Docket No. DCA 23-528

FINAL DECISION

The Postal Service seeks to collect $1,372.20 from Mr. Faron based on a shortage found during a unit reserve count on October 18, 2021. Mr. Faron had been the unit reserve custodian, but, by the count date, he had been on extended leave for four months.
During his leave, a subordinate supervisor accessed the unit reserve using a form that Mr. Faron had to complete for emergencies. Also, items from the unit reserve were moved to a less secure area and allowed to remain there despite an acting manager being aware of it.
Because the Postal Service should have transferred accountability to a successor custodian by at least the count date, I find that Mr. Faron was no longer accountable as the unit reserve custodian. Thus, I find that he is not liable for the debt.

FINDINGS OF FACT

1. Mr. Faron was a manager and the unit reserve custodian at Newburg Station in Cleveland, Ohio in 2021 (Pet. Exh. 1; Tr. 53, 88-89).¹
2. The unit reserve consists of all stamps and stamped paper and philatelic products at the unit that have not been consigned to other accountabilities within the unit. (Handbook F-101, Field Accounting Procedures, § 11-2 (Oct. 2020).
3. Mr. Faron kept the unit reserve in a locked cabinet within a larger locked vault. The cabinet was locked with a padlock and key. The vault had a combination lock. During the day, clerks and management had access to the vault. (Tr. 52-53, 105, 112).
4. Mr. Faron recorded transfers from the unit reserve to the retail floor stock using the Retail Systems Software (RSS) system. He accessed the system with a login ID and password. (Tr. 18-19).
5. Mr. Faron was not allowed to share the unit reserve key or his password, and he did not recall sharing his password, other than on a PS Form 3977, Duplicate Key, Combination, and Password Envelope. Like other employees with similar responsibilities, he was required to complete this form for "each duplicate key and each login ID and password" and identify on the form the names of two designated witnesses. Mr. Faron, however, listed only one designated witness: Deborah Martinsek, the only titled supervisor in the unit. (Handbook F-101 § 3-8, Exh. 3-8.2.2; Tr. 19, 90-91, 124).²
6. The purpose of the form was to allow for emergency access to the unit reserve. The form could be used if Mr. Faron went on extended leave and accountability for the unit reserve needed to be transferred. In that case, management would open the form in front of his designated witness and indicate the date and reason for access. Management would then conduct a count like the one required annually (explained below) but with a transfer. Management would then complete a new PS Form 3977. (Handbook F-101 § 3-8; Tr. 27-30, 33-34, 62, 92-93).
7. The form was not to be used for stamp transfers (Tr. 33-35, 92-93; see generally Handbook F-101 § 3-8).
8. Mr. Faron kept the PS Form 3977 for his unit reserve accountability sealed and in a safe near the retail window. The safe had a combination lock and inside were compartments that could be locked with keys. Mr. Faron kept his form locked in one of those compartments and the compartment key in a desk drawer in his unlocked office. (Tr. 91, 113-14).
9. On June 17, 2021, Mr. Faron went on sick leave under the Family and Medical Leave Act (FMLA). He did not return to work until November 1, 2021. He did not transfer accountability for the unit reserve before leaving. (Pet. Exh. 1; Tr. 88-89, 93-98, 111).
10. During Mr. Faron's absence, Ms. Martinsek transferred stamp stock from the unit reserve to the retail floor stock. To transfer, she used Mr. Faron's PS Form 3977. (Tr. 38-39, 59-63, 70-71).
11. From the end of June until the beginning of August, Deborah Jackson served in place of Mr. Faron as the acting manager. She did not conduct any stock transfers or stock counts herself. She was aware then, however, that Ms. Martinsek was transferring stamp stock. She found out later that Ms. Martinsek used Mr. Faron's PS Form 3977. (Tr. 58-61).
12. The unit had to conduct counts of stamp stock consigned to individual employees at least once every four months for bargaining unit employees and every fiscal year (October­September) for nonbargaining unit employees, such as Mr. Faron (Handbook F-101 § 13-3.1; Tr. 110-11).
13. When Ms. Jackson started, unspecified counts were late.³ During Ms. Jackson's tenure, the Manager, Customer Services Operations (MCSO) for the area, to whom Mr. Faron reported, repeatedly stated that the counts needed to be completed. Ms. Martinsek conducted counts and used the PS Form 3977 of absent employees who listed her as a designated witness, such as Mr. Faron. (Handbook F-101 § 13-3.1; Tr. 61-66, 116, 121).
14. On August 20, Ms. Martinsek conducted a count of the unit reserve and found a shortage of $25. The count report listed two counters, along with their electronic signatures: Mr. Faron and Ms. Martinsek. Mr. Faron, however, was not present. James Haynes, a unit employee who often assisted in counts, did not recall being present. (Resp. Exh. 8 at 95-104; Tr. 72-75, 95).
15. Around the end of August, Darlia Steele started at the unit as the acting manager. She did not recall whether it was before or after the August 20 count. Regardless, she did not recall being present at that count. (Tr. 37-38, 47-48).
16. By the time Ms. Steele started, the stamps were kept in the vault but not the locked cabinet. (Tr. 44-45, 50-54).
17. Ms. Martinsek told Ms. Steele that she was transferring stamps from the unit reserve to the retail floor stock using Mr. Faron's password. Ms. Martinsek did not, however, tell her how she obtained it. (Tr. 38-39).
18. Ms. Steele did not stop Ms. Martinek's password use. She considered it to be the responsibility of the MCSO. She did not, however, notify the MCSO. She also erroneously believed that the accountability for the unit reserve could not be transferred without Mr. Faron's being present. (Tr. 45-47, 49).
19. During Ms. Steele's tenure, the unit reserve count became due, and the MCSO told her that it needed to be conducted. Ms. Steele thus reached out to Mr. Faron to ask if he would come because the unit reserve was still under his name. (Tr. 39-40, 46, 48-49; see also Handbook F-101 §§ 13-3.1, 13-4).
20. According to Ms. Steele, Mr. Faron "confirmed ... Ms. Martinsek had his password, and that she can do the count." According to Mr. Faron, his response was "more to the effect of, I'm sure you guys can figure it out." Regardless, he declined to attend. (Tr. 40, 46, 96).
21. On October 18, the Postal Service conducted another count of the unit reserve and found a shortage of $1,372.20. Ms. Steele was at the unit then. Even though Mr. Faron did not attend, he was listed as a counter, and his electronic signature was on the report. His count sheet was blank. The two counters were, in fact, Ms. Martinek and Mr. Haynes. (Resp. Exh. 8 at 105-11, 114-25; Tr. 40-42, 75-76, 84, 118).
22. On that same date, the Postal Service generated a Letter of Demand for $1,372.20 based on the shortage. But the letter had the unit's address, not Mr. Faron's home address. Also, the copies in the record are unsigned. (Resp. Exh. 8 at 112-13; Tr. 118).
23. Nearly two years later, the Postal Service sent Mr. Faron a Letter of Debt Determination based on the October 18, 2021 shortage. It followed that with a Notice of Involuntary Administrative Salary Offset. (Pet. Exh. 2 at 28-29).

