UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER THIS SUMMARY ORDER WILL NOT BE PUBLISHED IN THE FEDERAL REPORTER AND MAY NOT BE CITED AS PRECEDENTIAL AUTHORITY TO THIS OR ANY OTHER COURT, BUT MAY BE CALLED TO THE ATTENTION OF THIS OR ANY OTHER COURT IN A SUBSEQUENT STAGE OF THIS CASE, IN A RELATED CASE, OR IN ANY CASE FOR PURPOSES OF COLLATERAL ESTOPPEL OR RES JUDICATA.

At a stated Term of the United Stated Court of Appeals for the Second Circuit, held at the day of United States Courthouse, Foley Square, in the City of New York, on the 11th December two thousand.

Present: JOSEPH M. MCLAUGHLIN, ROSEMARY S. POOLER, Circuit Judges, CHRISTOPHER F. DRONEY, District Judge*

CORNING INCORPORATED AND CORNING INTERNATIONAL COMPANY LIMITED, Petitioners-Appellants, -v- (00-7931)

SHIN ETSU QUARTZ PRODUCTS COMPANY, LIMITED, Respondent-Appellee.

Joseph P. Lavelle, Howrey Simon Arnold & White LLP, Washington, Appearing for Appellant:

D.C. (Michael G. Cowie, Laura C. Miller, Howrey Simon Arnold &

White); David M. Lascell, Stephanie L. Adler, Harter, Secrest &

Emery , LLP; Alfred L. Michaelsen, Timothy M. Schaeberle, Corning Inc., of counsel Appearing for Appellee: George L. Graff, Paul Hastings, Janofsky & Walker LLP; Phillips, Lytle, Hitchcock, Blaine & Huber LLP Appeal from the United States District Court for the Western District of New York (Telesca, J.).

ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the order of said District Court be and it hereby is AFFIRMED.

Corning Inc. and Corning International Co. Ltd. (collectively "Corning") appeal from the district court's judgment granting Shin Etsu Quartz Products Co. Ltd's ("Shin Etsu") Fed. R. Civ. P. 12(b)(2)

motion to dismiss for lack of personal jurisdiction. For the reasons given below, we affirm.

Corning and Shin Etsu both manufacture fused silica for specific industrial uses. Three companies in the world make fused silica - Corning, Shin Etsu and Heraeus. Heraeus owns 50 percent of Shin Etsu. The world market, at all times relevant, consisted of four customers. Of those four, two -

Nikon and Canon in Japan - were responsible for more than 70 percent of all fused silica purchases.

Corning and Shin Etsu compete directly for sales to Nikon and Canon.

Corning sued Shin Etsu, alleging Shin Etsu brought suit against Corning in Japan for infringement of two fraudulently procured Japanese patents in violation of Sections 2 and 6a of the Sherman Act.

Corning's amended complaint alleged Shin Etsu brought two patent infringment actions against Corning in Japan to prevent Corning from selling fused silica in Japan. It also alleged Shin Estu knowingly fraudulently procured the patents. The amended complaint alleged that if the pending patent litigation is successful, Corning would be eliminated as Shin Etsu's only competitor in Japan, and that losing access to 70 percent of the world market would force Corning to close one or both of its fused silica plants in the United States. It alleges Shin Etsu's acts were intended to eliminate Corning as a seller in the world market for fused silica, and thus the acts had foreseeable consequences in the United States.

Shin Etsu moved to dismiss the complaint for lack of personal jurisdiction. In support of its motion, Shin Etsu submitted affidavits from its managing director and Japanese patent attorney. The affidavits disputed a number of the allegations in Corning's complaint. Corning responded with an affidavit from its own Japanese patent counsel that rebutted some, but not all, of the statements contained in Shin Etsu's affidavits.

The district court granted Shin Etsu's 12(b)(2) motion, finding it lacked personal jurisdiction over the defendant. The court held Corning failed to show Shin Etsu had sufficient contacts with the United States to sustain personal jurisdiction based on traditional minimum contacts analysis. The district court rejected Corning's argument that personal jurisdiction existed because Shin Etsu directed its anti-competitive conduct at the United States, making it foreseeable that Shin Etsu could be haled into a U.S. court. The court stated:

Of course almost any action by a foreign company that competes with a U.S. company in the world market will have a direct impact on United States commerce. That does not mean, however, that every foreign company is subject to personal jurisdiction in the United States.

Rather, a company must know or have good reason to know that its conduct could subject it to jurisdiction in the state seeking to assert jurisdiction over it. Leasco Data Processing Equipment Corp. v. Maxwell, 468 F.2d 1326, 1341 (2d Cir. 1972). In this case, however, there is no evidence that the conduct complained of in the Complaint was directed at U.S.

Commerce. Rather, the Complaint alleges that a Japanese Corporation (Shin-Etsu), that sells products made in Japan exclusively to Japanese Customers, obtained Japanese patents under Japanese law, and later brought suit against another Japanese company (Corning International Company Limited), in a Japanese Court to enforce its rights under Japanese law.

