Tan v. Quick Box, LLC et al

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
LEANNE TAN, Individually and On
Behalf of All Others Similarly Situated,
Plaintiffs,
v.
QUICK BOX, LLC, et al.,
Defendants.
Case No.: 20-cv-1082-LL-DDL
FINDINGS OF FACT AND
CONCLUSIONS OF LAW
FOLLOWING BENCH TRIAL
I.
BACKGROUND
On July 3, 2025, Judge Lopez issued an Order granting Plaintiff Leanne
Tan’s motion for final approval of her settlement with defendants Konnektive LLC,
Converging 	Resources 	Corporation, 	Konnektive 	Rewards 	LLC, 	Matthew
Martorano, and Kathryn Martorano (collectively “Konnektive”). Dkt. No. 512. The
Order provides, in relevant part:
Plaintiff’s settlement agreement with Konnektive is signed and dated
August 2024. ECF No. 492-4. In consideration for class members
releasing their claims against it, Konnektive agreed to pay either
$2,000,000 or $5,000,000 into a common fund for the same distribution
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as in [the Quick Box defendants’] fund. See id. The amount depends
on the agreed-to bench trial before Magistrate Judge Leshner: if he
finds that Plaintiff proved any of her Consumer Legal Remedies Act
(“CLRA”) 	claims 	against 	Konnektive 	by 	a 	preponderance 	of 	the
evidence and that no affirmative defense applies, Konnektive shall pay
$5,000,000; conversely, if Plaintiff does not prove any CLRA claim or
Konnektive is otherwise found not liable due to one of its defenses,
Konnektive shall only pay $2,000,000 into the common fund. See id. at
15–16.
Id. at 3-4.
Plaintiff 	and 	Konnektive 	thereafter 	consented 	to 	the 	undersigned’s
jurisdiction to decide “all disputes regarding settlement terms arising during the
documentation thereof not resolved by the parties themselves” and “all disputes
arising out of the terms of the settlement agreement once completed.” 	Dkt. No.
518.
From October 24-27, 2025, the undersigned presided over a bench trial on
Plaintiff’s CLRA claim. 	Thereafter, the parties submitted post-trial briefing and
proposed findings of fact. Dkt. Nos. 542, 543, 545, 546.
II.
DISCUSSION
A. 	Plaintiff’s CLRA Claim Against Rocket Management Group
1. 	Legal Standards
The elements of Plaintiff’s cause of action against Rocket Management
Group (“RMG”) under the Consumer Legal Remedies Act are as follows:
1. 	That Class members purchased La Pura products for personal, family
or household use.
2. 	That RMG did one or more of the following: (a) misrepresented the
source, 	sponsorship, 	approval 	or 	certification 	of 	the 	La 	Pura 	Products,
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(b) misrepresented 	that 	the 	La 	Pura 	products 	had 	sponsorship, 	approval,
characteristics, ingredients, uses, benefits, or quantifies that they did not have; or
(c) misrepresented the La Pura Products with the intent not to sell them as
advertised.
3. 	That the class was harmed; and
4. 	That the class’s harm resulted from RMG’s conduct.
See CACI 4700; Cal. Civil Code § 1770.1
2. 	Factual Findings
Plaintiff received a text message branded as an Amazon advertisement with
a link that directed her to a La Pura website. That website did not have any terms
and conditions, nor did it mention a subscription. Plaintiff ordered a “free” La Pura
skin care product through the website, for which she expected to be billed only
$4.97 for shipping. However, she was charged over $22.00 for her initial purchase,
and two weeks later she was charged approximately $80.00 twice more. Plaintiff
complained and was given a partial refund of these additional charges.
Alan Kulvete received an email purportedly from Costco that linked to the La
Pura website. The website represented “free” La Pura products with the customer
paying only for shipping. 	Kulvete ordered La Pura products believing he would
only be charged $4.97 for shipping one La Pura product and $3.97 for an additional
La Pura product after his checkout from the La Pura website. 	Kulvete did not
expect to be signing up for a subscription to the La Pura product; however, he was
charged for additional La Pura products two weeks after his initial purchase.
