1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 LEANNE TAN, Individually and On Case No.: 20-cv-1082-LL-DDL Behalf of All Others Similarly Situated, 12 FINDINGS OF FACT AND Plaintiffs, 13 CONCLUSIONS OF LAW v. FOLLOWING BENCH TRIAL 14 QUICK BOX, LLC, et al., 15 Defendants. 16
17 I. 18 BACKGROUND 19 On July 3, 2025, Judge Lopez issued an Order granting Plaintiff Leanne 20 Tan’s motion for final approval of her settlement with defendants Konnektive LLC, 21 Converging Resources Corporation, Konnektive Rewards LLC, Matthew 22 Martorano, and Kathryn Martorano (collectively “Konnektive”). Dkt. No. 512. The 23 Order provides, in relevant part: 24 Plaintiff’s settlement agreement with Konnektive is signed and dated 25 August 2024. ECF No. 492-4. In consideration for class members 26 releasing their claims against it, Konnektive agreed to pay either 27 $2,000,000 or $5,000,000 into a common fund for the same distribution 28 1 as in [the Quick Box defendants’] fund. See id. The amount depends 2 on the agreed-to bench trial before Magistrate Judge Leshner: if he 3 finds that Plaintiff proved any of her Consumer Legal Remedies Act 4 (“CLRA”) claims against Konnektive by a preponderance of the 5 evidence and that no affirmative defense applies, Konnektive shall pay 6 $5,000,000; conversely, if Plaintiff does not prove any CLRA claim or 7 Konnektive is otherwise found not liable due to one of its defenses, 8 Konnektive shall only pay $2,000,000 into the common fund. See id. at 9 15–16. 10 Id. at 3-4. 11 Plaintiff and Konnektive thereafter consented to the undersigned’s 12 jurisdiction to decide “all disputes regarding settlement terms arising during the 13 documentation thereof not resolved by the parties themselves” and “all disputes 14 arising out of the terms of the settlement agreement once completed.” Dkt. No. 15 518. 16 From October 24-27, 2025, the undersigned presided over a bench trial on 17 Plaintiff’s CLRA claim. Thereafter, the parties submitted post-trial briefing and 18 proposed findings of fact. Dkt. Nos. 542, 543, 545, 546. 19 II. 20 DISCUSSION 21 A. Plaintiff’s CLRA Claim Against Rocket Management Group 22 1. Legal Standards 23 The elements of Plaintiff’s cause of action against Rocket Management 24 Group (“RMG”) under the Consumer Legal Remedies Act are as follows: 25 1. That Class members purchased La Pura products for personal, family 26 or household use. 27 2. That RMG did one or more of the following: (a) misrepresented the 28 source, sponsorship, approval or certification of the La Pura Products, 1 (b) misrepresented that the La Pura products had sponsorship, approval, 2 characteristics, ingredients, uses, benefits, or quantifies that they did not have; or 3 (c) misrepresented the La Pura Products with the intent not to sell them as 4 advertised. 5 3. That the class was harmed; and 6 4. That the class’s harm resulted from RMG’s conduct. 7 See CACI 4700; Cal. Civil Code § 1770.1 8 2. Factual Findings 9 Plaintiff received a text message branded as an Amazon advertisement with 10 a link that directed her to a La Pura website. That website did not have any terms 11 and conditions, nor did it mention a subscription. Plaintiff ordered a “free” La Pura 12 skin care product through the website, for which she expected to be billed only 13 $4.97 for shipping. However, she was charged over $22.00 for her initial purchase, 14 and two weeks later she was charged approximately $80.00 twice more. Plaintiff 15 complained and was given a partial refund of these additional charges. 16 Alan Kulvete received an email purportedly from Costco that linked to the La 17 Pura website. The website represented “free” La Pura products with the customer 18 paying only for shipping. Kulvete ordered La Pura products believing he would 19 only be charged $4.97 for shipping one La Pura product and $3.97 for an additional 20 La Pura product after his checkout from the La Pura website. Kulvete did not 21 expect to be signing up for a subscription to the La Pura product; however, he was 22 charged for additional La Pura products two weeks after his initial purchase. 23 / / / 24 25 26 1 The Court agrees with Konnective that Plaintiff’s First Amended Complaint 27 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 28 1 RMG operated a website that sold skin care products branded as La Pura. 2 Plaintiff purchased her La Pura product through RMG’s website. Kiet Lieu is 3 RMG’s principal. At his deposition, Lieu repeatedly invoked the Fifth Amendment 4 in response to questions concerning his involvement with RMG and the La Pura 5 websites. 