Petition for Writ of Certiorari — Banc of America Securities LLC, et al., Petitioners v. City of Philadelphia, Pennsylvania, et al.

APPENDIX

APPENDIX

TABLE OF CONTENTS

Page

APPENDIX A: Summary Order of the United

States Court of Appeals for the Second

Circuit, dated August 1, 2025 ................................... 1a

APPENDIX B: Opinion and Order of the

United States District Court for the

Southern District of New York, dated

September 21, 2023 .................................................. 13a

i

1a

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

24-297

City of Philadelphia v. Banc of Am. Sec. LLC

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE

PRECEDENTIAL EFFECT. CITATION TO A

SUMMARY ORDER FILED ON OR AFTER

JANUARY 1, 2007, IS PERMITTED AND IS

GOVERNED BY FEDERAL RULE OF APPELLATE

PROCEDURE 32.1 AND THIS COURT’S LOCAL

RULE 32.1.1. WHEN CITING A SUMMARY ORDER

IN A DOCUMENT FILED WITH THIS COURT,

A PARTY MUST CITE EITHER THE FEDERAL

APPENDIX OR AN ELECTRONIC DATABASE

(WITH THE NOTATION “SUMMARY ORDER”).

A PARTY CITING A SUMMARY ORDER MUST

SERVE A COPY OF IT ON ANY PARTY NOT

REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals

for the Second Circuit, held at the Thurgood Marshall

United States Courthouse, 40 Foley Square, in the City

of New York, on the 1st day of August, two thousand

twenty-five.

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PRESENT:

PIERRE N. LEVAL,

RICHARD C. WESLEY,

RICHARD J. SULLIVAN,

Circuit Judges.

No. 24-297

CITY OF PHILADELPHIA, SAN DIEGO ASSOCIATION OF

GOVERNMENTS, MAYOR AND CITY COUNCIL OF

BALTIMORE,

Plaintiffs-Appellees,

v.

BANC OF AMERICA SECURITIES LLC, MERRILL LYNCH,

PIERCE, FENNER & SMITH INCORPORATED, BARCLAYS

CAPITAL INC., CITIBANK, N.A., CITIGROUP GLOBAL

MARKETS INC., GOLDMAN SACHS & CO., J.P. MORGAN

SECURITIES LLC, RBC CAPITAL MARKETS LLC, WELLS

FARGO BANK, N.A., WACHOVIA BANK, N.A., WELLS

FARGO SECURITIES LLC, MORGAN STANLEY & CO. LLC,

Defendants-Appellants,

GOLDMAN SACHS GROUP, INC., JPMORGAN CHASE & CO.,

WELLS FARGO & CO., BMO FINANCIAL GROUP, BMO

FINANCIAL CORP., BMO CAPITAL MARKETS CORP., BMO

CAPITAL MARKETS GKST INC., FIFTH THIRD BANCORP,

FIFTH THIRD BANK, FIFTH THIRD SECURITIES, INC.,

BANK OF AMERICA, N.A., BANK OF AMERICA

CORPORATION, BARCLAYS BANK PLC, CITIGROUP, INC.,

CITIGROUP GLOBAL MARKETS LIMITED, ROYAL BANK OF

CANADA, WELLS FARGO FUNDS MANAGEMENT, LLC,

MORGAN STANLEY, MORGAN STANLEY SMITH BARNEY

LLC, MORGAN STANLEY CAPITAL GROUP INC.,

JPMORGAN CHASE BANK N.A.,

Defendants.

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*

*

*

Appeal from a judgment of the United States

District Court for the Southern District of New York

(Jesse M. Furman, Judge).

UPON DUE CONSIDERATION, IT IS HEREBY

ORDERED, ADJUDGED, AND DECREED that the

September 21, 2023 order of the district court is

AFFIRMED.

Defendants-Appellants appeal from an order of the

district court granting Plaintiffs-Appellees’ motion for

class certification pursuant to Federal Rule of Civil

Procedure 23. Defendants-Appellants primarily argue

that the district court erred in granting class

certification by (1) applying the wrong legal standard

when assessing whether the questions of law or fact

common to the class members predominated over any

questions affecting only individual members and (2)

discounting Defendants-Appellants’ individualized

defenses. We assume the parties’ familiarity with the

underlying facts, procedural history, and issues on

appeal, to which we refer only as necessary to explain

our decision below.

I.

Background

Plaintiffs-Appellees are issuers of a type of longterm bond issued by municipalities and other public or

charitable entities called a Variable Rate Demand

Obligation (“VRDO”). The bonds pay interest at a rate

that is periodically reset so as to maintain a market price

at or close to face value. An investor has the option to

redeem the VRDO at face value on the bond’s interest

reset dates.

Plaintiffs-Appellees hired Defendants-Appellants

and Defendants (collectively, the “Banks”) to act as

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remarketing agents to set the interest rates on more

than 12,000 VRDOs on their respective reset dates. As

part of their contracts with Plaintiffs-Appellees, the

Banks are required to set the interest rate at the lowest

possible rate that would cause the VRDOs to trade at

face value. When an investor decides to make use of the

option to redeem a VRDO on an interest reset date, the

Bank is contractually obligated to pay the investor face

value for the security, and then either remarket the

bond, sometimes to the provider of a letter of credit, or,

if it cannot sell it for a satisfactory price, hold it among

its own investments.

Importantly, the contractual obligation requiring

the Banks to set the interest rate at the lowest rate

possible ensures that Plaintiffs-Appellees are not

overpaying interest to VRDO investors. If a Bank sets

higher rates than what the market would require, the

issuer can replace that Bank with another remarketing

agent so as to avoid paying needlessly high interest

costs. In an efficient market, the competition between

the Banks and other remarketing agents for PlaintiffsAppellees’ business incentivizes the Banks to set

interest rates as low as will cause them to trade at face

value.

On August 6, 2021, Plaintiffs-Appellees filed an

amended complaint, alleging that the Banks “conspired

not to compete against each other in the market” and “to

keep interest rates on VRDOs artificially high[] to

benefit themselves … to the detriment of VRDO

issuers” in violation of section 1 of the Sherman

Antitrust Act, 15 U.S.C. § 1, and contrary to the Banks’

contractual and fiduciary duties under various state

laws. Dist. Ct. Doc. No. 210 at 31. According to

Plaintiffs-Appellees, the Banks worked together

between February 1, 2008 and November 30, 2015 to

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maintain inflated VRDO interest rates by sharing

proprietary information used to calculate VRDO

interest rates and by channeling prospective rate

information through third-party services to other

Banks. Plaintiffs-Appellees allege that the inflated rates

helped the Banks keep low-interest-rate VRDOs off

their books, benefitted the Banks’ money market

funds—which were the predominant holders of

VRDOs—and resulted in Plaintiffs-Appellees paying

higher interest rates than the VRDO markets required.

Plaintiffs-Appellees subsequently moved for

certification of a class of “[a]ll persons and entities who

directly paid interest expenses on VRDOs that had

interest rates reset … [by] Defendants at any point from

February 1, 2008 through November 30, 2015.” Dist. Ct.

Doc. No. 368 at 3. Plaintiffs-Appellees also sought

certification of a sub-class, specifically “[a]ll persons and

entities who were party to a remarketing agreement …

that applies to VRDOs that had interest rates reset …

from February 1, 2008 through November 30, 2015.” Id.

In support of their certification motion, PlaintiffsAppellees provided testimony from two experts—Dr.

William Schwert and Dr. Rosa Abrantes-Metz—who

asserted that virtually all VRDOs had their interest

rates inflated at least once during the conspiracy period

and that the Banks set base rates consistent with one

another, which “had a common and class-wide impact on

the VRDO rates charged to class members.” Dist. Ct.

Docs. 369-1 at 44; 369-2 at 109. The Banks then moved

to preclude the expert testimony and opposed the

motion for class certification. The district court denied

the Banks’ motion to exclude the expert testimony and

granted Plaintiffs-Appellees’ motion to certify the class.

Defendants-Appellants, a subset of the Banks, appealed

the district court’s decision to certify the class.

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II. Legal Standard

We review a district court’s order granting class

certification for abuse of discretion. See Denney v.

Deutsche Bank AG, 443 F.3d 253, 263 (2d Cir. 2006). To

attain class certification, a plaintiff “must affirmatively

demonstrate his compliance” with Federal Rule of Civil

Procedure 23. Comcast Corp. v. Behrend, 569 U.S. 27,

33 (2013) (internal quotation marks omitted). More than

just “a mere pleading standard,” Rule 23 requires a

party to “be prepared to prove that there are in fact

sufficiently numerous parties, common questions of law

or fact, typicality of claims or defenses, and adequacy of

representation, as required by Rule 23(a),” and to

“satisfy through evidentiary proof at least one of the

provisions of Rule 23(b).” Id. (internal quotation marks

omitted). Rule 23(b)(3)—the provision relevant here—

requires a court to find that “the questions of law or fact

common to class members predominate over any

questions affecting only individual members.” Fed. R.

Civ. P. 23(b)(3).

In determining whether a plaintiff has sufficiently

established that the requirements of Rule 23(b)(3) have

been satisfied, courts must conduct “a rigorous

analysis.” Comcast, 569 U.S. at 33. “Such an analysis

will frequently entail overlap with the merits of the

plaintiff’s underlying claim” and may even require

courts “to probe behind the pleadings.” Id. at 33-34

(internal quotation marks omitted). If the evidence

shows that the requirements have been met by a

preponderance of the evidence, a court may certify a

class. See Levitt v. J.P. Morgan Sec., Inc., 710 F.3d 454,

465 (2d Cir. 2013). Importantly, the party moving for

class certification bears the burden of proof. See id.

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III. Discussion

Defendants-Appellants challenge the district court’s

finding that Plaintiffs-Appellees met their burden of

showing that common questions of law or fact

predominate. Defendants-Appellants specifically raise

two arguments on appeal. First, they maintain that the

district court applied the wrong legal standard when

assessing whether common questions predominate.

