Weekly Docket
College Athlete Sues For Wages, DOJ Reviews NAR Settlement, Sports Betting Limits for Winners, and Disability Lawsuit Exploitation
Join Phil Silberman and Austin Black in Episode 28 of the ‘Weekly Docket’ as they delve into the recent U.S. appeals court ruling that could redefine college athletes as employees, entitling them to labor protections. Explore the DOJ's scrutiny of real estate commission structures and the fairness of sports betting companies limiting successful gamblers. Learn about the formation and benefits of nonprofits, and hear a rant on the exploitation of disability lawsuits that burden small businesses. Don't miss this episode filled with legal insights, expert advice, and lively discussions!
Join Phil Silberman and Austin Black in Episode 28 of the ‘Weekly Docket’ as they delve into the recent U.S. appeals court ruling that could redefine college athletes as employees, entitling them to labor protections. Explore the DOJ's scrutiny of real estate commission structures and the fairness of sports betting companies limiting successful gamblers. Learn about the formation and benefits of nonprofits, and hear a rant on the exploitation of disability lawsuits that burden small businesses. Don't miss this episode filled with legal insights, expert advice, and lively discussions!
Welcome to Silverman Law Firm's Weekly Docket, Episode 25, where we talk legal news and practical law. Today is July 25th, 2024. I'm Phil Silverman, owner of the firm, and your host, Austin Black, is my co host and also works in our Dallas office. Austin, how are you doing today?
austin_2_07-25-2024_131922:I am doing well. How about yourself?
phil-silberman_2_07-25-2024_141922:I'm doing well. I understand that you're super excited about the new Wolverine and Deadpool movie. Is that right?
austin_2_07-25-2024_131922:I am excited. I am a big fan of Ryan Reynolds. I think that role is just, I know he made that role for himself. So it's do you know how the first Deadpool movie got made?
phil-silberman_2_07-25-2024_141922:No, I do not.
austin_2_07-25-2024_131922:So people have been asking for a Deadpool movie for a long time, right? And apparently, there had been some test footage that was shot. with Ryan Reynolds in the costume and all that, but it had been stuck in, development, how, a lot of movies get stuck in, right? Then one year, someone leaked the test footage, right? Because the execs didn't think it was going to work, right? Someone leaked the test footage and it just went completely viral over the internet. And then I guess the execs were like, Oh, I guess we have to make it at this point because it looks like people are actually going to go see it. I guarantee you Ryan Reynolds was the one who leaked that footage
phil-silberman_2_07-25-2024_141922:I'm excited about seeing it, although it's not something that I'd like to admit. the first dead, the Deadpool, the first ones, they seemed a little bit raunchy for the, for me, a little bit more risque than some of the other Marvel comics.
austin_2_07-25-2024_131922:Yeah,
phil-silberman_2_07-25-2024_141922:so I, that being said, it's not something I can really encourage my kids to, to go see, but
austin_2_07-25-2024_131922:No,
phil-silberman_2_07-25-2024_141922:I,
austin_2_07-25-2024_131922:should not see it. Unfortunately, that is how the character is in the comics.
phil-silberman_2_07-25-2024_141922:Yeah, I've heard there is going to be a big reveal of a female Deadpool character at the end of this movie. Have you heard that?
austin_2_07-25-2024_131922:yes. that character is in the comics and the joke is that everyone says they either want it to be Ryan Reynolds in a wig or they want it to be Blake Lively, his wife.
phil-silberman_2_07-25-2024_141922:there you go. people, our listeners have not downloaded this podcast to hear us talk about Deadpool, so we have to move along. What's up?
austin_2_07-25-2024_131922:going to get it though. They're going to get it.
phil-silberman_2_07-25-2024_141922:What's on our docket today, Mr. Black? All right.
austin_2_07-25-2024_131922:So today, in our legal news section, we don't have any updates for the first time in a while. but in our legal news section, we're first going to be talking about. whether college athletes qualify as employees, there's some litigation going on that may tend to that direction. and then we're moving on to the Department of Justice, and they're questioning whether a recent real estate settlement went far enough or not, whether they're going to accept this or push for something more. and then sports betting companies. They limit successful gamblers, right? If you're successful in betting on a certain team or group of teams within a sport, and you're too successful, they will similar to a walk off in, a casino, they will stop you from betting, right? Cause they only want the really bad better to
phil-silberman_2_07-25-2024_141922:Yeah.
austin_2_07-25-2024_131922:then we'll move on to our legal questions section, talking a bit about nonprofits, what exactly the purpose of them is. How you form one, and why people might want them. finally, our Rancho Mirror section is talking about disability lawsuits. Every once in a while. favorite subject who is an ambulance chaser. None of us are. But if that's your calling in life, if you want to run after ambulances, we can talk to you about that.
