November 1, 2019

In the Matter of the Debt Collection Act Petition

WILSON DELGADO v UNITED STATES POSTAL SERVICE

P.S. Docket Nos. DCA 19-154 DCA 19-155 and AO 19-156

APPEARANCE FOR PETITIONER
Humberto Cobo-Estrella Esq
Cobo-Estrella Law Office

APPEARANCE FOR RESPONDENT
Krista M. Irons Esq.
United States Postal Service Law Department

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

The Postal Service seeks to collect three debts based on shortages in three separate accounts for which Mr. Delgado was accountable.  The first debt (DCA 19-154) for $10,352.20 relates to cash missing from Mr. Delgado’s retail associate drawer.  The second debt (DCA 19-155) for $937.08 relates to a unit reserves’ missing stamp stock.  The third debt (AO 19-156) for $101 relates to cash missing from the unit cash reserve.  Because counts of the three accounts finding the three shortages were done on the same day, these cases were consolidated for hearing.  Having reviewed the evidence, I deny the first two Petitions relating to the $10,352.20 and $937.08 and rule in favor of the Postal Service. 
With regard to the third debt, during the hearing it became apparent that a notice for the debt was not issued until May 2, 2019.  This date is well after Mr. Delgado’s dismissal from the Postal Service.  Because Mr. Delgado was a former employee as of May 2019, the Petition’s docket number has been changed from DCA 19-156 to AO 19-156.  I am issuing a separate decision under 39 C.F.R. Part 966, Rules of Practice in Proceedings Relative to Administrative Offsets Initiated Against Former Employees of the Postal Service that addresses the $101 debt.  I deny the Petition.  The Postal Service may collect $101 by administrative offset unless Mr. Delgado successfully appeals this part of the decision to the Judicial Officer.

