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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`U.S. Commodity Futures
`Trading Commission,
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`Plaintiff,
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`v.
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`Case No. 15-CV-2881
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`Judge John Robert Blakey
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`Kraft Foods Group, Inc., and
`Mondelēz Global LLC,
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`Defendants.
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`ORDER
`The CFTC sued Kraft in 2015, alleging unlawful manipulation of the national
`wheat market. Kraft denied the allegations, and, after years of zealous litigation, the
`parties settled their dispute via a settlement conference with this Court. On August
`14, 2019, based upon the parties’ own agreement, this Court entered an agreed
`Consent Order [310]. Among other provisions, the parties agreed to a confidentiality
`clause in Paragraph 8 of Section I, which stated that: “Neither party shall make any
`public statement about this case other than to refer to the terms of this settlement
`agreement or public documents filed in this case, except any party may take any
`lawful position in any legal proceedings, testimony or by court order.” Id. at 3.
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`The day after this Court entered the parties’ Consent Order, Plaintiff CFTC
`issued a press release and published public relations statements on its own website,
`[316-1], [316-2], [316-3] (“CFTC Press Materials”), in direct violation of the
`obligations the CFTC had voluntarily assumed by negotiating, approving, and
`executing the Consent Order. For example, the CFTC violated its own confidentiality
`provision when, in touting its victory, the CFTC Press Materials asserted various
`unproven claims (well outside the scope of the confidentiality clause) about Kraft’s
`actions in the market. Clearly, the CFTC willfully violated the clause, even if one
`excludes the actions of CFTC commissioners themselves as separate actors, because
`the CFTC itself engaged in misconduct, as a party to this case, when it issued its own
`press statements and when it also published the statements of “others” (i.e., its
`commissioners and agents).
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`Additionally, beyond any provision of the Consent Order, Plaintiff CFTC also
`willfully violated, via the publication of the same CFTC Press Materials, the routine
`orders of this Court regarding the requisite confidentiality of settlement proceedings.
`Following common practice nationwide, this Court had advised the parties at the
`1
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`Case: 1:15-cv-02881 Document #: 402 Filed: 04/15/22 Page 2 of 6 PageID #:24572
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`outset of the settlement conference that the proceeding would remain confidential by
`court order. This Court’s standard instructions were crystal clear:
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`Whatever happens stays here even if you settle the case. So anything I
`say during the settlement conference, anything the parties say during
`the settlement conference – whether it’s the joint session or the separate
`ex parte sessions – is not admissible or even disclosable to anyone at any
`time in any pleading or at any cocktail party so that’s a condition of going
`forward.
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`[303] at 3. With participation in the settlement conference predicated upon this
`condition, counsel for both parties consented, on the record, to this Court’s requisite
`settlement procedures, including its command to maintain the confidentiality of any
`settlement conversations (whether on or off the record). Id. at 4; see also [302]
`(“Consistent with the settlement protocol, the parties may not discuss the settlement
`conference.”). Nevertheless, Plaintiff CFTC disregarded this Court’s lawful orders.1
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`Naturally, Defendant Kraft moved for sanctions [315], [316]. Given the
`disputed motion, this Court set a status for September 27, 2019, [350], and intended
`to hear argument on the proper scope of any hearings on Kraft’s motions. For
`example, this Court intended to hear from the parties and determine the merits of
`CFTC’s procedural objections and assertions of executive privilege, and whether
`Kraft possessed a sufficient basis to compel high-ranking officials to provide
`testimony due to “extraordinary circumstances” for such testimony. See SEC v.