phil-silberman_2_07-25-2024_141922:Yeah, and that's the rant and rave section. It's really about just how abusive some of these plaintiffs shops have gotten with ADA lawsuits. We're going to talk a little bit about that, but let's go ahead and get it started with our legal news section. We've got a College athlete story here. And the idea is that for many years, the N. C. Double A. And I think everyone has is now agreed that this has been one big facade. The student athlete facade, right? That these kids are going to school, and this isn't a big business. And finally, we're all just Mhm. Accepting that this is nothing but a gigantic business and as such, the student athletes are trying to Classify themselves and employees and say, as employees, they're under, they have the right to the same protections as other employees have in our economy. So they, there was a case brought by Ralph Trey Johnson, versus the NCAA and Division One schools. And, Mr. Johnson is arguing that he's an employee for FLSA, purposes. Now the FLSA, are you very familiar with that, Austin, or heard about that? Yeah. That law, that federal law.
austin_2_07-25-2024_131922:think most practicing attorneys are familiar with that law. It's the Fair Labor Standards Act.
phil-silberman_2_07-25-2024_141922:Yeah. Yeah. It originated many years ago, came out of industrialization and it was really designed to keep factory owners from abusing factory workers, by mistreating them and this industrialized old economy. type of environment, and it stayed on the books for a very long time, and then in recent years after tort reform about 10 15 years ago, the plaintiff's lawyers needed something else to do, so they came across the Fair Labor Standards Act and started to apply that law to broad swaths of our economy, alleging overtime violations. So there's a little bit of history for that. Uh,
austin_2_07-25-2024_131922:personally opposed to the FLSA. I think the children need the minds, the children want to work, right? If seven year olds want to be in the coal mines, we should let them. That
phil-silberman_2_07-25-2024_141922:well, their hands are, it's really about the factories because they have small hands and they need to be
austin_2_07-25-2024_131922:They're quick. It helps them with their dexterity. kids nowadays, right? You wonder why so few kids are going into sports. It's because they don't have the dexterity
phil-silberman_2_07-25-2024_141922:right.
austin_2_07-25-2024_131922:factories anymore.
phil-silberman_2_07-25-2024_141922:they, an adult hand cannot reach inside a heavy industrialized machine full of sharp objects and gears to, to fix it.
austin_2_07-25-2024_131922:they are equipped for this.
phil-silberman_2_07-25-2024_141922:yeah.
austin_2_07-25-2024_131922:for this purpose.
phil-silberman_2_07-25-2024_141922:Yeah, while we're on the topic, do you have any grievances under the FLSA that you'd like to tell me about? Austin, isn't it?
austin_2_07-25-2024_131922:no. If I have any grievances of the SFLC, you will not find out until right when I'm
phil-silberman_2_07-25-2024_141922:Okay. Okay. Well, bad news. you're exempt as a professional. So because you're an attorney, they think you're sophisticated.
austin_2_07-25-2024_131922:yeah.
phil-silberman_2_07-25-2024_141922:Yeah, they think you're sophisticated enough toward the overtime. So I can work you to death and not pay you overtime. I want you to know that.
austin_2_07-25-2024_131922:Unfortunately, I'm fully aware of that.
phil-silberman_2_07-25-2024_141922:That, yeah, that's very much the culture of the Silverman Law Firm. we just work people to death and then they resign. all right, Mr. Johnson was a former Villanova football player and he said, hey, I'm out here doing work and if I'm going to work over. 40 hours a week. I'm entitled to minimum wage and tire entitled to overtime and that kind of thing. So they probably are doing a lot of hours, right? When you look at all the practice time and game times and travel time. So they say you got to pay the pay these guys something they're out there working, they're making money and for the school and you got to treat them like employees. What do you think Austin should they be protected? Should these athletes be protected under Minimum wage and overtime loss.
austin_2_07-25-2024_131922:Absolutely, they should be protected. And at the same time, let's do an overview of all these schools and the vastly inflated cost of education in the U. S. It all goes back to that, right? It all goes back to that. We should not only, don't only look at these little symptoms, okay? And be like, oh, we should fix this for this one person. No, okay? The schools, if they're going to charge this much money, yes, they absolutely, these people should be employees. Okay? the professors should not be paying, be paid as much. Okay? They're getting paid. That's a different rant of rapes
phil-silberman_2_07-25-2024_141922:Yeah,
austin_2_07-25-2024_131922:have later.
phil-silberman_2_07-25-2024_141922:I wonder if their scholarships should be credited against their wage. I don't know if, yes, okay, I don't know, that's a policy issue. I don't know if it works like that. let's say, under the FLSA, the Do you get to credit benefits? I don't think you get to credit benefits as additional compensation. I think you have to actually pay the wage. The NCAA's response, no surprise, the employment model would harm the overall college athlete experience. Yes, paying students would harm their experience.