Second, they contend that “the district court improperly

discounted [their] individualized defenses to injury and

causation in assessing predominance.” Appellants Br. at

22. We address each argument in turn.

A. The District Court Applied the Correct Legal

Standard

Defendants-Appellants insist that the district court

failed to conduct the requisite “rigorous analysis” when

determining whether the Rule 23(b)(3) predominance

requirement had been met. They assert that the district

court merely conducted an inquiry pursuant to Daubert

v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579

(1993), to determine whether Plaintiffs-Appellees’

expert reports were admissible and then simply

deferred to the reports when certifying the class. The

district court erred, they contend, by failing to weigh

their competing expert evidence, which in their view

would have compelled a finding that Plaintiffs-Appellees

failed to meet the predominance requirement of Rule

23(b)(3).

But Defendants-Appellants misread the district

court’s order. Contrary to Defendants-Appellants’

suggestions, the district court did not merely assess the

admissibility of the expert reports under Daubert before

concluding that common issues predominated. Rather,

the district court properly proceeded in two stages, first

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determining that Plaintiffs-Appellees’ expert testimony

was admissible under Daubert, and then examining both

sets of expert reports to conclude that common issues of

law and fact predominated at trial. See City of

Philadelphia v. Bank of Am. Corp., No. 19-cv-1608

(JMF), 2023 WL 6160534, at *3 (S.D.N.Y. Sept. 21, 2023)

(“[T]he Court here applies a Daubert analysis to the

extent that Defendants seek to exclude testimony

relevant to the pending class certification motion.”

(emphasis added) (alternations accepted and internal

quotation marks omitted)). In fact, the district court

made explicitly clear that Daubert “does not end the

analysis,” id. at *10, and subsequently explained why

Defendants-Appellants’ arguments against class

certification fell short, see, e.g., id. at *10-11 (rejecting

Defendants-Appellants’ argument that they would

introduce individual defenses “for thousands of VRDOs”

(internal quotation marks omitted)).

Nor are we persuaded that the district court’s

analysis was insufficiently rigorous. As DefendantsAppellants concede, the district court conducted a

thorough analysis before determining PlaintiffsAppellees’ expert reports were admissible under

Daubert. See id. at *3-9. But the district court did not

stop there. It went on to evaluate whether certification

was permissible, considering issues disputed and

undisputed

by

Defendants-Appellants,

before

ultimately deciding that the common issues to the case,

such as whether Defendants-Appellants’ alleged

conspiracy caused Plaintiffs-Appellees to pay higher

interest rates, predominated over individual issues. See

id. at *9-14. Such analysis, in our view, was sufficiently

“rigorous” to meet the requirements of Rule 23(b)(3).

Comcast Corp., 569 U.S. at 35.

9a

Defendants-Appellants ultimately argue that the

district court was required to resolve the disputes

between the parties’ dueling expert reports at the class

certification stage. But that argument is clearly based

on a misreading of Rule 23 and Supreme Court

precedent. “Rule 23(b)(3) requires a showing that

questions common to the class predominate, not that

those questions will be answered, on the merits, in favor

of the class.” Amgen Inc. v. Conn. Ret. Plans & Tr.

Funds, 568 U.S. 455, 459 (2013) (second emphasis

added); see also id. at 465-66 (“Although we have

cautioned that a court’s class-certification analysis must

be ‘rigorous’ and may ‘entail some overlap with the

merits of the plaintiff’s underlying claim,’ Rule 23 grants

courts no license to engage in free-ranging merits

inquiries at the certification stage.” (internal citation

omitted)). Indeed, in the context of assessing whether

expert testimony establishes that common issues

predominate, the Supreme Court has said that “[o]nce a

district court finds [expert] evidence to be admissible,”

a district court can only deny class certification based on

the persuasiveness of the expert evidence if “no

reasonable juror could have believed” the expert

evidence. See Tyson Foods, Inc. v. Bouaphakeo, 577

U.S. 442, 459 (2016). The district court properly applied

that standard below, concluding that “Dr. Schwert’s and

Dr. Abrantes-Metz’s [admissible] testimony”—if

believed by the factfinder—could support a finding of

antitrust liability as to “each class member.” Bank of

Am. Corp., 2023 WL 6160534, at * 10.

Based on the record before us, we cannot say that

the district court applied the incorrect legal standard—

either by substituting the Daubert standard for the Rule

23(b)(3) standard or by eschewing a “rigorous analysis”

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of the expert testimony—when ruling on PlaintiffsAppellees’ class-certification motion.

B. The District Court Did Not Improperly Discount

the Defenses

Defendants-Appellants also argue that the district

court “improperly discounted [their] individualized

defenses to injury and causation” in assessing whether

Plaintiffs-Appellees showed that common issues

predominate. Appellants Br. at 22. Specifically,

Defendants-Appellants contend that the district court

erred when it faulted them “for not quantifying precisely

how many individualized inquiries would be required” if

the case were to go to trial, in essence “flipp[ing] the

burden” of proving that common questions would

predominate onto Defendants-Appellants. Id. at 23

(internal quotation marks omitted). We disagree.

For starters, the district court clearly considered

Defendants-Appellants’ “‘main argument’ against class

certification,” i.e., “that ‘individual fact-specific

showing[s]’” would be required to “determine whether

the rates that were set on any given VRDO are fully

explained by the specific circumstances of that

particular bond” or at least partially explained by the

alleged conspiracy. Bank of Am. Corp., 2023 WL

6160534, at *10. The district court simply concluded that

Plaintiffs-Appellees’ expert testimony—once deemed

admissible—rendered the question of causation one to

be resolved “as a matter of summary judgment, not class

certification,” since “the concern about the proposed

class [was] not that it exhibit[ed] some fatal dissimilarity

but, rather, a fatal similarity,” namely “an alleged failure

of proof as to [Plaintiffs-Appellees’] cause of action.” Id.

(quoting Tyson Foods, 577 U.S. at 457).

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We likewise disagree with Defendants-Appellants’

suggestion that the district court flipped the burden of

proof with respect to predominance. The district court

explicitly acknowledged that “the moving party” has the

burden of showing that it met the requirements for class

certification. Id. at *2. And, as the district court noted,

Plaintiffs-Appellees overcame that burden here by

providing evidence showing that “virtually all VRDOs

had their rates inflated at least once during the

conspiracy period,” thereby raising an issue that was

common to the class. Id. at *5.

For these reasons, we cannot say that the district

court improperly discounted the Banks’ defenses while

assessing predominance under Rule 23(b)(3).

*

*

*

We have considered Defendants-Appellants’

remaining arguments and find them to be without merit.

Accordingly, we AFFIRM the order of the district court.

FOR THE COURT:

Catherine O’Hagan Wolfe, Clerk of Court

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APPENDIX B

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

19-CV-1608 (JMF)

CITY OF PHILADELPHIA et al.,

Plaintiffs,

v.

BANK OF AMERICA CORPORATION et al.,

Defendants.

OPINION AND ORDER

JESSE M. FURMAN, United States District Judge:

In these consolidated putative class actions, Plaintiffs—the City of Philadelphia (“Philadelphia”), the

Mayor and City Council of Baltimore (“Baltimore”), and

the Board of Directors of the San Diego Association of

Governments, Acting as the San Diego Regional Transportation Commission (“SANDAG”)—bring antitrust

and contract claims against eight banks (collectively, the

“Banks” or “Defendants”), alleging that, between 2008

and 2016, they conspired to fix the interest rates for a

type of bond called Variable Rate Demand Obligations

Now pending are Plaintiffs motion,

(“VRDOs”).1

1

The Defendant Banks are Bank of America, Barclays,

Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, the

Royal Bank of Canada, and Wells Fargo. In addition, Plaintiffs sue

various parents, affiliates, subsidiaries, predecessors, and successors of the Defendant Banks.

14a

pursuant to Rule 23 of the Federal Rules of Civil Procedure, for class certification and Defendants’ motions,

pursuant to Rule 702 of the Federal Rules of Evidence

and Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579

(1993), to preclude some or all of the testimony of two

experts upon whom Plaintiffs rely in seeking class certification. Defendants raise forceful arguments in opposition to Plaintiffs’ experts but, as the Court will explain,

they are not ultimately a basis for preclusion. That goes

a long way toward resolving Plaintiffs’ motion for class

certification as well because Defendants’ primary—albeit not only—argument in opposition to Plaintiffs’ motion rests on their Daubert motions. Accordingly, and

for the reasons that follow, Defendants’ motions to preclude are denied and Plaintiffs’ motion for class certification is granted.

BACKGROUND

As the Court explained in prior Opinions, see, e.g.,

City of Philadelphia v. Bank of Am. Corp., 498 F. Supp.

3d 516, 521-25 (S.D.N.Y. 2020), familiarity with which is

presumed, VRDOs are bonds issued by municipalities

and other public or charitable entities, such as schools,

hospitals, and community organizations, to raise funds

for operating expenses, infrastructure projects, and

public services. Am. Compl. ¶¶ 2, 63. They are issued

on a longterm basis but have short-term interest rates

that are reset on a periodic basis, typically weekly. Id.

¶¶ 3, 64, 72-73. In order to attract investors, VRDOs

have a “built-in ‘put’ feature that allows investors to redeem the bond at any periodic reset date at face value”—

that is, at “par”—plus any accrued interest. Id. ¶ 3.

That makes them a “low-risk and high-liquidity investment.” Id.

15a

To manage VRDOs, issuers like Plaintiffs contract

with a bank that acts as a remarketing agent (“RMA”).

Id. ¶ 4; see, e.g., ECF Nos. 125-4, 125-5, 125-6, 233-2 (examples of remarketing agreements between Plaintiffs

and Defendants). Under a typical remarketing agreement, an RMA has two primary responsibilities. First,

on each reset date, the RMA is required to reset the

VRDO’s interest rate at the lowest rate possible that

would permit the bond to trade at par. Am. Compl. ¶ 4.

Second, when an existing investor exercises the “put”

option on the bond, thereby tendering the bond to the

RMA, the RMA is required to remarket the VRDO to

other investors at the lowest possible rate. Id. If the

RMA cannot find another investor for the VRDO, the

obligation to purchase the tendered bond generally falls

on a letter-of-credit provider, frequently the RMA itself.