PROCEDURAL HISTORY

Mr. Faron filed a petition for hearing under the Debt Collection Act (DCA). Based on his election, I held a hearing by video-teleconferencing.

DECISION

A unit reserve stock custodian is accountable for the value of all items in the unit reserve, is responsible for managing the stamp stock inventory (which must be counted at least once each fiscal year), and must report unit reserve stock activities. Handbook F-101 §§ 2-4.6, 13-2.5, 13-3.1. Accountability for the unit reserve is held by one custodian at a time. See generally id. § 13-2.5.
To hold an employee accountable for a unit reserve shortage, the Postal Service bears the initial burden of proving that (1) a properly conducted count of the unit reserve shows an actual loss, and (2) the employee is the accountable stock custodian. See, e.g., Polanco v. United States Postal Service, DCA 16-255, 2017 WL 5516577, at *1 (April 19, 2017); Chavis-White v. United States Postal Service, DCA 16-182, 2017 WL 5516568, at *2 (April 19, 2017); Zeola H. Brady, DCA 10-190, 2011 WL 13238568, at *4 (Feb. 11, 2011). A properly conducted count of the unit reserve stamp stock credit requires at least two individuals, with one of them being, in order of availability, the employee, a designated witness, or the union steward. Handbook F-101 Exh. 3-8.2.2, §§ 3-8.3, 13-3, 13-4; see also Grant v. United States Postal Service, DCA 15-47, 2015 WL 13647649, at *2 (June 11, 2015).
If the Postal Service meets its initial burden, the burden shifts to the employee to come forward with evidence sufficient to alleviate or offset the shortage. See, e.g., Chavis-White, 2017 WL 5516568, at *2; Brady, 2011 WL 13238568, at *4.