austin_2_07-25-2024_131922:Yeah, that's always what I felt. I felt like when I was an undergrad, if I was making more money, that would really
phil-silberman_2_07-25-2024_141922:yeah.
austin_2_07-25-2024_131922:my experience. It would take away all the cup ramen from
phil-silberman_2_07-25-2024_141922:yeah.
austin_2_07-25-2024_131922:Yeah.
phil-silberman_2_07-25-2024_141922:When I was in law school, I was, I, I was about as poor as it could possibly get. I had student loans and everything. And I can promise you that paying me something would have certainly alleviated some pain, but
austin_2_07-25-2024_131922:no, we're not talking about alleviating pain. We're talking about harming the experience, right? a different thing, right?
phil-silberman_2_07-25-2024_141922:I was better off. The fact that I was
austin_2_07-25-2024_131922:off!
phil-silberman_2_07-25-2024_141922:the fact that I was more poor. We're going to see how this case shakes out. There's been a lot of movement in N. C. Double A. Athletes getting a lot of rights name and image likeness and N. I. L. Money. There's been movement in compensated. We all know about the transfer portal, and it has become big business. the college playoffs has now been expanded. I can't remember if it's 12 teams or 16 kids or what the number is. But college playoffs are expanding, and it's just a money thing. The college playoffs are gonna go well into. I think, late January or maybe even February now. I don't know, but it's, you're going to be watching college football, on into well into 2025 this year. So everyone can make a lot more money. We'll update our listeners, see how that shakes out. Let's move on to our next new legal news piece. We've got the DOJ, the Department of Justice questions, whether the real estate settlement goes far enough. So a little reminder, there was a big NAR lawsuit for many years. Realtors have been accused of having monopolistic tendencies. And finally, there was a class action lawsuit and a settlement. That, basically said, okay, realtors, you're no longer to keep this tight fisted control of commissions. The standard fees for selling a house is about 6%. Typically, the seller's realtor keeps 3 percent and then the buyer's realtor is paid 3 percent effectively by the seller. And when you put a house in the MLS rules were requiring the offering of 3 percent commission to the buyer's agent and the argument by the plaintiffs in this case was that artificially inflated, commissions for the transaction cost and the settlement says from now on, you're not required to put an MLS offer in the property. So you could just say, hey, I'm not offering anything at all. You could say, hey, buyer, you, you pay your agent or you could, you maybe offer, half a percent or 100. It gets a lot more flexible. That's effectively what the settlement does. I think it's a good thing. And I'm also a real estate. I'm a real estate broker, been a long time real estate broker. I own a real estate company. I'm currently in the process of launching a discounted fees model as part of my real estate company. As a result of this lawsuit, I think this lawsuit has finally publicized the flexibility of the commissions enough to where the public is ready and accepting of these flexible commissions. But the DOJ is now reviewing it and saying, okay, Settlement may not go far enough. What do you think, Austin, settlement goes far enough or you want to see the realtors disgorge and give up more commission?
austin_2_07-25-2024_131922:I, okay, so I don't really think I have a huge amount of experience in this area to make a statement one way or another. My initial implication is I don't like realtors, so anything that takes away more money from them, I'm happy with. But aside from
phil-silberman_2_07-25-2024_141922:we, whoa, we have a lot of realtor listeners out there. Okay. but I'm apologizing to all of our realtor listeners and our realtor clients. We love you by the way. Go ahead. Yeah.
austin_2_07-25-2024_131922:my experience with realtors is usually coming across the worst of the worst, right? Because I'm suing them, right?
phil-silberman_2_07-25-2024_141922:Okay, there you go.
austin_2_07-25-2024_131922:that there are great realtors out there. My experience is a little bit jaded with that. But no, in actuality, I don't think I have a huge amount. I don't know much about the market when things go really bad. And so yeah,
phil-silberman_2_07-25-2024_141922:you actually know more than you do than you think because what's often happening is people call our law firm sellers call our law firm and they're saying, Hey, I'm using a discount broker. I'm using a flat fee MLS service where they're paying a thousand bucks or something to put it in the MLS, but they want attorney support. So they know that they're going to hire our firm for, I don't know what we charge, a couple grand or something to go through the whole process. And you're representing them. And Austin, you're providing a service, a similar service that the realtor would provide by giving them counsel and doing their contracts and looking over their settlement statement. You're just being paid, you're just being paid a legal fee, not a commission. Which if the guy's selling a million dollar house and he's got to pay three percent that's 30 grand He's very happy to pay our law firm two grand instead of you know Another 30 grand or for seller representation. So
austin_2_07-25-2024_131922:absolutely.
phil-silberman_2_07-25-2024_141922:you're in the trenches austin. You just didn't know it.
