• DC Case Summary
  • May 10, 2018 | Author: Collin C. Shannon
  • Law Firm: Thomas, Thomas & Hafer LLP - Washington Office
  • Steiner v. Am. Friends of Lubavitch (Chabad)

    District of Columbia Court of Appeals

    Nos. 14-CV-1427 & 15-CV-203

    Decided: February 1, 2018

    D.C. Courts can interpret contracts for religious organizations where interpreting doctrinal principles is not required; D.C. adopts the equitable remediation rule.

    Background

    Plaintiffs belong to an Orthodox Jewish movement, and were hired by American Friends of Lubavitch (“AFL”) to be campus rabbi for the movement at George Washington University (“GWU”). Plaintiff Steiner was later terminated as rabbi, and while contesting his termination in religious and civil courts, continued to act as a rabbi at GWU under AFL’s name and a new organizational name. AFL brought a breach of contract action against Steiner based on a non-compete agreement in his employment contract. AFL was granted a preliminary injunction barring Steiner from continuing to act as a rabbi at GWU, and Steiner thereafter challenged the injunction, asserting several arguments. Of interest, Steiner challenged the subject matter jurisdiction of the Trial Court to hear the case as an impermissibly entangling in religious matters, and for improperly altering the overly broad non-compete agreement.

    The Court of Appeals noted that in addressing the first question, it had to determine whether, in the context of this non-compete clause, which did specify which kinds of rabbinical activities the Steiner could engage in, could be interpreted using “neutral principles of law.” In regards to the second question, the Court had to decide between the blue pencil rule, a more mechanical revisionary power, which allows severance of overly broad terms, where severable characteristics are patently evident, or the equitable reformation doctrine, which allows the deletion of unreasonable terms and narrowing the scope of existing language, without redrafting or adding language.

    Holding

    The Court of Appeals held that a non-compete agreement in this case expressed the limitations on Steiner’s rabbinical activities at GWU such that the Court did not need to interpret religious language beyond the purview of the Court’s knowledge. The Court pointed to years of contract performance upon which it could rely to define terms it might otherwise be unable to interpret. As for reformation, the Court elected to follow the equitable reformation doctrine, noting that it would look to Maryland cases for guidance where D.C. law lacked precedent. The Court so held because the blue-pencil rule offered too limited a toolset for courts to remedy contract drafting issues. The Court further stated that D.C. Courts should consider whether modified enforcement of a contract is possible without injury to the public or injustice to the parties before electing to use the equitable remediation doctrine.

    Questions about this case can be directed to Collin Shannon, at (202) 945-9504 or [email protected]