Born: 1949

Education: Boston University School of Law (1975); Brandeis University (1971)

Admitted to Bar: 1979 (Michigan); 1976 (New York)

Experience: Miro Weiner & Kramer, Bloomfield Hills; Smith, Miro, Hirsch & Brody, Detroit; Assistant District Attorney, State of New York

Legal affiliations: Oakland County Bar Association; Federal Bar Association; American Bar Association; American Academy of Matrimonial Lawyers

In 2003, Joseph Aviv handled one of the most complicated and publicized corporate cases in Michigan history: Simon Property Group, Inc. v. Taubman Centers, Inc.

The case involved an attempted "hostile takeover" of Taubman Centers, a Detroit-area commercial real-estate company, by the Simon Property Group, an Indiana-based commercial real-estate giant and owner of hundreds of shopping centers throughout the United States.

Because Taubman Centers was not for sale, the Simon Property Group's bid to take over the company was, to say the least, not well received by Taubman's board of directors.

In an effort to enforce the attempted takeover, Simon Property Group sued Taubman Centers in federal court, claiming that Taubman had violated the Michigan Control Share Acquisitions Act. Simon Property Group argued that, when it made a bid to purchase Taubman, Taubman secured voting agreements from its allies to prevent the takeover and this violated the Michigan Control Share Acquisitions Act.

In response, the Taubman family and its legal advisors undertook an intense lobbying effort to clarify the Michigan Control Share Acquisitions Act. These efforts were rewarded when the Michigan Legislature passed, and Gov. Jennifer Granholm signed, Public Act 181. The amendment clarified the Michigan Control Share Acquisitions Act to say that the formation of a shareholder group is not a "control share acquisition" — the shareholder must actually "acquire" shares.

According to Aviv, Public Act 181 benefits shareholders because it lets them align themselves to prevent hostile takeover bids without violating the Control Share Acquisitions Act.

Although the Taubman case was appealed to the 6th U.S. Circuit Court of Appeals over the summer, the litigation ended shortly after Public Act 181 went into effect on Oct. 7, 2003. That's when — much to Aviv's delight — Simon Property Group decided to drop its attempted takeover of Taubman.

Q. The Taubman case is an extremely complicated matter. Please explain what happened.

A. Yes, it is very complex. The lawsuit was against Taubman Centers and its board of directors. I represented the company and the directors. Taubman Centers is a public company and is traded on the New York Stock Exchange. The Simon Property Group is another public company, an Indiana-based company.

The litigation was brought in conjunction with a hostile tender offer. Simon made an attempt to take over Taubman. Simon is the largest shopping center owner and manager in the country — it's the "big behemoth." It was interested in Taubman because Taubman, a much smaller company, has among the most unique, profitable and high-quality shopping centers in the country. Actually, it was the portfolio that Simon wanted. It's much easier to buy a shopping center company than to develop shopping centers from the ground up, which is really why Simon was interested in Taubman.

This was a hostile bid because Taubman was not for sale and, therefore, a negotiated transaction was not possible. So Simon made an effort to acquire Taubman, notwithstanding the fact that Taubman's board of directors was not selling the company. The board of directors evaluated the offer and hired investment bankers to evaluate it. The investment bankers, namely Goldman Sachs, and the board of directors determined the offer was inadequate, in part, because many of the shopping centers were relatively new. By coming in at the time it did, Simon was trying to buy "on the cheap" because it wasn't buying the mature value of the centers, but was buying the developmental value.

After the bid's rejection, a lawsuit was initiated in the Eastern District of Michigan to disenfranchise the Taubman family from voting its shares. The ownership structure of Taubman was such that about 65 percent of the stock was owned by the public and about 31 percent was owned by the family, who were the founders of the company and took it public. This is not different from a lot of companies, such as Ford Motor Company. To sell the company, and most companies, it takes a two-thirds majority vote. Simon understood it could not get the two-thirds vote so long as the Taubman family had the right to vote its shares. So Simon started a lawsuit.

The Simon Group made two claims: (1) after the Taubman company went public and when the family received its votes, it got its votes in an "invalid" manner because it was given voting rights without appropriate payment and the board breached its fiduciary duty by issuing the shares of stock to the family; and (2) when Simon's offer came in, Taubman secured voting agreements from its allies to increase its holdings to 33.6 percent and, by entering into these voting agreements, the family violated the Michigan Control Share Acquisitions Act and, by violating that act, the voting rights of the Taubman family were negated.

The case was tried on a preliminary injunction basis in March 2003. A decision came down in May 2003. Judge Victoria Roberts, who I must say did an excellent job of understanding the matter, rejected Simon's claim that the 1998 issuance was invalid. She ruled that Simon was not a shareholder in 1998 and did not have standing to raise that claim. The original issuance claim went away.