FINDINGS OF FACT

1. Mr. Delgado was a Lead Sales and Service Associate (LSSA) supervising the retail associates at the San Sebastian Post Office in Puerto Rico in 2017 and 2018 (Tr. 25, 63-65; Resp. Exh. 2). 
2. In this position, he served as the lead clerk working at the service window interacting with customers (Tr. 17-18, 19-20, 55-56, 65-66; Resp. Exh. 4 at 43). 
3. Mr. Delgado also served as the unit stock reserve custodian and was responsible for issuing stock to the other retail clerks (Tr. 65-66, 104-05). 
4. Further, Mr. Delgado served as the unit cash reserve custodian (Tr. 57, 65-66, 73, 99, 104-05).¹
5. As the LSSA, Mr. Delgado was responsible for gathering cash from the clerks and depositing it with a local bank at the end of each day (Tr. 33, 38, 45, 75).
6. On January 26, 2019, Mr. Delgado and the Retail Systems Software identified $19,980 which was to be remitted to the bank.  He only deposited $11,580, which is a difference of $8,400.  (Resp. Exh 10 at 61; Tr. 32-34, 76, 108).
7. On January 30, 2019, in reconciling the San Sebastian Post Office’s banking records, the Postal Service’s field financial specialist in San Juan, Puerto Rico, recognized that $8,400 was not remitted to the bank on January 26, 2018.  She then contacted the San Sebastian Post Office and spoke with the Officer in Charge (OIC) because the Postmaster was not available.  (Tr. 32-34, 66-67, 108).
8. Based on the call, the OIC contacted the Postmaster who returned to the San Sebastian Post Office.  In the afternoon of January 30, 2018, the OIC explained to Mr. Delgado the telephone call he received saying that there was an apparent shortage and advised him that a count of the money and stamps in Mr. Delgado’s three accounts (his drawer, the unit stock reserve, and the unit cash reserve) was necessary.  (Tr. 23-25, 51, 67-69, 103-05).
9. The OIC and Mr. Delgado counted Mr. Delgado’s personal drawer containing the money he used as a window clerk.  The count showed a cash shortage of $10,352.20.  Mr. Delgado certified the count as correct on his PS Form 1412, Daily Financial Report.  (Resp. Exh. 4 at 43; Tr. 67-70).
10. The OIC then wanted to count the other two accounts – the unit stock reserve and the unit cash reserve – for which Mr. Delgado was responsible (Resp. Exh. 5 at 45; Tr. 67-70, 99-101, 103-04).
11. Before the OIC began counting the other two accounts, Mr. Delgado requested a day or two to replace the missing $10,352.20.  The Postmaster denied the request.  (Tr. 69, 103-04).
12. Mr. Delgado then explained to the OIC that he felt sick and wanted to leave the San Sebastian Post Office.  Before he left, he provided the combination to the safe which held the unit reserve stamp stock and cash.  (Tr. 72, 103-04).
13. Also, before Mr. Delgado left the Post Office, the Postmaster placed Mr. Delgado in emergency employee placement status which means that Mr. Delgado was not allowed to return to the San Sebastian Post Office until the Office of Inspector General conducted an investigation.  (Tr. 72, 103-04, 114, 121-23).
14. The OIC and Postmaster then conducted a count of the unit reserve stamp stock and determined that it was missing stamps worth $937.08.  (Resp. Exh. 5 at 45; Tr. 39, 72-74).
15. The OIC and Postmaster also counted the unit cash reserve and determined that it was short $101 (Resp. Exh. 7 at 56; Tr. 56, 72-74).
16. The OIC and Postmaster reported the results of the three counts which showed shortages of $10,352.20, $937.08, and $101 to the Office of Inspector General (Tr. 67, 87, 91, 104, 106-07, 114).
17. Upon completing their counts, the OIC and Postmaster put the stamp stock and money back in the safe and locked it.  Because the counts were completed late in the afternoon of January 30, 2018, it was not possible to have the safe’s combination reset.  (Tr. 123-24).
18. On the morning of January 31, 2018, the OIC opened the safe and discovered a bag of money.  The OIC and Postmaster counted the money which totaled $8,400.  The OIC then deposited the $8,400 in the bank.  (Tr. 75-76, 105-07).
19. On July 3, 2018, the Postal Service issued Mr. Delgado a Letter of Debt Determination assessing two debts in the amounts of $10,352.20 and $937.08 totaling $11,289.08.  The Letter did not include the $101 debt.  (See DCA 18-237, Resp. Exhs. at 1).
20. On August 15, 2018, the Postal Service issued Mr. Delgado a Notice of Involuntary Administrative Salary Offset which provided notice that the Postal Service sought to collect $11,289.08 from Mr. Delgado.  (See DCA 18-237, Petition Attachment).
21. Mr. Delgado filed a timely Petition challenging the assessed debt which was docketed as DCA 18-237 (See DCA 18-237, Petition).
22. Subsequent to filing the Petition docketed as DCA 18-237, Mr. Delgado filed additional legal actions which included a federal district court case, an Equal Employment Opportunity Commission claim, and two union grievances.  One grievance challenged the withholding of Mr. Delgado’s salary and the other challenged his dismissal from the Postal Service.  Mr. Delgado then moved to stay his Debt Collection Act Petition pending the outcome in the other litigation.  Instead of staying the Petition, I dismissed the Petition without prejudice.  (See DCA 18-237, Order and Memorandum of Telephone Conference dated October 24, 2018; DCA 18-237, Dismissal dated October 31, 2018). 
23. The Postal Service and Mr. Delgado’s union settled the grievance relating to salary withholding on March 7, 2019.  An arbitrator issued a decision dated April 15, 2019, on Mr. Delgado’s second grievance relating to his dismissal from the Postal Service.  The arbitrator upheld the dismissal.  (Resp. Exh. 6 at 46-55; Pet. Exh. 1).
24. On May 2, 2019, the Postal Service issued Mr. Delgado three Letters of Demand for Employee Accountability Shortage, seeking to collect for three debts in the amounts of $10,352.20, $937.08, and $101 (Petition Attachments). 
25. On May 14, 2019, Mr. Delgado filed a new Petition challenging the three debts which were docketed as DCA 19-154, DCA 19-155, and DCA 19-156.²  For judicial economy, the three cases were consolidated for trial.

DECISION

The Postal Service assessed three debts in the amounts of $10,352.20, $937.08, and $101 based on shortages in three separate accounts.  Each debt is analyzed separately.