Unit Reserve Counts
The Postal Service provided documentation for two unit reserve counts while Mr. Faron was on leave. Both showed losses. I next turn to whether the counts were properly conducted.
The August 20 count was performed by only one individual, Ms. Martinsek. While Mr. Faron was listed as one of the two counters, he was not there. This count, therefore, was not properly conducted and cannot serve as a basis for liability. See Grant, 2015 WL 13647649, at*2.
The October 18 count, on the other hand, was properly conducted. While Mr. Faron did not attend, there were two counters, one of whom was his designated witness. Therefore, the Postal Service met its burden of proof for the first element.

Accountable Stock Custodian
I now turn to the second element. Mr. Faron was the unit reserve custodian at least through June 17, 2021, and he did not transfer accountability before he went on extended leave. The Postal Service argued that it was Mr. Faron's responsibility to transfer accountability before he went on leave. Because he did not, according to the Postal Service, he remained accountable for the unit reserve through October 18.
Handbook F-101 discusses the transfer of accountability, with sections on "When" and "How." Under "When," it states, "Accountability for stamp stock must be transferred when the unit reserve custodian is replaced or is scheduled to be absent for a period during which access to the unit reserve stock may be necessary." Handbook F-101 § 11-10.2.1. This sentence is written in the passive voice, with no actor being assigned responsibility for the transfer. The "How" section assumes that the custodian and the replacement custodian are each available to perform an independent count with a witness. Id. § 11-10.2.2.
DCA decisions from the Judicial Officer Department (JOD) also discuss the transfer of accountability. Like here, in Diva Valdez, DCA 09-530, 2010 WL 11601980 (May 28, 2010) and Anthony Royal, DCA 04-73, 2004 WL 7329871 (Aug. 23, 2004), a unit reserve custodian went on extended leave without transferring. In both decisions, JOD held that custodians are responsible for transferring if they wish to protect themselves from potential liability. Valdez, 2010 WL 11601980, at *3; Royal, 2004 WL 7329871, at *4. Likewise, here, Mr. Faron should have transferred accountability before leaving to protect himself from this debt. But a key fact in those decisions was that the custodians had voluntarily shared access to the unit reserve before going on leave. Valdez, 2010 WL 11601980, at *1, 3; Royal, 2004 WL 7329871, at *l.
When custodians who have not shared access voluntarily go on extended leave without transferring accountability, the Postal Service cannot hold them accountable for the unit reserve indefinitely. There comes a time when Postal Service management must take affirmative steps to transfer accountability to a successor-at least if the Postal Service wants to hold an individual liable for any shortages.⁴ Handbook F-101 suggests that the time is reached once the unit needs access to the unit reserve stock in the custodian's absence. I will determine when accountability must be transferred on a case-by-case basis, considering when the Postal Service needed access and the actions of management.
Here, as of the October 18 count, Mr. Faron had been absent for four months. The Postal Service needed access to the unit reserve by then as evidenced by Ms. Martinsek's repeated stock transfers, the lateness of the unit reserve count, and the MCSO's instruction to count. Also, items from the unit reserve were moved to a less secure area and allowed to remain there despite an acting manager being aware of it.⁵ Because the Postal Service should have transferred accountability by at least October 18, I find that Mr. Faron was not the accountable stock custodian then.

Postal Service Arguments
Next, I address arguments of the Postal Service about Mr. Faron's RSS password, the permission given to Ms. Martinsek, and other DCA decisions.

