In the Matter of the Petition by ) June 26, 1998
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CHENELLE M. MEDINA )
1100 Broadway )
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at )
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Redwood City, CA 94063-9998 ) P.S. Docket No. DCA 98-164
APPEARANCE FOR PETITIONER: Henry Saitta
3932 Pasadena Drive
San Mateo, CA 94403-3643
APPEARANCE FOR RESPONDENT: Terry Beckstead
Labor Relations Specialist
United States Postal Service
1300 Evans Avenue
San Francisco, CA 94188-2290
Petitioner, Chenelle Medina, filed this Petition after receiving a Notice of Involuntary Administrative Salary Offsets on March 5, 1998 from her postmaster. This Notice stated the Postal Service's intention to withhold $33,976.86 from Petitioner's salary to recover for shortages in stamp stock for which Petitioner was accountable, disclosed by audits on December 16-17, 1997, and January 6-7, 1998.
A hearing was held in San Francisco, California on May 29, 1998. The Postal Service presented testimony from Ms. Yee and Mr. Johnson, who performed the January audits, and from the Redwood City Postmaster, Ms. Stevens. Petitioner testified in her own behalf. Both parties submitted documentary evidence and also relied on documents filed with the Petition and the Answer. Each party made an oral argument at the close of the hearing. The following findings of fact are based on the entire record, including observation of the witnesses and their demeanor.
1. Petitioner, Chenelle Medina, has been a postal employee for approximately fifteen years. At all times pertinent to this case she was a Supervisor of Customer Services in Redwood City, California. She worked at the Downtown Station, and was custodian of the unit reserve stock for that station, as well as for Woodside Plaza and Woodside Finance Station post offices. (Tr. 119).(1)
2. The unit reserve for all three offices was kept at the Downtown Station. Stock was kept in three locations: a walk-in vault that contained a safe and open shelves (Pet. Ex. 8-13); a security container (also referred to as a safe), located in the office near the vault (Pet. Ex. 5-6); and a tall metal cabinet, located in another room some distance from the vault. Only the left side of this cabinet, which had a keyed lock in the handle, was used for storing stamp stock. The right side was used for other supplies (Pet. Ex. 1-3). (Tr. 15-19, 75, 124).
3. The reserve stock for each of the three stations was not completely segregated (Tr. 43, 75). All the Downtown stock was kept in the walk-in vault - some in the safe located there and some on the open shelves (right-hand side) (Tr. 133-35; Pet. Ex. 12-13). Woodside Finance Station stock was kept in the security container (left-hand side) and in the tall metal cabinet (Tr. 86, 123, 126-28). Woodside Plaza stock was kept in the security container (right-hand side) and in the tall metal cabinet, and on the open shelves in the walk-in vault (left-hand side) (Tr. 86, 123, 126-28, 135; Pet. Ex. 11). Petitioner also used the shelves in the vault as a work area when issuing stock (Tr. 156).
4. The reserve stock accountability for the three stations at the times pertinent to this case was approximately as follows: Downtown - $290,000-$300,000; Woodside Plaza - $310,000-$335,000; Woodside Finance Station - $187,000-$195,000 (Rx. 6-11).
5. Petitioner did not intentionally issue stock from one station's account to clerks from other stations,(2) but on occasion would exchange stock of equal value between accounts in order to accommodate a clerk's needs (Tr. 129-30). Her practice was to make notes to herself to remind her to enter these transactions into the computer, but she did not keep written records of them (Tr. 164-65). The applicable regulation, Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996), requires a written record, PS Form 3958, for any transaction involving the unit reserve stock.(3)
6. While she was the custodian, Petitioner did not make any written request for additional secure storage space, or that safes be moved to the other stations so that each station's stock could be stored separately (Tr. 158, 199, 204). She discussed moving the stock with the manager of customer services at one time, but never with the postmaster (Tr. 121).
7. After Petitioner was relieved as the stock custodian, sometime in February 1998, the accountability was split up. One supervisor now has the Downtown stock and another has the two Woodside stocks. Also, the security container (safe) has been moved to the Woodside Finance Station. (Tr. 123, 202-03, 210).