`Comm. on Ways & Means of the U.S. House of Reps., 161 F. Supp. 3d 199, 251
`(S.D.N.Y. 2015); Sherrod v. Breitbart, 304 F.R.D. 73, 75 (D.D.C. 2014).2 But, before
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`1 For example, one of several violative statements by the CFTC provided: “In unanimously approving
`the settlement, our Commission considered carefully Paragraph 8 of Section I of the Consent Order,
`which was included at the Court’s request[.]” [316-2] at 2 (emphasis added). The CFTC Statement
`plainly discloses the contents of the settlement conference by saying that the parties included a
`provision of the Consent Order at this Court’s request. The CFTC thus violated this Court’s
`unambiguous commands and the violation “was significant” in that the CFTC did not demonstrate
`substantial compliance with this Court’s orders. Ohr ex rel. NLRB v. Latino Exp., Inc., 776 F.3d 469,
`474 (7th Cir. 2015). Moreover, this violation also constituted a material mischaracterization of the
`truth where this Court made no “request” of any party, but rather simply conveyed options between
`the two parties themselves, which each party was free to accept, reject, or modify. Put simply, the
`CFTC did not comply at all, much less substantially comply, with this Court’s settlement conference
`orders.
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` 2
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` Here, Kraft argued it could show that such extraordinary circumstances existed because, among
`other things, the CFTC commissioners had unique personal knowledge of relevant facts, having
`purportedly authored some of the offending statements themselves. See Est. of Richardson v. Kanouse,
`No. CV 10-5999 DDP (SSX), 2013 WL 12113222, at *2 (C.D. Cal. Mar. 18, 2013); Bagley v. Blagojevich,
`486 F. Supp. 2d 786, 789–90 (C.D. Ill. 2007); Tranzact Techs., Inc. v. 1Source Worldsite, 406 F.3d 851,
`855 (7th Cir. 2005) (“Due process requires a district court to resolve relevant factual disputes—
`allowing discovery and holding an evidentiary hearing if necessary—in a civil contempt proceeding.”).
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`2
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`this Court got a fair opportunity to hear out the parties on the predicate procedural
`issues, the CFTC filed an appeal to halt the contempt proceedings, [353].
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`On October 22, 2019, the Seventh Circuit issued its opinion [354]. In its ruling,
`the Seventh Circuit did not address CFTC’s violations of this Court’s own settlement
`conference orders, and instead simply rejected CFTC’s baseless request to disqualify
`this Court and held that no further evidentiary hearing need occur for this Court to
`rule and that the Consent Order executed by the CFTC did not bind the CFTC
`commissioners (and thus, they need not provide testimony and the contempt motions
`should proceed only as to the CFTC itself, rather than any individual parties).
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`In compliance with the Seventh Circuit’s order, this Court relied upon the
`current record to issue its rulings. Specifically, based upon the CFTC’s contention on
`appeal that it supposedly never thought the Consent Order prohibited the CFTC from
`publishing the CFTC Press Materials, and Kraft’s obviously contrary view, this Court
`found that a material term of the parties’ Consent Order remained in dispute
`(namely, the confidentiality provision); and thus, this Court vacated the Consent
`Order. [355].3 Based upon the record presented, this Court also granted, in part,
`Kraft’s motions for contempt against the CFTC itself, and advised that additional
`factual findings on the matter would be issued via a separate order. [378].
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`Subsequently, on March 4, 2020, Kraft moved to withdraw its motion for
`contempt “contingent upon the Court’s approval” of a revised proposed consent order
`that the parties had negotiated in resumed settlement discussions. [382] at 1. The
`parties also noted that, if the Court were to issue detailed factual findings on its prior
`contempt ruling, then those findings might impact the parties’ settlement and may
`require revisions to the proposed consent order. [387]. On March 11, 2020, the CFTC
`moved to vacate the February 14, 2020 contempt finding based upon mootness [384];
`Kraft, however, disagreed that its prior motion for contempt was moot, and stated
`that it had only agreed to withdraw the previously granted motion, if and only if, this
`Court approved the parties’ new proposed consent order. [389] at 1–2.4 Quite simply,
`Kraft indicated that, even though the factual and legal basis for the contempt findings
`remained, Kraft wanted to advise the Court that the parties still wanted to resolve
`their dispute, contingent to this Court’s approval. On March 31, 2021, this Court
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`3 See Pearson v. Target Corp., 893 F.3d 980, 985 (7th Cir. 2018) (vacating the Consent Order served
`Rule 60(b)(6)’s goal of restoring equity between the parties); see also, e.g., Wesco Prods. Co. v. Alloy
`Auto. Co., 880 F.2d 981, 986 (7th Cir. 1989) (Ripple, J., dissenting) (“affirmative misleading of a party”
`“can constitute the ‘extraordinary circumstances’ demanded by Rule 60(b)(6)”).
