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Steiner v. American Friends of Lubavitch

Court of Appeals of The District of Columbia

February 1, 2018

Yehuda Steiner, et al., Appellants,
v.
American Friends of Lubavitch (Chabad), et al., Appellees.

          Argued October 27, 2016

         Appeal from the Superior Court of the District of Columbia (CAB-6353-14) (Hon. John M. Campbell, Trial Judge)

          Nicolle Kownacki, with whom Kathryn J. Mims and Chauncey A. Bratt were on the brief, for appellants.

          Andrew M. Grossman, with whom Paul M. Levine was on the brief, for appellees.

          Before Beckwith and Easterly, Associate Judges, and Farrell, Senior Judge.

          Beckwith, Associate Judge.

         This case raises the question whether a noncompete and noninterference clause in a religious minister's employment contract may be enforced by a preliminary injunction after the employment is terminated. Appellant Rabbi Yehuda Steiner was hired by American Friends of Lubavitch (AFL), a nonprofit affiliated with "the Chabad-Lubavitch movement, " to run AFL's campus outreach at George Washington University (GW). The noncompete and noninterference clauses at issue in this case appear in an employment contract Rabbi Steiner signed-on behalf of himself and his wife, Rivky Steiner-with one of the organization's representatives, appellee Rabbi Levi Shemtov. When the Steiners' employment ended under contested circumstances, Rabbi Shemtov and appellee AFL filed a complaint alleging a breach of contract and successfully sought a preliminary injunction that required the Steiners to refrain from competing or interfering with AFL's involvement at GW. A subsequently amended version of that injunction is now the subject of this appeal.

         The Steiners challenge the injunction on five separate grounds, arguing that the trial court lacked subject-matter jurisdiction, that it abused its discretion by issuing the injunction, that it erred in applying the doctrine of equitable reformation to the noncompete clause, that the injunction violated the Free Exercise Clause of the First Amendment and the Religious Freedom Restoration Act, and that Rabbi Steiner's wife, Rivky Steiner, was not a party to the contract and was therefore improperly enjoined.

         We conclude that the trial court had subject matter jurisdiction to issue the injunction. We also formally adopt the doctrine of equitable reformation to modify contract provisions, but hold that the trial court's equitable revision of the noncompete clause in this case exceeded the bounds of that doctrine by describing the activities the Steiners were precluded from engaging in using broader language than the terms of the employment contract itself and thus effectively expanding the scope of the restrictions contained in the noncompete clause. We therefore vacate the injunction and remand for a determination of what, if any, provisions of the modified preliminary injunction remain enforceable, consistent with this opinion. We also remand for a determination as to whether Rivky Steiner could be properly enjoined, should any provisions remain enforceable.

         I. Background

         The appellants, Rabbi Yehuda Steiner and his wife Rivky Steiner, belong to Chabad-Lubavitch, an Orthodox Jewish movement centered in Brooklyn, New York. They moved to the District of Columbia in 2008 when Rabbi Steiner was hired by American Friends of Lubavitch-a nonprofit that describes itself as "the Chabad-Lubavitch movement's mandated representative entity in Washington"- to be a campus rabbi at George Washington University. Within a year, Rabbi Steiner's relationship with Rabbi Levi Shemtov, the head of AFL's Washington office, deteriorated, and in November 2011, Rabbi Shemtov purported to fire Rabbi Steiner. Rabbi Steiner challenged the termination before a rabbinical court and won, after which he and Rabbi Shemtov entered into a new employment contract.

         The new contract stated that Rabbi Shemtov had "ultimate rabbinic and executive authority over Chabad-Lubavitch activities in Washington, DC- governmental, communal and local, including the universities" and indicated that he was employing Rabbi and Rivky Steiner in that capacity. Rabbi Steiner's responsibilities under the contract included organizing Friday night Shabbos dinners, classes, social events, and annual trips to Israel "to enable Jewish students to interact with each other as much as possible[.]"

