DCA 08-82 FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

June 12, 2008

In the Matter of the Petition by

PAULETTE KENDRICK

P.S. Docket No. DCA 08-82

APPEARANCE FOR PETITIONER:

Paulette Kendrick

APPEARANCE FOR RESPONDENT:

Toby L. Lowe

Labor Relations Specialist

United States Postal Service

FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982

Petitioner, Paulette Kendrick, filed a Petition for Hearing after receiving a Notice of Involuntary Administrative Salary Offsets on February 14, 2008. This Notice stated the Postal Service’s intention to withhold $924.99 from Petitioner’s salary to collect for a bad check that Petitioner improperly accepted from a customer.

Petitioner requested a hearing on written submissions. This was discussed in a telephone conference with the parties on April 18, 2007. Respondent’s representative stated that an effort was being made to collect from the check writer and asked that additional time be granted for filing additional evidence and argument, beyond that filed with the Petition and the Answer. That request was granted and on May 12, 2008, the parties asked for a further extension of time. This was also granted. Respondent filed additional documents, including two witness declarations. Petitioner filed nothing beyond the documents included with her Petition and in a supplement to the Petition filed on March 26, 2008. The following findings of fact are based on all the material submitted by the parties.

FINDINGS OF FACT

1. At all times pertinent to this case, Petitioner was a window clerk at the General Mail Facility in Miami, Florida. On August 30, 2007, Petitioner accepted a check from a company called All Natural Network Marketing in the amount of $924.99. Petitioner did not consult the South Florida District “Bad Check List” before accepting the check. (Thomas Declaration).

2. Postal Service Handbook F-1, Post Office Accounting Procedures (November 1996, Updated With Postal Bulletin Revisions Through June 9, 2007), sets out in detail the procedures required to be followed by postal employees in accepting checks from customers. These procedures include the following: “Verify that the issuer of the check is not on the bad check list. If the customer is on the list, do not accept the check.”[1] (Respondent’s evidence, Ex. B).

3. At the time Petitioner accepted the above described check, All Natural Network Marketing was on the South Florida District “Bad Check List.” This list, for August 2007, was posted on or about August 14, 2007, in a manner sufficient to make window clerks aware of it. The $924.99 check was later returned from Bank Atlantic stamped “account closed.” (Respondent’s evidence, Ex. A, pp. 2-4; Villar Declaration; Thomas Declaration).

4. It is not clear when the Postal Service first became aware that the All Natural Network Marketing check had been returned, but on September 17, 2007, Petitioner’s second level supervisor, the Manager of Customer Services, was notified by someone from the Postal Service Accounting Service Center that Petitioner had accepted a bad check. (Villar Declaration; Respondent’s evidence, Ex. D).

5. On September 17, 2007, Petitioner was issued a Letter of Demand for $924.99 by her immediate supervisor, the Supervisor of Customer Services. (Respondent’s evidence, Ex. A).

6. On September 28, 2007, the Supervisor of Customer Services called someone at All Natural Network Marketing. This person, not further identified in the record, stated that he was unaware that the check had been returned but that he would pay what was owed. On instruction from the Supervisor of Customer Services, he was to mail a money order to the Manager of Customer Services at an address provided to him. (Thomas Declaration; Respondent’s evidence, Ex. G).

7. On February 14, 2008, Petitioner was issued the Notice of Involuntary Administrative Salary Offsets. She filed her Petition for Hearing on February 23, 2008. (Respondent’s evidence, Ex. F; Petition).

8. On April 17, 2008, no payment from All Natural Network Marketing having been received, the Supervisor of Customer Services wrote a letter to the company and again requested payment. The Supervisor followed up with a telephone call on April 22, 2008, to the number listed on the check. She was informed that the number was disconnected. She then called an alternate number and was told by an unidentified man that he no longer worked for All Natural Network Marketing. The supervisor then called the number listed in the yellow pages for All Natural Network Marketing, but was told by a woman who answered the telephone that she was unable to help. (Thomas Declaration; Respondent’s evidence, Ex. C).

9. The F-1 Handbook contains the following provisions regarding returned checks:

321 Collecting on Returned Checks

The U.S. Postal Service has a contract with CSC Services, a check collection agency, to collect on checks returned by the bank. You must use CSC unless previously authorized by Headquarters to use another service.

You may attempt to collect locally; however, checks should be sent to CSC as soon as possible if local check collection efforts are not successful.

* * *

323 Handling Exceptions

* * *

>> If the clerk did not follow proper acceptance procedures, send the check to CSC. If collection cannot be made from the customer within a reasonable time, request the check from CSC and collect the amount due from the clerk.

(F-1 excerpt filed by Petitioner on March 26, 2008).

DECISION

Petitioner has made no argument in this proceeding to dispute the fact that she accepted the check in question without reviewing the bad check list. However, she contends that she should not be held liable because the Postal Service did not follow the procedures prescribed in the F-1 Handbook and did not make a reasonable effort to collect from the maker of the bad check.

Respondent has not addressed the sections of the F-1 Handbook cited by Petitioner (see Finding #9), nor the adequacy of its effort to collect from All Natural Network Marketing, but argues that Petitioner is liable because her failure to follow prescribed procedures for accepting checks from customers directly resulted in a loss of $924.99.

The principle that the Postal Service must attempt to mitigate its damages before collecting a debt from an employee is well established. Javier A. Ybarra, P. S. Docket No. 07-429 (April 29, 2008); Darrell Kirby, P. S. Docket No. DCA 02-498 (April 14, 2003); Michael A. Martin, P. S. Docket No. DCA 00-78 (May 17, 2000); Rita M. Ballard, P. S. Docket No. DCA-134 (June 9, 1992); Paul E. Logan, P. S. Docket No. DCA-105 (September 10, 1991); Coral S. Vellocido, P.S. Docket No. DCA-47 (September 19, 1989).

In the case of a bad check from a customer, this means that the Postal Service must attempt, with reasonable diligence, to collect from the maker of the check. (See Martin, P. S. Docket No. DCA 00-78; Logan, P. S. Docket No. DCA-105; and Vellocido, P.S. Docket No. DCA-47). In this case, there is no evidence that the Postal Service took the action prescribed in Section 321 of the F-1 Handbook. While it may have initially appeared that the supervisor’s September 28 telephone call to All Natural Network Marketing was going to be successful (Finding #6), it must have been known within a short time that it was not successful. However, although it appears that the company remained in existence, nothing more was done for more than six months to attempt collection from All Natural Network Marketing (Finding #8).

On the facts presented in this record, the Postal Service cannot be said to have acted with reasonable diligence to attempt to collect from the maker of the bad check. The Petition is granted. Respondent may not collect $924.99 from Petitioner.

Bruce R. Houston

Chief Administrative Law Judge