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` 4
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` In the briefing, Kraft also noted that even though the Seventh Circuit’s decision might have mooted
`the issue of contempt against individual Commissioners, it did not moot the issue of contempt against
`the CFTC as an entity [360]. In fact, the Seventh Circuit declined to issue any writ with respect to
`contempt against the CFTC, finding that the CFTC’s “argument for mandamus on this subject is
`weak.” In re Commodity Futures Trading Commission, No. 19-2769 (7th Cir. Oct. 7, 2019) [36] at 7.
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`3
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`issued an order denying Kraft’s motion to withdraw its contempt motion except to the
`extent Kraft was asking the Court to ensure that its forthcoming findings on
`contempt reflected the “changed circumstances” of potential settlement, [400].
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`Mindful of the parties’ concerns above, considering the posture of the case as
`the pandemic begins to ease, and with the benefit of lengthy and considerable
`reflection (to say the least), this Court will forego making more detailed factual
`findings in support of the prior contempt ruling. Instead, this Court reserves
`jurisdiction for making such findings prior to entry of final judgment only if future
`proceedings warrant them. In other words, the hope is that the findings and
`admonishments of this short order alone will suffice to bring the contempt matter to
`a close.
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`To be sure, federal courts possess inherent power to enforce compliance with
`their lawful orders through civil contempt. Spallone v. United States, 493 U.S. 265,
`276 (1990). And, as previously made clear, the record here contains clear and
`convincing evidence that, when the CFTC published the CFTC Press Materials, it
`willfully violated the unambiguous and lawful confidentiality commands included in
`both the parties’ Consent Order and this Court’s routine settlement conference
`orders. Although this Court need not find willfulness or bad faith to hold the CFTC
`in contempt, see Taggart v. Lorenzen, --- U.S. ---, 139 S. Ct. 1795, 1802 (2019), the
`facts here overwhelming support the prior contempt finding by this Court.5
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`Indeed, the record confirms that the CFTC expressly agreed to abide by the
`confidentiality requirements, and then intentionally worked to unilaterally
`circumvent them with the CFTC Press Materials. In addition to other evidence, Kraft
`proffered compelling
`facts showing that the CFTC engaged
`in
`improper
`gamesmanship in finalizing the draft Consent Order and then publishing the CFTC
`Press Materials. See [339-1] at 3 (documenting, among other things, actions by the
`CFTC that remain totally inconsistent with any purported belief that the Consent
`Order did not prohibit the publication of the CFTC Press Materials). This evidence
`stands unrebutted by the CFTC who failed to credibly undermine Kraft’s showing
`(and otherwise successfully preempted a full evidentiary hearing on Kraft’s motion).
`Moreover, Kraft’s evidence also comports with this Court’s own observations (both on
`the record and off the record during the settlement conference) that Kraft’s request
`for the confidentiality provision constituted a material term to Kraft, and that the
`CFTC acted willfully, and in bad faith, in publishing the CFTC Press Materials after
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`5 This Court may find civil contempt if clear and convincing evidence exists as to four elements: (1) a
`court order sets forth an unambiguous command; (2) the alleged contemnor violated the command; (3)
`the violation “was significant,” meaning that the alleged contemnor “did not substantially comply”
`with the order; and (4) the alleged contemnor failed to take steps to reasonably and diligently comply
`with the order. Ohr, 776 F.3d at 474; SEC v. Hyatt, 621 F.3d 687, 692 (7th Cir. 2010). The present
`record more than satisfied this standard.
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`4
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`agreeing not to engage in such conduct. This Court hereby adopts Kraft’s proffer of
`evidence as part of this Court’s findings of fact today.
