April 5, 2012

In the Matter of the Petition by
JEFFREY CLARK

P.S. Docket No. DCA 11-328
APPEARANCE FOR PETITIONER
Jeffrey Clark

APPEARANCE FOR RESPONDENT
Laura Espinoza

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Jeffrey Clark, filed a Debt Collection Act Petition challenging a Notice of Involuntary Administrative Salary Offsets issued by Respondent, United States Postal Service.  The Notice asserted Respondent’s intention to offset $776.16 from Petitioner’s salary to recover a stamp stock shortage in a unit reserve account for which Petitioner was the accountable custodian.

At the parties’ request, the case is being decided on the written record without a hearing.  I rule in Respondent’s favor.

FINDINGS OF FACT

1. Petitioner was postmaster of the Weed, California Post Office throughout the times at issue, and in that position served as the facility’s accountable unit reserve custodian (Resp. Ev.  1-2; M. Johnson Decl. ¶ 4).

2. On October 7, 2010, Petitioner transmitted stamps from the Weed unit reserve by registered mail to Respondent’s Phoenix Stamp Distribution Center (SDC) for destruction.  The shipment consisted of 924 flag stamps of an obsolete $.42 denomination, for a total of $388.08.  Mr. Clark’s transmission included the transfer manifest (a PS Form 17), identifying the contents by a generic item number for redeemed (or obsolete) stock, by the stamp denomination, by the number of returned stamps, and by total value.  (Pet. Ex.; Resp. Ex. 1). 

3. The Weed unit reserve balance was reduced by $388.08 on the same day to reflect the accountability transfer from the unit reserve to the SDC (Resp. Ex. 3 at p. 2).

4. The SDC rejected the transfer because Mr. Clark did not identify the type of $.42 stamps on the PS Form 17 manifest included with the stamps.  On October 14, 2010, the SDC sent the shipment back to him by registered mail.  (Pet. Ex.).

5. Mr. Clark received the return shipment from the SDC on October 18, 2010.  On that date, the unit reserve balance initially increased by $4,788.08 to reflect an accountability transfer from the SDC to the Weed unit reserve.  This increase consisted of the $388.08 in returned $.42 stamps, as well as two other SDC stamp shipments in the amounts of $3,520 and $880 that are not in dispute.  (Resp. Ex. 1; Resp. Ex. 4A; Resp. Ex. 4B).

6. Mr. Clark then changed the PS Form 17 manifest by adding the word “flag” to the description of the $.42 cent stamps.  He listed the same item code for redeemed stock he had used earlier, and shipped the package back to the SDC the same day by registered mail (Resp. Ex. 1; Pet. Ex.).   The Weed unit reserve balance was reduced by $388.08 on that day – October 18 – to reflect Petitioner’s return of the package to the SDC (Resp. Ex. 4A; Resp. Ex. 4B; see also Resp. Ex. 1).

7. On October 28, 2010, Petitioner and another postal employee counted the Weed unit reserve, and Petitioner certified the count as correct.  The count revealed a balanced unit reserve.  However, $388.08 of unidentified redeemed stock and 924 otherwise unidentified $.42 stamps (calculating to an additional $388.08) were listed as having been counted and present in the unit reserve.  (Pet. Ex.).

8. On July 19, 2011, Petitioner and a second counter performed another count of the stamps in the Weed unit reserve, and again Petitioner certified the count as correct.  A $776.16 shortage was discovered, consisting of $388.08 in unidentified redeemed stock and $388.08 consisting of 924 $.42 stamps, both of which had been identified as present in the October 28 count.  (Resp. Ex. 5; Pet. Ex.).  Respondent transmitted a Letter of Demand to Petitioner seeking recovery of the $776.16 shortage the same day (Pet. Ex.).

9. Thereafter, at least two of Respondent’s Finance officials thoroughly reviewed all available documents searching for accounting or system errors that might explain the discovered shortage.  No exonerating evidence or explanation for the shortage was found.  (R. Moreno Decl. ¶¶ 2-5; M. Bautista Decl.; M. Johnson Decl. ¶¶ 2-4; G. Nakatani Decl. ¶¶ 1-4; Pet. Ex.).

10. Respondent transmitted a Notice of Involuntary Administrative Salary Offsets (incorrectly identified as a Letter of Debt Determination)  to Petitioner on November 14, 2011, asserting its intention to collect a $776.16 unit reserve shortage from Petitioner by administrative salary offset (Resp. Ex. 6).  Petitioner timely filed a Petition for hearing under the Debt Collection Act.

11. The parties jointly requested that I decide this case on the written record rather than with an oral hearing.  Accordingly, I ordered the parties to submit evidence by February 23, 2012.  I specifically advised the parties that sworn witness statements should be comprehensive and detailed, and provide the same information that would have been provided at a hearing.  I explained that statements made in the Petition and answer would not be considered as proof of the facts asserted in those pleadings, and that witness statements under oath should be submitted.  I suggested that Petitioner’s sworn statement may include the assertions made in his Petition.  See January 25, 2012 Order.

