In this article, we discuss Specs’s non-compliance with the PCI DSS and liability for card brand assessments, as well as its suit against the TABC. We also examine the company’s motion to dismiss based on qualified immunity. Read on for some unique insights from Specs’s employees. What is it like to work for Specs Family Partners Ltd?
Specs’s non-compliance with PCI DSS
First Data, the credit card processing company, argues that Spec’s breached the Merchant Agreement by failing to comply with PCI DSS and is therefore liable for the losses. Spec’s denies this, stating that it has taken measures to meet the standards.
Spec’s Family Partners, Ltd. operates dozens of liquor stores throughout Texas that accept payment cards. The acquiring banks sponsor merchants in the system and process transactions, and the intermediary companies contract with the banks to issue and receive the cards.
Specs’s liability for card brand assessments
The US Court of Appeals for the Sixth Circuit recently ruled that a merchant’s liability for card brand assessments was limited by an indemnity clause. The indemnity clause required the merchant to reimburse First Data for any losses caused by a card brand’s use of its service. However, the limitation of liability clause exempted the parties from liable for indirect or consequential damages. The court noted that the card brands may charge different fees for the same authorization.
The payment industry refers to card brand fees by several names, including interchange fees, network and association fees, and assessment fees. Understanding the difference between these terms is crucial when you discuss your rates with a payment processor. If your rate is higher than the average fee charged by a payment processor, you may need to negotiate a lower rate with the network. In addition, the liability for a card brand assessment is greater if your payment processor does not charge you any other fees for a particular brand.
Specs’s suit against TABC
Specs Family Partners ltd. is a liquor store chain in Texas that operates stores under the brand name Spec’s Wines, Spirits & Finer Foods. The TABC accuses Spec’s of violating numerous state laws and regulations. Spec’s’s suit claims that the TABC failed to provide witnesses with evidence, stacked the charges and made no substantive findings. The suit claims that Spec’s violated these laws and regulations and caused its reputation to suffer. In addition to these violations, Spec’s claims that the TABC fabricated evidence against them in order to make a settlement offer and to justify a SOAH proceeding.
The TABC threatened to revoke Spec’s licenses and fine it $713 million if they did not settle. After Specs refused, the TABC filed a Notice of Violation against the company. The notice alleged that Spec’s had violated numerous laws and regulations. The suit also alleged that the company had violated numerous state and local laws and regulations. The suit further alleges that the TABC was guilty of a series of violations and improper spending and abused companies.
Specs’s motion to dismiss based on qualified immunity
The court found that Specs failed to plead enough facts to state a constitutional claim. A plaintiff must identify a protected interest and establish that it was infringed. If a plaintiff fails to prove the deprivation of that interest, the court will find that the complaint is frivolous. Specs argues that its failure to plead enough facts would defeat its constitutional claim.
The Pearson case addressed the Saucier two-step qualified immunity analysis, which disserves the purpose of qualified immunity. This approach forces parties to bear additional burdens of the suit, such as litigation of constitutional questions and delays in resolving these issues. In contrast, a Section 1983 lawsuit can be settled much more quickly if the parties can reach a resolution of these constitutional issues on their own.