A federal court of appeals stayed all district court activity related to a claim by Kraft Foods Group, Inc. and Mondelez Global LLC that the Commodity Futures Trading Commission violated a mutual gag order included in a settlement of an enforcement action by the CFTC against the two food giants. 

Additionally, the appeals court ordered that all papers filed before it be made public as of October 1 absent an express statute or “recognized privilege” that requires confidentiality. The appeals court also ordered the defendants to file a response by October 7 to a petition for mandamus filed by the CFTC on September 13 and invited the judge in the district court action – the Hon. John Blakey – to provide his own response to the CFTC’s petition “if he so chooses.” (A party may seek a writ of mandamus to compel a government agency or court to correct alleged prior unlawful conduct.) 

In response, the district court cancelled all pending deadlines and hearings, including an evidentiary hearing on October 7 at which three CFTC commissioners, including Chairman Heath Tarbert, and the Director of the Division of Enforcement were instructed to attend.

The defendants claimed that the CFTC violated the gag order included in the settlement order resolving the CFTC's enforcement action charging the two firms with manipulating or attempting to manipulate the price of the December 2011 wheat futures contract traded on the Chicago Board of Trade and cash wheat and their agreement to pay a fine of US $16 million. The defendants claimed the CFTC immediately violated the gag order when it published a press release, a formal statement, and a statement by two commissioners contemporaneously with its August 15 publication of the consent order of settlement. (Click here for details regarding this dispute in the article “Contempt and Sanctions Hearing Against the CFTC Arising From Manipulation Complaint Settlement Delayed to October 2” in the September 2, 2019 edition of Between Bridges.)

My View: It appears we may soon finally gain comprehensive insight into the CFTC’s defense to defendants’ allegations regarding the Commission’s purported breach of the mutual gag order contained in the settlement order. This is how it should be. Pleadings regarding alleged wrongful actions or inactions of government agencies should not be shielded from sunlight absent compelling reason. Partial redaction of documents is preferred to complete secrecy, if necessary.