12. Respondent submitted additional documents and four sworn declarations.  Petitioner filed nothing in his defense.  Although my Order allowed the parties to submit written arguments by March 26, 2012, neither party did so and the record closed on that date.

DECISION

To recover in this case, Respondent initially must show that Petitioner was the accountable custodian of the Weed unit reserve, and that a stock shortage existed after a properly conducted count of the unit reserve.  However, Respondent is not required to prove any specific misdeed or act of negligence by Petitioner.  If Respondent satisfies this initial burden, Petitioner can be held personally liable for the unit reserve shortage unless circumstances are shown that should alleviate or offset that debt.  Petitioner bears the burden to demonstrate such alleviating circumstances.  See Zeola H. Brady, P.S. Docket No. DCA 10-190 (February 11, 2011).

It is uncontested that Petitioner was accountable as unit reserve custodian during the time in which the shortage occurred (Finding 1).  It also is uncontested that the July 19, 2011 count at issue, which Petitioner himself performed and certified as accurate, was properly conducted, and demonstrated a shortage in the Weed unit reserve account (Finding 8).  This is sufficient to satisfy Respondent’s initial burden to hold Petitioner liable for the shortage absent circumstances that should alleviate or offset that debt.  See Robert G. Patterson, P.S. Docket No. DCA 09-117 (October 9, 2009). 

It therefore becomes incumbent upon Petitioner to demonstrate circumstances that should alleviate or offset the debt.  See Margaret Sage, P.S. Docket No. DCA 10-184 (December 21, 2010).  However, my ability to assess alleviating circumstances is significantly hampered because Mr. Clark, who bears the burden of presentation of evidence for such a defense, did not submit evidence or argument (Finding 12).  Although I have not considered the facts alleged in his Petition as evidence (Finding 11), I have considered the Petition insofar as it informs me of Mr. Clark’s theory of the case.  He argues that an unidentified system or accounting error must have occurred because the $776.16 shortage was exactly double the $388.08 stamp destruction shipment that was transferred back and forth between the Weed Post Office and the SDC in October 2010, but he offers no specifics.

I remain mindful that it would be unfair for Petitioner to have to pay for a shortage if I believe, based on the record before me, that it is more likely than not that an actual loss to the Postal Service has not occurred, and the shortage is attributable to some sort of system or accounting error.  See Sharon E. Roby-Wilson, P.S. Docket No. DCA 01-96 (June 28, 2001).  Therefore, even in the absence of evidence from Mr. Clark, I have examined the entire record thoroughly on my own.  Initially I must note that Respondent has presented unusually precise documentation showing each transfer of the $388.08 at issue increasing or reducing, as appropriate, the unit reserve balance (Findings 3, 5-6).  Respondent also performed a responsible and apparently thorough investigation in an unsuccessful effort to explain the shortage (Finding 9).

I find the amount of the $776.16 shortage - exactly double the $388.08 involved in the October 2010 SDC shipments - to constitute strong circumstantial evidence that an unidentified system or accounting error may have occurred rather than an actual loss to the Postal Service.  I believe that such circumstantial evidence alone however, without supporting evidence from Mr. Clark (or otherwise apparent in the record), is insufficient to outweigh Respondent’s otherwise exacting proof. 

Although some confusion may have resulted from the back-and-forth shipments with the SDC,  the unit reserve balances were adjusted (Findings 3, 5-6).  Furthermore, shortly after the SDC exchanges were completed, Petitioner counted the unit reserve and certified the count as correct.  That count revealed that the now-missing $776.16 of stamps - $388.08 of unidentified redeemed stock and 924 $.42 stamps – were physically present in the unit reserve.  (Finding 7).  While this improbable sequence of events, certified as accurate by Petitioner, remains unexplained, based on this record it appears that the accountability shortage occurred between the two unit reserve counts.

As Petitioner has failed to present any evidence or argument, and  additional support for a system or accounting error is not evident in the record to explain the shortage, I find that Petitioner has failed to demonstrate alleviating circumstances by a preponderance of the evidence.  Accordingly Petitioner’s accountability for the loss is not excused.

The Petition is denied.  Respondent may collect $776.16 by administrative salary offset from Petitioner’s salary.

Gary E. Shapiro
Administrative Judge

[1] “Resp. Ev.” refers to the documents included in Respondent’s evidentiary submission.  “Resp. Ex.” refers to the exhibits attached to Respondent’s answer.  Sworn declarations included in Respondent’s evidentiary submission are referred to by the name of the witness followed by “Decl.” and the referenced paragraph number of the declaration.  Documents submitted with Mr. Clark’s Petition were unnumbered and are referred to generically as “Pet. Ex.”. 

[2] While the SDC’s return of the first shipment and apparent acceptance of the second shipment after the word “flag” was added to the manifest may have caused some avoidable confusion, the propriety of the SDC’s procedures is not before me in this case.

[3] The inaccurately identified letter stated that an invoice was attached, but that was not the case.  However, the letter included the correct notice of Petitioner’s ability to contest the assessment under the Debt Collection Act, and identified the amount and basis for the assessment.  Respondent’s errors had no prejudicial effect on Petitioner as he timely filed the Petition here at issue.