CFTC v. John Robert Blakey

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-2769
IN THE MATTER OF:
COMMODITY FUTURES TRADING COMMISSION,
Petitioner.
KRAFT FOODS GROUP, INC., and MONDELĒZ GLOBAL LLC,
Parties in Interest.
____________________
Petition for a Writ of Mandamus to the United States
District Court for the Northern District of Illinois, Eastern Division.
No. 15 C 2881 — John Robert Blakey, Judge.
____________________
SUBMITTED OCTOBER 15, 2019 — DECIDED OCTOBER 22, 2019
____________________
Before EASTERBROOK, RIPPLE, and SYKES, Circuit Judges.
EASTERBROOK, Circuit Judge. In 2015 the Commodity Fu-
tures Trading Commission filed a civil action against Kraft
Foods Group and Mondelēz Global. It was se\led in August
2019, and the parties’ bargain, which the judge entered as a
consent decree, includes this provision:
Neither party shall make any public statement about this case
other than to refer to the terms of this se\lement agreement or
public documents filed in this case, except any party may take
2 No. 19-2769
any lawful position in any legal proceedings, testimony or by
court order.
Shortly after the district court entered its order, the Commis-
sion issued a press release announcing the suit’s resolution.
Two Commissioners (Dan Berkovib and Rostin Behnam)
filed statements explaining why they voted in favor of ac-
cepting this se\lement.
Kraft and Mondelēz asked the district judge to hold the
Commission and Commissioners in contempt of court for
issuing the press release and concurring statements. The dis-
trict judge set the motion for a hearing and directed Chair-
man Heath Tarbert, Commissioners Berkovib and Behnam,
the Commission’s Director of Enforcement, and several of
the Commission’s other employees to appear in court and
testify under oath. The judge stated that he would adminis-
ter Miranda warnings to these witnesses in preparation for a
finding of criminal contempt and would demand that the
witnesses explain the thinking behind the press release and
the separate statements. Chairman Tarbert and the Commis-
sioners protested. After a motion asking the district court to
lift the demand for their presence and the threat of criminal
sanctions went unaddressed for approximately two weeks,
and the date scheduled for the hearing approached, the
Commission filed a petition for a writ of mandamus. A mo-
tions panel issued a stay pending further order of this court.
We also ordered all of the papers to be placed in the pub-
lic record. The district judge had directed the parties not to
say anything in public about the upcoming hearing and to
keep all of their legal filings secret, an order that is incon-
sistent with the law of this circuit. See, e.g., Union Oil Co. v.
Leavell, 220 F.3d 562, 567–68 (7th Cir. 2000); Herrnreiter v. Chi-
No. 19-2769 3
cago Housing Authority, 281 F.3d 634, 636–37 (7th Cir. 2002).
Those two decisions hold that a confidentiality clause in the
litigants’ agreement does not authorize secret adjudication.
We ordered Kraft and Mondelēz to respond to the peti-
tion and invited the district judge to do so. See Fed. R. App.
P. 21(b)(1), (4). The district judge’s response states, among
other things, that he no longer contemplates the possibility
of criminal contempt, so that aspect of the controversy has
dropped out. Everything we say from now on concerns civil
contempt only.
Chairman Tarbert and Commissioners Berkovib and
Behnam have moved for leave to intervene. We grant that
motion. Although the Commission is representing their in-
terests adequately for the present, the threat of being per-
sonally penalized for contempt of court entitles them to be
litigants in their own right, so that they may take such steps
as they deem wise to protect their personal interests.
Mandamus is a drastic remedy, reserved for urgent
needs, but, for all that, it remains available to a litigant who
can establish a clear right to relief and lacks any other way to
protect his or her rights. See, e.g., Cheney v. United States Dis-
trict Court, 542 U.S. 367 (2004); Ex parte Fahey, 332 U.S. 258(1947).
The district court’s order directing the Chairman and two
members of the Commission, plus members of the staff, to
appear for questioning in open court cannot be reviewed on
appeal from a final decision. The time taken away from their
official duties will be lost forever.
Cheney holds that mandamus is the appropriate remedy
when a district court has authorized an inquest into the in-
4 No. 19-2769
ternal deliberations of the Executive Branch’s senior officials.
See also, e.g., In re United States, 398 F.3d 615 (7th Cir. 2005).
That’s a good description of the order requiring the Chair-
man and two Commissioners, appointed by the President on
advice and consent of the Senate, to appear and reveal what
lies behind their published words. Many decisions hold that
mandamus is appropriate when a district judge inappropri-
ately compels a ranking federal official to appear personally
rather than by counsel. See, e.g., In re United States, 624 F.3d
1368, 1372 (11th Cir. 2010); In re Cheney, 544 F.3d 311, 314
(D.C. Cir. 2008); In re United States, 197 F.3d 310, 313–14 (8th
Cir. 1999); In re FDIC, 58 F.3d 1055, 1060 (5th Cir. 1995); In re
United States, 985 F.2d 510, 512 (11th Cir. 1993); United States
Board of Parole v. Merhige, 487 F.2d 25, 29 (4th Cir. 1973).
