Labor & Employment Law Daily Wrap Up, PROCEDURE—11th Cir.: Fired CEO forfeited argument that employer lacked discretion to determine cause, (Oct 3, 2025)

By Jason Albright, J.D.

He allegedly got drunk at an annual sales meeting and repeatedly called one of his employees a “f***ing bitch.”

The former CEO of Interface, Inc., fired by its board of directors for cause after he allegedly engaged in misconduct at an annual sales meeting, forfeited his argument that his employment contract gave the employer no discretion to determine the existence of cause, the Eleventh Circuit found. Yee v. City of Escondido, 503 U.S. 519 (1992) and Eleventh Circuit precedents establish that, although parties cannot forfeit particular arguments or authorities, they can forfeit positions or issues that they fail to properly raise at the district court. And here, the CEO impermissibly sought to present a new position—or issue—on appeal when, having contended in the district court that his employment agreement meant one thing, he reversed course and contended on appeal that it meant another (Gould v. Interface, Inc., No. 23-12882 (11th Cir. Oct. 2, 2025)).

Drunk at annual sales meeting. The plaintiff, according to the court, was the CEO of Interface, Inc., a carpet manufacturer. According to the company, he got drunk at its annual sales meeting and repeatedly called one of his employees a “f***ing bitch.”

Prior issue and warning. Nor was this his first breach of etiquette, according to Interface. Just a year before, Interface had sanctioned and counseled him for engaging in alcohol-fueled sexual harassment. Any further infractions, the company had warned, would result in discipline “up to and including termination for Cause.”

Investigation and discharge. Following the second episode, Interface hired King & Spalding LLP to conduct an investigation. The firm’s analysis corroborated the allegations against him, and Interface’s board of directors voted unanimously to fire him for cause.

Reduced severance. Under his employment agreement, termination with cause entitled him to far less compensation—potentially $10 million less—than termination without cause.

Contractual authority. Interface’s authority to fire him was covered by Section 5(c) of his employment contract, which provided 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.”

Section 5(d). Section 5(d), in turn, established the protocols for firing an employee without cause, but it did not specifically address termination with cause.

Definition of “cause.” A separate provision of the agreement, Section 5(a)(i), defined the term “Cause” as “(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 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).”

“Good faith.” Section 5(a)(i)’s final sentence—and in particular the concluding proviso, the court noted—made clear that Interface possessed discretion, qualified by a duty of “good faith,” to assess whether the events giving rise to “Cause” are “remediable.”

Discretion? Less clear—but central to the dispute—was what sort of discretion Interface enjoyed under the agreement to determine whether cause exists in the first place.

Three possibilities. The contract’s termination-related provisions yield three possibilities, according to the Eleventh Circuit: 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 cannot evaluate the merits of the company’s determination at all. 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 would have to decide whether Interface’s determination was made in “bad faith.” And third, the agreement might give Interface no discretion to determine the existence of cause, in which case the court would have to decide whether the company’s determination was “in fact erroneous.”

Lawsuit. The former CEO sued Interface, alleging that it had breached the contract based on the “manner of its termination and [its] fail[ure] to pay him under the terms” of the agreement. Interface moved for summary judgment on the ground that it enjoyed absolute discretion to determine the existence of cause for his firing, and in the alternative, it argued that, even if its discretion was qualified by a duty of good faith, it had discharged that duty by relying on the results of King & Spalding’s investigation.

“Sham investigation” argument. In opposition to Interface’s motion, the former CEO 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.”

Summary judgment for employer. In his report and recommendation, a magistrate judge below concluded that Interface was entitled to summary judgment for two independent reasons: first, the company had absolute discretion to terminate the CEO with cause and, therefore, its cause determination was not subject to a duty of good faith, and second, even if Interface had only qualified discretion to determine the existence of cause, the former CEO 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.

Motion for reconsideration and new position. The former CEO filed a motion for reconsideration in which, for the first time, he took a more aggressive position: under the contract, he contended, Interface had no discretion whatsoever—as opposed to qualified discretion, subject to a good-faith limitation—to terminate him with cause.

“Waiver” finding below. The district court denied relief, in part because his motion relied on what the court called an “argument” that he hadn’t previously raised. For purposes of reconsideration, the court ruled, he had “waived” that “argument” by raising it too late.

Appeal. The former CEO appealed the district court’s summary-judgment decision, and again argued before the Eleventh Circuit that Interface had no discretion to determine that cause existed to fire him.

Actually a forfeiture issue. Affirming, the Eleventh Circuit initially observed that “[t]he terms waiver and forfeiture—though often used interchangeably by jurists and litigants—are not synonymous.” Waiver is the “intentional relinquishment or abandonment of a known right.” And forfeiture, by contrast, “is the failure to make the timely assertion of a right.” Because no one had suggested that the former CEO meant to withhold or jettison his no-discretion theory in the district court, the question was whether he has forfeited his right to pursue the no-discretion theory on appeal.

Forfeited. The appeals court found that he had. Applying Yee v. City of Escondido, 503 U.S. 519 (1992) and Eleventh Circuit precedent, the court observed that “[l]itigants can waive or forfeit positions or issues through their litigation conduct in the district court but not authorities or arguments.” Though a party can cite new interpretive rules and authorities to bolster its previously presented theory that a text has a particular meaning, “a party cannot usually argue that a legal text should be read to mean something different on appeal than what it argued for below.” Otherwise stated, “having committed in the district court to the view that a written legal instrument means A, a party cannot thereafter urge the appellate court to conclude that the same instrument—comprising the same terms—means B.”

Applying this rule, the court found that the former CEO impermissibly sought to present a new position—or issue—on appeal when, having contended in the district court that his employment agreement meant one thing, he reversed course and contended on appeal that it meant something else. In the district court, he acknowledged that his employment agreement—a “legal text”—“should be read to mean” that Interface had qualified discretion to determine whether cause existed for his termination, but he contended that the company had, in effect, abused that discretion by making its determination in bad faith. By contrast, in his motion for reconsideration, and before the Eleventh Circuit, he claimed that, in fact, the agreement “should be read to mean” that the company had no discretion to determine the existence of cause in the first instance. He was thus not “fortifying a ‘consistent[]’ position with new arguments,” concluded the court, but insisting that his contract meant something else altogether.

The judgment of the district court was thus affirmed.

The case is No. 23-12882.

Judge: Newsom, K.

Attorneys: Keith R. Blackwell (Alston & Bird) for Jay D. Gould. Stephen E. Hudson (Kilpatrick Townsend & Stockton) for Interface, Inc.

Companies: Interface, Inc.

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