June 28, 2006
In
the Matter of the Petitions by
DENNIS
R. ESTERLINE
P.S. Docket Nos. AO 05-125 and AO
05-237
APPEARANCE FOR PETITIONER:
David Deakin
APPEARANCE FOR RESPONDENT:
Labor Relations Specialist
United States Postal Service
INITIAL DECISION
Petitioner, Dennis Esterline, a former Postal Service employee, filed two Petitions challenging the Postal Service's assertion that he owed the Postal Service debts of $5,003.15 and $9,059.28 for losses in the Cape May, New Jersey Post Office while Petitioner was postmaster. The two Petitions were consolidated for hearing.
A hearing was held in Bellmawr, New Jersey. At the outset, Respondent announced that, based on an offset of an overage in a related account, and some stamp stock being found, the two debts were reduced to $2,824.86 and $7,021.66, respectively. The Postal Service presented testimony from the Cape May Postmaster who succeeded Petitioner, a supervisor from the Cape May Post Office, a financial analyst, and a computer systems expert. Petitioner testified on his own behalf and also presented testimony from two clerks in his former office, and from his former supervisor. Both parties also relied on documents previously filed, and each submitted one additional document during the hearing. The parties elected to file post-hearing briefs and both did so. The following findings of fact are based on the entire record.
FINDINGS
OF FACT
1. The Cape May, New Jersey Post Office consists of the main office, an office at North Cape May, and an office at a nearby Coast Guard Station. Petitioner became the Cape May Postmaster in September 1996. (Tr. 126).[1]
The $9,059.28 ($7,021.66)
shortage
2. In September 2001, the Cape May and North Cape May offices were converted from a computerized stamp stock management system known as “IRT,” to a new system known as “POS One.” Part of the process was that the window clerks, who each had an assigned accountability of stamp stock under the IRT system, were instructed to package all their stamps into boxes on the designated day of conversion, and seal the boxes. All the clerks did this, each using individually identified boxes. There were a total of thirteen boxes. The boxes were then placed in a safe at the main office. The intention was that the postmaster or other designated supervisor would soon thereafter count the stamps, along with each of the clerks, in order to close out the accountability of each clerk. (Tr. 9-10, 22-23, 27, 54, 64, 75-76, 88-90, 114, 122, 141-42).
3. Neither Petitioner nor anyone else counted the clerks’ stamps, however, and the boxes remained in the safe until a new postmaster arrived in January 2005, to take over after Petitioner’s retirement in December 2004. The thirteen boxes were then removed to another location where they were opened and the contents counted by a group of finance specialists. (Tr. 9-10, 13, 41-42).
4. The total value of the stamps in all the boxes was $91,321.86. The counters did not attempt to identify which boxes belonged to which individual clerks. The system records for the night of conversion in 2001 showed that the total clerks’ accountability was $69,947.64 for the Cape May office, and $30,433.50 for the North Cape May office, for a total of $100,381.14. The difference between this and the amount actually found in the boxes equates to a shortage of $9,059.28. (Tr. 61-62, 64-66, 71, 150; PS Exs. 4, 5, and 13 from AO 05-237).
The $5,003.15 ($2,824.86) shortage
5. While Petitioner was the Cape May Postmaster, he was also the custodian of the main stock at both Cape May and North Cape May. He retired, effective January 3, 2005, and his last day of work was December 23, 2004. On that day, because the new postmaster was not arriving until early January, Petitioner and a supervisor in his office performed a count of the main stock at Cape May, so that the main stock could be turned over to the supervisor during the interim. (Tr. 8, 18-19, 128-29).
6. The count noted above resulted in a shortage of $5,003.15. On completion of the count, Petitioner entered that amount into the system as a “suspense” item,[2] so that the account would be balanced for the supervisor who was taking it over. (Tr. 8, 19, 143, 150; PS Exs. 1-3 from AO 05-125).
DECISION
The $9,059.28 ($7,021.66)
shortage
Respondent’s theory of liability for this shortage is that Petitioner was required to count the clerk accounts within 120 days of the night of conversion, just as it is a supervisor’s duty to audit all clerks’ accountabilities every 120 days. Failing to do so, and letting the boxes remain unopened and uncounted for more than three years, constitutes negligence and results in the accountability for the stamps in those accounts becoming the responsibility of Petitioner, Respondent contends.
