the unit reserve accountability. In this regard, Petitioner complains about lack of access to potentially exculpatory documents. Second, Petitioner argues that postal management directed, approved, or condoned improper shared access to the unit reserve, fatally compromising the integrity of the account and excusing her accountability. As described below, I reject both defenses.
Did an actual loss occur?
Petitioner’s first argument – that the shortage resulted from stamps that may have been sent for destruction but not recorded properly – is unsupported by any specific or persuasive evidence. While it is apparent that the unit reserve contained considerable obsolete stock,[4] that state of the unit reserve at the time of the audit was Petitioner’s responsibility, and she acknowledges having been behind in her obligation to transmit obsolete stock to the SDO (Findings 9, 17-18). Furthermore, while the unit reserve was unorganized at the time of the audit (Finding 16), I have found that to have been the case at the time Ms. Smith first accessed it (Finding 9). Accordingly, that too was Petitioner’s fault.
As support for her theory that an actual loss did not occur due to obsolete stock or otherwise, Petitioner offers only vague theories which lack support from other testimony or documentation in the record (see Tr. 27, 180, 205). Petitioner does not identify POS system entry errors or other accounting errors that could explain the shortage. Moreover, the count was performed carefully and in accordance with proper procedures (Findings 14-16). In such circumstances, where Petitioner has not identified any omission, error, or other discrepancy, she has failed to produce evidence sufficient to alter her accountability for the shortage. Cinder Isreal, P.S. Docket No. DCA 10-149 (October 14, 2010).
Petitioner’s related argument, that obsolete stamps have no value to the Postal Service which therefore has not suffered an actual loss, fares no better. Although potentially subject to destruction, obsolete stamps or redeemed stock bearing postage at a former rate continue to possess the value of their denominations and a custodian continues to be accountable for them. See, e.g., Yvette C. Square, P.S. Docket No. DCA 99-352 (February 23, 2000). We commonly have upheld accountability for such missing stamps, where appropriate. See, e.g., Cinder Isreal; Carolyn Williams, P.S. Docket No.AO03-338 (I.D. May 13, 2004).
Although not argued by Petitioner, one factual matter apparent in the record requires additional analysis on this issue. Postmaster Carlton testified, and in the absence of any contrary evidence in the record I have found as a fact, that (presumably uncounted) stamps were found in a container in the unit reserve subsequent to the June 10, 2009 audit (Finding 24). I find it appropriate to offset Petitioner’s debt by the amount of the overage discovered in the October 1, 2009 audit. I do so based on the postmaster’s concession on behalf of Respondent that it was appropriate to reduce the debt in this manner and because no other explanation was offered for the presence of the stamps accounting for the overage.
The most plausible reconciliation of the evidence is that the auditors mistakenly failed to count the stamps in this container during the twelve-hour June 10, 2009 audit. That error was corrected during the October 1, 2009 audit, and I have given Petitioner a $5,101.42 offset for those otherwise uncounted stamps. I find the audit to be reliable notwithstanding this issue.
Petitioner also argues that she was not provided with records in Respondent’s possession which may have enabled her to prove her position that an otherwise unspecified accounting error caused the shortage. She urges that the resulting prejudice to her ability to defend against the debt assessment should excuse her accountability.
Respondent is responsible to maintain records pertaining to the debt it seeks to collect, and must provide them to Petitioner upon request. See Deborah Chong, P.S. Docket No. DCA 99-384 (November 17, 1999). Although the parties spent a year attempting to resolve this matter before Respondent issued the Notice of Involuntary Administrative Salary Offsets which led to this proceeding, document disputes between them persisted. In the end, I have resolved the factual disputes concerning those documents by concluding that Petitioner was provided access to the documents and reviewed most of them, but that she failed to have made the effort to review all such documents (Finding 22).
More importantly, Petitioner availed herself of the opportunity to obtain potentially exonerating documents during this proceeding. She filed a request for desired documents with Respondent and provided me with a copy, later seeking that I compel their production, which I ordered. Responsive documents then were provided by Respondent to Petitioner in advance of the hearing. Accordingly, Petitioner’s document production request filed during this proceeding and my resulting Order were satisfied by Respondent, as Petitioner acknowledged. (Finding 23).
