Antitrust Law Daily Wrap Up, ANTITRUST NEWS—U.S.: Municipal bond issuers: Second Circuit properly applied ‘rigorous analysis‘ standard in certifying VRDO class, (Mar 17, 2026)

By Martin A. Steinberg, J.D.

Certiorari should be denied because no circuit split exists, and Rule 23 does not require courts to resolve expert disputes at class certification.

Respondents City of Philadelphia and other municipal plaintiffs urged the Supreme Court to deny certiorari from a Second Circuit decision affirming class certification in an antitrust action alleging a conspiracy by major financial institutions to inflate variable-rate demand obligations (VRDO) interest rates. They argued in their Brief in Opposition that the lower courts correctly applied the well-settled Rule 23 “rigorous analysis” standard, evaluating competing expert evidence while properly declining to resolve merits disputes reserved for the jury. According to respondents, there was no circuit split, as all courts of appeals applied the same framework requiring scrutiny, but not resolution, of the ultimate persuasiveness of expert testimony at the certification stage. The petition, they contended, improperly sought a rule requiring courts to decide which experts are more persuasive, conflicted with Supreme Court precedent, and presented a poor vehicle for review given the fact-bound nature of the ruling, petitioners’ failure to preserve key arguments below, and their failure to challenge the district court’s predominance findings (Banc Of America Securities LLC v. City Of Philadelphia, Pennsylvania, No. 25-639 (U.S. Mar. 13, 2026)).

Background. The case arose from allegations that major financial institutions conspired from approximately 2008 to 2015 to fix and inflate interest rates on variable-rate demand obligations (VRDOs), a type of municipal bond whose rates are periodically reset by banks acting as remarketing agents (RMAs). According to respondents, instead of competing to set the lowest possible rates, as required, petitioners coordinated base rates. They shared pricing and inventory information, resulting in supra-competitive rates that increased costs for municipal issuers.

To support class certification, plaintiffs presented expert analyses showing classwide impact. Their primary expert used regression models to estimate but-for rates and concluded that nearly all class members were injured. A second expert provided market structure and pricing analyses demonstrating coordinated behavior and a common impact across the market.

The district court denied defendants’ Daubert challenges, found the expert methodologies reliable, and held that common issues, particularly whether the alleged conspiracy inflated VRDO rates, predominated over individual issues. It rejected defendants’ criticisms as disputes among economists or attacks on modified models rather than plaintiffs’ actual analyses. It concluded that any individualized questions did not defeat predominance, given evidence that over 99% of the class was impacted.

The Second Circuit affirmed in a summary order, holding that the district court conducted the required “rigorous analysis” under Rule 23 and properly evaluated, but did not resolve, competing expert evidence. The court rejected petitioners’ argument that Rule 23 requires courts to decide which expert is more persuasive at the certification stage, emphasizing that predominance turns on whether issues can be resolved with common proof rather than on the ultimate merits, and concluding that common questions regarding the alleged conspiracy and its impact predominated.

Reasons for denying the petition. Respondents argued that certiorari should be denied for three principal reasons: (1) no circuit split exists because all courts apply the same settled Rule 23 standard requiring a “rigorous analysis” without resolving merits disputes between experts; (2) the petition raised no important or recurring legal issue and was a poor vehicle for review, given the fact-bound nature of the ruling, the absence of preserved arguments, and the Second Circuit’s nonprecedential summary order; and (3) the lower courts correctly applied Supreme Court precedent, which permits scrutiny of expert evidence at class certification but reserves questions of persuasiveness and ultimate merits for the jury.

No circuit split. Respondents argued that there is no circuit split because all courts of appeals apply the same settled Rule 23 standard requiring a “rigorous analysis” of whether common issues predominate, including consideration of expert evidence, but without resolving ultimate merits disputes. The Second Circuit properly followed this framework by confirming that the district court thoroughly evaluated the admissibility and relevance of plaintiffs’ expert models and determined that, if credited, they could establish classwide antitrust impact.

They further contended that petitioners mischaracterized other circuits, which likewise require scrutiny of expert evidence but do not mandate that courts decide which expert is more persuasive at the class-certification stage. Cases cited by petitioners instead reflected fact-specific applications in which courts either failed to adequately engage with expert disputes or addressed threshold issues relevant to predominance rather than resolving the merits. Accordingly, respondents maintained that appellate courts uniformly hold that district courts must rigorously analyze expert evidence to determine whether common questions can be resolved on a classwide basis, while leaving the ultimate weighing of competing expert opinions to the jury.

No significant legal issues. Respondents argued that the petition presented no important or cert-worthy issue and was a poor vehicle for Supreme Court review. They emphasized that the Court has already addressed, and recently declined to revisit, the same Rule 23 and expert-evidence issues, and that this case involves only a fact-bound application of settled law in a nonprecedential, summary affirmance.

They further contended the case is procedurally flawed because petitioners failed to raise their core argument—that courts must resolve expert disputes—before the district court, and do not meaningfully challenge the key finding that common issues can be resolved with classwide evidence. Nor did petitioners identify individualized issues that would defeat predominance; instead, they advance a legally unsupported theory that certification should fail even where common issues predominate. Finally, respondents noted that the central dispute of whether VRDO rate increases were caused by the alleged conspiracy or external market forces is itself a common question capable of classwide resolution, reinforcing that the district court acted within its discretion in certifying the class.

Expert disputes. Respondents argued that petitioners’ proposed rule requiring courts to resolve competing expert disputes at the class-certification stage is contrary to Supreme Court precedent and basic procedural principles. Under cases such as Amgen and Tyson, the relevant inquiry is whether common questions are capable of classwide resolution using common evidence, not whether that evidence will ultimately prevail on the merits; once expert testimony is deemed admissible, its persuasiveness is for the jury, not the court, to decide.

They contended that petitioners misread precedent, including Comcast and related cases, which require courts to consider challenges to expert models but do not mandate a choice between competing experts. Here, both the district court and Second Circuit conducted the required rigorous analysis, evaluated petitioners’ critiques, and concluded that plaintiffs’ evidence could support classwide proof of antitrust impact.

Finally, respondents argued that petitioners’ approach is legally unsound because it would improperly shift factfinding from the jury to the judge and potentially violate the Rules Enabling Act by imposing heightened requirements on classwide evidence. The proper standard, they maintained, is whether a reasonable jury could rely on the common evidence, not whether the court finds it more persuasive at the certification stage.

The Case is No. 25-639.

Judge: NA.

Attorneys: Noah Adam Levine (Wilmer Cutler Pickering Hale & Dorr LLP) for Banc of America Securities LLC. Daniel L. Brockett (Quinn Emanuel Urquhart & Sullivan, LLP) for City of Philadelphia.

Companies: Banc of America Securities LLC

News: Antitrust