DRR … steps to take now.

28 10 2008

If you are a member of Digital Railroad, you are probably scrambling to deal with their shut down.

Photographers rushed to get their images before the shut-down. But what about the money you have spent in advance (say you paid 12 months in advance to secure a discount)?

Eleven out of 12 account members who pay annually (perhaps it is really 364 out of 365), have paid for a service that they will not be getting.

It is time to consider what rights you have here.

This situation frankly leaves me with more questions than answers as I don’t know much about liquidating a company, but I see some answers in contract law concepts. Most of this discussion is academic, since if they are truly broke, you don’t have much hope of getting the money back.

I see a few options:

  • First, you can ask for a refund. Maybe you will get one. You will probably have to go through these people: Digital Railroad, Inc, c/o Diablo Management Group, 1452 N. Vasco Road, #301, Livermore, CA 94551 (I would do this sooner rather than later- they will run out of money eventually)
  • You can try suing for your money back. Now is the time to contact your attorney to get advice on if you might have a chance at getting some of your money back. Certainly, the creditors will be beating down their doors, and if this ends in bankruptcy, you will be at the end of a very long line (if you have any rights at all). On the flip side, if they have been bought by another company, that company might have responsibility to pay DRR debts (your attorney should know). You will have to sue in New York Court.
  • If you signed up within the last month, you might want to call your bank or credit card company and ask them if it is possible to refute the charge. Tell them that DRR has stated that they will not be providing the service that you bought.

Finally, since the website went down, so did your ability to access those terms and conditions that will guide a court in determining if you get your money back. Hopefully you kept a copy for yourself when you signed up. If you didn’t, email me. I copied the Terms and Conditions from today and will send you what I have. They were updated in August.

A couple of things that are important elements of the current terms and conditions:

  • under the agreement, the law of New York apply, and any suits must be filed in New York. Lucky if you live in NY. Not so lucky if you live in Hawaii. Not so lucky either for the management company that is based in California.
  • Under the agreement, their liability is limited to the amount of money that you have paid to them. (don’t try to charge them your day rate for the trouble of downloading your archive)
  • Don’t expect to get anything at all from a company who has no money (although we don’t really know if they are completely broke or not)

Final notes:

  • You should sign up with another service provider and migrate your workflow as quickly as possible. You don’t want the failure of DRR to cost you business.
  • You should evaluate all of your other business relationships. For any vendor that you have, for any business that you rely on- ask yourself where you would be if they went under. This includes your website provider, your email system, your print fulfillment service, even your cell phone company… every service that is critical to your connection with customers. You should have a back-up plan for each of these. The economy is bad, and DRR is just one of many companies that will fail.
  • For that matter, look at your client base. If your main client goes out of business, where will you turn to pick up new business. Have a plan.

Reminder. This should not be considered legal advice. For that you should consult an attorney, not a blog. As a law student, I don’t have experience or expertise in bankruptcy law, and do not practice law. This blog merely raises issues and discusses them from the perspective of the author.

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