Furthermore, Petitioner has offered no evidence that the records that she believes were not provided to her likely would have demonstrated accounting errors sufficient to relieve her from accountability for the shortage, and she has not offered testimony or any other evidence to explain the shortage that missing records may have corroborated. Accordingly, no relief is available to her on this basis. Margaret Sage, P.S. Docket No. DCA 10-184 (December 21, 2010).
Should accountability be excused
due to Ms. Smith’s access of the unit reserve?
Petitioner argues that Ms. Smith’s shared access of the unit reserve makes it impossible to determine that the loss was caused by or occurred during Petitioner’s exclusive control of the unit reserve, thereby demonstrating circumstances that should alleviate the debt. Petitioner’s argument continues that since Ms. Smith was a postal manager, Respondent should be charged with having directed, approved, or condoned the improper sharing of access, excusing accountability under precedent of this office.
Where shared access to an account exists, it is difficult to attribute a shortage to the assigned employee. Normally it is the responsibility of the assigned employee to ensure that no one else has access to her account. See Barry A. Will, P.S. Docket No. DCA 05-83 (August 16, 2005). For that reason, an accountable custodian generally will not be permitted to avoid liability for a shortage by allowing others to gain access to the account and then arguing that she may not be held responsible because she did not have exclusive access. See Terrianne Stryhas, P.S. Docket No. DCA 09-285 (November 6, 2009); Alexander Binetski, P.S. Docket No. DCA 02-473 (February 12, 2003). Accordingly, where the custodian herself voluntarily shares access, her liability is not excused. See Diva Valdez, P.S. Docket No. DCA 09-530 (May 28, 2010); Raymond Keith Davis, P.S. Docket No. DCA 09-107 (July 9, 2009).
Under these principles, in Diva Valdez, a petitioner’s defense that the integrity of the unit reserve accountability was compromised was rejected, where the accountable custodian was away from work for maternity leave, did not transfer control of the unit reserve to protect herself from potential liability, and voluntarily shared access to the unit reserve during her absence.
However, as Petitioner argues, there is a significant exception to these principles -- where an accountable custodian’s manager directs, approves, or condones such shared access. See Michael B. Schoenecker, P.S. Docket No. DCA 04-154 (January 21, 2005); Eric Ortiz, P.S. Docket No. DCA 01-336 (December 31, 2001). Generally, where a Petitioner’s own supervisor is the person that shares such access, liability of the custodian will be excused. See Terrianne Stryhas; Barry A. Will; Michael B. Schoenecker.
Where an accountable employee’s manager is involved in shared account access, that employee would be faced with an untenable dilemma – share access with her supervisor or in accordance with the supervisor’s direction or policy, thereby subjecting herself to potential liability for a loss outside her control – or face the consequences of ignoring the directions or policies of her supervisor or failing to cooperate with her supervisor. In certain circumstances, it well may be unfair to place an employee in such an unenviable position. See, e.g., Linda A. Lilly, P.S. Docket No. DCA 96-195 (October 31, 1996). We therefore have excused accountability in appropriate circumstances where shared access to the account was directed, approved, or condoned by the custodian’s supervisor. See James Santa Ana, P.S. Docket No. DCA 02-458 (February 11, 2003).
In this case however, Ms. Smith was not Petitioner’s supervisor at the time in question (Findings 2, 4). Although Ms. Smith was a postal manager, she was not in Petitioner’s management chain (Finding 4). Moreover, Ms. Smith did not direct or instruct Petitioner to share access, which was Petitioner’s idea on which she voluntarily acted (Findings 7-12). Moreover, it is clear to me that Petitioner and Ms. Smith at the time had a friendly outside-the-workplace relationship as opposed to a supervisor-employee relationship.[5] Accordingly, Petitioner would have faced no adverse consequences had she not shared access to the unit reserve. Ms. Smith’s subsequent transfer to manager of the Chesapeake MPO occurred after Petitioner no longer was accountable custodian (Finding 3), and is of no relevance. I find that Petitioner’s accountability is not excused by her voluntarily having shared access to the unit reserve with Ms. Smith.[6]
Petitioner further argues though, that her direct supervisor knew that Ms. Smith was accessing the unit reserve in her absence and failed to stop the practice. She also suggests that Mr. Maguire himself may have participated in such access. Finally, she contends that if Mr. Maguire did not know that Ms. Smith was accessing the unit reserve, he should have known, which she believes also should excuse her accountability.