austin_2_07-25-2024_131922:Ah, so I'm just taking all the jobs what you're saying.
phil-silberman_2_07-25-2024_141922:Yeah, you're like ai you're you're like the ai Job killing machine for real the realtor should hate you
austin_2_07-25-2024_131922:went to school for a really long time to do real
phil-silberman_2_07-25-2024_141922:Heh. Look, I, it's hard to say. I, and I'm, I want real, I do think realtors provide, some sort of valuable service. I do think in some situations there, it's a rip off. they're overpaid. it doesn't take any more time to sell a 2 million listing than say a 500, 000 listing. So I don't think You know, some of these very large commissions, I think sellers, listeners out there, if you're selling your home, buyers out there, these commissions are in fact negotiable, the realtors are fine with negotiating, you should negotiate that commission fee. If you're not comfortable doing it yourself, you can hire a law firm to negotiate that listing agreement for you, and even help you find a realtor that's going to negotiate it. The DOJ out there is saying, hey, they're examining this, maybe not going far enough. They may not approve the settlement agreement, Austin. In which case, that's going to have to, they're going to have to go back to the drawing board on that agreement and do a deal. And this, the settlement agreement was a big deal. They basically got a book. They basically had almost all the brokers across the entire country. their liability was relieved as part of the settlement agreement with the exception of some big brokers who were still negotiating. So if they go back to the drawing board, I think there's a bit of peril that may occur for some of these small brokers. So we'll keep our eye on that. and see what happens if they make them go redo this thing or not. But I think the,
austin_2_07-25-2024_131922:if the DOJ reviewed every single settlement in the U like a
phil-silberman_2_07-25-2024_141922:we,
austin_2_07-25-2024_131922:dispute, the DOJ is nah, no, we're not okay with that.
phil-silberman_2_07-25-2024_141922:we'd never get anything done. we would never get anything done. We would just be locked in gridlock.
austin_2_07-25-2024_131922:DOJ.
phil-silberman_2_07-25-2024_141922:All right,
austin_2_07-25-2024_131922:Okay. Yep.
phil-silberman_2_07-25-2024_141922:The D. O. J. I. Let's move on to our next legal news section. We got three legal news pieces here this week just because I thought some of this stuff was pretty interesting. Sports betting companies limit successful gamblers. is it fair? I didn't know this, but if you're doing a lot of online sports betting, Some people are really good. There are some guys out there that have developed some mathematical models. I thought of doing, because I'm a big tennis guy, right? I play a lot of tennis and I watch a lot of very obscure tennis matches on the tennis channel. And I go to tournaments. I see these guys in person. I've got friends that have coached on tour and I'm in the know on this stuff now. I'm not like I'm not like traveling around with these guys like every tournament, but. I had this idea. It's could I develop so much tennis knowledge and maybe partner with some guys on tour that were and I would develop this mathematical model and I would just like just absolutely dominate tennis sports betting. I'm glad that I did not invest in that because apparently these private sports betting facilities, these companies like DraftKings or whatever, they would not appreciate that. They don't like winners. They want losers. So all those commercials out there about DraftKings, they're like, yeah, it's so fun as long as you lose with us. As long as the house wins and you lose, they're fine. But if you do it in an educated fashion and you have a mathematical model, they're going to say, hey, you, you can't, you can't bet with this anymore. And we've got some examples here. This guy, Michael Holt, he placed 1, 000 in wages and won 1, 200 only to find his bets were limited. I guess ESPN bet. And, and Caesar's limited as low as five bucks. I don't want you in another guy, David, Dave Holmes. he was up nearly 50 grand. Using mathematical strategies, but he's now facing, betting limits. there's some legislation coming out of some states now looking at fairness and trans transparency, and there may be some movement in the, among The state legislatures in trying to say, Hey, you can't limit this. you got to take all betters, even the really good ones. I don't know. How do you feel about that, let me make the case, let's say I'm counsel for DraftKings. And I'm like, judge, you're honored. It, my, my client is a private business. They're a for profit corporation. And they're allowed to make independent decisions. And just maybe if maybe a restaurant Austin that owns, owns, it runs a buffet, like you don't, you can't discriminate, but maybe they can't let people that eat a lot in,
austin_2_07-25-2024_131922:Okay, then have that in your, I'd be interested to see like the terms of their agreement, the terms of their end user, but end user license agreement on
phil-silberman_2_07-25-2024_141922:Yeah.
austin_2_07-25-2024_131922:to see exactly how they state that you can be limited. what are the metrics
phil-silberman_2_07-25-2024_141922:Yeah.
austin_2_07-25-2024_131922:Is it just completely arbitrary? Like they decide who they think goes too far? I think as long as and it goes back to the fairness and transparency thing. As long as it's fully disclosed at the beginning, once you're looking at those terms of agreement, there's, the, that end user license agreement for the betting, service, that you understand at what point you can be limited, I think it's all fair game. If that's not clearly defined, then no. I don't think
phil-silberman_2_07-25-2024_141922:All right.
