Judge Reprimands Agency for Violating Confidentiality Requirements in Settlement Negotiations with Kraft Foods

On Friday, the Northern District of Illinois issued an order finding that the U.S. Commodity Futures Trading Commission (CFTC) violated confidentiality requirements in the case of U.S. Commodity Futures Trading Commission v. Kraft Foods, Inc. et al.

The order states that, in 2015, the CFTC sued Kraft alleging unlawful manipulation of the national wheat market, and after years of litigation, the parties settled their disputes through a settlement conference with the Northern District of Illinois. Subsequently, the court issued a mutually agreed upon Consent Order on August 14, 2019. 

The court states that the consent order included an agreed upon confidentiality clause prohibiting either party from making public statements about the case other than the terms of the Consent Order. Additionally, the court states that the confidentiality of the settlement proceedings is a routine and requisite practice in courts nationwide, and both parties agreed to the courts confidentiality recruitment. 

However, the order states that the day after the Consent Order was issued, the CFTC issued a press release and published public relations statements on its own website that were in direct violation of the court’s and Consent Order’s confidentiality requirements. Following these violations by the CFTC, Kraft moved for sanctions against the plaintiff and a contempt proceeding on the proper scope of Kraft’s motion was set for September 27, 2019. 

However, the order states that before the Northern District of Illinois could hear any arguments the CFTC appealed to the Seventh Circuit to halt the contempt proceedings. On October 22, 2019, the Seventh Circuit issued its opinion without addressing CFTC’s violation of its own settlement conference orders and instead rejected CFTC’s “baseless request” to disqualify the Northern District of Illinois. 

Following the Seventh Circuit opinion, the Northern District of Illinois granted in part Kraft’s motion for contempt against CFTC and vacated the Consent Order finding that the confidentiality provision remained in dispute. Subsequently, on March 4, 2020, Kraft moved to withdraw its motion for contempt “contingent upon the Court’s approval” of a revised consent order negotiated by the parties. On March 31, the court denied the motion except for Kraft’s request for the court to recognize that the previous events and forthcoming findings on contempt reflected the “changed circumstances” of potential settlement.  

In the present order, authored by Judge John Robert Blakey, the court reserved the right to make additional factual findings to support the granted contempt ruling against CFTC, but stated it hoped the findings and reprimand in the order will bring the contempt matter to a close. In the order, Judge Blakey found that the CFTC willfully violated this Court’s orders concerning participation in settlement negotiations and intentionally worked to unilaterally circumvent the agreed upon confidentiality requirement in the Consent Order. Further, Blakey stated that the CFTC’s actions undermine the rule of law, violated the public trust, as well as the CFTC’s own core values. 

However, the court stated that despite the CFTC’s misconduct, the court will not impede the resolution and settlement of this matter and thus will not issue any sanctions for civil contempt beyond the reprimand in the order.  Finally, the court stated that on April 29, 2022, the parties shall file a status report and submit , if they wish, an updated proposed Consent Order. Kraft foods is represented by Jenner & Block, Sutherland Asbill & Brennan, Mayer Brown and Lynch Thompson.