Id. Importantly, if an RMA cannot deliver low rates, the

bond issuer has the right to replace the RMA with another one who can. Id. ¶ 5. Thus, in a properly functioning market, RMAs compete against each other for issuers’ business by actively working to set the best—that

is, the lowest—possible rates for their issuer customers.

Id.

In 2019, Plaintiffs brought this action alleging that

Defendants—who together serve as RMAs for the vast

majority of the VRDO market, id. ¶ 69—actively conspired not to compete against each other in the market

for remarketing services, in violation of Section 1 of the

Sherman Antitrust Act, 15 U.S.C. § 1, and contractual

and fiduciary duties under different state laws. Id. ¶ 96.

According to Plaintiffs, Defendants worked together in

two ways to keep VRDO interest rates artificially high

between February 1, 2008, and November 30, 2015 (the

“Class Period”). Id. ¶ 97. First, employees “from the top

to the bottom of [Defendants’] VRDO operations …

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communicated regarding proprietary information such

as VRDO inventory and planned changes to ‘base rates’

for VRDOs … regularly, almost daily, using the telephone, in-person meetings, Bloomberg messaging technology, and third-party intermediaries.” Id. ¶ 96. Second, Defendants channeled prospective rate information

through third-party pricing services such as J.J. Kenny

Drake Inc. Id. ¶ 112. Plaintiffs claim that the inflated

rates helped Defendants keep the VRDOs off their own

books, id. ¶ 109, and benefitted Defendants’ money market funds, which were the predominant holders of

VRDOs, id. ¶ 97.

In prior Opinions, the Court granted in part and denied in part two motions to dismiss Plaintiffs’ claims.

The net result was that Plaintiffs’ federal antitrust

claims survived, along with their state-law claims for

breach of contract and breach of fiduciary duty as to

some Defendants. See City of Philadelphia, 498 F. Supp.

3d at 539; City of Philadelphia v. Bank of Am. Corp., 609

F. Supp. 3d 269, 275 (S.D.N.Y. 2022). Following discovery, Plaintiffs now move, pursuant to Rule 23, for certification of the following class:

All persons and entities who directly paid interest expenses on VRDOs that had interest rates

reset on a weekly or daily basis pursuant to remarketing agreements with Defendants at any

point from February 1, 2008 through November

30, 2015 … [e]xclud[ing] … Defendants and their

employees, affiliates, parents, subsidiaries, and

co-conspirators, and the United States government.

ECF No. 368, (“Pls.’ Class Cert. Mem.”), at 3. Plaintiffs

also seek certification of the following sub-class:

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All persons and entities who were party to a remarketing agreement with any Counterparty

Defendant that applies to VRDOs that had interest rates reset on a weekly or daily basis at

any point from February 1, 2008 through November 30, 2015 … . [e]xclud[ing] … Defendants

and their employees, affiliates, parents, subsidiaries, and co-conspirators, and the United

States government.

Id. (cleaned up). In support of their motion, Plaintiffs

rely heavily on the testimony of two experts, Dr. William

Schwert, see ECF No. 369-1 (“Schwert Rep.”), and Dr.

Rosa Abrantes-Metz, see ECF No. 369-2 (“AbrantesMetz Rep.”).2 See Pls.’ Class Cert. Mem. 19-34. Defendants move, pursuant to Rule 702 and Daubert, to preclude some or all of the testimony of Plaintiffs’ experts

and, in part on that basis, oppose Plaintiffs’ motion for

class certification. See ECF No. 386. On August 1, 2023,

the Court held oral argument on the motions. See ECF

No. 454 (“Oral Arg. Tr.”).

DISCUSSION

The standards governing class certification are well

established. The party seeking certification must

demonstrate by a preponderance of the evidence that all

the requirements of Rule 23 have been met. See Levitt

v. J.P. Morgan Secs., Inc., 710 F.3d 454, 465 (2d Cir.

2013). That means, first, satisfying the “four threshold

requirements of Rule 23(a)—numerosity, commonality,

typicality, and adequacy of representation.” In re U.S.

Foodservice Inc. Pricing Litig., 729 F.3d 108, 117 (2d Cir.

2013). On top of those requirements, the Second Circuit

2

An unredacted copy of Dr. Schwert’s report is currently

sealed. See ECF No. 364-1 (“Unredacted Schwert Rep.”).

18a

has “recognized an implied requirement of ascertainability.” In re Petrobras Sec., 862 F.3d 250, 260 (2d Cir. 2017)

(internal quotation marks omitted). If those threshold

requirements are met, the moving party must also

“demonstrate through evidentiary proof that the class

satisfies at least one of the three provisions for certification found in Rule 23(b).” U.S. Foodservice, 729 F.3d at

117 (internal quotation marks omitted). Here, Plaintiffs

seek certification under Rule 23(b)(3), which means that

they “must establish: (1) predominance—that the questions of law or fact common to the class members predominate over any questions affecting only individual

members; and (2) superiority—that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Id. (internal quotation marks omitted). In evaluating whether the moving party has met its burden, the Court must engage in

a “rigorous analysis,” in which it is permitted to “probe

behind the pleadings before coming to rest on the certification question.” Comcast Corp. v. Behrend, 569 U.S.

27, 33 (2013).

The only Rule 23 requirement that Defendants contest in this case is predominance. Oral Arg. Tr. 4.

Whether Plaintiffs satisfy that requirement turns

largely—albeit, as discussed below, not entirely—on

whether their expert models on class-wide impact are

admissible. Thus, the Court will begin with Defendants’

motions to preclude those models.

A. Defendants’ Daubert Motions

The admissibility of expert testimony is generally

governed by Rule 702 of the Federal Rules of Evidence,

which provides that “[a] witness who is qualified as an

expert by knowledge, skill, experience, training, or education may testify” to his or her opinion if:

19a

(a) the expert’s scientific, technical, or other

specialized knowledge will help the trier of

fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or

data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702. In Daubert, the Supreme Court emphasized the “gatekeeping role” of district courts with

respect to expert testimony, declaring that “the Rules of

Evidence—especially Rule 702— … assign to the trial

judge the task of ensuring that an expert’s testimony

both rests on a reliable foundation and is relevant to the

task at hand.” 509 U.S. at 597; see also Troublé v. Wet

Seal, Inc., 179 F. Supp. 2d 291, 302 (S.D.N.Y. 2001)

(“[The] proffered testimony … must not only have a reliable foundation but also be relevant in that it ‘fits’ the

facts of this case.”).

That said, neither the Supreme Court nor the Second Circuit has definitively resolved “whether and to

what extent Daubert applies at the class certification

stage.” Royal Park Invs. SA/NV v. U.S. Bank Nat’l

Ass’n, 324 F. Supp. 3d 387, 393 (S.D.N.Y. 2018); accord

U.S. Foodservice, 729 F.3d at 129; cf. In re Zurn Pex

Plumbing Prods. Liab. Litig., 644 F.3d 604, 613 (8th Cir.

2011) (“The main purpose of Daubert exclusion is to protect juries from being swayed by dubious scientific testimony. That interest is not implicated at the class certification stage where the judge is the decision maker.”).

District courts in this Circuit regularly subject expert

20a

testimony at the class certification stage to Daubert, but

they limit the inquiry at that stage to “whether or not

the expert reports are admissible to establish the requirements of Rule 23. In other words, the question is

not whether a jury at trial should be permitted to rely

on the expert’s report to find facts as to liability, but rather whether the Court may utilize it in deciding

whether the requisites of Rule 23 have been met.” Ge

Dandong v. Pinnacle Performance Ltd., No. 10-CV-8086

(JMF), 2013 WL 5658790, at *13 (S.D.N.Y. Oct. 17, 2013)

(cleaned up); accord In re Aluminum Warehousing Antitrust Litig., 336 F.R.D. 5, 28-29 (S.D.N.Y. 2020); Bowling v. Johnson & Johnson, No. 17-CV-3982 (AJN), 2019

WL 1760162, at *7 (S.D.N.Y. Apr. 22, 2019) (Nathan, J.);

In re Foreign Exch. Benchmark Rates Antitrust Litig.,

407 F. Supp. 3d 422, 429 (S.D.N.Y. 2019); In re LIBORBased Fin. Instr. Antitrust Litig., 299 F. Supp. 3d 430,

470 (S.D.N.Y. 2018) (“LIBOR VII”). Accordingly, the

Court “here applies a Daubert analysis to the extent that

[Defendants] seek to exclude testimony relevant to the

pending class certification motion.” Aluminum Warehousing, 336 F.R.D. at 29.

As noted, Defendants challenge the testimony, in

whole or in part, of Plaintiffs’ two experts, Dr. Schwert

and Dr. Abrantes-Metz. ECF No. 399 (“Defs.’ Daubert

Mem.”), at 1-4. Defendants do not contest the experts’

qualifications. See Oral Arg. Tr. 63. Instead, they contest their methodologies and conclusions, arguing that

Dr. Schwert fails to account for key factors and relies on

false assumptions (among other things), see Defs.’ Daubert Mem. 7-19, and that Dr. Abrantes-Metz fails to establish causation, see id. at 20-25. The Court will address

each expert in turn.

21a

1. Dr. William Schwert

In his expert report, Dr. Schwert offers two different regression models that Plaintiffs rely on to measure

class-wide impact and damages—a multiple dummy variable model and a backcasting model. See generally

Schwert Rep. ¶¶ 39-47.3 A regression analysis “is a statistical tool used to determine the relationship between

an unknown variable (the ‘dependent’ variable) and one

or more ‘independent’ variables that are thought to impact the dependent variable.” In re Urethane Antitrust

Litig., 768 F.3d 1245, 1260 (10th Cir. 2014). “If a regression model uses appropriate independent or explanatory

variables, it can test and isolate the extent to which the

actual prices paid by plaintiffs are higher because of a

defendant’s collusive behavior.” Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651,

671 (9th Cir. 2022) (cleaned up). As Dr. Schwert describes it, a regression model can be used to “isolate the

effect of an alleged conspiracy on prices by comparing

prices during a conspiracy period to prices during a nonconspiracy period after controlling for the effects on

price of relevant non-conspiratorial factors.” Schwert

Rep. ¶ 43.