8. An audit of Petitioner's three accounts was conducted on December 16-17, 1997, by Leonard Paulor, a supervisor from another post office. The Downtown stock was found to be $7,440.00 short, and the Woodside Plaza stock was $14,617.02 short. The Woodside Finance Station stock was $1.31 over. Petitioner participated in these audits and signed a PS Form 3294, Cash and Stamp Stock Count and Summary, for each count, indicating that she agreed to the accuracy of the counts. (Tr. 162, Rx. 6-8). These shortages were placed in suspense and a Letter of Demand for $22,057.02, the sum of the two shortages, was issued to Petitioner on December 22, 1997 (Rx. 2, Rx. 4, Rx. 12).
9. Another audit of Petitioner's three accounts was conducted on January 6-7, 1998, by Terry Yee, Postal Systems Coordinator for the San Francisco District, and James Johnson, a neighboring postmaster. Petitioner was present in the office, but did not remain with the auditors during the entire process, although she had the opportunity to do so if she wished. (Tr. 15-16, 74, 136-37). Their method of counting was that Ms. Yee physically counted the stamp stock, by separate denomination and amount, and Mr. Johnson checked her findings against the computer generated inventory list, i.e., the amounts that were supposed to be present. When there was a discrepancy, he recorded that discrepancy, by type of stamp and amount, on a form created for that purpose. (Tr. 39-40, 72, 94; e.g., Rx. 9, p. 5). At the outset, the procedure was to call Ms. Medina's attention to any discrepancy when one was found, but it is unclear whether the auditors continued to do this throughout the entire process (Tr. 137). On some occasions, Ms. Medina was able to clear up discrepancies by identifying certain stock as belonging to a different station, or bringing stock from one of the other locations so it could be counted as part of the stock belonging to the station being counted. When this happened, some entries on the discrepancy list were crossed off, and the net totals were adjusted. (Tr. 42-45, 81, 109, 112-14). For the most part, however, the auditors counted stock by its designated location in the three containers, even if Petitioner identified a particular item in one location as belonging to a different account (Tr. 82-83).
10. Ms. Yee and Mr. Johnson did not run an adding machine tape of everything they counted, but arrived at the net total for each count just by using the discrepancy lists (Tr. 39, 92-93). They fully completed the count of one station before beginning to count the next one. This included having the auditors and Ms. Medina sign page four of the Form 3294. (Tr. 111). Ms. Medina signed the Forms 3294 in the block stating, "I agree to the count:" for each of the three stations. For the Woodside Finance Station, the count showed a shortage of $5,927.58 (Rx. 9). For Woodside Plaza, the count showed a shortage of $5,645.26 (Rx. 10). For the Downtown Station, the count showed an overage of $5,390.32 (Rx. 11). A Letter of Demand for $11,919.84 was issued to Petitioner on February 11, 1998. This included the sum of the two Woodside shortages, plus $347.00 described as a shortage in unassigned clerk credits, discovered on January 20, 1998. (Rx. 3). Respondent presented no evidence to prove that $347.00 shortage.
11. On March 10, 1998, Petitioner submitted to the postmaster three forms titled, "Accountability Adjustment Form."(4) These requested that Petitioner be credited with various overages, against the shortages alleged in the two Letters of Demand (Tr. 176). The overages claimed by Petitioner were $5,954.18 for the Downtown Station, $3,176.96 for Woodside Plaza, and $5,708.96 for Woodside Finance Station (Tr. 235). These numbers are arrived at by adding the overages from computer generated printouts listing trust and suspense items for the three offices, as of February 20, 1998, and March 19, 1998.(5)
12. With the Answer, Respondent submitted another set of computer generated printouts listing trust and suspense items for the three offices, as of April 9, 1998. These list the following overages next to Petitioner's name: Woodside Plaza - $223.19 and $7.28 (Rx. 4, p. 1); Downtown - $5,190.32, $7.06 and $322.32 (Rx. 4, p. 2); Woodside Finance - $5,360.22 and $1.31(6) (Rx. 4, p. 3).