This argument is inconsistent with a long established Postal Service policy of not holding postmasters or supervisors personally liable for employee shortages if the postmaster or supervisor has not acted in collusion with the employee and does not have direct responsibility for the shortage. (See Angela Rhodes, P. S. Docket No. DCA 06-23, May 10, 2006; Randy Peters, P. S. Docket No. DCA 04-105, December 1, 2004; Nicholas Frank, P. S. Docket No. DCA 00-406, June 15, 2001).
A
“Normally, it is the policy of the Postal Service not to hold supervisors and postmasters personally accountable for employee shortages, if they do not have direct responsibility for the shortage. While this does not relieve management’s responsibility for auditing and supervising credits assigned to employees, other action should be taken based on the circumstances of each case, bearing in mind our basic principle that, in the administration of discipline, our actions should be corrective in nature rather than punitive.”
A second memorandum, dated September 16, 1987, from two Assistant Postmasters General to regional directors of finance and human resources further states:
“It has been brought to our attention that there is some confusion in regard to the policy of the Postal Service concerning the personal accountability of postmasters and supervisors in situations involving employee credit shortages where contractual or other reasons preclude collection of the shortage from the employee.
The Postal Service will not normally hold postmasters and supervisors personally accountable for such employee shortages if they do not have direct access to the credit or are not involved in collusion with the employee. That policy was enunciated in a December 4, 1985, memorandum from former Senior Assistant Postmaster General for the Employee and Labor Relations Group, Michael S. Coughlin, and it has not been withdrawn or modified. The policy is not intended to absolve a postmaster, supervisor or others who have financial accountability for postal funds and accountable paper from conscientiously enforcing Postal Service policies and procedures. However, rather than issuing a letter of demand to these individuals, it is more appropriate to consider counseling or discipline for failure to properly carry out the duties of their position. The action warranted should be determined on a case by case basis depending upon the particular circumstances.”
It is clear in this case that the loss was in one or more of the clerk accountabilities, not from an account that was assigned to Petitioner. All the testimony was that the boxes were never opened, but simply sat in the safe for more than three years. There is no evidence that the stamps were ever absorbed into Petitioner’s account. The fact that the opportunity to determine which clerk, or clerks, may have been short was lost because of Petitioner’s failure to perform a required duty is not sufficient reason to transfer personal liability to Petitioner.
The Petition in AO 05-237 is granted. Respondent may not collect $7,021.66 from Petitioner.
The $5,003.15 ($2,824.86)
shortage
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 “are held strictly accountable for any loss unless evidence establishes that they followed the postal procedures established when performing their duties.” Postal Service Handbook F‑1, Post Office Accounting Procedures (November 1996, Updated With Postal Bulletin Revisions Through October 24, 2004), §141.
Respondent’s burden of proof in a case of unexplained shortage is to show that a loss occurred from an account for which the employee is accountable. When a properly conducted inventory, or audit, shows a stock shortage relative to a previously established balance, this constitutes proof of loss unless other evidence raises sufficient doubt about the accuracy of the inventory or the previously established balance, or otherwise suggests that there may have been no actual loss. In this case, there is no dispute that Petitioner was the custodian of the main stock at Cape May, and he conducted the audit that revealed the $5,003.15 shortage – since reduced to $2,824.86.
Petitioner raised a number of issues, but they are all quite speculative and he produced no evidence to demonstrate that there was no actual loss from his main stock. There was testimony that the POS system occasionally went into what is called a “degraded mode,” which means that the individual computer terminals are temporarily not communicating with the main computer. Petitioner presented nothing to show how this would have affected the main stock, however, and the more persuasive testimony was that it would not.
There was also testimony about flooding in the storage area of the Cape May Post Office, but Petitioner presented nothing to show that loss of, or damage to, any particular records had any impact on the December 23, 2004 shortage in the main stock.
Finally, Petitioner argues that Postal Service management did not take proper steps to assure that his office, including the main stock, was transferred to the incoming postmaster in a timely and efficient manner once he announced that he was going to retire. Whether or not that is true, there is no question that, on December 23, 2004, Petitioner was still accountable for the main stock and that a shortage was found on that date. Respondent’s evidence is sufficient to prove a loss of $2,824.86, and Petitioner’s evidence does not establish a basis for relief. The Petition in AO 05-125 is denied. Respondent may collect $2,824.86 from Petitioner. Petitioner must be credited with any amounts already withheld. If more than $2,824.86 has been withheld, the difference must be returned to him.
Bruce R.
Chief Administrative Law Judge
[1] References to the hearing transcript are "Tr._." References to documents attached to Respondent's Answers are "PS Ex._."
[2] “Suspense” is
an accounting entry used to designate a shortage.