US SUPREME COURT DECISIONS

Petitioner brought a diversity action in Federal District Court against respondent, seeking damages and reformation with regard to a certain series of contracts between the parties. Various claims were asserted, including a $19 million claim for amounts due on the contracts already performed. Respondent filed counterclaims. The facts as to most of the claims and counterclaims are in dispute, but the sole dispute as to petitioner's claim for the $19 million balance due concerns the application of a release clause in each of the contracts. The District Court granted summary judgment for petitioner for $19 million, plus prejudgment interest at the statutory rate of 6%, notwithstanding the release clause. Petitioner then moved for a certification of this judgment as a final judgment under Federal Rule of Civil Procedure 54(b), which provides that, when more than one claim is presented in an action, whether as a claim or counterclaim, a district court may direct the entry of a final judgment as to one or more but fewer than all of the claims upon an express determination that there is no just reason for delay. The court granted the motion and directed entry of final judgment for petitioner after determining that there was "no just reason for delay" and finding, inter alia, that certification would not result in unnecessary appellate review; that the claims finally adjudicated were separate from chanrobles.com-red

Page 446 U. S. 2

any of the other claims or counterclaims; that the nature of the claims was such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals; that petitioner would suffer severe financial loss from nonpayment of the $19 million judgment because current interest rates were higher than the statutory prejudgment rates; and that the solvency of the parties was not a significant factor, since each appeared to be financially sound. Dismissing the case for want of an appealable order, the Court of Appeals held that the District Court had abused its discretion by granting the Rule 54(b) certification, since the possibility of a setoff required that the status quo be maintained unless petitioner could show harsh or unusual circumstances and since no such showing had been made.

Held: The District Court did not abuse its discretion in granting petitioner's motion for certification under Rule 54(b). Pp. 446 U. S. 7-13.

(a) In deciding whether there are just reasons to delay an appeal of individual final judgments in a setting such as this, a district court must take into account the interests of sound judicial administration, as well as the equities involved. Hence, it was proper for the District Court here to consider such factors as whether the claims under review were separable from the others remaining to be adjudicated and whether the nature of the claims already determined was such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals. The mere presence of nonfrivolous counterclaims does not render a Rule 54(b) certification inappropriate. Pp. 446 U. S. 8-9.

(b) The Court of Appeals' holding that the status quo had to be maintained absent a showing by petitioner of harsh or unusual circumstances reflects a misinterpretation of the standard of review for Rule 54(b) certifications and a misperception of the appellate function in such cases. Pp. 446 U. S. 9-10.

(c) The proper standard against which a district court's exercise of discretion in granting a Rule 54(b) certification is to be judged is the interest of sound judicial administration. Under this standard, although the court of appeals must scrutinize the district court's evaluation of such factors as the interrelationship of the claims so as to prevent piecemeal appeals, once such juridical concerns have been met, the district court's discretionary judgment should be given substantial deference, and the court of appeals should disturb the district court's assessment of the equities only if it can say that the district judge's conclusion was clearly unreasonable. Pp. 446 U. S. 10-11.

(d) The question before the District Court here came down to which of the parties should get the benefit of the difference between the prejudgment chanrobles.com-red

Page 446 U. S. 3

and market rates of interest on the debts admittedly owing and adjudged to be due while unrelated claims were litigated. While the possibility of a setoff against the amount respondent owed petitioner was not an insignificant factor, the District Court took this into account when it determined that both litigants appeared to be financially sound, and that petitioner would be able to satisfy a judgment on the counterclaims if any were entered. Pp. 446 U. S. 11-12.

597 F.2d 35, vacated and remanded. BURGER, C.J.,delivered the opinion for a unanimous Court.