austin_2_07-25-2024_131922:fine or
phil-silberman_2_07-25-2024_141922:yes.
austin_2_07-25-2024_131922:of good bettors, right? That is it.
phil-silberman_2_07-25-2024_141922:you're allowed to discriminate against smart people. Yeah,
austin_2_07-25-2024_131922:class.
phil-silberman_2_07-25-2024_141922:but I wonder back to my restaurant example on the buffet example, if I own a Chinese buffet,
austin_2_07-25-2024_131922:Yeah,
phil-silberman_2_07-25-2024_141922:I think it might be illegal to discriminate against fat people.
austin_2_07-25-2024_131922:probably.
phil-silberman_2_07-25-2024_141922:Yeah.
austin_2_07-25-2024_131922:I will say, I don't think I don't think obesity has been held to be a protected class
phil-silberman_2_07-25-2024_141922:Maybe is it a disability though under the ADA? Is it a disability? I don't know.
austin_2_07-25-2024_131922:Being obese? Yeah, I'm not sure.
phil-silberman_2_07-25-2024_141922:I, but can I offer half off for anyone on Ozempic? I, I don't know.
austin_2_07-25-2024_131922:Probably not.
phil-silberman_2_07-25-2024_141922:did I pronounce that right? Is that the right name of that drug, Azimpec? I don't know.
austin_2_07-25-2024_131922:there was a, I don't know if you know what this game is, there was a, ramen place in China that offered people discounts based on their League of Legends rank for a long time,
phil-silberman_2_07-25-2024_141922:Okay.
austin_2_07-25-2024_131922:like a video game.
phil-silberman_2_07-25-2024_141922:Okay.
austin_2_07-25-2024_131922:so if we did things like that here, I think, as a promotional, I think it's okay, but
phil-silberman_2_07-25-2024_141922:Yeah,
austin_2_07-25-2024_131922:into, can you give discounts to people on Ozempic? I think it's really hard to regulate that. Yeah.
phil-silberman_2_07-25-2024_141922:like our piece, our news piece last week where we talked about ATM fees and how the, the bank was at city group was sued for, discriminate reverse discrimination against white people for charging them fees. And so you have protected classes out there and. Certainly smart people are not a protected class, so I think this is good.
austin_2_07-25-2024_131922:against. It's
phil-silberman_2_07-25-2024_141922:I don't know how smart I am, so I may not be in that group. So, I think this is going to come out okay for DraftKings. I think the House can tell smart people that they're not allowed to bet. they prey upon stupid people. And as a public service message, I'm not a fan of gambling. I don't think people should do it. I think it's a bad thing. I think it ends in a lot of pain for a lot of households. but there are some people out there that, swear they can do it responsibly. All right, let's move right along and we are going to answer some legal questions. And we're going to start, we have one legal question. And we're going to start off with this kind of a little bit or a lot about nonprofits. and why you might want to form one and how to form one. Did you, I mean do you ever, you take a lot of calls Austin, I mean do you ever get any calls for the law firm where it's like someone's like I gotta have a non profit or not really?
austin_2_07-25-2024_131922:Not usually most people calling me, they want profit.
phil-silberman_2_07-25-2024_141922:I've been doing it obviously for many, years and We routinely get calls where someone calls. I'm like, I just had one today. Actually, I was doing a call and I've got to have a nonprofit and we're like, and they don't really need a nonprofit. they're not, there's some sort of urban lore or some sort of, rumor out there or some court, some sort of myth that having a nonprofit is some way, some hack, some life hack, to financial stability, to wealth. It's almost like a cheat code. And I don't really get it. I think what's going on is they're hearing the term non profit and if I have a non profit then I can earn income and not pay tax on it.
austin_2_07-25-2024_131922:Yeah, that's not usually if you hear about wealthy people, like the Gates foundation, things like that, people having nonprofits, the wealth comes before the nonprofit doesn't develop.
phil-silberman_2_07-25-2024_141922:you, some people, need, if you're out there and you're calling us for a legitimate purpose for a non profit, by all means, some people need non profits, right? We have a def in the comment section. You thought you file a nonprofit certificate of formation with the Texas Secretary of State and their corporations. And I've got, I'm not gonna read this whole quote, but they're formed for the purpose of operating a nonprofit institution, charitable, benevolent, religious, patriotic, civic, cultural, missionary, education, scientific, and so on and so forth. All of these admirable things. that we want to encourage. You have to do one of those things to actually be a non profit and qualify. So people call us up thinking, I'm really want to be in a private business, but I want it to be a non profit. And that's not the way it works. If you're doing that, that's not going to work. And by the way, you don't really save taxes because I guess you could rig it and cheat the system and use it as a tax shelter, but if you're, if you were operating a business out of a non profit. And maybe you don't end up paying corporate income tax, like a C corporation, Austin. A C corporation pays corporate income tax, and then it pays salaries, and the employees pay taxes on those salaries. And then if a C corporation makes a dividend, taxes are incurred on those dividends, right? if you're a non profit, you don't really disperse profit, so there's no tax, but if, but when you pay your employees salaries, they're getting taxed.
