Michael C. Wagner

Partner

EDUCATION
  • Franklin & Marshall College
    B.A., Government 1992
  • University of Pittsburgh School of Law
    J.D. 1996, Lead Executive Editor, Journal of Law and Commerce
ADMISSIONS
  • Pennsylvania
  • USCA, Third Circuit
  • USDC, Eastern District of Pennsylvania
  • USDC, Western District of Pennsylvania
  • USDC, District of Colorado
  • USDC, Western District of Michigan
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Michael C. Wagner is a partner in the Firm’s corporate takeover and stockholder derivative department, prosecuting breach of fiduciary claims against public company officers and directors on behalf of the firm’s individual and institutional clients.   

A seasoned litigator with nearly 20 years of trial and appellate litigation experience, Michael has previously represented Fortune 500 companies, venture capital funds, and financial institutions in a wide variety of matters.  His work focuses on the nuanced duties owed by officers and directors to stockholders in the context of mergers and other fundamental corporate transactions.  Michael frequently appears for the Firm’s clients in the Delaware Court of Chancery and other jurisdictions across the country.   

Experience
Ongoing Cases
  • Kessler Topaz recently defeated efforts to dismiss litigation regarding Delek US Holdings, Inc. (“Delek”) and its 2017 squeeze-out of the public investors in Alon USA Energy, Inc. (“Alon”).

    Delek had become Alon’s controlling stockholder in 2015 when it purchased 48% of Alon’s common shares in a block sale from Alon’s then largest shareholder, Alon Israel. In that sale, Delek paid approximately $16.99 per Alon share. Ordinarily, Delaware law would prohibit Delek from acquiring the rest of Alon for a period of three years once Delek acquired an ownership stake that large. But instead, Alon’s board of directors approved the sale and shortened the statutory period from three years to one year. During that one year period, Delek was contractually required to not seek to acquire the remaining shares of Alon stock. However, after the merger of Alon into Delek was announced on January 3, 2017, the proxy revealed that almost immediately upon Delek’s block purchase of Alon stock, discussions ensued regarding a potential combination of the two companies.

    In fact, the proxy demonstrated that Alon’s board of directors immediately formed a special committee to evaluate an eventual combination of Alon and Delek. For months, the chairman of that special committee chased Delek for a deal, repeatedly bidding against itself. Ultimately, a merger was agreed to at an exchange ratio of 0.504 shares of Delek stock for each share of Alon stock, reflecting a value of $12.13 per Alon share, a significant discount to what Delek had paid for its initial stake.

    Believing the terms of the merger were the result of an unfair process and undervalued Alon’s common stock, Kessler Topaz initiated litigation alongside Delaware co-counsel in 2017. Defendants moved to dismiss the action in July 2018.

    The Court of Chancery denied defendants’ motions to dismiss on June 28, 2019. Nearly all of the claims asserted by Kessler Topaz survived. Also, because substantive merger negotiations began in the one-year period where Delek was contractually required to not seek to acquire the remaining shares of Alon stock, the Court of Chancery sustained plaintiffs’ statutory claims that the merger was invalid under Delaware law. This case is now set to move forward into discovery where Kessler Topaz will seek to prove that the merger was unfair for all of Alon’s former minority shareholders.

    Kessler Topaz recently defeated efforts to dismiss litigation regarding Delek US Holdings, Inc. (“Delek”) and its 2017 squeeze-out of the public investors in Alon USA Energy, Inc. (“Alon”).

    Delek had become Alon’s controlling stockholder in 2015 when it purchased 48% of Alon’s common shares in a block sale from Alon’s then largest shareholder, Alon Israel. In that sale, Delek paid approximately $16.99 per Alon share. Ordinarily, Delaware law would prohibit Delek from acquiring the rest of Alon for a period of three years once Delek acquired an ownership stake that large. But instead, Alon’s board of directors approved the sale and shortened the statutory period from three years to one year. During that one year period, Delek was contractually required to not seek to acquire the remaining shares of Alon stock. However, after the merger of Alon into Delek was announced on January 3, 2017, the proxy revealed that almost immediately upon Delek’s block purchase of Alon stock, discussions ensued regarding a potential combination of the two companies.

    In fact, the proxy demonstrated that Alon’s board of directors immediately formed a special committee to evaluate an eventual combination of Alon and Delek. For months, the chairman of that special committee chased Delek for a deal, repeatedly bidding against itself. Ultimately, a merger was agreed to at an exchange ratio of 0.504 shares of Delek stock for each share of Alon stock, reflecting a value of $12.13 per Alon share, a significant discount to what Delek had paid for its initial stake.

    Believing the terms of the merger were the result of an unfair process and undervalued Alon’s common stock, Kessler Topaz initiated litigation alongside Delaware co-counsel in 2017. Defendants moved to dismiss the action in July 2018.

