UMG Recordings, Inc.v. Shelter Capital Partners LLC, 2011 U.S. App. LEXIS 25168 (9th Cir. Dec. 20, 2011):

Veoh Networks (Veoh) operates a publicly accessible website that enables users to share videos with other users. Universal Music Group (UMG) is one of the world's largest recorded music and music publishing companies, and includes record labels such as Motown, Def Jam and Geffen. In addition to producing and distributing recorded music, UMG produces music videos. Although Veoh has implemented various procedures to prevent copyright infringement through its system, users of Veoh's service have in the past been able, without UMG's authorization, to download videos containing songs for which UMG owns the copyright. UMG responded by filing suit against Veoh for direct and secondary copyright infringement. The district court granted summary judgment to Veoh after determining that it was protected by the Digital Millennium Copyright Act (DMCA) "safe harbor" limiting service providers' liability for "infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider." 17 U.S.C. § 512(c). We agree, and accordingly affirm. ***

UMG's argument that the district court too broadly construed the scope of § 512(c) rests in part on UMG's contention that the DMCA's "by reason of" language should be interpreted in the same way as similar language in the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968. RICO provides that "[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor." 18 U.S.C. § 1964(c). In Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 268 (1992), the Supreme Court held that RICO's "by reason of" language required proximate causation. UMG contends that we should thus read § 512(c)'s "by reason of storage" to mean that infringement must be proximately caused by the storage, rather than caused by the access that the storage facilitates.

Ordinarily we presume that "similar language in similar statutes should be interpreted similarly." United States v. Sioux, 362 F.3d 1241, 1246 (9th Cir. 2004); see also Northcross v. Bd. of Educ. of Memphis City Schs., 412 U.S. 427, 428 (1973) (noting that the "similarity of language" in two statutes is an indicator that the statutes "should be interpreted pari passu," particularly when they "share a common raison d'etre" (internal quotations omitted)). In this case, however, there are important differences between the statutes and their purposes. The reasoning underlying Holmes counsels against extending its reading to the DMCA, and the language and structure of § 512(c) compel us to conclude that it should not be interpreted in the same manner as RICO.

The Holmes Court began its analysis by recognizing that "by reason of" "can, of course, be read to mean that . . . the defendant's violation was a 'but for' cause of plaintiff's injury." 503 U.S. at 265-66.

Footnote 6. "'But for' causation is a short way of saying '[t]he defendant's conduct is a cause of the event if the event would not have occurred but for that conduct.' It is sometimes stated as 'sine qua non' causation, i.e., 'without which not . . . .'" Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1183 (9th Cir. 2000). "In determining whether a particular factor was a but-for cause of a given event, we begin by assuming that that factor was present at the time of the event, and then ask whether, even if that factor had been absent, the event nevertheless would have transpired in the same way." ***

Ultimately, however, Holmes held that the "unlikelihood that Congress meant to allow all factually injured plaintiffs to recover persuades us that RICO should not get such an expansive reading." Id. at 266. Holmes explained that "[t]he key to the better interpretation lies in some statutory history," and traced the "by reason of" language back to § 4 of the Clayton Act, which courts had long held required proximate causation. Id. at 267. Because RICO was specifically modeled on § 4, Holmes concluded that the Clayton Act's interpretation was particularly persuasive. See id. at 267-68.

Holmes also explained that "such directness of relationship" between the harm and the alleged wrong is a "central element[ ]" of "Clayton Act causation" for three primary reasons, and, significantly, concluded that all three "apply with equal force to suits under [RICO]." Id. at 269-70. First, "the less direct an injury is, the more difficult it becomes to ascertain the amount of a plaintiff's damages attributable to the violation." Id. at 269. Second, "recognizing claims of the indirectly injured would force courts to adopt complicated rules apportioning damages among plaintiffs removed at different levels of injury from the violative acts, to obviate the risk of multiple recoveries." Id. "And, finally, the need to grapple with these problems is simply unjustified by the general interest in deterring injurious conduct, since directly injured victims can generally be counted on to vindicate the law as private attorneys general, without any of the problems attendant upon suits by plaintiffs injured more remotely." Id. at 269-70.

None of these concerns applies to the DMCA, which, unlike the Clayton Act and RICO, involves a narrow affirmative defense rather than the expansion of liability. Further, unlike in Holmes, there is no indication that Congress modeled the DMCA on the Clayton Act or RICO. We are therefore doubtful that in this quite different context, Holmes' strict reading of "by reason of" is what Congress intended.

Footnote 7. A number of other courts have concluded, outside the RICO and Clayton Act context, that "by reason of" should be read to require only "but for" rather than proximate causation. See, e.g., Gross v. FBL Fin. Servs., Inc., 129 S. Ct. 2343, 2350 (2009) ("The words 'because of' mean 'by reason of: on account of. ' Thus, the ordinary meaning of the ADEA's requirement that an employer took adverse action 'because of' age is that age was the 'reason' that the employer decided to act. To establish a disparate-treatment claim under the plain language of the ADEA, therefore, a plaintiff must prove that age was the 'but-for' cause of the employer's adverse decision." (citations omitted) (emphasis added)); Robinson Knife Mfg. Co. v. C.I.R., 600 F.3d 121, 131-32 (2d Cir. 2010) (holding that in 26 C.F.R. § 1.263A-1(e)(3)(i), the language "'directly benefit or are incurred by reason of' boils down to a but-for causation test"); Spirtas Co. v. Ins. Co. of Pa., 555 F.3d 647, 652 (8th Cir. 2009) (holding that the "language 'by reason of having executed any bond' is unambiguous and sets forth a simple cause-in-fact or 'but-for' causation test."); New Directions Treatment Servs. v. City of Reading, 490 F.3d 293, 301 n.4 (3d Cir. 2007) ("[T]he ADA prohibits discrimination against an individual 'by reason of such disability.' . . . [T]his language . . . clearly establishes that the . . . ADA . . . requires only but for causation." (citations omitted)); Pacific Ins. Co. v. Eaton Vance Mgmt., 369 F.3d 584, 589 (1st Cir. 2004) ("[W]e consider the language unambiguous: 'by reason of' means 'because of,' Black's Law Dictionary 201 (6th ed. 1990), and thus necessitates an analysis at least approximating a 'but-for' causation test.").

Our doubts are confirmed by the fact that UMG's reading of the "by reason of" language would create internal statutory conflicts. ***