Defendant Petros A. Palandjian appeals both the district court's granting of summary judgment in favor of plaintiff Chahram Pahlavi and its certification under Federal Rule of Civil Procedure (Fed.R.Civ.P.) 54(b) that the judgment was final and appealable despite Palandjian's pending counterclaims.1 This appeal has required us to review and announce for perhaps the first time the extent of a judge's obligation under Rule 54(b). Our analysis forces us to conclude that the court's conclusory certification under the circumstances of this case was an abuse of discretion. We dismiss the appeal.

It is undisputed that in March 1979 defendant Palandjian endorsed a check for $127,400 payable to plaintiff Pahlavi and deposited it in his own account. Two months later, in May 1979, Pahlavi demanded the money and Palandjian wrote a personal check to Pahlavi for $127,400. The check bounced when Palandjian directed his bank not to make payment on it. Pahlavi filed suit based, inter alia, on the bounced check, and Palandjian filed counterclaims alleging that Pahlavi, a nephew of the late Shah of Iran, owed him $125,000 for construction work on Pahlavi's personal palace near Teheran, Iran, for the use of airplanes and pilots furnished by Palandjian at Pahlavi's request, and for a pair of cuff links which Pahlavi allegedly borrowed but never returned. Palandjian's defenses to the original complaint also involved these old debts; he allegedly stopped payment on the check when Pahlavi failed to carry out his part of an agreement to clear up the money issues between the two men.

Despite the factual overlap between the claim and counterclaims, the district court granted Pahlavi's motion for summary judgment, and left pending Palandjian's counterclaims. The court certified the summary judgment ruling as final under Fed.R.Civ.P. 54(b), Pahlavi v. Palandjian, No. 83-0437-Z (D.Mass. Feb. 6, 1984) (order granting summary judgment), thereby allowing an appeal to proceed on plaintiff's claim. If the district court improperly applied Fed.R.Civ.P. 54(b), we would have no jurisdiction to rule substantively on the appeal,2 and so our consideration of this case must first focus on that rule.

Rule 54(b) allows the entry of judgment, and thus an appeal, on one or more, but fewer than all the claims, in a multi-claim action. It is an exception from the traditional rule against piecemeal disposal of litigation, and it was adopted in view of the wide scope given to a "civil action" by the Federal Rules of Civil Procedure. Fed.R.Civ.P. 54(b) advisory committee note (1946 amendment); Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 432-33, 76 S. Ct. 895, 897-99, 100 L. Ed. 1297 (1956). Its goal was "to avoid the possible injustice of a delay in judgment of a distinctly separate claim to await adjudication of the entire case." Fed.R.Civ.P. 54(b) advisory committee note (1946 amendment); Allis-Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d 360 (3d Cir.1975) ("The rule attempts to strike a balance between the undesirability of piecemeal appeals and the need for making review available at a time that best serves the needs of the parties." 521 F.2d at 363).

Under Rule 54(b), a district court may direct entry of judgment on fewer than all the claims in an action "only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment." Fed.R.Civ.P. 54(b). The U.S. Supreme Court has described the function of the district court under Rule 54(b) as that of a " 'dispatcher' " with the discretion to decide when each final decision in a multiple claims action is ready for appeal. Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 8, 100 S. Ct. 1460, 1465, 64 L. Ed. 2d 1 (1980), quoting Sears, Roebuck & Co., 351 U.S. at 435, 76 S.Ct. at 899. Any abuse of that discretion remains reviewable by the court of appeals. 446 U.S. at 8, 100 S.Ct. at 1465.

It is this court's initial task, therefore, to determine whether the district court properly fulfilled its role as dispatcher under Rule 54(b) when it certified its judgment on plaintiff Pahlavi's claim for appeal even though defendant Palandjian's counterclaims were pending.

In Curtiss-Wright Corp. v. General Electric, 446 U.S. 1, 100 S. Ct. 1460, 64 L. Ed. 2d 1 (1980), the Supreme Court stated that:

"The mere presence of [nonfrivolous counterclaims] ... does not render a Rule 54(b) certification inappropriate. If it did, Rule 54(b) would lose much of its utility.... [C]ounterclaims are not to be evaluated differently from other claims. Like other claims, their significance for Rule 54(b) purposes turns on their interrelationship with the claims on which certification is sought." 446 U.S. at 9, 100 S.Ct. at 1465 (citations omitted; emphasis added).

In this case, the overlap between factual issues in the plaintiff's claim and in the defendant's counterclaims appears to be extensive. The parties have addressed in their briefs to this court conflicting interpretations of conversations between the plaintiff and defendant concerning the alleged debts between them, a conflict which seems destined to reappear if an appeal is taken on the counterclaims. Thus, on the record as we received it, it appears that the equities must weigh in favor of defendant Palandjian; the claims are closely connected, and requiring immediate payment of the $127,400 imposes a substantial economic burden that may be unnecessary if the counterclaims are resolved in favor of the defendant.4 Although the district court did require that the plaintiff post a substantial bond as a condition to execution on the judgment, that action at best only partially relieves this burden.

We do not base our decision on this cursory assessment of the equities, however. Although it seems unlikely that a Rule 54(b) certification is appropriate in this case,5 it should be up to the district court in the first instance to make the specific determination. It may be, for example, that the district could base its decision entirely on a legal issue which an appeals court could review in isolation from the counterclaims. In this case, however, the district judge stated only "That plaintiff's motion for the entry of judgment be and it hereby is allowed as there is no just reason for delay." Pahlavi v. Palandjian, No. 830437-Z (D.Mass. Feb. 6, 1984) (order granting summary judgment). Since this certification comes to us without explanation, we are unable to make the required review. Thus, we have no choice but to vacate the Rule 54(b) certification here as an abuse of discretion by the district court.

At the least, a district court in cases such as this has an obligation to explain its conclusion that there is "no just reason for delay" in entering final judgment. We do not impose a rigid requirement on the district court to prepare a written statement in every case to justify its Rule 54(b) actions. However, in cases where the claims appear to be so closely related, and the possibility of setoff thus suggests there is "just reason for delay", a statement of the district court's contrary conclusion is clearly most helpful if not indispensable to an intelligent appellate review of the district court's exercise of discretion. We therefore join at least five other circuits which endorse this practice.6

Since the Rule 54(b) certification in this case was improper, this court has no jurisdiction to consider the merits of the grant of summary judgment.7 The appeal will be dismissed with a direction to the district court that it vacate so much of its Feb. 6, 1984 order as entered judgment pursuant to Rule 54(b).

The case is remanded to the district court for further proceedings consistent with this opinion. No costs.