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The U.S. Supreme Court ( SCOTUS ) on Monday, April 20, 2026, declined to review a Second Circuit decision that upheld class certification in a major antitrust lawsuit involving variable-rate demand obligations (VRDOs), a type of municipal bond.This denial lets the case proceed as a class action against eight (8) major banks, with potential damages estimated in the billions.
What Are VRDOs?
VRDOs are long-term municipal bonds with interest rates that reset periodically (often weekly). They include a “put” feature allowing holders to sell them back at par value, typically supported by liquidity facilities from banks. They have been popular with municipalities for lower borrowing costs but are sensitive to remarketing and interest rate practices.
The Lawsuit
Cities and other municipal issuers (including Baltimore, Philadelphia, and San Diego) accuse banks of conspiring from roughly 2008 to 2016 to artificially inflate the interest rates (or “remarketing rates”) on thousands of VRDOs. The plaintiffs claim this collusion cost issuers hundreds of millions annually in higher interest payments, with the total class-wide damages sought reaching around $12 billion (including trebled antitrust damages).The defendants are major financial institutions acting as remarketing agents for these bonds.
Key Procedural History
- A district court certified the plaintiff class after analyzing expert evidence on whether common issues (like the alleged conspiracy’s class-wide impact) predominate over individual ones, as required by Federal Rule of Civil Procedure 23(b)(3).
- The banks petitioned the Supreme Court, arguing the lower court failed to resolve a “battle of the experts” on antitrust impact before certifying the class. They claimed this violated the “rigorous analysis” standard from Supreme Court precedents like Comcast and Tyson Foods.
- The Second Circuit affirmed certification (via summary order).
- In December 2025, the banks filed a petition for certiorari (No. 25-639).
The Supreme Court denied review without comment, as is typical for most cert petitions. No circuit split was deemed sufficient to warrant intervention, and the case was viewed as a fact-specific application of established class certification standards.
What Happens Next?
The class action can now move forward toward trial or settlement in the district court. Class certification is often a pivotal “bet-the-case” moment in antitrust litigation because it dramatically increases the defendant’s exposure.This outcome aligns with the Supreme Court’s general reluctance to micromanage fact-intensive class certification disputes absent a clear legal conflict among the circuits.The headline you mentioned (“Justices Won’t Review Class Cert. In $12B VRDO Suit”) comes directly from Law360’s coverage of the denial. Similar reports appeared from Reuters and other outlets.If you’d like more details on the underlying allegations, the expert disputes, VRDO mechanics, or related municipal bond cases, let me know!