Jay Gould v. Interface, Inc.

CourtCourt of Appeals for the Eleventh Circuit
DecidedOctober 2, 2025
Docket23-12882
StatusPublished

This text of Jay Gould v. Interface, Inc. (Jay Gould v. Interface, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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

Opinion

USCA11 Case: 23-12882 Document: 50-1 Date Filed: 10/02/2025 Page: 1 of 22

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, In- terface’s board of directors terminated his employment for cause. Gould sued, claiming that Interface had breached his employment USCA11 Case: 23-12882 Document: 50-1 Date Filed: 10/02/2025 Page: 2 of 22

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 overstep- ping 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 employ- ment contract, he now says, gave Interface no discretion to deter- mine the existence of cause. The question at the heart of this ap- peal 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 manufac- turer. According to the company, Gould got drunk at its annual sales meeting and repeatedly called one of his employees a “fuck- ing 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, In- terface had sanctioned and counseled him for engaging in alcohol- fueled sexual harassment. Any further infractions, the company USCA11 Case: 23-12882 Document: 50-1 Date Filed: 10/02/2025 Page: 3 of 22

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had warned, would result in discipline “up to and including termi- nation 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 employ- ment 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]ub- ject to the terms of Section 5(d) below, the Company may termi- nate 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 Con- trol Agreement 10, § 5(c), Dkt. No. 4-1. Section 5(d), in turn, es- tablishes 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 Com- pany applicable to persons occupying the same or similar positions, (C) Executive’s material breach of USCA11 Case: 23-12882 Document: 50-1 Date Filed: 10/02/2025 Page: 4 of 22

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this Agreement, or (D) Executive’s conviction of a fel- ony or other crime involving moral turpitude. A ter- mination 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 Com- pany’s description of the alleged Cause, unless Exec- utive shall, during such 30-day period, remedy the events or circumstances constituting Cause; provided, however, such termination shall take effect immedi- ately upon the giving of written notice of termina- tion for Cause under any of such clauses if the Com- pany 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 con- cluding 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 possibili- ties: First, the agreement might give Interface absolute discretion to determine the existence of cause, in which case, under the gov- erning 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 USCA11 Case: 23-12882 Document: 50-1 Date Filed: 10/02/2025 Page: 5 of 22

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contract “leave[s] decisions absolutely to the uncontrolled discre- tion of one of the parties[,] . . . the issue of good faith is irrele- vant”). Second, the agreement might give the company qualified discretion—subject to a duty of good faith—to determine the ex- istence of cause, in which case the court must decide whether In- terface’s determination was made in “bad faith.” Id. Or third, the agreement might give Interface no discretion to determine the ex- istence 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 em- ployment 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 & Spal- ding’s investigation. In opposition to Interface’s motion, Gould seemed to accept that the company had qualified discretion to de- termine 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. USCA11 Case: 23-12882 Document: 50-1 Date Filed: 10/02/2025 Page: 6 of 22

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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, there- fore, that its cause determination wasn’t subject to a duty of good faith.

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