austin_2_07-25-2024_131922:Absolutely. it's not a tax ex, there are some parts of this that are tax exempt, yes, but not everything. No.
phil-silberman_2_07-25-2024_141922:yeah, you could try to kind of rig the system and maybe have, take in donations and hold the donations in the, in, in your nonprofit coffers and defer tax. Okay. Now my, my people, some of my listeners said, Phil, Hey, when you start talking, I'm going to stop there. Because I had one listener say, tell me, oh, I don't know what the topic was, but they're like, Phil, do you just realize that you gave someone the instruction on how to do something, inappropriate, right? I don't remember what we were talking about, Austin, and maybe we did, it was part of an example. So I'm going to stop, and I'm not going to say any more about how, if, if I were to rig, if I were to use a nonprofit as an illegal shelter, tax shelter, I'm not going to go any further, okay? But.
austin_2_07-25-2024_131922:that, that is what lawyers do,
phil-silberman_2_07-25-2024_141922:Yeah, no, we don't, we're not supposed to set up illegal tax shelters in,
austin_2_07-25-2024_131922:you said we gotta keep it honest. We
phil-silberman_2_07-25-2024_141922:right?
austin_2_07-25-2024_131922:it open.
phil-silberman_2_07-25-2024_141922:no, we're not. We're not doing that. Okay. There is an element of a joke or an idea, just like the NCAA and student athletes being a bit of a farce, there's an element of a lot of these big non profits, actually being non profits, ridiculous. And here's an example we have. A lot of these big hospital systems, at least in Texas, and I've got an example of the Methodist Hospital in Houston. There is a different Methodist in Dallas. I'm talking about the Methodist Hospital in Houston, the hospital system. It's actually a foundation. It's a type of non profit. I'm not going to go into exactly what a foundation is right now. But the Methodist Hospital is a 501c3 foundation. 501c3 is the provision in the IRC, the Internal Revenue Code, and Methodist, you go and you can have babies there, you can get surgeries there. It's a big hospital, Austin, okay?
austin_2_07-25-2024_131922:do need to be pregnant first, but you
phil-silberman_2_07-25-2024_141922:yeah,
austin_2_07-25-2024_131922:have
phil-silberman_2_07-25-2024_141922:don't. They're not, you can't go there to have a baby, but yeah. it's a big hospital that offers, millions or billions of dollars in revenue. I don't remember what it is. But the CEO, okay, this is a court, I may have mispronounced this, correct me if you know it Austin, according to
austin_2_07-25-2024_131922:Pro publica. Pro
phil-silberman_2_07-25-2024_141922:ProPublica, Mark L. Boom was the CEO of, maybe still be the CEO of Methodist Hospital Systems, and in 2022 his annual compensation was 4 million, 4 million a year. Now, the people look at that and they're like, alright, is Methodist really a non profit?
austin_2_07-25-2024_131922:no. He's just taking one for the team. that has to go somewhere. people do with it? It's
phil-silberman_2_07-25-2024_141922:Yeah. Yeah, it's specifically what you cannot do and the IRS, if you want to lose your nonprofit status really quickly, what you cannot do is basically set up the nonprofit and then pay inflated salaries. Now I'm not, his argument and Methodist has been around a long time and they've got some very sophisticated and smart attorneys and tax planners and tax consultants who would also be prohibited from gambling at DraftKings. Okay, just so we're clear. They're going to argue that's just what it costs to run an organization that size and that's not an inflated salary. Okay, so be it. We're not going to go down that path. If you want to form a non profit in Texas, you've got a valid reason. Maybe you've saved some money. You feel passionately about the arts. You feel passionately about some missionary work, whatever, whatever is for the public good. You can call, a law firm, have them form a not for profit corporation in Texas. It's a 25 filing fee with the Secretary of State. and you, here's the thing, you have to have three board members. on this corporation. That's different than a regular corporation, a for profit corporation. You have to have three board members, you get it formed, and now that just, they'll form it, but that does not give you 501c3 status. That is a separate process within the Internal Revenue Code. That is like step two. You can try to do that yourself. You can file form 1023 with the IRS. You can hire a tax lawyer to do it. the big requirement is you've got to do these annual filings with the IRS and you've got to maintain that, that status, okay? that's non profits in a nutshell. Anything you want to add to that, Austin, or any other comments about non profits?