    The Court of Chancery denied defendants’ motions to dismiss on June 28, 2019. Nearly all of the claims asserted by Kessler Topaz survived. Also, because substantive merger negotiations began in the one-year period where Delek was contractually required to not seek to acquire the remaining shares of Alon stock, the Court of Chancery sustained plaintiffs’ statutory claims that the merger was invalid under Delaware law. This case is now set to move forward into discovery where Kessler Topaz will seek to prove that the merger was unfair for all of Alon’s former minority shareholders.

  • A February 2018 trial culminated from nearly two years of litigation against the governing board of master limited partnership and oil pipeline firm Energy Transfer Equity, L.P. (“ETE”), and its controller, Texas billionaire Kelcy Warren. Kessler Topaz represented two common unitholders of ETE, which had agreed to purchase The Williams Cos. in September 2015. In the wake of deteriorating oil prices, the ETE board approved in February 2016 an issuance of convertible preferred units that effectively gave holders a valuable hedge against the projected effects of substantial debt that ETE would incur in the Williams merger. The new units were approved and issued only to Warren, other board members, and others whom Warren selected as recipients, following a three-day conflict-of-interest review by a single 80-year-old director and former employee. Following a three-day trial, the Delaware Court of Chancery ruled that the new units’ issuance violated the governing ETE limited partnership agreement because the conflicts review process did not fulfill the agreement’s requirements and because the issuance was unfair to other ETE unitholders.

Representative Outcomes
  • Kessler Topaz served as lead counsel in class action litigation challenging a proposed private equity buyout of Amicas that would have paid Amicas shareholders $5.35 per share in cash while certain Amicas executives retained an equity stake in the surviving entity moving forward.

    Kessler Topaz prevailed in securing a preliminary injunction against the deal, which then allowed a superior bidder to purchase the Company for an additional $0.70 per share ($26 million). The court complimented Kessler Topaz attorneys for causing an “exceptionally favorable result for Amicas’ shareholders” after “expend[ing] substantial resources.”

  • Kessler Topaz, as co-lead counsel, challenged the take-private of Arthrocare Corporation by private equity firm Smith & Nephew.

    This class action litigation alleged, among other things, that Arthrocare’s Board breached their fiduciary duties by failing to maximize stockholder value in the merger. Plaintiffs also alleged that that the merger violated Section 203 of the Delaware General Corporation Law, which prohibits mergers with “interested stockholders,” because Smith & Nephew had contracted with JP Morgan to provide financial advice and financing in the merger, while a subsidiary of JP Morgan owned more than 15% of Arthrocare’s stock. Plaintiffs also alleged that the agreement between Smith & Nephew and the JP Morgan subsidiary violated a “standstill” agreement between the JP Morgan subsidiary and Arthrocare. The court set these novel legal claims for an expedited trial prior to the closing of the merger. The parties agreed to settle the action when Smith & Nephew agreed to increase the merger consideration paid to Arthrocare stockholders by $12 million, less than a month before trial.

  • On August 27, 2015, Vice Chancellor J. Travis Laster issued his much-anticipated post-trial verdict in litigation by former stockholders of Dole Food Company against Dole’s chairman and controlling stockholder David Murdock.

    In a 106-page ruling, Vice Chancellor Laster found that Murdock and his longtime lieutenant, Dole’s former president and general counsel C. Michael Carter, unfairly manipulated Dole’s financial projections and misled the market as part of Murdock’s efforts to take the company private in a deal that closed in November 2013. Among other things, the Court concluded that Murdock and Carter “primed the market for the freeze-out by driving down Dole’s stock price” and provided the company’s outside directors with “knowingly false” information and intended to “mislead the board for Mr. Murdock’s benefit.”

    Vice Chancellor Laster found that the $13.50 per share going-private deal underpaid stockholders, and awarded class damages of $2.74 per share, totaling $148 million. That award represents the largest post-trial class recovery in the merger context. The largest post-trial derivative recovery in a merger case remains Kessler Topaz’s landmark 2011 $2 billion verdict in In re Southern Peru.

  • Kessler Topaz served as Co-Lead Counsel in this shareholder class action brought against the directors of Genentech and Genentech’s majority stockholder, Roche Holdings, Inc., in response to Roche’s July 21, 2008 attempt to acquire Genentech for $89 per share.

    We sought to enforce provisions of an Affiliation Agreement between Roche and Genentech and to ensure that Roche fulfilled its fiduciary obligations to Genentech’s shareholders through any buyout effort by Roche. After moving to enjoin the tender offer, Kessler Topaz negotiated with Roche and Genentech to amend the Affiliation Agreement to allow a negotiated transaction between Roche and Genentech, which enabled Roche to acquire Genentech for $95 per share, approximately $3.9 billion more than Roche offered in its hostile tender offer. In approving the settlement, then-Vice Chancellor Leo Strine complimented plaintiffs’ counsel, noting that this benefit was only achieved through “real hard-fought litigation in a complicated setting.”