For his first regression analysis, Dr. Schwert utilizes a multiple dummy variable model. Such a model

“uses data from both the conspiracy and non-conspiracy

periods to estimate the relation between price, non-conspiratorial economic factors, and a … number of dummy

variables[] for the conspiracy period.” Id. Each dummy

3

Dr. Schwert also ran a third type of regression: a single

dummy variable model. Schwert Rep. ¶¶ 58-62. But Plaintiffs do

not rely on this model in their class certification motion, and Defendants therefore do not challenge it under Daubert. Accordingly, the

Court need not and does not address it.

22a

variable represents a separate time period during the alleged conspiracy and “measures the average effect of the

conspiracy” during that period. Id. ¶ 45.4 Importantly,

this “allows for the effect of the conspiracy to vary over

time.” Id. A backcasting model (which is sometimes referred to as a prediction model), on the other hand, “uses

data from only a non-conspiratorial period to estimate

the relation between price and non-conspiratorial economic factors.” Id. ¶ 43. Based on this relation, the

model can be used to predict “what prices would have

been during the conspiracy period but-for the existence

of the conspiracy.” Id. The difference between the actual price and the predicted “but-for” price at any point

in time is the isolated effect of the conspiracy on the

price. See id. ¶ 46.

Dr. Schwert defines the non-conspiracy period as

beginning in December 2015, when the Securities and

Exchange Commission began investigating Defendants

for the practices at issue here, and ending in December

2020, the last month for which Defendants produced

data. Id. ¶ 48. To capture the macro- and micro-economic factors that affect VRDO rates, he uses nine explanatory variables. They include two systemic variables, a “commercial paper premium” and a “municipal

bond premium,” to account for the general default risk

in the economy and seven idiosyncratic variables that

are VRDO-specific and account for individual VRDO

4

To quote Schwert’s explanation: “For example, for an alleged

conspiracy that lasted one year, a model could be estimated with 52

weekly dummy variables; each dummy variable would measure the

effect of the conspiracy during the week corresponding to that

dummy variable (i.e., the week in which the dummy variable has the

value one).” Schwert Rep. ¶ 45.

23a

features. Id. ¶¶ 51-52.5 The results of Dr. Schwert’s

analyses are stark: The multiple dummy variable model

estimates, with statistical significance, that 99.3% of

weekly-reset VRDOs and 98.8% of daily-reset VRDOs

were reset during a week with inflated rates. Unredacted Schwert Rep. ¶ 69 n.90; see also Schwert Rep.

¶¶ 65 n.85, 68 n.88. That is, virtually all VRDOs had

their rates inflated at least once during the conspiracy

period. Similarly, the backcasting model estimates that

99.4% of weekly-reset VRDOs and 99.5% of daily-reset

VRDOs were reset during a week with inflated rates.

Unredacted Schwert Rep. ¶ 74.

Defendants lodge several objections to Dr. Schwert

that, they claim, render his models fundamentally

flawed. First and foremost, they argue that Dr. Schwert

failed to account for the effects of lawful factors that influenced VRDO rates, including extreme macroeconomic conditions (namely, the Financial Crisis and the

European Sovereign Debt Crisis), changes in the supply

and demand of VRDOs, and changes in VRDO inventory

levels. See Defs.’ Daubert Mem. 7-14. Next, they argue

that Dr. Schwert was wrong to include the “commercial

paper premium” and “municipal bond premium” variables in his models. Id. at 19-20. And, interspersed

throughout their objections, they claim that Dr.

Schwert’s models are unreliable and should be excluded

because they generate false positives and mask VRDOs

that were never reset to inflated rates. See id. at 7-20;

see also Oral Arg. Tr. 27-29.

5

Specifically, the idiosyncratic variables are a VRDO’s (1) federal tax status; (2) alternate minimum tax status; (3) issuer state;

(4) initial notional amount; (5) general obligation bond status; (6)

long-term ratings; and (7) short-term ratings. See Schwert Rep.

¶ 52.

24a

Before the Court turns to these arguments, a few

background principles warrant mention. First, regression models are routinely used—and accepted—in antitrust cases. See, e.g., Olean Wholesale Grocery Coop.,

Inc., 31 F.4th at 677 (“In antitrust cases, regression models have been widely accepted as a generally reliable

econometric technique to control for the effects of the

differences among class members and isolate the impact

of the alleged antitrust violations on the prices paid by

class members.”); see also, e.g., id. n.23 (collecting cases);

accord In re Urethane Antitrust Litig., 768 F.3d at 125961. Second, no complex model is perfect. At the end of

the day, a regression model is meant to generate estimates for what the modeler is attempting to measure.

As a result, disputes about the accuracy of a model often

go to weight, not admissibility. See, e.g., Kurtz v. Costco

Wholesale Corp., 818 F. App’x 57, 61-62 (2d Cir. 2020)

(summary order); see also, e.g., Chen-Oster v. Goldman,

Sachs & Co., No. 10-CV-6950 (AT), 2022 WL 814074, at

*12 (S.D.N.Y. Mar. 17, 2022). As long as a model is not

“so incomplete as to be inadmissible as irrelevant,”

Bazemore v. Friday, 478 U.S. 385, 400 n.10 (1986) (Brennan, J., concurring in part and joined by all members of

the Court); does what it claims to do; and is supported by

reasoned and sound methodological choices, it will generally survive a Daubert challenge. See, e.g., Dial Corp.

v. News Corp., 314 F.R.D. 108, 115 (S.D.N.Y. 2015). Put

differently, “[t]he real question” is whether Plaintiffs

“have established a workable multiple regression equation, not whether [their] model actually works.” In re

Ethylene Propylene Diene Monomer (EPDM) Antitrust Litig., 256 F.R.D. 82, 100 (D. Conn. 2009) (emphasis

added).

In light of these principles, Defendants’ arguments

fall short. As noted, Defendants first contend that Dr.

25a

Schwert “ignore[s] a series of factors unrelated to the alleged conspiracy that had a major impact on VRDO

rates.” Defs.’ Daubert Mem. 7. Most notably, they claim

that his models do not account for the Financial Crisis

and European Sovereign Debt Crisis and, thus, confuse

the effects of these two crises on VRDO rates for an alleged conspiracy to inflate rates. See id. at 2, 7-11; see

also ECF No. 397 (“Defs.’ Class Cert. Opp’n”), at 2-5.

But, as Plaintiffs explain, Dr. Schwert did account for

these macroeconomic conditions in his regressions—by

using the commercial paper premium and municipal

bond premium variables. See Pls.’ Daubert Opp’n 7-8;

see also ECF No. 428-2 (“Schwert Reply”), ¶¶ 10-12 (explaining that both systemic explanatory variables spiked

during the Financial Crisis). To be sure, Defendants

point to a few examples of when the VRDO market

sharply diverged from the commercial paper and municipal bond markets during the Financial Crisis. See Oral

Arg. Tr. 31-35. But even if Defendants are correct that

Dr. Schwert’s explanatory variables do not perfectly

capture the effects of the Financial Crisis, the objection

boils down to an argument over which reasonable economists can (and apparently do) differ. Such squabbles

are more appropriately resolved later in the litigation.

See, e.g., In re: Gen. Motors LLC Ignition Switch Litig.,

No. 14-MD-2543 (JMF), 2016 WL 4077117, at *2

(S.D.N.Y. Aug. 1, 2016) (“[A]lthough expert testimony

should be excluded if it is speculative or conjectural, or

if it is based on assumptions that are so unrealistic and

contradictory as to suggest bad faith, or to be in essence

an apples and oranges comparison, other contentions

that the assumptions are unfounded go to the weight,

not the admissibility, of the testimony.” (internal quotation marks omitted)); Daubert, 509 U.S. at 596 (noting

that “the traditional and appropriate means of attacking

26a

shaky but admissible evidence” are not exclusion, but rather “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of

proof.”).

Defendants further argue that “the relationship between VRDO, commercial paper, and long-term municipal bond rates is unstable” and that this instability undermines Dr. Schwert’s core premise that the three

rates have a fixed relationship. Defs.’ Daubert Mem. 1719; see also Oral Arg. Tr. 31-35. But Dr. Schwert explains that his regression does not depend on such a relationship. See Schwert Reply ¶¶ 29-30. Instead, he

shows that the precise relationship between commercial

paper and municipal bond rates does not affect the predicted VRDO rates. See id. ¶¶ 31-33. That is sufficient,

at this stage, to allay any concerns about whether his

model is “workable.” Dial Corp., 314 F.R.D. at 115.

Defendants also claim that Dr. Schwert’s models are

flawed because he accounts for neither the supply and

demand of VRDOs nor VRDO inventory levels. See

Defs.’ Daubert Mem. 11-17. Dr. Schwerts counters that

he accounted for the former through his two systemic

explanatory variables. See Schwert Reply ¶ 48. Defendants contend that these two variables do not accurately

capture VRDO supply and demand levels, but this is

merely another good faith dispute over discretionary

modeling decisions that is more appropriately resolved

at the merits stage of the litigation. As for inventory

levels, Dr. Schwert provides a reasonable explanation

for why he chose not to include them as an explanatory

variable: because they would introduce errors. See id.

¶ 53. And in any event, a regression model need not include every possible explanatory variable for it to be

deemed reliable. See, e.g., Kurtz, 818 F. App’x at 62.

27a

Finally, Defendants disagree with Dr. Schwert’s use

of the commercial paper premium and municipal bond

premium explanatory variables. See Defs.’ Daubert

Mem. 19-20. But Dr. Schwert’s inclusion of these variables is not “methodologically unsound.” Id. at 19. To

begin, Defendants argue that the Financial Crisis

uniquely affected VRDOs in a way that was not reflected

in the commercial paper market because the Federal Reserve directly intervened in that market. See Oral Arg.