Contentions of the Parties
Respondent asserts that the two audits, in December 1997 and January 1998, at which Petitioner signed all the forms indicating her agreement with the accuracy of the counts, establishes a loss of $33,976.86. Respondent also argues that Petitioner's "commingling" of stock from the three accounts, rather than maintaining it in an orderly, segregated manner precludes any finding that Petitioner exercised reasonable care or followed established procedures. As for security, Respondent argues that the facilities available to Petitioner for storing her stamp stock were adequate. Finally, Respondent contends that Petitioner has not established a sufficient relationship between the overages and the shortages to justify crediting her with the overages.
Petitioner first makes two procedural arguments. Citing sections 452.11 and 452.22 of the Employee and Labor Relations Manual (ELM), she argues that no debt is created until the Minneapolis Accounting Service Center forwards an invoice to the postmaster, who then must provide a copy of that invoice to the employee. There is no evidence that these steps were followed in this case. Petitioner also argues that the letters of demand issued to her by the postmaster did not include all the information about her procedural rights that is required by the ELM.
As to the merits of the case, Petitioner argues that her superiors failed to provide proper security for the stock. Specifically, she refers to the fact that she was forced to keep the three separate accounts all in the same office, without sufficient secure storage areas to maintain each office's stock entirely segregated from the others. As evidence that this arrangement was improper, she points to the fact that changes were made after she was relieved (Finding of Fact #7). She also cites an apparent $200.00 computer error as an indication that there was a "bug" on one of the disks she used, that might have caused the inventory figures to be incorrect. She also faults the methods of the January auditors, specifically that they did not run an adding machine tape of their counts, and that they did not correct some of the apparent discrepancies after she located stock that they had listed as missing. Finally, she argues that she used reasonable care in managing her stamp stock under the difficult conditions she had to work with.
The Procedural Issues
The two procedural errors alleged by Petitioner are not of sufficient substance to bar Respondent from pursuing collection of the alleged debts. The failure of the Accounting Service Center to create an invoice did not deprive Petitioner of any rights or hinder her in any way as she prepared and presented her case. ELM Section 452.11 states, in pertinent part: "Depending on the circumstances of a particular case, the determination of a debt subject to collection under this subchapter may be made by an official in the field or at the Minneapolis Accounting Service Center (ASC)." In this case, the determination was made by the Redwood City Postmaster based on the results of the two audits. The action required to be taken by the ASC was purely administrative in nature. Petitioner was clearly notified of the basis for, and amounts of, the alleged debts and of the Postal Service's intention to collect the debt by withholding certain amounts from her salary.
As to her second objection, if in fact she was not given all the required information about Debt Collection Act procedures at the prescribed time, this had no effect on the case. From whatever source, she obviously knew her rights and exercised them. I find no evidence that she was harmed in any way.
The December 1997 Shortages
The standard for determining an employee's liability in a case such as this provides that employees to whom postal funds and accountable paper are consigned (such as Petitioner) "are held strictly accountable for any loss unless evidence establishes that they followed postal procedures established when performing their duties." Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996), Section 141.(7) Respondent's burden of proof is to show that a loss occurred from an account for which the employee is responsible. The burden then shifts to Petitioner to show that she followed established procedures, or that she should be relieved of liability for some other reason.
Although Respondent presented no testimony on these December shortages, Respondent did present the documentary records of the audits, and Petitioner offered no challenge to them. (8) (See Finding of Fact #8). There is no dispute over the fact that Ms. Medina was the custodian of the unit reserve for the three offices, and the audit records signed by Ms. Medina indicating agreement with the counts are sufficient to establish the $22,057.02 shortage.