The $10,352.20 Debt For Missing Cash DCA 19-154

Mr. Delgado worked as an LSSA at the San Sebastian Post Office.  Mr. Delgado had a drawer with stamp stock and cash.  The first assessed debt of $10,352.20 is based on a cash shortage in Mr. Delgado’s drawer. 
The Postal Service’s regulations make Mr. Delgado accountable for his drawer.  Specifically, the Postal Service negotiated a contract with one of the unions representing Postal Service retail associates.  The agreement is made part of the Postal Service’s regulations and identified as Handbook EL-912, Agreement between the United States Postal Service and the American Postal Workers Union, AFL-CIO.³  Article 28, Section 1, provides:  “Employees who are assigned fixed credits or vending credits shall be strictly accountable for the amount of the credit.  If any shortage occurs, the employee shall be financially liable unless the employee exercises reasonable care in the performance of his duties.”  Id. (emphasis added).  Furthermore, Handbook PO-209, Retail Operations Handbook, § 11-15.3.2 provides:
All field unit employees are accountable for the following:
a. All accountable paper issued to them as a stamp credit.
b. All funds received from accountable paper sales until deposited as postal funds.
c. Accurate and timely recording of all financial transactions.
All employees assigned responsibility for accountable paper are liable for losses in their accountability.
(Emphasis added).
As we have held, the Postal Service must identify the legal basis for holding the employee liable.  McGee v. United States Postal Service, DCA 16-184, 2016 WL 10572245 (November 14, 2016).  In McGee, the Postal Service did not do so which resulted in a ruling in favor of the Petitioner.  In the present case, the Postal Service properly cites to Handbooks EL-912 and PO 209.  I believe that these regulations are applicable; therefore, I am guided by the regulations, not the outcome in McGee.
The next issue is whether the Postal Service met its burden of proof.  “In a case of an unexplained cash shortage, Respondent must prove that a loss occurred for which Petitioner is accountable, and the amount of that loss.”  Dominguez-Young v. United States Postal Service, DCA 15-186, 2016 WL 10572239 (March 3, 2016).  In other words, the Postal Service bears the initial burden of proving that Mr. Delgado was accountable for the money and that there was a monetary shortage representing an actual loss after a properly conducted count of the account.  See generally Roby v. United States Postal Service, DCA 16-234, 2017 WL 5516575 (February 1, 2017)(citing Ralph v. United States Postal Service, DCA 15-204, 2016 WL 10572240 (January 5, 2016)); Dominguez-Young, DCA 15-186.
The Postal Service showed that Mr. Delgado was accountable for the contents of his drawer.  Nothing in the record shows that he shared the drawer with another employee or someone else had access to the drawer.  The Postal Service also showed that Mr. Delgado completed the count on January 30, 2018, and that this count was witnessed by the OIC.  Mr. Delgado’s drawer was short $10,352.20.  Mr. Delgado certified the accuracy of the count on his PS Form 1412, Daily Financial Report.  The Postal Service has proved by a preponderance of the evidence that Mr. Delgado is accountable for the missing $10,352.20.  Williams v. Dep’t of Veterans Affairs, VA 14-40, 2018 WL 4091008 (July 17, 2018); see also Dominguez-Young, DCA 15-186 (a window clerk can be accountable for a cash shortage in her account).
Mr. Delgado provided no evidence (neither documents nor testimony) which counter the Postal Service’s evidence.  Furthermore, he provided no evidence that he acted with reasonable care.  When there is no evidence of reasonable care, a retail associate working at a Post Office may be held accountable for a shortage in his drawer.  See Ralph E. Brown, DCA Nos. 98-92, 98-93, and 98-94, 1998 WL 36014521 (May 6, 1998) (a Window Services Technician who provided no evidence of reasonable care was held liable for a cash shortage of $270.73).
With regard to this shortage, Mr. Delgado argues that the $8,400 discovered in the safe on January 31, 2018, should reduce the assessed debt because there was no actual loss to the Postal Service.  This argument is unpersuasive because there were two shortages in January 2018.  The $8,400 was applied to the first shortage of $8,400 which was missing on January 26, 2018.  Because the $8,400 was applied to the January 26, 2018 shortage, it does not reduce the assessed debt for the second shortage of $10,352.20.⁴ 
Because the Postal Service has met its initial burden of proof on this debt, and Mr. Delgado provides no evidence or argument sufficient to counter that of the Postal Service, the Postal Service has proved its right to collect this debt.

The $937.08 Debt for Missing Unit Reserve Stamp Stock DCA 19-155

The second debt is for $937.08 of missing unit reserve stamp stock.  Handbook F-101, Field Accounting Procedures, § 13-2.5, provides that a unit stock reserve custodian is accountable for the value of stock in the unit reserve.  To hold a unit stock reserve custodian accountable under the provisions of Handbook F-101, the Postal Service must show that Mr. Delgado was (1) the unit stock reserve custodian; (2) there was a shortage in the unit stock reserve; (3) the shortage represents an actual loss to the Postal Service; and (4) the shortage is confirmed by a properly conducted count of the unit stock reserve.  See, e.g., Roby, DCA 16-234. 
The Postal Service proved that Mr. Delgado was the unit stock reserve custodian at the San Sebastian Post Office.  It also proved that there was a shortage of stamp stock worth $937.08 and that the shortage represents an actual loss.  The Postal Service proved that the OIC and Postmaster completed a proper count.
Again, Mr. Delgado provides no evidence which counters the evidence submitted by the Postal Service.  In response, Mr. Delgado appears to argue that the count cannot be trusted because he was not present.  The facts do not support this argument.  Mr. Delgado voluntarily left the Post Office before the count was made, knowing that such a count was imminent after the detection of the $10,352.20 shortage.  He did not request that it be deferred until he returned.  He also provided the OIC with the safe’s combination knowing that a count would be completed after his departure by the OIC and Postmaster.  Under the circumstances of this case, I give little weight to Mr. Delgado’s argument and rule in favor of the Postal Service on this issue.