6 RMG was a customer of CodeClouds, which developed roughly 100 7 websites for RMG. The websites created by CodeClouds for RMG included “bank 8 pages” and “offer pages.” Banks require a company to have an approved “bank 9 page” before the bank issues a company a merchant ID, as described below. The 10 banks require that terms and conditions and disclosure of a subscription exist on 11 the “bank page.” An “offer page” is the website on which that the merchant actually 12 intended for customers to purchase products 13 Various “bank pages” that CodeClouds created for RMG included terms and 14 conditions concerning a subscription. However, the La Pura website that Tan 15 purchased from had an “offer page” that did not have any disclosures of a 16 subscription nor any conspicuous terms and conditions that a consumer had to 17 accept as a condition to the sale. 18 3. Conclusion 19 Plaintiff established by a preponderance of the evidence her CLRA claim 20 against RMG. Plaintiff purchased La Pura products for her personal use. RMG 21 misrepresented that the La Pura Products were “free” and did not disclose that 22 Plaintiff would be enrolled in a subscription to purchase additional products. 23 RMG’s conduct harmed Plaintiff and the class because they were charged for 24 products they did not order. 25 / / / 26 / / / 27 / / / 28 / / / 1 B. Konnektive’s Liability 2 Plaintiff contends that Konnektive aided and abetted RMG’s CLRA violation 3 and conspired with RMG to violate the CLRA. 4 1. Legal standards 5 “Liability may be imposed on one who aids and abets the commission of an 6 intentional tort if the person [] knows the other’s conduct constitutes a breach of 7 duty and gives substantial assistance or encouragement to the other to so act . . .” 8 Casey v. U.S. Bank Nat. Assn., 127 Cal. App. 4th 1138, 1144 (2005). “California 9 courts have long held that liability for aiding and abetting depends on proof the 10 defendant had actual knowledge of the specific primary wrong the defendant 11 substantially assisted.” Id. at 1145. Thus, “aiding and abetting liability under 12 California law, as applied by the California state courts, requires a finding of actual 13 knowledge, not specific intent.” In re First All. Mortg. Co., 471 F.3d 977, 993 (9th 14 Cir. 2006). See CACI 3610. 15 In addition to actual knowledge of the “specific primary wrong,” the aider and 16 abettor must “give[] substantial assistance or encouragement to the other to so act 17 . . .” Casey, 127 Cal. App. 4th at 1144. “[E]ven ‘ordinary business transactions’ a 18 bank performs for a customer can satisfy the substantial assistance element of an 19 aiding and abetting claim if the bank actually knew those transactions were 20 assisting the customer in committing a specific tort.” Id. at 1145. “Knowledge is 21 the crucial element.” Id. See also In re First All. Mortg.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 LEANNE TAN, Individually and On Case No.: 20-cv-1082-LL-DDL Behalf of All Others Similarly Situated, 12 FINDINGS OF FACT AND Plaintiffs, 13 CONCLUSIONS OF LAW v. FOLLOWING BENCH TRIAL 14 QUICK BOX, LLC, et al., 15 Defendants. 16
17 I. 18 BACKGROUND 19 On July 3, 2025, Judge Lopez issued an Order granting Plaintiff Leanne 20 Tan’s motion for final approval of her settlement with defendants Konnektive LLC, 21 Converging Resources Corporation, Konnektive Rewards LLC, Matthew 22 Martorano, and Kathryn Martorano (collectively “Konnektive”). Dkt. No. 512. The 23 Order provides, in relevant part: 24 Plaintiff’s settlement agreement with Konnektive is signed and dated 25 August 2024. ECF No. 492-4. In consideration for class members 26 releasing their claims against it, Konnektive agreed to pay either 27 $2,000,000 or $5,000,000 into a common fund for the same distribution 28 1 as in [the Quick Box defendants’] fund. See id. The amount depends 2 on the agreed-to bench trial before Magistrate Judge Leshner: if he 3 finds that Plaintiff proved any of her Consumer Legal Remedies Act 4 (“CLRA”) claims against Konnektive by a preponderance of the 5 evidence and that no affirmative defense applies, Konnektive shall pay 6 $5,000,000; conversely, if Plaintiff does not prove any CLRA claim or 7 Konnektive is otherwise found not liable due to one of its defenses, 8 Konnektive shall only pay $2,000,000 into the common fund. See id. at 9 15–16. 10 Id. at 3-4. 