The district court concluded Corning's conclusory allegations that Shin Etsu's acts were directed at the United States were unsupported by the evidence.

This court reviews the dismissal of an action for lack of personal jurisdiction de novo. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999).

In defending itself against a 12(b)(2) motion to dismiss, plaintiff bears the burden of showing the court has jurisdiction over the defendant. Bank Brussels, 171 F.3d at 784. Plaintiff's burden is apportioned based on how far the case has progressed. See Ball v. Metallurgie Hoboken-Overpelt, 902 F.2d 194, 197 (2d Cir. 1990). Before discovery, a plaintiff facing a 12(b)(2) motion may defeat the motion by pleading, in good faith, legally sufficient allegations of jurisdiction. Ball, 902 F.2d at 197.

Plaintiff may make a prima facie showing solely on the allegations. Id. "If defendant is content to challenge only the sufficiency of the plaintiff's factual allegation, in effect demurring by filing a Rule 12(b)(2) motion, the plaintiff need persuade the court only that its factual allegations constitute a prima facie showing of jurisdiction." Id.; see also Bank Brussels, 171 F.3d at 784; Metropolitan Life Ins. Co.

v. Robertson-Ceco Corp., 84 F.3d 560, 566-67 (2d Cir. 1996). The district court has "considerable procedural leeway" in deciding 12(b)(2) motions, and it may accept affidavits if it so chooses. See Marine Midland Bank v. Miller, 664 F.2d 899, 904 (2d Cir. 1981). Thus, "[w]here . . . the district court relies solely on the pleadings and supporting affidavits, the plaintiff need only make a prima facie showing of jurisdiction." Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994).

A close reading of the district court opinion shows the district court correctly treated the allegations made by Corning in its amended complaint as true, even though it also considered affidavits submitted by the parties. Corning concedes on appeal that the district court lacks personal jurisdiction using traditional minimum contacts analysis. We turn then to the effects test.

Both parties rely on Leasco Data Processing Equip. Corp. v. Maxwell, 468 F.2d 1326 (2d Cir. 1972), as did the district court below. In Leasco, plaintiffs sought to recover for damages allegedly caused by the purchase of shares in a British company on the London Stock Exchange, in violation of §10(b) of the Securities Exchange Act. Leasco, 468 F.2d at 1330. Both the Securities and Exchange Act and the Sherman Act confer national jurisdiction on the courts, thus both extend the court's ability to exercise personal jurisdiction to the limits of the due process clause. See Leasco, 468 F.2d at 1338, U.S.C. §2. "[A] state has the power to exercise judicial jurisdiction over an individual who causes effects in the state by an act done elsewhere with respect to any action arising from these effects unless the nature of the effects and of the individual's relationship to the state makes the exercise of such jurisdiction unreasonable." Id. at 1341. The "low floor" of foreseeability needed in the tort context is not enough to support personal jurisdiction, and "[a]t minimum the conduct must meet . . . the important requirement that the effect 'occurs as a direct and foreseeable result of the conduct outside the territory.'" Id. (internal citations omitted). Thus, the defendant "must know, or have good reason to know, that his conduct will have effects in the state seeking to assert jurisdiction over him." Leasco, 468 F.2d at 1341. Plaintiff's suffering a commercial loss from acts committed elsewhere, is, in itself, not enough to support jurisdiction as the "place of impact is ruled by the injured party's choice of place of doing business rather than the locus of activity directly traceable to the defendant." Id. at 1341 fn.

11.

To prevail on the effects test, Corning must, on its pleadings, make out a legally sufficient prima facie case showing (1) Shin Etsu's actions in Japan caused effects in the United States; (2) the effect "occurs as a direct and foreseeable result" of the conduct; (3) Shin Etsu knew, or had good reason to know, its conduct would have effects in the United States; with the caveat that (4) the fact Corning suffered a commercial loss in the United States from the acts committed in Japan alone is not enough to support personal jurisdiction. See Leasco, 468 F.2d at 1338-1341.

Corning's amended complaint sufficiently alleges Shin Etsu's actions would have effects on Corning's U.S. operations, and arguably contains sufficient allegations that such effects are a "direct and foreseeable result" of Shin Etsu's conduct in Japan. Corning argues that as there were only two competitors, that is sufficient to show Shin Etsu had good reason to know its actions would have an effect in the United States. However, the amended complaint fails to set forth, in a legally sufficient matter, allegations that Shin Etsu knew, or had good reason to know, its conduct would have effects in the United States. As the district court noted, "almost any action by a foreign company that competes with a U.S. company in the world market will have a direct impact on United States commerce." It is not enough to simply allege that Shin Etsu's actions would have an impact in the United States. See As Corning failed to sufficiently allege facts showing the knowing nature Leasco, 468 F.2d at 1341.

of Shin Etsu's actions to support its prima facie case of personal jurisdiction, the district court correctly granted Shin Etsu's 12(b)(2) motion.

We have examined the remainder of Corning's arguments and find them without merit.

[*]-. The Honorable Christopher J. Droney, United States District Court Judge for the District of Connecticut, sitting by designation.