Yehuda Steiner v. American Friends of Lubavitch (Chaabad)

177 A.3d 1246
CourtDistrict of Columbia Court of Appeals
DecidedFebruary 1, 2018
Docket14-CV-1427 & 15-CV-1203
StatusPublished
Cited by9 cases

This text of 177 A.3d 1246 (Yehuda Steiner v. American Friends of Lubavitch (Chaabad)) is published on Counsel Stack Legal Research, covering District of Columbia Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Yehuda Steiner v. American Friends of Lubavitch (Chaabad), 177 A.3d 1246 (D.C. 2018).

Opinion

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.cam-pus 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 noncom-pete 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 Cha-bad-Lubayttch, 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-Lu-bavitch 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 Shem-tov] 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 over-broad and thus unenforceable restraint on trade.”

The resulting order required the Stein-ers 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 ...

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Bluebook (online)
177 A.3d 1246, Counsel Stack Legal Research, https://law.counselstack.com/opinion/yehuda-steiner-v-american-friends-of-lubavitch-chaabad-dc-2018.