The district court’s order requiring the Chairman, Com-
missioners, and members of the staff to appear for question-
ing might be supportable on two grounds: first, that they po-
tentially could be held in contempt; second, that their testi-
mony is essential to determine whether the Commission is in
contempt. Neither of these potential justifications suffices.
We start with the possibility that the persons compelled
to appear may themselves be in contempt. They are not par-
ties to the agreement and consent decree, so the only basis
for adjudicating them in contempt would be Fed. R. Civ. P.
65(d)(2)(B), which says that “the parties’ officers, agents,
servants, employees, and a\orneys” are bound by an injunc-
tion. But that clause would control only if the Commission
has the authority to bind its members, and it does not.
Whenever the Commission issues for official publication any
opinion, release, rule, order, interpretation, or other determina-
tion on a ma\er, the Commission shall provide that any dissent-
ing, concurring, or separate opinion by any Commissioner on
No. 19-2769 5
the ma\er be published in full along with the Commission opin-
ion, release, rule, order, interpretation, or determination.
7 U.S.C. §2(a)(10)(C). In other words, every member of the
Commission has a right to publish an explanation of his or
her vote.
This is a right that the Commission cannot negate. It
could not vote, three to two, to block the two from publish-
ing their views. So if we understand the consent decree as an
effort to silence individual members of the Commission, it is
ineffectual, for no litigant may accomplish through a consent
decree something it lacks the power to accomplish directly,
unless some other statute grants that power—and no one ar-
gues that any other statute overrides §2(a)(10)(C). See Dunn
v. Carey, 808 F.2d 555 (7th Cir. 1986); Kasper v. Board of Elec-
tion Commissioners, 814 F.2d 332, rehearing denied, 814 F.2d
345 (7th Cir. 1987); People Who Care v. Rockford Board of Educa-
tion, 961 F.2d 1335, rehearing denied, 964 F.2d 639 (7th Cir.
1992); Paige v. Cisneros, 91 F.3d 40 (7th Cir. 1996). And be-
cause members of federal agencies are entitled to the assis-
tance of their staffs, a statute entitling the Commissioners to
speak their minds also means that it would be inappropriate
to penalize persons who helped them do it.
Now consider the possibility that testimony from the
Chairman, Commissioners, and staff members is essential to
decide whether the Commission as an institution is in con-
tempt. The district judge apparently believed that only evi-
dence about a litigant’s thoughts and goals supports an ad-
judication in contempt, and who other than the Chairman
and Commissioners could provide that evidence? But the
Supreme Court has held that disputes about civil contempt
must be resolved objectively. See, e.g., Taggart v. Lorenzen,
6 No. 19-2769
139 S. Ct. 1795, 1804 (2019). The agreement, consent decree,
and press release are wri\en documents; their meaning and
effect depends on their four corners. See, e.g., United States v.
ITT Continental Baking Co., 420 U.S. 223 (1975). If the Com-
mission has done wrong, that is because of what the Com-
mission itself said and did, not because of what any of its
members or employees thought or planned. See, e.g., In re
United States, 398 F.3d at 618.
Judicial review of an agency’s decision is limited to the
agency’s official acts and the administrative record in all but
the most extraordinary situations. United States v. Morgan,
313 U.S. 409, 422 (1941). One important reason for that rule is
that intra-agency deliberations are covered by multiple
privileges, as Cheney and other decisions explain. Although
these privileges may be overridden for compelling reasons,
no such reason has been established or even asserted here.
Because the propriety of the Commission’s official deeds
depends on those deeds, plus the administrative record (if
any), there is neither need nor justification for testimony by
the Chairman, any Commissioners, or any members of the
agency’s staff. We issue a writ of mandamus and direct the
district court to withdraw its demand that these persons ap-
pear in court for questioning. We also direct the district court
to desist from any effort to hold the Chairman, Commission-
ers, and staff members personally in contempt of court, or
otherwise to look behind the Commission’s public state-
ments and the administrative record.
The Commission has asked us to go further and order the
district court to close the contempt proceeding. Kraft and
Mondelēz contend that four statements in the Commission’s
press release violate the consent decree:
No. 19-2769 7
• “The $16 million penalty is approximately three
times defendants’ alleged gain.
• “We are pleased to bring this matter to a successful
resolution, which terminates more than four years
of litigation.
• “The Commission believes that the Consent Order
advances our mission of fostering open, transparent,
and competitive markets.
• “We do not expect the Commission to agree to simi-
lar language in the future, except in limited situa-
tions where our statutory enforcement mission of
preventing market manipulation is substantially
advanced by the settlement terms and the public’s
right to know about Commission actions is not im-
paired.”
The Commission asserts that none of these statements vio-
lates the confidentiality clause of the agreement.
The argument for mandamus on this subject is weak. If
the district judge ultimately concludes that the Commission
is indeed in contempt, its arguments can be vindicated by an
appeal in the regular course. We therefore deny the request
for mandamus on this issue. Likewise we deny the Commis-
sion’s request that we transfer the district court’s proceed-
ings to a different judge. The judge who entered the consent
decree is in the best position to decide, as an initial ma\er,
whether its provisions have been violated. The final decision
will be subject to plenary review.
The motion to intervene is granted. The petition for
mandamus is granted to the extent we indicated above and
otherwise denied.