Jay Gould v. Interface, Inc.

Court of Appeals for the Eleventh Circuit·Decided October 2, 2025·No. 23-12882·Published

Opinion

FOR PUBLICATION

In the

United States Court of Appeals For the Eleventh Circuit

No. 23-12882

JAY D. GOULD, Plaintiff-Counter Defendant-Appellant, versus

INTERFACE, INC., Defendant-Counter Claimant-Appellee.

Appeal from the United States District Court for the Northern District of Georgia D.C. Docket No. 1:20-cv-00695-SDG

Before JILL PRYOR, NEWSOM, and LAGOA, Circuit Judges. NEWSOM, Circuit Judge:

When Jay Gould was the CEO of Interface, Inc. he allegedly engaged in misconduct at an annual sales meeting. As a result, Interface ’s board of directors terminated his employment for cause. Gould sued, claiming that Interface had breached his employment

2 Opinion of the Court 23-12882

agreement by firing him. In particular, Gould contended that the board made its cause determination in bad faith, thereby overstepping the qualified discretion it enjoyed under the agreement. The district court granted summary judgment to Interface, holding that the contract gave the board absolute discretion to determine cause and that, in any event, Interface hadn’t acted in bad faith.

On appeal, Gould presents a different theory: The employment contract, he now says, gave Interface no discretion to determine the existence of cause. The question at the heart of this appeal is whether Gould’s new no-discretion theory is an “issue” of the sort that is subject to forfeiture or a subsidiary “argument” of the sort that isn’t. After careful review, we hold that Gould’s new theory is more the former than the latter and, accordingly, that he has forfeited it by failing to raise it below. And because Gould has presented nothing else in support of his breach-of-contract claim, we affirm the district court’s judgment.

I

A

Jay Gould was the CEO of Interface, Inc., a carpet manufacturer . According to the company, Gould got drunk at its annual sales meeting and repeatedly called one of his employees a “fucking bitch.” Final R. & R. 12, Dkt. No. 195. And, the company says, that wasn’t Gould’s first breach of etiquette. Just a year earlier, Interface had sanctioned and counseled him for engaging in alcoholfueled sexual harassment. Any further infractions, the company

23-12882 Opinion of the Court 3

had warned, would result in discipline “up to and including termination for Cause.” Id. at 7.

Following the latter episode, Interface hired King & Spalding LLP to conduct an investigation. The firm’s analysis corroborated the allegations against Gould, and Interface’s board of directors voted unanimously to fire him for cause. Under Gould’s employment agreement, termination with cause entitled him to far less compensation—potentially $10 million less—than termination without cause.

Interface’s authority to fire Gould is covered by Section 5(c)

of his employment contract. That provision provides that, “[s]ubject to the terms of Section 5(d) below, the Company may terminate Executive’s employment hereunder, in its sole discretion, whether with or without Cause, at any time upon written notice to Executive.” Am. and Restated Employment and Change in Control Agreement 10, § 5(c), Dkt. No. 4-1. Section 5(d), in turn, establishes the protocols for firing an employee without cause, but it doesn’t specifically address termination with cause. Id. § 5(d). A separate provision of the agreement, Section 5(a)(i), defines the term “Cause” as follows:

(A) Executive’s fraud, dishonesty, gross negligence, or willful misconduct with respect to business affairs of the Company (including its subsidiaries and affiliated companies), (B) Executive’s refusal or repeated failure to follow the established lawful policies of the Company applicable to persons occupying the same or similar positions, (C) Executive’s material breach of

4 Opinion of the Court 23-12882

this Agreement, or (D) Executive’s conviction of a felony or other crime involving moral turpitude. A termination of Executive for Cause based on clause (A), (B) or (C) of the preceding sentence shall take effect 30 days after Executive receives from the Company written notice of intent to terminate and the Company ’s description of the alleged Cause, unless Executive shall, during such 30-day period, remedy the events or circumstances constituting Cause; provided, however, such termination shall take effect immediately upon the giving of written notice of termination for Cause under any of such clauses if the Company shall have determined in good faith that such events or circumstances are not remediable (which determination shall be stated in such notice).