The January 1998 Shortages
Again, there is no dispute that Petitioner was the custodian, but she did challenge the accuracy of the audits performed by Ms. Yee and Mr. Johnson. Her testimony that she signed the Forms 3294 indicating agreement with the counts even though she did not agree, and believed that errors would be corrected later, is not persuasive, however. In addition, I am satisfied from the testimony of Ms. Yee and Mr. Johnson, along with the documentary evidence, that the counts were done properly and accurately. Except for the $347.00, on which there was no evidence (see Finding of Fact #10), the evidence is sufficient to establish the shortages alleged. The total is $11,572.84. The amount of actual loss that Respondent has proved depends on how much of the overages should be offset. That issue is discussed later.
The Security Issues
Petitioner's arguments on the security issues also fail to provide a basis for relieving her of responsibility. Having the unit reserve of all three offices under one roof was not ideal, and the facilities used for storage could undoubtedly have been better, but the evidence does not establish that Petitioner's superiors failed to provide adequate security. There was sufficient room to store all the stock and to keep the three accounts separated, all the storage areas were lockable and there is no evidence that any unauthorized person had access to those areas.(9) There is also no evidence that Petitioner made any complaints about these matters, or told her superiors that she did not believe her stock was secure. The fact that improvements were made after she gave up these accounts does not amount to proof that the system was previously inadequate. As to the purported "bug" in the computer disk, there is almost no evidence on this point, certainly not enough to conclude that such a "bug" caused the alleged shortages.
Reasonable Care
Petitioner testified that she used reasonable care, but presented little specific evidence of it, other than to say she issued stock only to clerks, personally delivered it to them, and did her best to keep the three accounts separated. As noted earlier, however, Petitioner did not keep written records of stock exchanges she made between accounts (Finding of Fact #5), and it was demonstrated during the January audits that not all the stock belonging to the three separate accounts was clearly segregated (Finding of Fact #9).
Based on all the facts presented, and my conclusion that she should have done a better job of keeping the stock for the three accounts separated, Petitioner has not met her burden of establishing that she should be relieved of liability because she exercised reasonable care or that she followed established procedures.
Credit for Overages
Petitioner has claimed credit for $14,840.10 (Finding of Fact #11). Respondent has declined to offset any of the overages. The regulation states that overages should be offset against shortages if there is a "relationship" between the two, and that "managers should exercise judgment" in making this determination.(10) Respondent cannot have it both ways, i.e., fault Petitioner for the so-called "commingling" of the three accounts, but not offset overages in one against shortages in another. Petitioner, however, did not present sufficient evidence to show that all of the claimed overages are related to the established shortages. The origin of some of the claimed amounts is uncertain even on the most recent trust and suspense lists, but Petitioner is clearly entitled to credit for substantial overages and as those lists were put in evidence by Respondent, I find it appropriate to offset all the overages shown there (see Finding of Fact #12). These total $11,111.70.
The Petition is denied in part and granted in part. Respondent
has proved a loss of $22,518.16 ($22,057.02 + $11,572.84 - $11,111.70).
Respondent may collect that amount from Petitioner's salary.
Bruce R. Houston Chief Administrative Law Judge
2. She also acknowledged, however, that sometimes it was difficult to remember which account she was working from and that it was possible she made some mistakes (Tr. 129-30).
3. Handbook F-1, Sections 417, 425.34, 425.38, and 426.71.
4. These are unnumbered exhibits attached to Ms. Medina’s Petition. Also, Pet. Ex. 14 is a memo from Petitioner to the postmaster relating to these forms.
5. These documents are also attached to Ms. Medina’s Petition, but there was no testimony about them at the hearing.
6. This $1.31 is the unit reserve overage found in the December 1997 audit (Finding of Fact #8).
7. The previous edition of the F-1 Handbook (1991) used the phrase “. . . unless evidence establishes they exercised reasonable care in the performance of their duties.” In this case the parties addressed the issue in terms of “reasonable care,” and neither party suggested that the new language presents a different standard. Therefore, I shall treat the two standards as being the same in this case.
8. She testified that she and Mr. Paulor counted the stock together and she believed “our count was good.” (Tr. 162).
9. Petitioner made one reference to two employees who were suspected of some “illegal activity,” but there is no other evidence as to who they were or to connect them in any way with Petitioner’s missing stock (Tr. 151).
10. Handbook F-1, Section 429.16.