P.S. Docket No. DCA 20-73


February 26, 2021

P.S. Docket No. DCA 20-73

In the Matter of the Debt Collection Act Petition

LAURA DAVIS v UNITED STATES POSTAL SERVICE

APPEARANCE FOR PETITIONER
Jeremiah Groff
Postmaster, Porterville Post Office

APPEARANCE FOR RESPONDENT
Joseph Khamis
Labor Relations Specialist

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

This matter involves a claim of debt that Respondent seeks for stamps missing from Petitioner’s unit reserve accountability. A hearing was held with both parties present by video-teleconferencing. The following facts are based upon the record.

FINDINGS OF FACT

  1. At all relevant times, Petitioner Laura Davis worked for the Postal Service (Resp. Exh. 7A).
  2. In November 2018, Ms. Davis assumed the position of unit reserve custodian at the Bakersfield Post Office in Bakersfield, California (Tr. 22, 27, 60-62, 71-72, 163-68; Resp. Exh. 7A). 1
  3. On January 17, 2019, Ms. Davis removed 200 coils of US Flag forever stamps (Item no. 749700) valued at $10,000 from the unit reserve with the intent to transfer the coils to the retail floor stock (Tr. 15-16, 20, 24, 31-32, 120; Resp. Exh. 7A).
  4. After removing the coils from the unit reserve, but before conducting the transfer, Ms. Davis left the 200 coils unattended (Tr. 15-16, 120-21, 132-33; Resp. Exh. 7A).
  5. At some point during the day on January 17, 2019, the 200 coils disappeared (Tr. 15, 19, 20-21, 64, 66, 119-20, 131-34; Resp. Exh. 7A at 6, 18-19, 22-23, 125, 148).
  6. A report run on the Retail Software System (RSS) on January 17, 2019, confirmed that the 200 coils were not transferred to the retail floor stock (Tr. 21, 55, 96; Resp. Exh. 7A at 125).
  7. On January 17, 2019, after the stamps were discovered missing, Ms. Davis created a Form 17 to transfer the 200 missing coils (at least for accounting purposes) to the retail floor stock (Tr. 20, 64, 93; Resp. Exh. 7A at 26-27).
  8. The lead retail clerk refused to sign the Form 17 because the 200 coils were not physically present for transfer to the retail floor stock at the time of the attempted transfer (Tr. 20, 64-65, 93; Resp. Exh. 7A at 22).
    Nonetheless, on Ms. Davis’s instruction, the lead retail clerk entered the unsigned Form 17 into the RSS, effectively transferring the 200 missing coils from the unit reserve to the retail floor stock for accountability purposes (Tr. 20, 64-65, 93, 108-110; Resp. Exh. 7A at 22).
  9. On January 28, 2019, an audit of the unit reserve at the Bakersfield facility found the unit reserve (apart from a counting error later corrected) in balance (Tr. 63, 125-127; Res. Exh. 7C).
  10. The record does not reflect the issuance of a Notice of Involuntary Administrative Salary Offsets. 2