austin_2_07-25-2024_131922:No, I think we've pretty much wrapped that up again. We do handle these from time to time
phil-silberman_2_07-25-2024_141922:yeah.
austin_2_07-25-2024_131922:most of the time when people call thinking that they need a non profit they don't actually need it I think usually when people have called us and they're clear that they need a non profit It's because they usually Have a pattern of giving charitable donations and they want a more efficient way to do that. those are usually the people that call us with this sort of thing. It's usually some sort of organization, a large family that has a business, something like that. So
phil-silberman_2_07-25-2024_141922:Okay. I trust that this legal question has been very profitable. So we will move right along to my favorite section of the show, our rants and raves section. And we're talking about just exploitation of disability lawsuits. A recent WSJ article, Wall Street Journal article talking about there's some law firms out there specializing and then they're filing thousands of disability lawsuits across the country. Great. alleging that small business owners in Austin, we're technically a small business. I know that we're not, their firm's a lot smaller than ours, but we're, compared to IBM, we're small. Okay. they're saying these small business websites need to be ADA compatible. They need to be disability compatible. I guess for blind people. and I didn't know anything about this. Isn't, I thought there were third party websites out there that, that are software out there or vendors out there. They would, you would just, if you were blind, you'd have the software set up and it would read the website to you, right? Maybe.
austin_2_07-25-2024_131922:I don't know. I'm, I was like thinking more like you have a
phil-silberman_2_07-25-2024_141922:Yeah.
austin_2_07-25-2024_131922:and it like makes the little Braille bumps. Like you just got your hands all over the screen. maybe
phil-silberman_2_07-25-2024_141922:No, I don't know if that's how it works. There was a guy, Bob Kramer, in Kramer Knives. Kramer was sued by, Oh, am I allowed to call him blind? Because I see Aaron, our producer here, Austin, put in visually impaired.
austin_2_07-25-2024_131922:can say blind, everyone knows what it means, I've never heard anyone be offended by the term blind. If people are offended by the term blind, I would say be a little less sensitive, because you know exactly what it means.
phil-silberman_2_07-25-2024_141922:Yeah, all right. Visually impaired plaintiff who claimed the website wasn't accessible. you're out there selling knives. Maybe they got you know what flashes. I don't think we use flash anymore, but
austin_2_07-25-2024_131922:has been out of usage for a while, but
phil-silberman_2_07-25-2024_141922:Okay, back in the day, you'd have these big, beautiful flash websites and it was bad for SEO for search engine optimization because, you couldn't really You couldn't really Read the website, right? It was all this visual, flash stuff So maybe the site had a lot of video on it without words. Maybe it had flash I don't know but this guy gets sued in New York Supreme Court in Queens 20 grand and Says hey your website isn't ADA compatible and the problem and here's the rant and rave with this These are really nuisance value lawsuits. if there's a big plaintiff shop all over the country, they're filing tons of nuisance value lawsuits and saying, hey, settle with me for 10 grand, 15 grand, 20 grand, because they know the cost of the defendant, that small business owner, going out there and hiring counsel and defending the lawsuit is far in excess of what they're demanding on the nuisance value. I think that is a just, rampant abuse of our justice system. And I think there should be some checks and balances on it. We do, our firm, Austin, does benefit from nuisance value lawsuits because a lot of times the defendants have to call us and at least we have to put up some defense, at least answer the lawsuit and try to settle it, right? And when that happens, we usually say, hey, we'll answer it, we'll try to settle it, but we'll try to save you as much money as possible. We just don't want to spend money on attorney's fees.
austin_2_07-25-2024_131922:Mm
phil-silberman_2_07-25-2024_141922:Um, this was the strategy with the FLSA. We talked about the FLSA lawsuits. When tort reform happened, I think it was 2012 in Texas, I can't remember when it was no longer profitable to sue doctors because you could not get more than, I think, 250, 000 in punitive damages. So the plaintiff's attorneys were going, we got to find something else to do. They got on the FLSA bandwagon and they sued some very large companies. And I think the first case is actually started with strippers, but yeah, it was because the strippers were paid as independent contractors.
austin_2_07-25-2024_131922:Ah, yes.
phil-silberman_2_07-25-2024_141922:So like when you go down to your local strip club and you're watching Coco or something like that, she was paid. Yeah. Paid as an independent contractor.
austin_2_07-25-2024_131922:Yeah, that's a travesty. Travesty. Yeah.
phil-silberman_2_07-25-2024_141922:Yeah, the and it's most a lot of strip clubs are in Houston So I think they did this with the strippers against the strip clubs all the big ones got cleaned out You know once
austin_2_07-25-2024_131922:I was part of a group where I was trying to convince to go, and I was like, nah, I'm good. I'm not interested in anything like that. You guys can partake, but I'm good.