  • Kessler Topaz served as co-lead counsel in class action litigation arising from Globe’s acquisition by Grupo Atlantica to form Ferroglobe.

    Plaintiffs alleged that Globe’s Board breached their fiduciary duties to Globe’s public stockholders by agreeing to sell Globe for an unfair price, negotiating personal benefits for themselves at the expense of the public stockholders, failing to adequately inform themselves of material issues with Grupo Atlantica, and issuing a number of materially deficient disclosures in an attempt to mask issues with the negotiations. At oral argument on Plaintiffs’ preliminary injunction motion, the Court held that Globe stockholders likely faced irreparable harm from the Board’s conduct, but reserved ruling on the other preliminary injunction factors. Prior to the Court’s final ruling, the parties agreed to settle the action for $32.5 million and various corporate governance reforms to protect Globe stockholders’ rights in Ferroglobe.

  • On behalf of the Erie County Employees’ Retirement System, we alleged that GSI’s founder breached his fiduciary duties by negotiating a secret deal with eBay for him to buy several GSI subsidiaries at below market prices before selling the remainder of the company to eBay.

    These side deals significantly reduced the acquisition price paid to GSI stockholders. Days before an injunction hearing, we negotiated an improvement in the deal price of $24 million.

  • Kessler Topaz challenged a coercive tender offer whereby MPG preferred stockholders received preferred stock in Brookfield Office Properties, Inc. without receiving any compensation for their accrued and unpaid dividends.

    Kessler Topaz negotiated a settlement where MPG preferred stockholders received a dividend of $2.25 per share, worth approximately $21 million, which was the only payment of accrued dividends Brookfield DTLA Preferred Stockholders had received as of the time of the settlement.

  • Kessler Topaz represented the Oklahoma Firefighters Pension and Retirement System in class action litigation challenging the acquisition of Safeway, Inc. by Albertson’s grocery chain for $32.50 per share in cash and contingent value rights.

    Kessler Topaz argued that the value of CVRs was illusory, and Safeway’s shareholder rights plan had a prohibitive effect on potential bidders making superior offers to acquire Safeway, which undermined the effectiveness of the post-signing “go shop.” Plaintiffs sought to enjoin the transaction, but before the scheduled preliminary injunction hearing took place, Kessler Topaz negotiated (i) modifications to the terms of the CVRs and (ii) defendants’ withdrawal of the shareholder rights plan. In approving the settlement, Vice Chancellor Laster of the Delaware Chancery Court stated that “the plaintiffs obtained significant changes to the transaction . . . that may well result in material increases in the compensation received by the class,” including substantial benefits potentially in excess of $230 million.

  • In 2006, the Wall Street Journal reported that three companies appeared to have “backdated” stock option grants to their senior executives, pretending that the options had been awarded when the stock price was at its lowest price of the quarter, or even year. An executive who exercised the option thus paid the company an artificially low price, which stole money from the corporate coffers. While stock options are designed to incentivize recipients to drive the company’s stock price up, backdating options to artificially low prices undercut those incentives, overpaid executives, violated tax rules, and decreased shareholder value.

    Kessler Topaz worked with a financial analyst to identify dozens of other companies that had engaged in similar practices, and filed more than 50 derivative suits challenging the practice. These suits sought to force the executives to disgorge their improper compensation and to revamp the companies’ executive compensation policies. Ultimately, as lead counsel in these derivative actions, Kessler Topaz achieved significant monetary and non-monetary benefits at dozens of companies, including:

    Comverse Technology, Inc.: Settlement required Comverse’s founder and CEO Kobi Alexander, who fled to Namibia after the backdating was revealed, to disgorge more than $62 million in excessive backdated option compensation. The settlement also overhauled the company’s corporate governance and internal controls, replacing a number of directors and corporate executives, splitting the Chairman and CEO positions, and instituting majority voting for directors.

    Monster Worldwide, Inc.: Settlement required recipients of backdated stock options to disgorge more than $32 million in unlawful gains back to the company, plus agreeing to significant corporate governance measures. These measures included (a) requiring Monster’s founder Andrew McKelvey to reduce his voting control over Monster from 31% to 7%, by exchanging super-voting stock for common stock; and (b) implementing new equity granting practices that require greater accountability and transparency in the granting of stock options moving forward. In approving the settlement, the court noted “the good results, mainly the amount of money for the shareholders and also the change in governance of the company itself, and really the hard work that had to go into that to achieve the results….”

    Affiliated Computer Services, Inc.: Settlement required executives, including founder Darwin Deason, to give up $20 million in improper backdated options. The litigation was also a catalyst for the company to replace its CEO and CFO and revamp its executive compensation policies.

Publication

Oklahoma Tax Commission v. Jefferson Lines: Commerce Clause Restraints on State Taxing Power, 14 J. L. & COM. 277 (1995).

Community Involvement

Planned Parenthood of Southeastern Pennsylvania