INITIAL DECISION

Petitioner, Alfred Araiza, a former Postal Service employee, filed a Petition requesting an oral hearing to challenge a letter of demand sent to him by Respondent, United States Postal Service. In the letter, Respondent demanded that Petitioner pay an alleged indebtedness of $49,137.41. The procedural prerequisites to a hearing established by the rules governing administrative offset proceedings, 39
C.F.R. Part 966, had not been met, so the proceedings were suspended to allow those steps to be concluded. The prerequisites have now been satisfied.[1]

However, Respondent has filed a motion to dismiss these proceedings, contending that Petitioner’s liability for the debt has already been established in an arbitration proceeding and that Petitioner, therefore, is not entitled to an administrative offset hearing regarding the same debt. Petitioner opposed the motion, and the parties were given an opportunity to submit evidence and argument regarding the motion to dismiss.

The following facts, based on the documents filed by the parties, are found for purposes of deciding Respondent’s motion.

FINDINGS OF FACT

1. In August of 1995, Petitioner was a window clerk in the South Texas Medical Center Station in San Antonio, Texas. He had worked in that position for a number of years. (Investigative Memorandum dated October 25, 1995 (“IM”)).

2. Respondent had assigned exclusively to Petitioner’s custody a window credit consisting of stamps and cash for conducting transactions with customers. That credit was to be audited by management at least three times per year. In the years before August 1995, Petitioner, contrary to Postal Service regulations, was told in advance when his window credit was going to be audited. Before each official audit, conducted by Petitioner and a supervisor, Petitioner conducted a self-audit. In these self-audits he discovered substantial and escalating shortages in his credit. So that his credit would balance in the official count, Petitioner entered into a scheme with one or more fellow employees to lend him stamps or create a fictitious paper transfer of stamps from Petitioner’s credit immediately before the official count. By this artifice, Petitioner’s accountability was within allowable tolerance each time it was audited officially. After the official audit, Petitioner returned any borrowed stamps and he and his confederate reversed the fictitious transaction. (IM).

3. On August 10, 1995, without advance notice and in Petitioner’s absence, his stock was counted and found to be short by $49,137.41. The credit was recounted by Petitioner and a postal inspector on August 14, 1995, and found to be short by $49,116.61. (IM).

4. Respondent issued Petitioner a letter of demand seeking payment of $49,137.41, and Petitioner’s union, the American Postal Workers Union, filed a grievance on Petitioner’s behalf over the debt. The grievance was pursued to arbitration under the collective bargaining agreement (“National Agreement”) between Respondent and the union, and an arbitration hearing was held on August 11, 2000. Petitioner was represented at the hearing by a union advocate who was afforded the opportunity to call and to cross-examine witnesses, to submit documentary evidence, to make opening and closing arguments and to file a post hearing brief. (Arbitration Decision by Louis V. Baldovin dated August 24, 2000 (“Arbitration Decision”)).

5. The arbitrator considered Petitioner’s liability for the shortage under the following standard:

“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.” (National Agreement, Article 28.1, as quoted in the Arbitration Decision).

6. The arbitrator denied the grievance. He concluded, “Grievant [Petitioner], having conceded he engaged in covering up his shortages over an extended period of time, it cannot be said that he exercised reasonable care in the performance of his duties.” The arbitrator found insufficient evidence to show a causal connection between Petitioner’s shortage and lax security at the station or misconduct of the finance supervisor or other employees that would relieve Petitioner of liability. He found insufficient evidence to support Petitioner’s assertion that someone at the station was stealing from his stamp credit. (Arbitration Decision).

7. Based on the arbitrator’s denial of the grievance, the San Antonio Acting Manager of Finance issued Petitioner a letter of demand on October 12, 2000, seeking repayment of $49,137.41 (Attachment to Petition).

8. Petitioner, through counsel, filed a Petition with this office seeking review under the Debt Collection Act of the letter of demand and requesting an oral hearing. That Petition was docketed as an administrative offset case, P.S. Docket No. AO 00-429, because the Debt Collection Act procedures of 39 C.F.R. Part 961 were not available to Petitioner as a former employee. On January 15, 2001, Petitioner, again through counsel, filed a Petition for Review under 39 C.F.R. Part 966. This Petition was docketed as P.S. Docket No. AO 01-24. As the two Petitions address the same issues, they are being decided together.