Tr. 31-35. According to Dr. Schwert, however, the Federal Reserve’s intervention reduced commercial paper

rates rather than premiums, which effectively track

“the ‘general default risk’ in the economy even if an individual liquidity provider is downgraded.” Schwert Reply ¶ 96 & n.136. Defendants further argue that Dr.

Schwert’s selection of a long-term, rather than shortterm, municipal bond variable is designed to “ratchet up

his damages estimates.” Defs.’ Daubert Mem. 20. Again,

however, Dr. Schwert counters that Defendants’ model

“that replaces [his] municipal bond premium variable

with a short-term version” has its own problems, such as

“produc[ing] damages that make no economic sense.”

Schwert Reply ¶ 94. Furthermore, as Plaintiffs explained during oral argument, Dr. Schwert chose a longterm municipal bond index because he wanted to capture

systemic risk in the economy, not idiosyncratic VRDOspecific risk. See Oral Arg. Tr. 42-43. At this stage, Dr.

Schwert’s explanations of why his selection of the longterm variable is a “workable methodology” are sufficient. Dial Corp., 314 F.R.D. at 115.

In short, this is not a case where the plaintiffs’ models “offer no means of controlling for the effects of economic events and business developments.” LIBOR VII,

299 F. Supp. 3d at 487. Instead, Dr. Schwert controlled

for various external factors that could influence VRDO

28a

rates, and he grounded his models in well-supported,

reasoned methodology. Although Defendants have

forceful, perhaps even meritorious, disagreements with

Dr. Schwert regarding his variable selection and model

specification, that is not enough to reject his models at

this stage. See Kurtz, 818 F. App’x at 62 (affirming a

decision to admit a regression model even though the

model “fail[ed] to consider some arguably significant

variables” because such failures “affect the analysis’ probativeness, not its admissibility” (internal quotation

marks omitted)).

In addition to the foregoing objections, Defendants

claim that Dr. Schwert’s models generate false positives.

See, e.g., Defs.’ Daubert Mem. 10-11, 15-16; Defs.’ Class

Cert. Opp’n 23-26; Oral Arg. Tr. 27-29.6 False positives

can indeed be fatal to a model. See, e.g., Aluminum

Warehousing, 336 F.R.D. at 49 (explaining that a model

is “flawed” and may “result in denial of class certification” if it “yields false positives”); In re Rail Freight

Fuel Surcharge Antitrust Litig. (“Rail I”), 725 F.3d 244,

253-55 (D.C. Cir. 2013) (vacating class certification after

finding that the plaintiffs’ model was “prone to false positives”). But Defendants here do not point to evidence

of systemic false positives produced by Dr. Schwert’s

models. In other words, to the extent Defendants identify false positives at all, their objection does not undermine the workability of Dr. Schwert’s models and goes,

once again, to weight, not admissibility.

Defendants assert that Dr. Schwert’s models find

rate inflation before the conspiracy is alleged to have

started. See Defs.’ Daubert Mem. 11 (“Dr. Schwert’s

6

Although Defendants primarily raise these arguments in

their opposition to class certification, not in their Daubert motion,

the Court addresses them here.

29a

models also manufacture false estimates of ‘rate inflation’ outside the alleged conspiracy period following the

9/11 terrorist attacks, the ‘dotcom’ bubble burst of the

early 2000s, and during periods of very low interest

rates.”); see also Oral Arg. Tr. 29, 37-38. This argument,

however, is misleading on two fronts. First, Dr. Schwert

does not state that there was no rate inflation prior to

what he treats as the conspiracy period; instead, his assumption (consistent with Plaintiffs’ claim) is that “the

alleged conspiracy began no later than February 2008,

not that it began in February 2008.” Schwert Reply ¶

63 (emphases added). That is, Defendants may well have

been conspiring to inflate VRDO rates before the Class

Period. Thus, “there is no basis to conclude that any

finding of inflation in the years prior to 2008 is a ‘false’

positive.” Id.; see also ECF No. 427 (“Pls.’ Class Cert.

Reply”), at 7-8. Second, the “false positives” that Defendants identify were not generated by Dr. Schwert’s

models, but by modified versions of Dr. Schwert’s models put forward by Defendants’ rebuttal expert, Dr.

Glenn Hubbard. See Schwert Reply ¶¶ 54-62; see also

Pls.’ Daubert Opp’n 9. Defendants cite, and the Court

has found, no case where a court looked beyond a model

itself to determine whether the model generated false

positives. Accord Rail I, 725 F.3d at 250-52.

Defendants also claim that Dr. Schwert’s models

generate false positives when Defendants held a high inventory of VRDOs. See Defs.’ Class Cert. Opp’n 23-24.

But as Plaintiffs correctly note, Defendants “offer no

reason why these positives are false.” Pls.’ Class Cert.

Reply 8. Instead, Defendants’ argument on this point is

essentially that it is “economically nonsensical” for

VRDO rates to be inflated when investors are unwilling

to buy them. Defs.’ Class Cert. Opp’n 24; see also Oral

Arg. Tr. 30-31. Defendants highlighted a number of

30a

these supposed false positives during oral argument.

See Oral Arg. Tr. 27-29. Plaintiffs, however, offered reasonable explanations of why these potentially cherrypicked examples were misleading snapshots in time and

might not genuinely represent false positives. See id. at

53-55.

Defendants’ strongest argument on this front pertains to March 2020, the onset of the COVID-19 pandemic. See id. at 28-29. Notably, Dr. Schwert himself

effectively concedes that his model generates false positives for that month. See Schwert Reply ¶ 64 (“[E]xcept

for March 2020, my model predicts no systemic rate inflation during the rest of 2020 … .” (emphasis added));

see also Pls.’ Daubert Opp’n 10 (“Schwert’s model predicts no systemic rate inflation except for March 2020

… .”); Oral Arg. Tr. 19-20 (Plaintiffs’ counsel acknowledging that Dr. Schwert’s model went “haywire” for

March 2020). Defendants’ point is even more compelling

because the Federal Reserve intervened in the VRDO

market April 2020, when Dr. Schwert’s models stop predicting systemic rate inflation. See Oral Arg. Tr. 28-29.

But the point does not doom Dr. Schwert’s models. The

four weeks in March 2020 account for less than 1% of the

total conspiracy and non-conspiracy time period. Defendants do not cite, and the Court has not found, any

cases in which a court has thrown out a model because it

generated a miniscule number of false positives wholly

outside of the alleged conspiracy period.

Finally, Defendants argue that Dr. Schwert’s models “rely on aggregated averages that mask the existence of unharmed class members.” Defs.’ Class Cert.

Opp’n 26-27. But Defendants’ argument misses the

mark. There is no requirement in the Second Circuit

that all putative class members be injured. “District

courts in this and other Circuits have held that a class

31a

may be certified so long as a de minimis number of class

members were uninjured or, conversely, virtually all

class members were injured.” In re Restasis (Cyclosporine Opthalmic Emulsion) Antitrust Litig., 335

F.R.D. 1, 17 (E.D.N.Y. 2020) (internal quotation marks

omitted). Although there is no bright-line definition of

“de minimis” in this context, Dr. Schwert’s estimate that

less than 2% of VRDOs never had an inflated rate clearly

falls within its boundaries. See id. at 17-18 (explaining

that the consensus of what qualifies as “de minimis” hovers around 5% to 6% and collecting cases); see also, e.g.,

In re Namenda Indirect Purchaser Antitrust Litig., 338

F.R.D. 527, 563 (S.D.N.Y. 2021). In arguing otherwise,

Defendants once again rely on Dr. Hubbard’s modified

versions of Dr. Schwert’s models to show significantly

higher “non-injury” rates. See Pls.’ Class Cert. Reply 9.

But again, Defendants do not cite, and the Court has not

found, any case in which a court looked at something

other than a model itself to determine whether the

model impermissibly masked uninjured plaintiffs.

In conclusion, although Defendants raise any number of forceful arguments in response to Dr. Schwert’s

analysis, they are not enough to exclude his models at

this stage of the litigation. Accordingly, their Daubert

motion with respect to him must be and is denied.

2. Dr. Rosa Abrantes-Metz

As noted, Defendants also challenge Plaintiffs’ second expert, Dr. Abrantes-Metz. In her report, Dr.

Abrantes-Metz offers two studies to prove class-wide

impact—a qualitative market-structure analysis and a

rate study. See generally Abrantes-Metz Rep. ¶¶ 58188. In the former, Dr. Abrantes-Metz analyzes six different factors that characterize the VRDO industry and

concludes that “a conspiracy [among Defendants] to

32a

increase VRDO rates would be effective … [and] that

Defendants had a readily available mechanism for effectuating that conspiracy: coordination on their base

rates.” Id. ¶ 130; see also id. ¶¶ 123-129. Notably,

“[s]imilar market analyses have been accepted by courts

as a source of common evidence of impact.” In re Air

Cargo Shipping Servs. Antitrust Litig., No. 06-MD-1175

(JG), 2014 WL 7882100, at *48 (E.D.N.Y. Oct. 15, 2014),

adopted, 2015 WL 5093503 (E.D.N.Y. July 10, 2015); see

also In re Blood Reagents Antitrust Litig., No. 09-MD2081, 2015 WL 6123211, at *31 (E.D. Pa. Oct. 19, 2015)

(explaining that “[m]any courts have accepted marketstructure analyses in finding predominance with respect

to antitrust impact” and collecting cases).

Dr. Abrantes-Metz’s rate study includes both qualitative and quantitative components. The qualitative

component examines the record to determine how Defendants calculated their VRDO reset rates and concludes that they did so nearly uniformly “by reference to

a base rate.” Abrantes-Metz Rep. ¶¶ 132, 151. The

quantitative component uses regression models to test

whether the base rates and VRDO rates are correlated.

Id. ¶¶ 152-59. This analysis shows both that “each Defendants’ base rate correlates tightly, positively, and in

a statistically significant fashion, with the VRDO rates

charged to class members,” id. ¶ 185, and that “there is

a strong co-movement between [] base rates among Defendants,” id. ¶ 187. This leads Dr. Abrantes-Metz to

conclude that “Defendants set base rates consistent with

one another, directionally, and that a conspiracy to inflate VRDO interest rates implemented, in part, by coordinating on base rates had a common and class-wide

impact on the VRDO rates charged to class members.”