DECISION

If this case were a Nancy Drew novel, it might be dubbed The Mystery of the Missing Coils. The parties agree that 200 coils of US Flag forever stamps went missing from the unit reserve on their way to the retail floor stock on January 17, 2019. Ms. Davis had previously stated to investigators that she left the coils on top of the retail floor safe. Later, she stated that she placed them into the retail floor safe. In either event, she removed the coils from the unit reserve. While it does appear that she did so with the intent to initiate a transfer of the stamps from the unit reserve to the retail floor stock, somewhere along the way, the coils disappeared.
This case requires me to consider two issues. First, was Ms. Davis the unit reserve custodian at the time of the “transfer” of the coils? Second, is the unit reserve custodian financially liable for the missing coils if they were “transferred” to the retail stock in the RSS system?
Was Ms. Davis the Unit Reserve Custodian?
Although the Postal Service was unable to produce a Form 3369 signed by Ms. Davis, the preponderance of the evidence establishes that Ms. Davis was the unit reserve custodian at all relevant times. In November 2018, Ms. Davis assumed the unit reserve account from Janet Galvin. (Tr. 60). There is ample evidence in the record to find that Ms. Davis was the unit reserve custodian, and her assertions to the contrary are unconvincing. Accordingly, I find that the Postal Service has met its burden that Ms. Davis was the unit reserve custodian at the time of the discovery of the missing coils. Blados v. United States Postal Service, DCA 14-328, 2015 WL 13647635 (June 9, 2015).
Is Ms. Davis Financially Responsible for the Missing Stamps?
The question of employee financial responsibility is tied to whether the loss of the coils is attributable to the unit reserve or the retail floor stock. Our precedent states that the Postal Service must establish a loss in an account for which the employee is accountable. A unit reserve audit that results in a shortage is one way in which the Postal Service can meet its burden of proof. However, in this case, the only audit conducted resulted in no shortage in the unit reserve. Therefore, the traditional path to establish employee financial responsibility is not available to the Postal Service in this case.
Rather, the Postal Service argues that Ms. Davis avoided a unit reserve shortage when she directed the lead retail clerk to accept the 200 coils into the retail floor stock. Once entered in the system, the 200 coils were no longer part of the unit reserve. As this act was done to avoid an accountable shortage in the unit reserve, the Postal Service argues that personal financial liability should attach.
Ms. Davis argues that the stamps were headed to the retail floor, and did, in fact, reach the retail floor when she placed them on the safe (or in the safe or on the floor). 3 She opines that the stamps were stolen due to lax security at the facility, and that she should not be held accountable for security breaches. She also argues that since the Form 17 transfer was entered into the RSS system, and because there was no shortage after an audit in the unit reserve, her accountability has not been established.
In prior cases, we have repeatedly found that the Debt Collection Act is not a vehicle to punish poor job performance. This has been our consistent precedent because holding an employee personally financially liable is an extraordinary remedy. While this is clearly a loss to the Postal Service, I must consider whether the Postal Service may hold a unit reserve custodian liable even when the unit reserve is “in balance.” While our precedent often declines to attach personal financial liability in situations where there is a lack of shortage after an audit, or for shortages in the retail floor stock, we have had exceptions to that general rule.
An actual loss is normally proved by a stamp stock count showing a shortage relative to a previously established balance, Patricia Todd, DCA 02-82, 2002 WL 35644070 (May 17, 2002), and proof of a properly conducted count is often sufficient to prove an actual loss, Christina Lamb, DCA 09-203, 2009 WL 10690559 (October 30, 2009). In limited circumstances, however, evidence or admissions other than those relating to a stamp stock count may be used to prove a loss of specific items from a unit reserve account. See Steward v. United States Postal Service, DCA 16-59, 2017 WL 5516581 (March 29, 2017), and cases cited therein.
Chirico v. United States Postal Service, DCA 18-600, 2020 WL 2198023 (April 28, 2020).
In this case, there is no dispute over the “loss.” The 200 coils are indeed missing. There is also no dispute that Ms. Davis physically removed the coils from the unit reserve. The Postal Service need not prove what happened to the coils after she took that action. The fact that they went missing is sufficient to prove the loss. Chirico, 2020 WL 2198023 at *4; see also Zane v. United States Postal Service, DCA 16-217 2017 WL 5516570, at *5 (January 26, 2017)(recognizing that the Postal Service need not prove “what happened to the missing stamps” to recover for their loss.) Where the actions of a unit reserve custodian are directly responsible for a loss to the Postal Service, the unit reserve custodian may be held financially liable for the loss. This is consistent with our precedent and especially applicable to the facts of this case, which establish that the missing stamp stock was never successfully transferred to the retail floor stock.
In Chirico, Judge Caramella held that a unit reserve custodian could be found personally financially liable when a box of stamps headed for destruction went missing when the employee left them in an open area unattended. Similarly, in Pride v. United States Postal Service, DCA 17-286, 2018 WL 2688565 (May 22, 2018), Judge Shapiro found that although the unit reserve custodian attempted a transfer of stamps between units, the transfer did not happen as expected, and the custodian remained liable for the missing stamps. In neither the Chirico case nor the Pride case did the Postal Service conduct an audit to establish the amount of the loss. Like this case, the loss amount in Chirico and Pride was not in dispute. Accordingly, I find that the Postal Service has met its burden that an actual loss occurred.
Ms. Davis argues that her accountability terminated when the Form 17 purporting to transfer 200 coils from the unit reserve to the retail floor stock was entered into the system. The key issue in these cases is whether the stamps that went missing had left the account (unit reserve) for which the employee is accountable. For this to occur, Ms. Davis would need to produce a Form 17, executed by the retail floor clerk, that confirms that the floor received the stamps. See Handbook F 101, Field Accounting Procedures, §13-2.8. 4 It is not enough that Ms. Davis coerced the lead clerk into entering the Form 17 into the RSS system. The fact that the lead clerk properly refused to sign the Form 17 because the 200 coils it purported to transfer were not present at the time of the transfer is sufficient to invalidate the transfer for the purposes of avoiding financial accountability. An employee cannot escape personal financial liability by manipulating the existing system to hide an actual shortage. Pride, 2018 WL 2688565 at *4. Here, Ms. Davis created the loss when she removed the stamps from the unit reserve and failed to ensure that they were properly (and securely) transferred to the retail floor stock. In other words, by leaving the stamps unattended, her actions were directly responsible for the loss.
Having met its burden of proof, the Postal Service is entitled to judgment in its favor.

