Judge denies Kraft interlocutory appeal and grants CFTC motion to strike affirmative defenses

On July 16, U.S. District Judge John Robert Blakey issued an Memorandum Opinion and Order regarding the CFTC’s ongoing case against Kraft for alleged manipulation of the cash wheat and wheat futures markets.  The order denies Kraft’s motion for interlocutory appeal and stay, and grants the CFTC’s motion to strike affirmative defenses.  As we previously reported, the CFTC filed a motion opposing Kraft’s request for an interlocutory appeal of Judge Blakey’s December 18 order denying Kraft’s motion to dismiss.  Judge Blakey denied Kraft’s motion, finding that it did not meet the standards to certify an order for interlocutory appeal under 28 U.S.C. § 1292(b).  In particular, Judge Blakey found that there was not: (1) a question of law; and that question must be (2) controlling and (3) contestable, and (4) promise to speed up the litigation.

Judge Blakey also granted the CFTC’s motion to strike Kraft’s affirmative defenses (which included unclean hands, laches, estoppel, waiver, and lack of subject matter jurisdiction).  After filing its affirmative defenses, Kraft subsequently conceded that certain of its affirmative defenses were improper and agreed to withdraw certain defenses during a status hearing, so the only affirmative defenses considered by Judge Blakey were the affirmative defenses of unclean hands and laches.  Judge Blakey ruled that while the Seventh Circuit has not definitively addressed whether unclean hands may be asserted against a government agency in an enforcement action, the great weight of authority shows that it may not.  Additionally, Judge Blakey ruled that when the action brought by the government is an enforcement action where the government asserts its own rights, it falls within the general rule that the United States is not subject to the equitable defense of laches in enforcing its rights.