Id. ¶ 188. This sort of rate study is also commonly accepted by courts in antitrust price-fixing cases. See, e.g.,

33a

Olean Wholesale Grocery Coop., Inc., 31 F.4th at 671,

676.

Defendants raise several challenges to Dr.

Abrantes-Metz’s models, but they are swiftly rejected.

First, Defendants attack the rate study for not controlling for macroeconomic factors, using aggregated averages, and failing to include daily-reset VRDOs. See

Defs.’ Daubert Mem. 21-22, 25; Defs.’ Class Cert. Opp’n

32-34. But as Plaintiffs point out, Dr. Abrantes-Metz addresses all of these criticisms in her reply report and concludes that they do not change her analyses. See Pls.’

Daubert Opp’n 22-24; see also ECF No. 428-3

(“Abrantes-Metz Reply”), ¶¶ 45-50 (macroeconomic factors), 61-62 (aggregated averages), 67-75 (daily-reset

VRDOs). Next, Defendants argue that their rate-setters did not uniformly base VRDO reset rates on base

rates. See Defs.’ Daubert Mem. 23-24. But this is merely

a disagreement with Dr. Abrantes-Metz’s interpretation

of the record. See Pls.’ Daubert Opp’n 21 (“In the end,

[Defendants’] arguments are not methodological, but rather boil down to a disagreement about what the factual

record reflects.”). There is ample evidence in the record

that Defendants referenced base rates when setting

VRDO rates, see, e.g., Pls.’ Class Cert. Mem. 6-12; Pls.’

Daubert Opp’n 18-19 & n.22, so Dr. Abrantes-Metz’s interpretations and conclusions are plausible, if not reasonable. Accordingly, this challenge fails. See also, e.g.,

In re Term Commodities Cotton Futures Litig., No. 12CV-5126 (ALC), 2020 WL 5849142, at *18 (S.D.N.Y.

Sept. 30, 2020); Sumotext Corp. v. Zoove, Inc., No. 16CV-1370, 2020 WL 533006, at *11 (N.D. Cal. Feb. 3,

2020). Finally, Defendants argue that Dr. AbrantesMetz “ignores important aspects of the market structure

that undermine her conclusion that the alleged conspiracy would have been effective.” Defs.’ Class Cert. Opp’n

34a

31. In reality, though, Defendants implicitly concede

that Dr. Abrantes-Metz considered the relevant factors;

they merely argue that she misinterpreted the factors.

See Pls.’ Class Cert. Reply 10-11. Given Dr. AbrantesMetz’s thorough and reasoned responses to Defendants’

criticisms, see id., the Court is satisfied that her models

are “theoretically capable of evidencing a common impact, and [her] factual analysis [] actually do[es] so,” Air

Cargo Shipping Servs., 2014 WL 7882100 at *48.

Accordingly, Defendants’

Abrantes-Metz also fails.

challenge

to

Dr.

B. Plaintiffs’ Class Certification Motion

The Court turns then to Plaintiffs’ class certification

motion. As noted, Defendants contest only one of the

Rule 23 requirements: predominance. The “predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591,

623 (1997). More specifically, it “calls upon courts to give

careful scrutiny to the relation between common and individual questions in a case. An individual question is

one where members of a proposed class will need to present evidence that varies from member to member,

while a common question is one where the same evidence

will suffice for each member to make a prima facie showing or the issue is susceptible to generalized, class-wide

proof.” Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442,

453 (2016) (cleaned up). To demonstrate predominance,

the plaintiff must demonstrate that “the common, aggregation-enabling, issues in the case are more prevalent or

important than the non-common, aggregation-defeating,

individual issues.” Id. (internal quotation marks omitted). Significantly, if that standard is met, “the action

may be considered proper under Rule 23(b)(3) even

35a

though other important matters will have to be tried

separately, such as damages or some affirmative defenses peculiar to some individual class members.” Id.

(internal quotation marks omitted); see Roach v. T.L.

Cannon Corp., 778 F.3d 401, 405-08 (2d Cir. 2015) (reaffirming the “well-established” principle “that the fact

that damages may have to be ascertained on an individual basis is not sufficient to defeat class certification under Rule 23(b)(3)” (internal quotation marks omitted));

Brown v. Kelly, 609 F.3d 467, 484 (2d Cir. 2010) (“Rule

23(b)(3) requires that common questions predominate,

not that the action include only common questions.”).

Significantly, Defendants do not dispute that

whether they engaged in collusion is an important question common to all class members. See Oral Arg. Tr. 45. That is for good reason. The predominance requirement is “‘a test readily met in certain cases alleging …

violations of the antitrust laws.’” Cordes & Co. Fin.

Servs., Inc. v. A.G. Edwards & Sons, Inc., 502 F.3d 91,

108 (2d Cir. 2007) (quoting Amchem Prods., Inc., 521

U.S. at 625). In this case, Defendants acknowledge that

VRDO rates “behaved during [the Class Period] in a

way that is different from all other comparable financial

instruments.” Oral Arg. Tr. 15, see Defs.’ Daubert Mem.

8. Therefore, the primary dispute is over why—specifically, over whether the rates did so because Defendants

conspired in violation of the Sherman Act or whether

they did so for some other reason, such as the Financial

Crisis. See, e.g., Defs.’ Daubert Mem. 8. The answer to

that question turns on whether Defendants’ conduct

“stem[med] from independent decision or from an agreement, tacit or express,” rather than on the actions of individual Plaintiffs. Bell Atl. Corp. v. Twombly, 550 U.S.

544, 553 (2007). Thus, as in In re GSE Bonds Antitrust

Litig., 414 F. Supp. 3d 686 (S.D.N.Y. 2019), it is likely

36a

that “[P]laintiffs’ primary claim concerning [the] existence and scope of the alleged conspiracy to fix [interest

rates] can be established by common evidence such as

the [] communications and deposition testimony of [Defendants’ ratesetters].” Id. at 701; see also Air Cargo

Shipping Servs., No. 06-MD-1175, 2014 WL 7882100, at

*37-38 (S.D.N.Y. Oct. 15, 2014).

Defendants instead focus their fire on whether

Plaintiffs “can prove, through common evidence, that all

class members were in fact injured by the alleged conspiracy.” Rail I, 725 F.3d at 252 (emphasis added); see

also Oral Arg. Tr. 4-5 (defense counsel stating that Defendants “agree that the existence of the alleged conspiracy is a common question” but “do not agree that the

effects of the alleged conspiracy is a common question”

(emphasis added)); see generally In re Rail Freight Fuel

Surcharge Antitrust Litig. - MDL No. 1869, 934 F.3d

619, 623 (D.C. Cir. 2019) (“Rail II”) (“To establish liability under section 4 [of the Clayton Act], each plaintiff

must prove not only an antitrust violation, but also an

injury to its business or property and a causal relation

between the two.”). Defendants’ principal arguments on

that score rest on their Daubert motion. See Def. Class

Cert. Opp’n. 18-33. The denial of that motion thus

weighs heavily in favor of granting Plaintiffs’ class certification motion. See, e.g., Tyson Foods, 577 U.S. at 459

(“Once a district court finds evidence to be admissible,

its persuasiveness is, in general, a matter for the jury.”).

That does not end the analysis, however, as Defendants

make four other arguments in opposition to Plaintiffs’

motion for class certification: first, that even if Plaintiffs’

expert testimony is admissible, resolution of their claims

will require individualized inquiries, see Defs.’ Class

Cert. Opp’n 14-18; second, that proof of injury and damages will require individualized inquiries into synthetic

37a

fixed rate transactions, see id. at 35-43; third, that proof

of class membership and antitrust standing will require

individualized inquiries to determine the direct payors

of interest on VRDOs given the prevalence of “conduit”

issuances, see id. at 43-45; and fourth, that individualized

inquiries will be necessary to determine if class members’ claims are timely, see id. at 45-49. The Court will

address each of these arguments in turn.

1. Individualized Inquiries

Defendants’ “main argument” against class certification is that “individual fact-specific showing of no rate

inflation … would occur thousands of times for thousands of VRDOs” should the Court grant Plaintiffs’ motion. Oral Arg. Tr. 6-8; see also Defs.’ Class Cert. Opp’n

14-18. According to Defendants, rate-setters considered

each VRDO’s “credit quality, inventory levels, historical

performance, notional size, tax status, and industry sector” in making individualized judgments about the appropriate rate. Defs.’ Class Cert. Opp’n 14. They argue

that, as a result, “[a]ll of these differentiating factors

must be individually examined to determine whether the

rates that were set on any given VRDO are fully explained by the specific circumstances of that particular

bond.” Id. at 15.

For the most part, however, this argument falls with

Defendants’ Daubert motion. Cf. Defs.’ Class Cert.

Opp’n 12-32 (tying argument to criticism of Dr.

Schwert’s and Dr. Abrantes-Metz’s expert reports).

Plaintiffs submitted Dr. Schwert’s and Dr. AbrantesMetz’s testimony to establish the existence of class-wide

injury. The Court’s acceptance of their testimony therefore undermines Defendants’ arguments about individualized adjudication. Of course, it remains an open question “whether, assuming Plaintiffs paid supra-

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competitive [interest], that payment was caused by” Defendants’ allegedly anti-competitive behavior, as opposed to the other factors emphasized by Defendants.

Dial Corp., 314 F.R.D. at 120. Whatever the answer to

this question may be, however, it is a common question.

As the Supreme Court has put it: “When, as here, the

concern about the proposed class is not that it exhibits

some fatal dissimilarity but, rather, a fatal similarity—

an alleged failure of proof as to … the plaintiffs’ cause of

action—courts should engage that question as a matter

of summary judgment, not class certification.” Tyson

Foods, 577 U.S. at 457 (cleaned up).