I have found that Mr. Maguire did not participate in and was not aware of the situation (Finding 9). In reaching this conclusion, I have rejected the testimony of Ms. Beach, a clerk who testified that she witnessed Mr. Maguire in the unit reserve with Ms. Smith (Tr. 119-122). I do so because Ms. Beach appeared to be confused about the timing of her observations (see Tr. 122), her testimony was uncorroborated by other testimony, and was denied by Mr. Maguire.
While I agree that Mr. Maguire should have been suspicious of how the unit reserve was issuing stock to the retail unit during Petitioner’s absence and that he should have taken some action to inquire, I do not find persuasive evidence in the record to suggest that he should have known that Ms. Smith or anyone else was accessing the unit reserve in this case (see Finding 9).[7]
In the final analysis, Petitioner could have protected herself against the accountability here imposed against her. A simple explanatory telephone call in a timely manner to her management (Mr. Maguire or Mr. Carlton) seeking to be excused as unit reserve custodian because of her absence of an uncertain duration may have sufficed. Petitioner never made that call (Findings 9, 13; see especially Tr. 192, 212), and she relied instead upon unwarranted vague assumptions (see Tr. 196, 211-12). Petitioner managed frequent calls and contacts with Ms. Smith and certainly could have and should have contacted her management. It was unreasonable in these circumstances for her not to have done so. Similarly, it was unreasonable for Petitioner instead to have released control of her key and confidential POS information.
CONCLUSION
The Petition is granted in the amount of $5,101.42, and denied in the remaining amount of $27,093.95. Respondent may offset the latter amount from Petitioner’s salary.
Gary E. Shapiro
Administrative Judge
[1] Despite their disparate positions during the hearing, it is apparent to me that at the time that Petitioner was off work, she and Ms. Smith had a friendly outside-the-workplace relationship rather than merely a work relationship. This is apparent from the uncontested facts that Petitioner called Ms. Smith rather than her own managers, on the very day on which her medical problem developed, and from Ms. Smith having driven Petitioner to medical appointments. It is also corroborated by Petitioner having provided her POS password and logon identification to Ms. Smith well before these incidents (see Finding 12, infra). This relationship is consistent with Petitioner having asked Ms. Smith to cover the unit reserve on her behalf, as I have found (Finding 7), rather than with a conclusion urged by Petitioner, that Ms. Smith directed her to provide the unit reserve key, as an instruction from a manager.
[2] Both Mr. Maguire and Mr. Carlton were oblivious to how the unit reserve was issuing stamps to the retail unit in this period. Mr. Maguire testified that he assumed that Petitioner was coming to the post office at night to issue stock (see Tr. 14, 18-19, 40), testimony which I found to be inherently incredible in this situation. Mr. Carlton did not think about the issue at all, deferring to the responsibility of his subordinate, Mr. Maguire, and testifying that he “wasn’t interested” in the situation (Tr. 239-40). Because they did not receive complaints from the retail unit which appeared to be running smoothly during this time, I conclude that neither manager thought about the problem at all (see Tr. 13-15, 148, 150-51, 233, 236-37), just as they appeared unconcerned about Petitioner’s incapacity or the duration of her absence (see Tr. 19, 40, 42, 44, 233, 236). I conclude that they only became concerned when they discovered the severity of Petitioner’s physical problems, shortly before the audit in question. Responsibility for the unit reserve then promptly transferred (Tr. 235).
[3] Postmaster Carlton’s testimony as to why he believed it was not appropriate to offset this $5,101.42 overage before the hearing, but was appropriate to do so after the hearing, was confusing and unclear to me (see Tr. 107-10).
[4] Compare accountability exceeding $800,000 at time of audit (Finding 15) with accountability below $300,000 in October, 2009 (Finding 24), following Mr. Maguire’s transfer of obsolete stock in the unit reserve.
[6] Ms. Smith knew better than to have accessed Petitioner’s unit reserve (see, e.g., Tr. 160). However, her accountability for the loss is not before me. My focus must remain on Petitioner’s conduct rather than on what Ms. Smith did, should have done, or should have reported.
[7] Therefore, whether satisfaction of a “should-have-known” standard by an accountable employee’s direct supervisor satisfies the liability exception is not before me, and I offer no opinion on the issue.