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`Beyond the Consent Order, the record also confirms that the CFTC willfully
`violated this Court’s orders concerning participation in settlement negotiations when
`the CFTC intentionally disclosed (and in part misrepresented) the contents of the
`settlement conference discussions in bad faith. Among other concerns, CFTC’s
`misconduct here raises troubling concerns for the future, because its actions
`fundamentally erode the long-established protocols for settlement conferences in both
`state and federal court. See, e.g., Suenos, LLC v. Goldman, No. CV10-1034-TL, 2014
`WL 460965, at *1 (D. Ariz. Feb. 5, 2014) (“failure to protect the confidentiality of
`settlement communications would chill the settlement process” as an “open and frank
`discussion of the strengths and weaknesses of a case is required for effective
`settlement negotiations” and the publication of settlement communications
`discourages “the very candor necessary to the process”); Davis v. Kan. City Fire &
`Marine Ins. Co., 195 F.R.D. 33, 38 (N.D. Okla. 2000) (“A well-functioning settlement
`program is essential to the efficient administration of justice in the federal court
`system . . . . The confidentiality requirements of the Local Rules and the Settlement
`Conference Order are absolutely necessary to ensure the effectiveness of the
`program.”). Future litigants should take note of the CFTC’s position that consent
`orders only bind the CFTC, but not its commissioners or agents who, apparently, may
`act with impunity.6
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`In the end, the CFTC’s contemptuous actions undermine the rule of law,
`especially where, as here, the plaintiff represents an agency of the United States
`government. As an entity exercising federal executive power, the CFTC is the
`“representative not of an ordinary party to a controversy, but of a sovereignty whose
`obligation to govern impartially is as compelling as its obligation to govern at all” and
`while it may pursue its cases “with earnestness and vigor” and “strike hard blows,” it
`is “not at liberty to strike foul ones.” Berger v. United States, 295 U.S. 78, 88
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`6 Settlement, of course, is an elective process. And this Court does not force litigants to engage in
`settlement conferences. But if they do elect to participate in a settlement conference, this Court
`expects them to follow this Court’ lawful orders regarding confidentiality. Doing so ensures not only
`the integrity of all settlement conferences conducted daily by district and magistrate judges
`throughout the country, but it also protects and aids the parties themselves by ensuring good faith,
`candid communications about the strengths and weaknesses of their positions. Absent such baseline
`agreements, a settlement conference is a total waste of time and judicial resources. Here, the CFTC
`expressly agreed to abide by the standard confidentiality protocol, and then secretly contemplated how
`it could circumvent its obligations under that protocol. When Kraft denied the CFTC’s request to
`remove the confidentiality provision, the CFTC could have, and should have, rejected the settlement,
`and re-entered into negotiations, rather than unilaterally adopt an undisclosed legal interpretation
`that the confidentiality provision bound only the CFTC but not those charged with carrying out the
`CFTC’s business. See Nelson v. Steiner, 279 F.2d 944, 948 (7th Cir. 1960) (stating that the executive
`branch of government has “no right to treat with impunity the valid orders of the judicial branch”);
`Am. Rivers v. U.S. Army Corps of Eng’rs, 274 F. Supp. 2d 62, 70 (D.D.C. 2003) (“Litigants may not defy
`court orders because their commands are not to the litigants’ liking.”).
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`(1935). Here, the CFTC struck foul blows. Its conduct in this case violated the public
`trust, as well as the CFTC’s own core values and its long tradition of providing
`excellent service to the nation.
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`Nevertheless, if, despite the CFTC’s misconduct, the parties wish to finalize a
`resolution of this matter, then this Court will not impede that process further by
`imposing any sanctions for civil contempt beyond the reprimand contained in this
`short order.
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`On or before April 29, 2022, the parties shall file a status report and submit, if
`they wish, an updated proposed Consent Order to this Court’s proposed order in-box
`for review.
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`Dated: April 15, 2022
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`Entered:
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`John Robert Blakey
`United States District Judge
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