/ / /
1 The Court agrees with Konnective that Plaintiff’s First Amended Complaint
does not allege a CLRA violation based on an unconscionable provision in the
terms of sale under Civil Code § 1770(a)(19) and thus does not consider that
CLRA theory of liability. 	See Dkt. No. 89 at 117-118.
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RMG operated a website that sold skin care products branded as La Pura.
Plaintiff purchased her La Pura product through RMG’s website. 	Kiet Lieu is
RMG’s principal. At his deposition, Lieu repeatedly invoked the Fifth Amendment
in response to questions concerning his involvement with RMG and the La Pura
websites.
RMG 	was 	a 	customer 	of 	CodeClouds, 	which 	developed 	roughly 	100
websites for RMG. The websites created by CodeClouds for RMG included “bank
pages” and “offer pages.” 	Banks require a company to have an approved “bank
page” before the bank issues a company a merchant ID, as described below. The
banks require that terms and conditions and disclosure of a subscription exist on
the “bank page.” An “offer page” is the website on which that the merchant actually
intended for customers to purchase products
Various “bank pages” that CodeClouds created for RMG included terms and
conditions concerning a subscription. However, the La Pura website that Tan
purchased from had an “offer page” that did not have any disclosures of a
subscription nor any conspicuous terms and conditions that a consumer had to
accept as a condition to the sale.
3. 	Conclusion
Plaintiff established by a preponderance of the evidence her CLRA claim
against RMG. 	Plaintiff purchased La Pura products for her personal use. 	RMG
misrepresented that the La Pura Products were “free” and did not disclose that
Plaintiff would be enrolled in a subscription to purchase additional products.
RMG’s conduct harmed Plaintiff and the class because they were charged for
products they did not order.
/ / /
/ / /
/ / /
/ / /
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B. 	Konnektive’s Liability
Plaintiff contends that Konnektive aided and abetted RMG’s CLRA violation
and conspired with RMG to violate the CLRA.
1. 	Legal standards
“Liability may be imposed on one who aids and abets the commission of an
intentional tort if the person [] knows the other’s conduct constitutes a breach of
duty and gives substantial assistance or encouragement to the other to so act . . .”
Casey v. U.S. Bank Nat. Assn., 127 Cal. App. 4th 1138, 1144 (2005). 	“California
courts have long held that liability for aiding and abetting depends on proof the
defendant had actual knowledge of the specific primary wrong the defendant
substantially assisted.” 	Id. at 1145. 	Thus, “aiding and abetting liability under
California law, as applied by the California state courts, requires a finding of actual
knowledge, not specific intent.” 	In re First All. Mortg. Co., 471 F.3d 977, 993 (9th
Cir. 2006). 	See CACI 3610.
In addition to actual knowledge of the “specific primary wrong,” the aider and
abettor must “give[] substantial assistance or encouragement to the other to so act
. . .” 	Casey, 127 Cal. App. 4th at 1144. “[E]ven ‘ordinary business transactions’ a
bank performs for a customer can satisfy the substantial assistance element of an
aiding and abetting claim if the bank actually knew those transactions were
assisting the customer in committing a specific tort.” Id. at 1145. 	“Knowledge is
the crucial element.” Id. 	See also In re First All. Mortg. Co., 471 F.3d at 995
(affirming jury verdict for plaintiff on aiding and abetting theory where “Lehman
satisfied all of First Alliance's financing needs and, after other investment banks
stopped doing business with First Alliance, kept First Alliance in business, knowing
that its financial difficulties stemmed directly and indirectly from litigation over its
dubious lending practices”).
A similar principle applies to a conspiracy claim under California law. 	See,
e.g., Kidron v. Movie Acquisition Corp., 40 Cal. App. 4th 1571, 1584 (1995) (“to
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hold a defendant liable for joining an ongoing conspiracy to commit a tort, there
must be evidence that the joiner had actual knowledge of the scheme to commit
the tort”). 	See CACI 3600.
2. 	Factual Findings
A merchant that accepts debit and credit cards for the purchase of its goods
utilizes the services of a “payment processor” to connect the merchant to a bank
so the merchant can process card transactions. The payment processor provides
the merchant with a “merchant ID” (also known as a “MID”), a numerical ID that is
used for the card transactions. A merchant can have one or more MIDs.
