Quinn Emanuel recently secured class certification in City of Philadelphia v. Bank of America Corp., a case that addresses alleged collusion in the variable rate demand obligation (“VRDO”) market. The class seeks over $4 billion in damages, before trebling, from the alleged collusion.
The class consists of VRDO issuers, which are typically municipalities that use VRDO instruments to raise funds for critical infrastructure projects like building hospitals or airports. The key distinction between VRDOs and traditional municipal bonds is that the interest rate is variable, with the bank intermediary—the “remarketing agent”—setting the rate periodically based on the level the bank believes would clear the market, the rate where VRDO supply from the VRDO issuers meets demand of the VRDO investors. The largest remarketing agents in the industry are the Defendants in the class action.
In a competitive market, the remarketing agents would compete against each other for issuers' business by setting the lowest possible rate—if any remarketing agent sticks out by setting artificially high rates, issuers would switch to a new remarketing agent with a competitive rate. The Plaintiffs allege that rather than engage in this competitive process, the remarketing agents agreed to collectively set inflated rates, harming the class while minimizing their own inventory costs.
Quinn Emanuel, along with co-counsel Susman Godfrey and Wollmuth Maher & Deutsch, filed for class certification on October 27, 2022, supported by economic evidence from Professor William Schwert and Dr. Rosa Abrantes-Metz. After the briefing was completed, the Court held oral argument on August 1, 2023. The presiding judge—the Honorable Judge Jesse Furman—issued a request that younger attorneys be given an opportunity to participate in the oral argument. Heeding the call, Quinn Emanuel tasked associates David LeRay and Nicolas Siebert of the New York office to take on the core economic components of the argument, with David LeRay handling Professor Schwert's analysis and Nicolas Siebert handling the analysis of Dr. Rosa Abrantes-Metz.
On September 21, 2023, the Court granted Plaintiffs' motion for class certification, adopting many of the positions we argued in our briefs and at the class certification hearing. The win represents a landmark victory for Quinn Emanuel's antitrust practice. The firm will continue to represent the class through summary judgment and trial, which should occur in 2025.
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