The $101 Debt For Money Missing From the Unit Cash Reserve AO 19-156

The third debt is for $101 of cash missing from the unit cash reserve.  Handbook PO-209, Retail Operations Handbook, § 12-7.1, provides that a Postal Retail Unit “may establish a unit cash reserve to supplement the needs of the unit. . . .  [T]he unit cash reserve [is assigned] to an individual who is directly accountable.”  Similarly, Handbook F-101, Field Accounting Procedures, § 13-7.1.2, provides:  “[u]se PS Form 3369, Consigned Credit Receipt, to assign the unit cash reserve to an employee who is directly accountable.”  A custodian of a unit cash reserve may be held financially accountable for demonstrated shortages in that account.  See Terrianne Stryhas, DCA 09-385, 2009 WL 10690563 (November 6, 2009).
As with stamp stock, the Postal Service must prove that Mr. Delgado was (1) the unit cash reserve custodian; (2) there was a shortage in the unit cash reserve; (3) the shortage represents an actual loss to the Postal Service; and (4) the shortage is confirmed by a properly conducted count of the unit cash reserve.  Handbook PO-209, Retail Operations Handbook, § 12-2 (“All employees with consigned credits are accountable for the value of their assigned stamp stock, cash, and money orders.”); Ross A. Pfaff, Jr., DCA 08-295, 2008 WL 11383914 (November 25, 2008); see also Roby, DCA 16-234. 
The Postal Service proved, and Mr. Delgado does not contest, that he was the unit cash reserve custodian, and that there was a $101 shortage which represents an actual loss to the Postal Service.  The Postal Service proved that the OIC and Postmaster properly conducted a count of the cash and determined that the unit cash reserve account was short $101.  Mr. Delgado does not specifically argue that he is not liable for the shortage or disagree with the amount.  Because the Postal Service has met its burden of proof, I rule in favor of the Postal Service on this issue. 
Finally, I address a procedural matter.  During a prehearing conference with the parties, I raised the issue of whether the three debts should be litigated as a Debt Collection Act case under 39 C.F.R. Part 961, or an Administrative Offset Initiated Against Former Employees of the Postal Service case under 39 C.F.R. Part 966.  See Order and Memorandum of Telephone Conference dated June 26, 2019.  During the discussion, both parties and I believed that all three debts had been raised and dismissed without prejudice in 2018 against a current employee (or at the very least, one whose employment status was still in question).  Neither party objected to this litigation continuing under Part 961.  At trial, it became apparent that the $101 debt had not been raised in 2018, but only raised in May 2019 – well after the end of Mr. Delgado’s employment with the Postal Service.  Because this issue may relate to jurisdiction to hear the dispute, I raise it at this late hour.  Substantively, the Rules of Practice for Part 961 and Part 966 are almost identical.  The primary difference between the two is that Part 966 allows the Petitioner to appeal a denied Petition to the Judicial Officer.  See 39 C.F.R. § 966.11.  Because the $101 debt was not raised in 2018, the case docket number is changed from DCA 19-156 to AO 19-156.  If I had granted the Petition, the issue of Part 961 or 966 would be academic.  However, I deny the Petition as to the $101 debt.  On this debt, and this debt alone of the three, Mr. Delgado may file an appeal to the Judicial Officer.  See 39 C.F.R. § 966.11.

Severe Financial Hardship

Mr. Delgado’s counsel argues that any offset schedule to repay the debts should be reduced because Mr. Delgado faces severe financial hardship after the loss of his Postal Service job.  The applicable rules provide that “the employee shall provide a statement and supporting documents indicating the employee's financial status.  This statement should address total income from all sources; assets; liabilities; number of dependents; and expenses for food, housing, clothing, transportation, medical care, and exceptional expenses, if any.”  39 C.F.R. § 961.4(b)(6).⁵  Mr. Delgado was provided an opportunity to provide such evidence, but did not provide any evidence of severe financial hardship or an alternate repayment plan.  Accordingly, I do not adopt an alternate offset schedule.  The offset schedule is remanded to the parties.

ORDER

The Petitions are denied. The Postal Service may collect $11,390.26 by involuntary administrative offset.

Peter F. Pontzer
Administrative Judge