To be sure, the Court may indeed have to “make individualized inquiries with respect to some of the plaintiffs.” Brown v. Kelly, 609 F.3d at 483. But this “does

not render certification inappropriate,” as “Rule 23(b)(3)

requires that common questions predominate, not that

the action include only common questions.” Id. at 484;

In re Asacol Antitrust Litig., 907 F.3d 42, 52 (1st Cir.

2018) (“A class may be certified notwithstanding the

need to adjudicate individual issues so long as the proposed adjudication will be both administratively feasible

and protective of defendants’ Seventh Amendment and

due process rights.” (internal quotation marks omitted)).

The Supreme Court’s decision in Tyson Foods is especially instructive. See 577 U.S. at 454-55. There, meat

processing workers sought to recover overtime pay for

time spent donning and doffing their protective gear.

The defendants argued that, because “each employee

must prove that the amount of time spent donning and

doffing” pushed into overtime hours, “these necessarily

person-specific inquiries into individual work time predominate[d] over the common questions raised by [the

plaintiffs’] claims, making class certification improper.”

Id. at 454. The Supreme Court disagreed and held that

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class certification was appropriate because “each class

member could have relied on [the plaintiffs’ representative] sample to establish liability if he or she had brought

an individual action.” Id. at 455. The same is true here.

Even if Defendants are correct that VRDO rate-setting

was an individualized process involving multiple factors,

each class member could rely on Dr. Schwert’s and Dr.

Abrantes-Metz’s testimony to support a finding of antitrust liability in a hypothetical individual action. That is

sufficient at this stage.

Defendants’ arguments to the contrary rest heavily

on Rail II, Asacol, and Aluminum Warehousing, see

Defs.’ Class Cert. Opp’n 12-13, but all three cases are distinguishable. In Rail II, the plaintiffs’ own model indicated that 2,037 putative class members, or 12.7% of the

proposed class, were uninjured. 934 F.3d at 624-25. In

Asacol, “the reports of both sides’ experts” made clear

that “approximately ten percent of class members had

not been injured by [the defendant’s] allegedly anticompetitive conduct.” 907 F.3d at 46-47; see id. at 53 (“[T]his

is a case in which any class member may be uninjured,

and there are apparently thousands who in fact suffered

no injury. The need to identify those individuals will

predominate and render an adjudication unmanageable.”). Here, by contrast, Dr. Schwert found that,

“[o]verall, 99.3% of VRDOs had at least one reset in a

week where Defendants were inflating VRDO reset

rates.” Pls.’ Class Cert. Mem. at 21. And Defendants

offer no counter-estimate of how many individualized inquiries would be required. Thus, the record here is a far

cry from the records in Rail II and Asacol. See Cyclosporine Opthalmic Emulsion, 335 F.R.D. at 17-18 (explaining that the consensus of what a “de minimis” percentage of uninjured members is hovers around 5% to

6% and collecting cases). “That the defendant might

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attempt to pick off the occasional class member here or

there through individualized rebuttal does not cause individual questions to predominate.” Halliburton Co. v.

Erica P. John Fund, Inc., 573 U.S. 258, 276 (2014).

Aluminum Warehousing is similarly distinguishable. There, the plaintiffs’ case for class certification was

impaired by “non-uniform … views” by class members

and expert models that the court refused to accept due

to a “range of significant methodological infirmities.”

336 F.R.D. at 50, 63. Accordingly, Judge Engelmayer

concluded that the plaintiffs “lack[ed] common proof of

antitrust injury caused by the alleged conspiracy” and

that injury would be “provable only via individualized inquiries keyed to each particular purchaser.” Id. at 63.

Here, as discussed, the Court has accepted Plaintiffs’ expert testimony as common proof of antitrust injury. Defendants’ reliance on Aluminum Warehousing is therefore inapposite for reasons the Court has already discussed at length. See, e.g., Tyson Foods, 577 U.S. at 459

(“Once a district court finds evidence to be admissible,

its persuasiveness is, in general, a matter for the jury.”).

2. Synthetic Fixed Rate Transactions

Next, Defendants argue that “intensive individualized analysis is necessary to determine which class members, if any, would have been harmed by VRDO rate inflation in light of their synthetic fixed rate structures.”

Defs.’ Class Cert. Opp’n 36. A synthetic fixed rate transaction insulates the issuer from fluctuations in the

VRDO rate by combining a VRDO bond with one or

more interest swaps. ECF No. 398-2 (“Chalmers Rep.”),

¶ 151. In essence, the issuer generally agrees to pay the

swap counterparty a fixed interest rate, and the swap

counterparty pays the VRDO issuer a variable or floating rate—called the “floating rate leg”—that is intended

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to correspond to the VRDO’s variable interest rate. Id.

¶¶ 151, 156. The floating rate leg is generally one of: a

“cost of funds swap,” a “SIFMA swap,” or a “LIBOR

swap.” Id. ¶ 156. In a cost of funds swap, the rate the

issuer receives is equivalent to the VRDO rate it pays

out to the VRDO investor. Id. In a SIFMA swap, the

rate is tied to the SIFMA Index, “an index calculated

based on an average of eligible weekly VRDO rates.”

Id.; see also id. n.251 (defining the SIFMA Index). Finally, a LIBOR swap, as the name suggests, pegs the

rate to a set percentage of LIBOR. Id. ¶ 156.

Relying on In re LIBOR-Based Fin. Instruments

Antitrust Litig. (“LIBOR V”), No. 11-MDL-2262 (NRB),

2015 WL 6696407 (S.D.N.Y. Nov. 3, 2015)—in which

Judge Buchwald dismissed the claims of a plaintiff

whose swap agreements “definitely show[ed] that [it]

was never exposed to fluctuations in [the allegedly

rigged LIBOR rate] at all,” id. at *22—Defendants argue that because some Plaintiffs “entered into VRDOs

as inseparable components of ‘synthetic fixed rate transactions,’” a number of Plaintiffs never paid “inflated”

VRDO rates and therefore suffered no injury, Defs.’

Class Cert. Opp’n at 35-38. More to the point, Defendants contend that “identify[ing] unharmed class members … would [result in the] need to engage in thousands

of time-intensive, individualized analyses of each

VRDO’s bond documents to determine whether it was

issued as part of a synthetic fixed rate transaction,” thus

defeating predominance. Id. at 36; see also Oral Arg. Tr.

77-78.

There is some force to Defendants’ argument, but it

is not enough to tip the balance away from a finding of

predominance. No doubt, some individualized swap-related questions—for example, which VRDOs were part

of synthetic fixed rate transactions (especially “cost of

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fund” swaps that perfectly eliminate any exposure to

changes in the VRDO rate), when the individual VRDO

was issued and when the swap was entered, and whether

the issuer was completely hedged against VRDO rate inflation—will have to be addressed at some point in the

litigation. See Defs.’ Class Cert. Opp’n 36-38; see also

Chalmers Rep. ¶¶ 219-20. But Defendants have not

come close to identifying which or how many class members were never exposed to interest overcharges on account of their participation in swaps. And their vague

observation that “many issuers” entered into synthetic

fixed rate transactions, Defs.’ Class Cert. Opp’n at 35,

without more, is not enough to overcome Plaintiffs’ expert testimony establishing the existence of class-wide

injury. This necessarily pushes any swap-related questions into the merits stage and makes them inseparable

from the damages inquiry. And as noted, “the fact that

damages may have to be ascertained on an individual basis is not sufficient to defeat class certification under

Rule 23(b)(3).” Roach, 778 F.3d at 405 (internal quotation marks omitted)).

Ironically, Judge Buchwald’s subsequent opinion in

LIBOR VII is especially instructive. Like Defendants

here, the defendants there cited Judge Buchwald’s opinion in LIBOR V in opposing class certification. See LIBOR VII, 299 F. Supp. 3d at 592. Notably, Judge Buchwald agreed with the defendants that swaps, unlike the

“series of purchases like the pharmaceuticals at issue” in

In re Nexium Antitrust Litigation, 777 F.3d 9 (1st Cir.

2015), may constitute a single transaction, such that corresponding offsets would necessarily inform whether or

not there was antitrust injury. Id. at 593-94. Even so,

she granted the plaintiffs’ class certification motion, explaining that, even if “[the court] accepted [the] defendants’ definition [of injury], . … [t]he considerations that

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underlie this determination of ‘injury,’ including issues

of absorption and netting, are otherwise identical to the

determination of damages.” Id. at 595. That analysis

rings even truer here, as Defendants fail to chip away at

predominance with even a ballpark estimate of how

many class members are likely to be uninjured on account of their participation in swaps, let alone by making

a “definitive show[ing]” of no injury for a particular

plaintiff. LIBOR V, 2015 WL 6696407, at *22. Thus,

“any class member-specific question of fact relating to

injury will be reducible to corresponding questions of

fact relating to damages.” Id. at 595. It follows that Defendants’ argument is not sufficient, at this stage, to defeat class certification.7

3. Conduit Issuances

Defendants’ next argument, that individualized inquiries will be necessary to determine class membership

and antitrust standing given the prevalence of “conduit

issuances”—that is, issuances in which a government

7

In light of the foregoing, the Court need not and does not

reach Plaintiffs’ argument that Defendants’ unitary-transaction

theory is foreclosed by the Supreme Court’s decision in Hanover

Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968). In

Hanover Shoe, the Court held that a buyer who raises his prices to

consumers in response to an illegal price overcharge by a supplier

is still entitled to damages from the supplier, even though the buyer

may have “passed on” the overcharge and “maintain[ed] his profit

level.” Id. at 489. The offset Defendants identify here is arguably

of a different nature—one that they allege occurred in the same

transaction. Cf. LIBOR VII, 299 F. Supp. 3d at 594 (“We are skeptical that … exclusion of recoupment attributable to a distant second-order effect should extend to later savings attributable to the

same or related transaction.” (internal quotation marks omitted)).

Moreover, even if VRDOs and swaps should not be considered parts

of one transaction, any offset from a swap would still have been

“passed on” horizontally, not vertically.