         The contract included a noncompete clause stating that if the Steiners were terminated, they would not "enter into employment or arrangement-of whatever scope or duration-with any Chabad-Lubavitch entity or any other institution, performing similar work, anywhere in DC, or suburban MD or VA." This noncompete clause was followed by a noninterference clause stating that, after the end of the employment, the Steiners agreed "to conclude their operations at GWU peacefully within 30 days of notification" and to do so "without causing any damage or discomfort" to Rabbi Shemtov or AFL and without "interfering with any arrangement or subsequent decision made by [Rabbi Shemtov] in connection with GW or any other activities over which [Rabbi Shemtov] has authority." The contract concluded with a statement that the parties agreed to the specified terms and conditions "in conformance with the laws of, under the jurisdiction of, and enforceable in the District of Columbia." Rabbi Steiner signed the contract on behalf of himself and his wife, and Rabbi Shemtov signed it on behalf of himself, his wife, and AFL.

         The parties performed pursuant to the terms of the contract for two years, until the relationship between Rabbi Steiner and Rabbi Shemtov broke down again, and Rabbi Shemtov for the second time fired Rabbi Steiner. While contesting the termination before religious and civil courts, Rabbi Steiner continued his religious outreach activities at GW, including his use of the "Chabad @ GW" name and of property belonging to AFL. He later switched to using the name "Jewish Colonials" or "Jewish GW."

         AFL and Rabbi Shemtov brought this breach of contract action and simultaneously moved for a preliminary injunction ordering the Steiners to "cease their operations at GWU immediately, " not perform similar work "at, around, or related to GWU, " and cease using the Chabad name and Chabad property. In response, the Steiners asserted several affirmative defenses and counterclaims and sought a declaratory judgment that the noncompete clause was unenforceable.

         The trial court granted a preliminary injunction, but applied the doctrine of equitable reformation to narrow the scope of the restrictions, noting that AFL and Rabbi Shemtov "d[id] not seriously dispute" that the noncompete clause was "an overbroad and thus unenforceable restraint on trade."

         The resulting order required the Steiners to cease their operations at GW and stop using "ChabadGW" branding, return property and a leased "Chabad Lounge" to the plaintiffs, and refrain for two years from conducting any of the activities the Steiners were hired to do, as directly specified in their employment contract, within one mile of the GW campus. The trial court found that two years was "a reasonable period of time necessary to enable the plaintiffs to regain control of the Chabad program at GW without unreasonable interference and competition from defendants, " and that the activities that the Steiners were to organize with GW students as laid out in the contract were the "core of what the plaintiffs bargained for."

         The trial court found that AFL and Rabbi Shemtov had clearly demonstrated all four prerequisites of a preliminary injunction. AFL and Rabbi Shemtov were likely to succeed on the merits, the court found, because the Steiners were "clearly not in compliance with the noncompete clause of the contract . . . whether as written or as equitably revised." AFL and Rabbi Shemtov had likewise demonstrated that they would suffer irreparable harm without the injunction, that they would suffer greater harm from the denial of the injunction than the Steiners would, and that the injunction would be consistent with the public interest because the "short-term . . . disruption for a handful of students"[1] was less of a concern than the "strong public interest in the enforcement of contracts."

         The Steiners appealed and asked this court to stay the preliminary injunction. This court held oral argument on the stay request and then issued an order-instructing the trial court to clarify the scope of the injunction and to explain how the injunction was "compatible with the requirements of the First Amendment." After further briefing from both parties, the trial court ruled that the preliminary injunction had no constitutional or statutory infirmities. The court nonetheless modified the injunction to reflect the parties' understanding that the prohibition on organizing the types of programs normally associated with Rabbi Steiner's religious duties under his contract with AFL-such as Shabbos dinners, classes, and social events for Jewish students-only applied to activities with GW students near the GW campus. The court also adjusted and widened the geographic area around the GW campus to which the injunction applied and attached a corresponding new map.

         The Steiners filed an appeal from this modified injunction order, which was consolidated with the earlier appeal. Before this court the Steiners now challenge the injunction on various grounds, ranging from this court's jurisdiction over the matter to the overall validity and constitutionality of the injunction.

         II. Subject Matter Jurisdiction

         The Steiners contend on appeal that this case falls outside the secular jurisdiction of the District of Columbia courts because "resolution of this religious dispute" and enforcement of the modified injunction "would require the Superior Court to decide matters of ecclesiastical cognizance and impermissibly entangle itself with religious concerns." We apply a de novo standard of review to the trial court's contrary conclusion, "as the issue of subject matter jurisdiction is a question of law." Meshel v. Ohev Sholom Talmud Torah, 869 A.2d 343, 353 (D.C. 2005) (citations omitted).