As for the control share claim, the judge ruled that even though a member of the Taubman family only acquired about 2.9 percent by the voting agreements, the family was "deemed" to have formed a group of the entire shareholding class, which thereby triggered the Control Share Acquisitions Act as to all of their shares, not just the 2.9 percent.

We believed this was a misinterpretation of the act, so the decision was appealed to the 6th Circuit.

But during the pending appeal, an effort was undertaken in the Michigan Legislature to clarify the Control Share Acquisitions Act — not to change it, but to clarify it so it would be understood that it only covered actual acquisitions as opposed to "deemed" acquisitions.

The legislation ultimately passed and the act was clarified. This meant that Judge Roberts' interpretation was not the one that the Legislature accepted. In the face of that, Simon withdrew its hostile tender offer and the case was over.

Q. There obviously was an intense lobbying effort on the Taubman family's behalf to amend the Michigan Control Share Acquisitions Act. Did you play an active role in getting the amendment passed?

A. Both sides had many, many lobbyists. There's hardly a lobbying firm in Lansing that either side didn't contact. There was testimony before the various committees in the House and Senate. I testified before the committees and wrote position papers in support of the amendment. The lawyers were really the legal strategists; the lobbyists were the political strategists.

When the attorney general of Indiana wrote a brief supporting Simon's interpretation of Michigan law, we then put together a brief to the Attorney General of Michigan, requesting that he put forward the state's position as to Michigan law, as stated in our brief.

Q. How does Public Act 181 change the Control Share Acquisitions Act?

A. I do not believe it does. The act talks about the acquisition of shares that take a holder above a certain level. There are three different levels: a 20 percent level, a 33-1/3 percent level, and a 50 percent level. If you're below one level and you acquire shares that take you above that level, then those shares that took you over the threshold are "control shares." The acquisition of the control shares is governed by the act. The acts says that those control shares do not get to vote unless the remaining shareholders grant you the vote. That's how the act read.

Here, the Taubmans had something like 30 percent of the votes. They then went out and got voting agreements, or proxies, for an additional 3 percent of the votes. So that 3 percent took them over the threshold and were "control shares."

In her decision, Judge Roberts said that when one member of the group bought the 3 percent, all members of that group lost the right to vote their pre-existing shares.

After the amendment, the act specifically says that the formation of a group alone is not a control share acquisition. The fact that a number of people get together and oppose something isn't an acquisition of shares. And that was always the understanding of the act. Otherwise, anytime a group of shareholders would get together to oppose anything, it would be a control share acquisition and the shareholders would lose their vote. That's kind of an undemocratic interpretation of the act.

The amendment clarifies this by saying that the formation of a group is not a control share acquisition.

Q. How does Public Act 181 benefit Michigan corporations?

A. Without the clarification, it would be very difficult for those shareholders who oppose a hostile takeover to get together and align themselves and vote together.

Q. Does Public Act 181 apply only to family-owned and operated companies?

A. No. But what made the act significant is that it was made retroactive. It was made specifically retroactive to the adoption of the act in 1998.

Q. There were many opponents to the passage of Public Act 181. Some critics said the proposal should have been postponed until the Taubman case was resolved because the legislation appeared to be a reaction to a current judicial dispute. How did you react to such criticism?

A. I think the person who best spoke to that is Judge Roberts herself.

While the case was pending and the legislation was being lobbied for, Judge Roberts specifically said this was a case of first impression and it was unsettled as to what the Legislature intended by the Control Share Acquisitions Act. She welcomed the Legislature's taking up the task of clarifying its legislative intent.

Certainly the judge didn't feel that anything was improper.

Q. Other opponents of the act said it was "antishareholder" and "didn't make sense." What was your reaction to that?

A. The only ones who said that were people on the payroll of Simon or who had something to benefit from the Simon transaction going forward. What I mean by that is the people who said the amendment was "antishareholder" were shareholders in Simon who wanted the deal to go through because their interests in Simon would become more valuable.

Q. The case is closed. When did it ultimately end?

A. It ended in October when Simon withdrew its tender offer and entered into a stipulation dismissing its case with prejudice and dismissing the appeal.

Q. Do other states have acts similar to Public Act 181? If so, is Public Act 181 modeled after any particular state's legislation?

A. Yes. It's modeled after the Indiana act. But there are no other cases that have this particular fact pattern. The cases which have dealt with similar facts have all held the way Taubman reads the act: the formation of a group is not a control share acquisition — you have to actually acquire shares.

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