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unit issues bonds on behalf of a third party—is more easily dispatched. Defs.’ Class Cert. Opp’n 43-44; see also

Chalmers Rep. ¶¶ 261-62. At bottom, the argument is

an administrative feasibility argument dressed up in

predominance clothing. Essentially, Defendants argue

that it would be difficult and “intensive” to identify the

direct payor in the case of each VRDO. Defs.’ Class

Cert. Opp’n 44. But in a recent case where, like Defendants here, a party argued that class certification was inappropriate because “the dispute over which entity was

the direct payor for any given transaction will lead to

hundreds of thousands of mini trials,” the Second Circuit

held that “[that] argument rests on a faulty premise” because “[r]equiring administrative feasibility is neither

compelled by precedent nor consistent with Rule 23.”

Fikes Wholesale, Inc. v. HSBC Bank USA, N.A., 62

F.4th 704, 717 (2d Cir. 2023) (internal quotation marks

omitted). Ascertaining the direct payor on a VRDO may

not be as easy as Plaintiffs make it out to be, see Oral

Arg. Tr. 95-96, but Defendants “do not contend that

identifying the direct payor for each transaction is impossible,” Fikes Wholesale, Inc., 62 F.4th at 717. Accordingly, Defendants’ “ascertainability argument must

fail.” Id.

4. Timeliness

Finally, Defendants argue that individualized inquiries will be required to determine which class members’ antitrust claims are timely. See Defs.’ Class Cert.

Opp’n 45-48. Plaintiffs counter that the question of

fraudulent concealment—which turns on whether Defendants took affirmative steps to prevent Plaintiffs’ discovery of the conspiracy or whether the conspiracy itself

was inherently self-concealing—is a common question

that predominates over any individual question regarding the knowledge or diligence of individual class

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members. See Pls.’ Class Cert. Mem. 37-40. The weight

of authority is firmly on Plaintiffs’ side. See, e.g., In re

NASDAQ Mkt.-Makers Antitrust Litig., 169 F.R.D. 493,

520 (S.D.N.Y. 1996) (“Courts have overwhelmingly held

that, even when the issue of fraudulent concealment involves both common and individual questions, the common question of whether Defendants successfully concealed the existence of the alleged conspiracy predominates over any individual questions regarding the

knowledge or diligence of individual plaintiffs.” (citing

cases)); see also, e.g., Fire & Police Pension Ass’n of Colorado v. Bank of Montreal, 368 F. Supp. 3d 681, 707

(S.D.N.Y. 2019); In re London Silver Fixing, Ltd., Antitrust Litig., 332 F. Supp. 3d 885, 913 (S.D.N.Y. 2018);

Fort Worth Emps.’ Ret. Fund v. J.P. Morgan Chase &

Co., 301 F.R.D. 116, 134 (S.D.N.Y. 2014); Pub. Emps.’

Ret. Sys. of Mississippi v. Merrill Lynch & Co., 277

F.R.D. 97, 116 (S.D.N.Y. 2011).

To be sure, most of these cases arise in the securities-fraud context, not the antitrust context. But the differences in relevant analysis notwithstanding, compare

In re Foreign Exch. Benchmark Rates Antitrust Litig.,

No. 13-CV-7789 (LGS), 2016 WL 5108131, at *15

(S.D.N.Y. Sept. 20, 2016) (antitrust), with Cohen v.

S.A.C. Trading Corp., 711 F.3d 353, 361-62 (2d Cir. 2013)

(securities), Defendants fail to explain why the arguments they press here could not be tabled or organized

in the way that these cases contemplated. For example,

Defendants argue that qui tam actions “filed in at least

California, New York, Illinois, and Massachusetts …

should have caused a reasonably diligent class member

to investigate the possibility of improper rate inflation.”

Defs.’ Class Cert. Opp’n at 47. Whether that is true,

however, may be a common question in itself. Pub.

Emps.’ Ret. Sys. of Mississippi, 277 F.R.D. at 116 (“If …

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civil complaints attached as exhibits to Defendants’ moving papers were sufficient, either singly or in combination, to place a reasonable investor on inquiry notice of

Defendants’ … violations, then the claims of all class

members are time-barred [and] [t]his is the very definition of generalized proof.”). And in any event, if individualized inquiry proves to be necessary, “Rule 23 gives

the district court flexibility to certify subclasses as the

case progresses and as the nature of the proof to be developed at trial becomes clear.” U.S. Foodservice, 729

F.3d at 129 (quoting Marisol A. v. Giuliani, 126 F.3d 372,

379 (2d Cir.1997)).8 The same is true with respect to Defendants’ claim that the jury in this case would “need to

consider individualized evidence that some class members were on inquiry notice because they closely monitored the performance of the VRDO rates.” Defs.’ Class

Cert. Opp’n 48. Defendants offer no reason why the

Court could not certify subclasses—perhaps of class

members who had the necessary “tools and information”

and of those who did not, id.—later in the litigation. See

In re Currency Conversion Fee Antitrust Litig., 264

F.R.D. 100, 116 (S.D.N.Y. 2010) (“To the extent … potential defenses could present some individual issues,

there are many ways in which this Court can deal with

those issues when they arise.”).

8

Notably, Defendants appear to agree that those on actual notice can be (or have already been) easily identified. See, e.g., Defs.’

Class Cert. Opp’n 47 (noting that “third-party discovery confirmed

that class members—including SANDAG—were on notice of [the

qui tam] cases before February 21, 2015”). And as noted above,

“[t]hat the defendant might attempt to pick off the occasional class

member here or there through individualized rebuttal does not

cause individual questions to predominate.” Halliburton, 573 U.S.

at 276.

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In short, a statute-of-limitations “defense may arise

and may affect different class members differently.” In

re Visa Check/MasterMoney Antitrust Litig., 280 F.3d

124, 138 (2d Cir. 2001). But this occurrence “does not

compel a finding that individual issues predominate over

common ones.” Id. (internal quotation marks omitted).

5. Class and Sub-Class Definitions and Class

Counsel

In sum, the Court finds that Plaintiffs satisfy the

predominance requirement of Rule 23(b)(3). As noted,

Defendants do not dispute that Plaintiffs also satisfy the

requirements of Rule 23(a) and the “superiority” requirement of Rule 23(b)(3). Oral Arg. Tr. 4. The Court

therefore grants Plaintiffs’ motion to certify a nationwide Class composed of all persons and entities who directly paid interest expenses on VRDOs that had interest rates reset on a weekly or daily basis pursuant to remarketing agreements with Defendants at any point

from February 1, 2008 through November 30, 2015, excluding Defendants and their employees, affiliates, parents, subsidiaries, and co-conspirators, and the United

States government. The parties agree that Plaintiffs’ request for certification of the Class and certification of a

Contract Sub-Class “rise and fall together.” Oral Arg.

Tr. 100. It therefore follows that the Court also grants

Plaintiffs’ request to certify a Contract Sub-Class composed of all persons and entities who were party to a remarketing agreement with any Counterparty Defendant that applies to VRDOs that had interest rates reset

on a weekly or daily basis at any point from February 1,

2008 through November 30, 2015, excluding Defendants

and their employees, affiliates, parents, subsidiaries, and

coconspirators, and the United States government. Finally, the Court also grants Plaintiffs’ motion to appoint

Quinn Emanuel Urquhart & Sullivan, LLP; Wollmuth

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Maher & Deutsch LLP; and Susman Godfrey LLP as

class counsel.

CONCLUSION

For the foregoing reasons, Plaintiffs’ motion for

class certification is GRANTED and Defendants’ motion

to preclude Dr. Schwert and Dr. Abrantes-Metz is DENIED.

No later than two weeks from the date of this Opinion and Order, Plaintiffs shall file a proposed order consistent with this Opinion and Order and prescribing procedures by which class members will be provided notice

and an opportunity to opt out of the class. By the same

date, Plaintiffs shall file a letter brief addressing why

their proposals for notice and opting out are consistent

with the requirements of Rule 23 and due process.

One housekeeping matter remains. In several prior

Orders, the Court granted the parties permission to file

documents temporarily under seal. See ECF No. 372,

401, 434, 446. Both parties filed documents under seal in

connection with their respective motions. See, e.g., ECF

Nos. 363-64, 366, 370-71, 387-91, 393-96, 398, 404, 411-14,

423-25, 429-30, 433, 435, 443-44. It is well established

that filings that are “relevant to the performance of the

judicial function and useful in the judicial process” are

considered “judicial documents” to which a presumption

in favor of public access attaches. Lugosch v. Pyramid

Co. of Onondaga, 435 F.3d 110, 119 (2d Cir. 2006). Significantly, assessment of whether the presumption in favor of public access is overcome must be made on a document-by-document basis. See, e.g., Brown v. Maxwell,

929 F.3d 41, 48 (2d Cir. 2019). And the mere fact that

information is subject to a confidentiality agreement between litigants is not a valid basis to overcome that presumption. See, e.g., United States v. Wells Fargo Bank

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N.A., No. 12-CV-7527 (JMF), 2015 WL 3999074, at *4

(S.D.N.Y. June 30, 2015) (citing cases). In light of this

Opinion and Order, and to facilitate the Court’s review

of the parties’ requests, the parties shall, no later than

two weeks from the date of this Opinion and Order,

submit a joint letter with a single chart listing each and

every document that any party (or third party) believes

should remain under seal or in redacted form with a hyperlinked reference to the docket number of the document; the party (or third party) who seeks to keep the

document under seal; a succinct (i.e., two- or threeword) justification for the request; and a hyperlinked

reference to any prior letter-motion that addresses the

document. For the sake of completeness, the parties

should include in this chart any document that the Court

has already determined should be kept under seal permanently and include a hyperlinked reference to the

Court’s prior ruling in the chart. To the extent that the

parties (and, as relevant, third parties) agree that a document previously filed under seal or in redacted form

can or should be filed publicly, the parties should include

that in the letter, with a hyperlinked reference to the

relevant document.

The Clerk of Court is directed to terminate ECF

Nos. 362 and 386.

SO ORDERED.

Dated: September 21, 2023

New York, New York

/s/ Jesse M. Furman

JESSE M. FURMAN

United States District Judge