         The two "religion clauses" of the First Amendment, the Free Exercise Clause and the Establishment Clause, together "severely circumscribe the role that civil courts may play in the resolution of disputes involving religious organizations." Meshel, 869 A.2d at 353. This principle, as a rule of constitutional law, dates back to a pair of Supreme Court cases that held that "matter[s] of ecclesiastical government, " such as the selection of clergy or the decision of which sect speaks for a church, could not be determined by the government, whether through legislative action, Kedroff v. St. Nicholas Cathedral of Russian Orthodox Church in North America, 344 U.S. 94, 115 (1952), or judicial order, Kreshik v. St. Nicholas Cathedral, 363 U.S. 190, 191 (1960). See generally Presbyterian Church in U.S. v. Mary Elizabeth Blue Hull Mem'l Presbyterian Church, 393 U.S. 440, 445-49 (1969).

         The rule that emerged from this line of cases, sometimes referred to as constitutional immunity, see United Methodist Church, Baltimore Annual Conference v. White, 571 A.2d 790, 793 (D.C. 1990), or religious abstention, see Family Fed'n for World Peace v. Hyun Jin Moon, 129 A.3d 234, 248 (D.C. 2015), states that the First Amendment prevents civil courts "from adjudicating church fights that require extensive inquiry into matters of 'ecclesiastical cognizance.'" Bible Way Church of Our Lord Jesus Christ of Apostolic Faith of Washington, D.C. v. Beards, 680 A.2d 419, 427 (D.C. 1996) (quoting Burgess v. Rock Creek Baptist Church, 734 F.Supp. 30, 31 (D.D.C. 1990)). As we have recognized, however, "[n]ot every civil court decision . . . jeopardizes values protected by the First Amendment." Heard v. Johnson, 810 A.2d 871, 879 (D.C. 2002) (quoting Presbyterian Church in U.S., 393 U.S. at 449). "Religious organizations come before [the courts] in the same attitude as other voluntary associations for benevolent or charitable purposes, and their rights of property, or of contract, are equally under the protection of the law . . . ." Family Fed'n for World Peace, 129 A.3d at 248 (quoting Watson v. Jones, 80 U.S. (13 Wall.) 679, 714, 20 L.Ed. 666 (1871)).

         "The touchstone for determining whether civil courts have jurisdiction is whether the courts may employ 'neutral principles of law' and ensure that their decisions are not premised on the 'consideration of doctrinal matters, whether the ritual and liturgy of worship or the tenets of faith.'" Family Fed'n for World Peace, 129 A.3d at 249 (quoting Second Episcopal Dist. African Methodist Episcopal Church v. Prioleau, 49 A.3d 812, 816 (D.C. 2012)). "[T]he 'neutral principles' approach avoids prohibited entanglement in questions of religious doctrine, polity, and practice by relying 'exclusively upon objective, well-established concepts' of law that are familiar to lawyers and judges." Meshel, 869 A.2d at 354 (quoting Jones v. Wolf 443 U.S. 595, 603 (1979)). "[I]n determining whether the adjudication of an action would require a civil court to stray impermissibly into ecclesiastical matters, we look not at the label placed on the action but at the actual issues the court has been asked to decide." Id. at 356.

         The Steiners first argue that enforcement of an injunction that precludes them from engaging in certain ministerial and religious outreach activities with students who had previously been their congregants would require the court to make difficult and constitutionally questionable findings while policing the border between prohibited and allowed conduct.

         In this case, the injunction sought by the appellees and issued by the trial court bars the Steiners as parties to an agreement from engaging in certain outreach activities with a population-GW students-who had previously been their congregants. The relevant provision of the injunction in this case is one that the trial court imposed by equitably reforming the language of the noncompete clause to prohibit the Steiners from doing those activities set out in the employment contract that they were hired to perform. To enforce this injunction, the court does not need to determine what religious activities are required of the Steiners by Chabad religious doctrine. The court need only determine what ...


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