phil-silberman_2_07-25-2024_141922:okay, Austin is not a fan of the strippers
austin_2_07-25-2024_131922:Not a
phil-silberman_2_07-25-2024_141922:strip So most strippers seem to come up on this show a lot. I don't know why that is but Yeah, they The big companies, I don't know, I think Walmart was maybe sued under, I don't know, but there's all kinds of big companies that were probably originally sued under this,
austin_2_07-25-2024_131922:The Walmart lawsuits were relating to Walmart strippers, right? That they have in Is that
phil-silberman_2_07-25-2024_141922:Walmart, FLSA, okay, and see if you can find a case site or something.
austin_2_07-25-2024_131922:of labor recovered, it caught the, apparently some costs them like 5. 3 million for 4500 Walmart
phil-silberman_2_07-25-2024_141922:what year was that?
austin_2_07-25-2024_131922:2012.
phil-silberman_2_07-25-2024_141922:Okay, that's about the time frame, right? Because you, once Walmart gets popped, all the other big companies, all the other fortune 500, they're not stupid,
austin_2_07-25-2024_131922:Yeah.
phil-silberman_2_07-25-2024_141922:They, the general counsel like goes into full kind of remedial mode, all the policies change and the plaintiff's attorneys have no one left to sue. And then they just keep going further and further down the food train. until they got to strippers. So that's, and I was, by the way, I had my real estate company. I had this big apartment locating company. We were sued under the FLSA where all my apartment locators got together and said they, they weren't really independent contractors. They were misclassified and they're properly employees. And I spent two or three years defending that lawsuit. That's how I learned so much about the FLSA. And there was,
austin_2_07-25-2024_131922:You had to pay like a 20 million settlement, right?
phil-silberman_2_07-25-2024_141922:I settled.
austin_2_07-25-2024_131922:Was it
phil-silberman_2_07-25-2024_141922:I settled it. I, it's a confidential settlement.
austin_2_07-25-2024_131922:settlement. Okay. Okay.
phil-silberman_2_07-25-2024_141922:I, I can't, the Department of Labor may or may not have reviewed it,
austin_2_07-25-2024_131922:Okay. Okay. Okay.
phil-silberman_2_07-25-2024_141922:the, but yeah, I settled and it was a it, but once I, then we updated all our policies and all that kind of stuff. So
austin_2_07-25-2024_131922:Phil, did you want to settle or did you just want to fight? Which one
phil-silberman_2_07-25-2024_141922:it's,
austin_2_07-25-2024_131922:to do? I
phil-silberman_2_07-25-2024_141922:it's,
austin_2_07-25-2024_131922:did. Which one did you want to do?
phil-silberman_2_07-25-2024_141922:I wanted to fight. But it was actually interesting because it was going to have far reaching effects for realtors because the apartment locators are licensed real estate agents I was in talks with I think the general counsel of the Texas Association of Realtors and we were in talks about maybe trying to get them to sponsor some of the lawsuit and the legal fees because it was getting expensive
austin_2_07-25-2024_131922:Yeah.
phil-silberman_2_07-25-2024_141922:but they wanted control of the case and I think they wanted to actually take it to a verdict. And that business was at stake and I didn't want to necessarily.
austin_2_07-25-2024_131922:Yeah. That makes
phil-silberman_2_07-25-2024_141922:put it on the line. So I think I ended up, yes, I ended up backing off and settling. We ended up with some really cool strategies, but, yeah, there's a lot of nuisance value stuff going on there's a big kind of industry of plaintiff's attorneys. I think some of them are still doing this FLSA stuff where they're just, they'll find like one employee and they'll say, I'm demanding 2, 000. And if you don't pay me, the FLSA guarantees my legal fees. And they'll just keep going until you pay. So some similar, this is similar with what's going on with this, a DA stuff, another federal law that's being exploited. I think this is a, A does not serve the justice system. I don't think this serves the plaintiffs very well because they end up just, why is the plaintiff going on going through all this thing to get two grand?
austin_2_07-25-2024_131922:You know who it
phil-silberman_2_07-25-2024_141922:It's the law.
austin_2_07-25-2024_131922:The attorneys, right?
phil-silberman_2_07-25-2024_141922:yes. This is who this is serving. All right. That's I'm fine. I'm just fired up when I get fired up like that. I, I, we got to shut the show down. Okay. I've been your host Phil Silverman. Austin Black has been my cohost. Like us, follow us, review us wherever you get your podcasts. Nothing in the show is to be considered legal advice. And this has all been for entertainment purposes. If you have a legal question, email us at info. I N F O at SILB. SIL be like boy law firm dot com and say you want it publicly answered in the podcast. We will do our best. So thank you everybody. Have a good afternoon and we appreciate you listening.
austin_2_07-25-2024_131922:Thanks guys.