RSS Password
The Postal Service argued that Mr. Faron should be liable for the debt because he disclosed his RSS password to Ms. Martinsek or did not safeguard it (Tr. 15). The Postal Service did not, however, prove by a preponderance of the evidence that Mr. Faron voluntarily disclosed his password to Ms. Martinsek. Mr. Faron did not admit to voluntarily disclosing it, and Ms. Steele testified that Ms. Martinek did not tell her how she obtained it. Significantly, Ms. Jackson testified that Ms. Martinsek used Mr. Faron's PS Form 3799. The Postal Service generally cannot, on the one hand, require an employee to provide his password on a form, and, on the other, use that disclosure as a basis for liability.
Next, I consider whether Mr. Faron failed to safeguard his password, and, if so, the effect of that. There was no evidence that Mr. Faron disclosed his password anywhere except on his required PS Form 3799. Handbook F-101 called for those forms to be kept in the main safe or vault under the exclusive control of the postmaster, manager, supervisor, or designee. Exh. 3-8.2.2. Mr. Faron kept his own form sealed in a locked compartment in a combination safe. He kept the compartment key in a desk drawer in his unlocked office. Even if he should have safeguarded the compartment key better or provided his form to the postmaster for safeguarding, the earliest properly-conducted count was on October 18. That count cannot be relied on because the Postal Service should have transferred accountability by then.
The Postal Service also referred to Handbook AS-805-C, Information Security Requirements for All Personnel, in support of its position (Resp. Exh. 1; see also Tr. 43). That handbook contains the following bullet: "Keep your password confidential. You are accountable for the actions of anyone using your login ID and password, even if you didn't give the user permission." (Resp. Exh. 1 at 33). But that bullet must be read as part of the whole document.
The whole document makes no mention of the PS Form 3799 requirement, calling into question whether the Postal Service intended for the document's strict accountability standard to apply here. Even if it did, as explained above, the earliest properly-conducted count was on October 18. That count cannot be relied on because the Postal Service should have transferred accountability by then.
Finally, the Postal Service argued that an RSS requirement to change the password every 90 days supported its position (Tr. 109, 127). It did not, however, explain how. Postal Service time and attendance records supported Mr. Faron's extended leave dates. As acknowledged by the Postal Service in its closing argument, Mr. Faron was not present at the August 20 and October 18 counts (Tr. 127). In addition, testimony proved that Ms. Martinsek logged onto the system as Mr. Faron before the 90 days expired. It was more likely than not that she changed the password to maintain access to the system through the October 18 count.

Permission given to Ms. Martinsek
The Postal Service argued that Mr. Faron should be liable for the debt because he gave permission to Ms. Martinsek to conduct business in his absence (Tr. 126). At the hearing, there were references by both parties to Ms. Martinsek as his proxy (Tr. 60, 65-66). But the Postal Service proved only that Mr. Faron listed Ms. Martinsek as his designated witness on his PS Form 3977. A designated witness is given permission to witness the opening of the form and the count of a stamp or cash credit when the employee is absent. Handbook F-101 §§ 3-8.2.1 Note, 3-8.3. A designated witness is not given permission to conduct business in an employee's absence. See generally id. The Postal Service's argument fails.

Other DCA Decisions
The Postal Service cited several DCA decisions in support of its position: Zeola H. Brady, DCA 10-190, 2011 WL 13238568 (Feb. 11, 2011), Raymond Keith Davis, DCA 09-107, 2009 WL 10690552 (July 9, 2009), Anthony Royal, DCA 04-73, 2004 WL 7329871 (Aug. 23, 2004) (discussed above), Dave Huggins, DCA 01-315, 2002 WL 35644022 (Jan. 28, 2002), and Barry A. Will, DCA 05-83, 2005 WL 8152932 (Aug. 16, 2005) (Tr. 13, 129-30). All five decisions are distinguishable from this one.
In the first four, the petitioner shared access to the unit reserve voluntarily. Brady, 2011 WL 13238568, at *2, 7; Davis, 2009 WL 10690552, at *1; Royal, 2004 WL 7329871, at *1; Huggins, 2002 WL 35644022, at *2. The Postal Service did not prove that to be the case here. In addition, Royal and Huggins rely on a standard found in Handbook F-1, Post Office Accounting Procedures, which was not applicable during the relevant time here.⁶ Royal, 2004 WL 7329871, at *2; Huggins, 2002 WL 35644022, at *2.
The fifth decision, Will, involved shared access to a window clerk account. As noted by the Postal Service (Tr. 13), the judge held, "Normally, it is the responsibility of the assigned individual to [ensure] that no one else has access to his account." Will, 2005 WL 8152932, at *2. However, the judge then found an exception "when the individual's supervisor initiates or condones the practice of shared access." Id. The judge found the exception to apply and granted the petition in favor of the petitioner.⁷ Id. While Will sets forth the general rule on safeguarding access, it does not otherwise support the Postal Service's position.
In sum, I find that Mr. Faron was not the unit reserve custodian as of the count on which the debt is based. He therefore is not liable for the debt.

ORDER

The petition is granted. The Postal Service may not collect the debt.