9. In 1995, the liability of window clerks for shortages in their credits was determined in administrative offset and Debt Collection Act cases according to the following Postal Service regulation:

“The postmaster consigns postal funds and accountable paper to other employees. Employees are held strictly accountable for any loss unless evidence establishes they exercised reasonable care in the performance of their duties.” (Postal Service Handbook F-1, Post Office Accounting Procedures (April 1991), Section 132).

DECISION

Under the doctrine of res judicata, a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326, n. 5, 99 S. Ct. 645, 58 L. Ed. 2d 552 (1979). This principle has the dual purpose of protecting litigants from the burden of relitigating an identical cause of action with the same party or his privy and of promoting judicial economy by preventing needless litigation. Id.

The claim addressed in the arbitration was exactly the same claim Petitioner seeks to challenge in this administrative offset case; namely, Respondent’s claim against Petitioner based on the shortage in Petitioner’s credit in August of 1995.[2] The arbitrator conducted a hearing where the parties were allowed to participate fully (Finding 4) and, on the facts developed in the arbitration proceeding, he decided on the merits that Petitioner was liable for the debt under the National Agreement (Finding 6). That this proceeding would address Petitioner’s liability under Postal Service regulations (Finding 9) as opposed to the National Agreement is of no moment. First, the standard for a window clerk’s liability for a shortage expressed in the applicable regulations is substantially the same as the standard of the National Agreement. More importantly, however, the prior liability determination of the arbitrator forecloses successive litigation of that very same claim, whether or not relitigation of the claim raises exactly the same issues as the earlier suit. See New Hampshire v. Maine, 532 U.S. 742, 121 S. Ct. 1808, 1814, 149 L. Ed. 2d 968, 976-977 (2001).

Therefore, Petitioner is barred from a further hearing regarding this debt if he is legally bound in these administrative offset cases by the decision on the grievance, which was pursued through arbitration by Petitioner’s union on his behalf and not by Petitioner himself. In the labor union context, the union acts as the duly constituted representative of its members regarding resolution of issues arising from the collective bargaining agreement. Panza v. Armco Steel Corp., 316 F.2d 69, 70 (3^rd Cir. 1963), cert. denied, 375 U.S. 897; 18 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure, §4456 at p. 491 (1981). Accordingly, Petitioner may not relitigate Respondent’s claim, which was decided adversely to his interest in the grievance proceeding between Respondent and his union. See, e.g., Satterwhite v. United Parcel Service, Inc., 496 F.2d 448, 452 (10^th Cir. 1974), cert. denied, 419 U.S. 1079. This preclusive effect is generally extended to arbitration decisions. See Id.; Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 96 S. Ct. 1048, 47 L. Ed. 2d 231 (1976).

Petitioner charges that the hearing he received before the arbitrator was inadequate. He contends that the arbitrator was biased in favor of the Postal Service (Opening Statement dated June 21, 2001 (“Statement”), p. 2), and that the union advocate failed to understand the issues of the case (Statement, p. 6). He contends the advocate failed to present evidence in Petitioner’s defense (Statement, pp. 12, 14) and that the advocate wrongly advised him that the Postal Service probably could not recover any debt from his retirement payments (Statement, pp. 11, 15). However, the res judicata consequence of the final, unappealed decision by the arbitrator on the merits is not altered by possible error in the decision. See Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 325, 47 S. Ct. 600, 71 L. Ed. 1069 (1927). The arbitrator’s decision is not open to collateral attack in an administrative offset proceeding on the same cause of action but can be corrected, if in error, only by direct review. See Id.; Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 101 S. Ct. 2424, 69 L. Ed. 2d 103 (1981).

Accordingly, principles of res judicata preclude Petitioner from relitigating in these administrative offset proceedings his liability that was established in the arbitrator’s decision. These Petitions are dismissed.

Norman D. Menegat

Administrative Judge

[1] Respondent’s Minneapolis Accounting Service Center has provided Petitioner with a statement of Respondent’s claim of debt. Although that statement did not advise him of his right to request reconsideration by his former postmaster, the San Antonio Postmaster in an August 16, 2001 letter advised Petitioner of that right, and Petitioner requested reconsideration. He and his attorney met with the postmaster on September 5, 2001, and by letter dated September 18, 2001, the postmaster denied the reconsideration request. Thus, the steps required by 39 C.F.R. §966.4(a)(2) and (3) have been taken. Petitioner’s express intention to continue his challenge to Respondent’s collection of the debt at issue is sufficient confirmation of his Petition. 39 C.F.R. §966.4(b).

[2] There is some discrepancy about the amount at issue, see Finding 3, but that discrepancy is minor and of no significance in deciding the motion to dismiss.