11 Plaintiff and Konnektive thereafter consented to the undersigned’s 12 jurisdiction to decide “all disputes regarding settlement terms arising during the 13 documentation thereof not resolved by the parties themselves” and “all disputes 14 arising out of the terms of the settlement agreement once completed.” Dkt. No. 15 518. 16 From October 24-27, 2025, the undersigned presided over a bench trial on 17 Plaintiff’s CLRA claim. Thereafter, the parties submitted post-trial briefing and 18 proposed findings of fact. Dkt. Nos. 542, 543, 545, 546. 19 II. 20 DISCUSSION 21 A. Plaintiff’s CLRA Claim Against Rocket Management Group 22 1. Legal Standards 23 The elements of Plaintiff’s cause of action against Rocket Management 24 Group (“RMG”) under the Consumer Legal Remedies Act are as follows: 25 1. That Class members purchased La Pura products for personal, family 26 or household use. 27 2. That RMG did one or more of the following: (a) misrepresented the 28 source, sponsorship, approval or certification of the La Pura Products, 1 (b) misrepresented that the La Pura products had sponsorship, approval, 2 characteristics, ingredients, uses, benefits, or quantifies that they did not have; or 3 (c) misrepresented the La Pura Products with the intent not to sell them as 4 advertised. 5 3. That the class was harmed; and 6 4. That the class’s harm resulted from RMG’s conduct. 7 See CACI 4700; Cal. Civil Code § 1770.1 8 2. Factual Findings 9 Plaintiff received a text message branded as an Amazon advertisement with 10 a link that directed her to a La Pura website. That website did not have any terms 11 and conditions, nor did it mention a subscription. Plaintiff ordered a “free” La Pura 12 skin care product through the website, for which she expected to be billed only 13 $4.97 for shipping. However, she was charged over $22.00 for her initial purchase, 14 and two weeks later she was charged approximately $80.00 twice more. Plaintiff 15 complained and was given a partial refund of these additional charges. 16 Alan Kulvete received an email purportedly from Costco that linked to the La 17 Pura website. The website represented “free” La Pura products with the customer 18 paying only for shipping. Kulvete ordered La Pura products believing he would 19 only be charged $4.97 for shipping one La Pura product and $3.97 for an additional 20 La Pura product after his checkout from the La Pura website. Kulvete did not 21 expect to be signing up for a subscription to the La Pura product; however, he was 22 charged for additional La Pura products two weeks after his initial purchase. 23 / / / 24 25 26 1 The Court agrees with Konnective that Plaintiff’s First Amended Complaint 27 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 28 1 RMG operated a website that sold skin care products branded as La Pura. 2 Plaintiff purchased her La Pura product through RMG’s website. Kiet Lieu is 3 RMG’s principal. At his deposition, Lieu repeatedly invoked the Fifth Amendment 4 in response to questions concerning his involvement with RMG and the La Pura 5 websites. 6 RMG was a customer of CodeClouds, which developed roughly 100 7 websites for RMG. The websites created by CodeClouds for RMG included “bank 8 pages” and “offer pages.” Banks require a company to have an approved “bank 9 page” before the bank issues a company a merchant ID, as described below. The 10 banks require that terms and conditions and disclosure of a subscription exist on 11 the “bank page.” An “offer page” is the website on which that the merchant actually 12 intended for customers to purchase products 13 Various “bank pages” that CodeClouds created for RMG included terms and 14 conditions concerning a subscription. However, the La Pura website that Tan 15 purchased from had an “offer page” that did not have any disclosures of a 16 subscription nor any conspicuous terms and conditions that a consumer had to 17 accept as a condition to the sale. 18 3. Conclusion 19 Plaintiff established by a preponderance of the evidence her CLRA claim 20 against RMG. Plaintiff purchased La Pura products for her personal use. RMG 21 misrepresented that the La Pura Products were “free” and did not disclose that 22 Plaintiff would be enrolled in a subscription to purchase additional products. 23 RMG’s conduct harmed Plaintiff and the class because they were charged for 24 products they did not order. 