ORDER

The Petition is DENIED. The Postal Service may collect the $10,000 debt by administrative salary offset. 5

James G. Gilbert
Chief Administrative Law Judge

1 Due to an error in submission, Respondent’s Exh. 7 was renumbered as Resp Exh. 7A (IG Report), Resp. Exh 7B (January 25, 2019 audit), Resp. Exh. 7C (January 28, 2019 unit reserve audit).

2 Both parties agreed to jurisdiction in this forum in advance of the hearing.

3 Ms. Davis did not testify in this proceeding, but her prior statements to others indicate that she believed they were left on top of the retail safe or on the floor. Later, Ms. Davis stated to others she put them in the retail safe. She also seems to argue that they were placed in retail inventory, though evidence shows this was not true. Regardless of her prior statements, the evidence is clear: the stamps went missing after she removed them from the unit reserve.

4 When the stamp stock is received, the RA must do the following:
a. Count the stock and verify with a witness the amount reported on PS Form 17.
b. Sign PS Form 17 as the person receiving the stock. (A witness is required.)
c. Enter the amount of stock received in AIC 841 on the individual’s PS Form 1412 following the process for the reporting technology used by the PRU to report PS Form 1412.
d. Keep a copy of the completed PS Form 17 until the next stamp credit count or resolution of differences, whichever is longer.
Note: RAs must notify the unit reserve stock custodian of any discrepancies with PS Form 17. Discrepancies must be resolved before the RA receives the stock.
Handbook F 101, Field Accounting Procedures, §13-2.8.

5 During the proceeding, there was some confusion about the actual number of stamps based on a retail floor audit on January 25, 2019. Some evidence suggested that three coils of these same type of stamps may have been sold at the retail window either during or after the purported transfer. While it is unclear why the record reflects this, I find it is more likely than not that the missing 200 coils are not related to the sale of flag stamps in the retail floor stock (Finding 6). I make that determination because they would have been flagged if they had made it to the retail, and this did not occur (Tr. 95-96, 121-24; 149-53; Resp. Exh. 7B at 71). This finding applies only to damages, and the calculation of the amount of the loss.