Konnektive provides customer relationship management (“CRM”) software
to merchants. 	The services provided by Konnektive include a feature that allows
the merchant to distribute credit and debit card transactions across multiple MIDs.
A merchant accesses this feature through a system called GT Pay that is controlled
by Konnektive. Plaintiff calls this feature a “load balancer,” and Konnektive calls it
a “transaction router.” The purpose of this feature is to spread transactions across
multiple MIDs so any chargebacks for consumer purchases do not all go the same
MID and thereby reduce the likelihood that the bank will shut down that MID due
to an excessive number of chargebacks.
RMG was a Konnektive client and had multiple MIDs for processing card
transactions. 	Konnektive’s 	CRM 	software 	allowed 	it 	to 	see 	its 	customers’
chargeback rates. 	RMG’s chargebacks were 8.3 percent of sales, which was an
indicator that RMG was engaged in fraudulent activity.
3. 	Conclusion
To prevail on the aiding and abetting theory of liability, Plaintiff must establish
that Konnektive had actual knowledge of RMG’s “specific primary wrong” (i.e., the
free trial scheme) and provided substantial assistance. 	Casey, 127 Cal. App. 4th
at 1144. See also In re First All. Mortg. Co., 471 F.3d at 993; CACI 3610. Plaintiff
has not met her burden.
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The evidence shows that Konnektive’s CRM software allowed merchants to
spread transactions across multiple MIDs. Whether one calls it “load balancer” or
a “transaction router,” the feature’s functionality could be used by merchants
engaged in fraudulent activity to perpetuate that activity by allowing them to
minimize the number of chargebacks on each MID and evade scrutiny by the
payment processor and the bank. 	And Casey makes clear that “even ‘ordinary
business transactions’ a bank performs for a customer can satisfy the substantial
assistance element of an aiding and abetting claim if the bank actually knew those
transactions were assisting the customer in committing a specific tort.” Casey, 127
Cal. App. 4th at 1145.
Assuming arguendo that Konnektive’s CRM substantially assisted RMG in
perpetuating its free trial scheme (a point Konnektive contests), Plaintiff must
establish that Konnektive knew about the free trial scheme. 	Id. at 1144. 	It is
unclear whether or how the load balancing functionality served any legitimate
business purpose, and the evidence showed this functionality could be used to
perpetrate fraud as discussed above. Moreover, Konnektive’s decision to move
the load balancing functionality to the separate GT Pay platform in 2018 is
circumstantial 	evidence 	that 	Konnektive 	knew 	merchants 	were 	using 	the
functionality to evade chargeback thresholds imposed by the banks. However, the
evidence presented by Plaintiff did not establish by a preponderance of the
evidence that Konnektive had actual knowledge of RMG’s free trial scheme.
The testimony of Konnektive’s principals was evasive and unconvincing in
certain respects. 	It strains credulity that Matthew and Kathryn Martorano were
unable to recognize their son’s recorded voice. 	Kathryn Martorano’s answers to
questions about her ability to hire and fire employees were evasive. And Matthew
Martorano’s testimony that Konnektive’s software offered a “transaction router”
function but not a “load balancer” function was unconvincing. 	Plaintiff correctly
points out that the principle of falsus in uno, falsus in omnibus allows a trier of fact
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“to decide that a witness who has lied about one material fact must be disbelieved
as to all facts.” 	Hughes v. Rodriguez, 31 F.4th 1211, 1219 n. 2 (9th Cir. 2022).
However, considering the totality of the evidence adduced at trial, the Court cannot
conclude that any false testimony by Matthew or Kathryn Martorano warrants a
determination that the entirety of their testimony was false and that Konnektive had
actual knowledge of RMG’s free trial scheme. 	Plaintiff’s failure to establish
Konnektive’s knowledge of the free trial scheme is fatal to both the aiding and
abetting and conspiracy theories of liability. See Casey, 127 Cal. App. 4th at 1144;
Kidron, 40 Cal. App. 4th at 1584.
III.
CONCLUSION
For the foregoing reasons, the Court concludes that Plaintiff has not proved
her CLRA claims against Konnektive by a preponderance of the evidence.
IT IS SO ORDERED.
Dated: January 5, 2026.
Hon. David D. Leshner
United States Magistrate Judge
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