Id. at 8, § 5(a)(i).

Section 5(a)(i)’s final sentence—and in particular the concluding proviso—makes clear that Interface possesses discretion, qualified by a duty of “good faith,” to assess whether the events giving rise to “Cause” are “remediable.” Less clear—but central to the dispute here—is what sort of discretion Interface enjoys under the agreement to determine whether cause exists in the first place. The contract’s termination-related provisions yield three possibilities : First, the agreement might give Interface absolute discretion to determine the existence of cause, in which case, under the governing Georgia law, a reviewing court can’t evaluate the merits of the company’s determination at all. See Automatic Sprinkler Corp. of Am. v. Anderson, 243 Ga. 867, 868 (1979) (holding that, when a

23-12882 Opinion of the Court 5

contract “leave[s] decisions absolutely to the uncontrolled discretion of one of the parties[,] . . . the issue of good faith is irrelevant ”). Second, the agreement might give the company qualified discretion—subject to a duty of good faith—to determine the existence of cause, in which case the court must decide whether Interface ’s determination was made in “bad faith.” Id. Or third, the agreement might give Interface no discretion to determine the existence of cause, in which case the court must decide whether the company’s determination was “in fact erroneous.” Id.

B

Gould sued Interface, alleging that it had breached his employment contract based on the “manner of its termination and [its] fail[ure] to pay him under the terms” of the agreement. Am. Compl. ¶ 81, Dkt. No. 4. Interface moved for summary judgment on the ground that it enjoyed absolute discretion to determine the existence of cause for Gould’s firing. In the alternative, it argued that even if its discretion was qualified by a duty of good faith, it had discharged its duty by relying on the results of King & Spalding ’s investigation. In opposition to Interface’s motion, Gould seemed to accept that the company had qualified discretion to determine the existence of cause, but he argued that it had failed to perform in good faith both because King & Spalding’s investigation was a “sham” and because it didn’t make “any good faith findings of violations . . . of the ‘Cause’ provision.” Opp’n to Mot. for Summ. J. 37, Dkt. No. 174-1.

6 Opinion of the Court 23-12882

In his report and recommendation, the magistrate judge concluded that Interface was entitled to summary judgment for two independent reasons. First, he concluded that the company had absolute discretion to terminate Gould with cause and, therefore , that its cause determination wasn’t subject to a duty of good faith. Second, he concluded that even if Interface had only quali- fied discretion to determine the existence of cause, Gould had failed to create a genuine issue of material fact regarding whether the company had acted in bad faith in making that determination. Both parties filed objections to the report and recommendation, but the district court adopted it in its entirety.

Free access — add to your briefcase to read the full text and ask questions with AI

Jay Gould v. Interface, Inc., (11th Cir. 2025).

Jay Gould v. Interface, Inc. (Jay Gould v. Interface, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Yee v. City of Escondido
503 U.S. 519 (Supreme Court, 1992)
Castro v. United States
540 U.S. 375 (Supreme Court, 2003)
Greenlaw v. United States
554 U.S. 237 (Supreme Court, 2008)
Automatic Sprinkler Corp. of America v. Anderson
257 S.E.2d 283 (Supreme Court of Georgia, 1979)
CHRISTOPHER SHELNUTT v. THE MAYOR AND ALDERMEN OF THE CITY OF SAVANNAH
776 S.E.2d 650 (Court of Appeals of Georgia, 2015)
CSX Transportation, Inc. v. General Mills, Inc.
846 F.3d 1333 (Eleventh Circuit, 2017)
United States v. Erickson Meko Campbell
26 F.4th 860 (Eleventh Circuit, 2022)
ECB USA, Inc. v. Chubb Insurance Company of New Jersey
113 F.4th 1312 (Eleventh Circuit, 2024)