25 / / / 26 / / / 27 / / / 28 / / / 1 B. Konnektive’s Liability 2 Plaintiff contends that Konnektive aided and abetted RMG’s CLRA violation 3 and conspired with RMG to violate the CLRA. 4 1. Legal standards 5 “Liability may be imposed on one who aids and abets the commission of an 6 intentional tort if the person [] knows the other’s conduct constitutes a breach of 7 duty and gives substantial assistance or encouragement to the other to so act . . .” 8 Casey v. U.S. Bank Nat. Assn., 127 Cal. App. 4th 1138, 1144 (2005). “California 9 courts have long held that liability for aiding and abetting depends on proof the 10 defendant had actual knowledge of the specific primary wrong the defendant 11 substantially assisted.” Id. at 1145. Thus, “aiding and abetting liability under 12 California law, as applied by the California state courts, requires a finding of actual 13 knowledge, not specific intent.” In re First All. Mortg. Co., 471 F.3d 977, 993 (9th 14 Cir. 2006). See CACI 3610. 15 In addition to actual knowledge of the “specific primary wrong,” the aider and 16 abettor must “give[] substantial assistance or encouragement to the other to so act 17 . . .” Casey, 127 Cal. App. 4th at 1144. “[E]ven ‘ordinary business transactions’ a 18 bank performs for a customer can satisfy the substantial assistance element of an 19 aiding and abetting claim if the bank actually knew those transactions were 20 assisting the customer in committing a specific tort.” Id. at 1145. “Knowledge is 21 the crucial element.” Id. See also In re First All. Mortg. Co., 471 F.3d at 995 22 (affirming jury verdict for plaintiff on aiding and abetting theory where “Lehman 23 satisfied all of First Alliance's financing needs and, after other investment banks 24 stopped doing business with First Alliance, kept First Alliance in business, knowing 25 that its financial difficulties stemmed directly and indirectly from litigation over its 26 dubious lending practices”). 27 A similar principle applies to a conspiracy claim under California law. See, 28 e.g., Kidron v. Movie Acquisition Corp., 40 Cal. App. 4th 1571, 1584 (1995) (“to 1 hold a defendant liable for joining an ongoing conspiracy to commit a tort, there 2 must be evidence that the joiner had actual knowledge of the scheme to commit 3 the tort”). See CACI 3600. 4 2. Factual Findings 5 A merchant that accepts debit and credit cards for the purchase of its goods 6 utilizes the services of a “payment processor” to connect the merchant to a bank 7 so the merchant can process card transactions. The payment processor provides 8 the merchant with a “merchant ID” (also known as a “MID”), a numerical ID that is 9 used for the card transactions. A merchant can have one or more MIDs. 10 Konnektive provides customer relationship management (“CRM”) software 11 to merchants. The services provided by Konnektive include a feature that allows 12 the merchant to distribute credit and debit card transactions across multiple MIDs. 13 A merchant accesses this feature through a system called GT Pay that is controlled 14 by Konnektive. Plaintiff calls this feature a “load balancer,” and Konnektive calls it 15 a “transaction router.” The purpose of this feature is to spread transactions across 16 multiple MIDs so any chargebacks for consumer purchases do not all go the same 17 MID and thereby reduce the likelihood that the bank will shut down that MID due 18 to an excessive number of chargebacks. 19 RMG was a Konnektive client and had multiple MIDs for processing card 20 transactions. Konnektive’s CRM software allowed it to see its customers’ 21 chargeback rates. RMG’s chargebacks were 8.3 percent of sales, which was an 22 indicator that RMG was engaged in fraudulent activity. 23 3. Conclusion 24 To prevail on the aiding and abetting theory of liability, Plaintiff must establish 25 that Konnektive had actual knowledge of RMG’s “specific primary wrong” (i.e., the 26 free trial scheme) and provided substantial assistance. Casey, 127 Cal. App. 4th 27 at 1144. See also In re First All. Mortg. Co., 471 F.3d at 993; CACI 3610. Plaintiff 28 has not met her burden. 1 The evidence shows that Konnektive’s CRM software allowed merchants to 2 spread transactions across multiple MIDs. Whether one calls it “load balancer” or 3 a “transaction router,” the feature’s functionality could be used by merchants 4 engaged in fraudulent activity to perpetuate that activity by allowing them to 5 minimize the number of chargebacks on each MID and evade scrutiny by the 6 payment processor and the bank. And Casey makes clear that “even ‘ordinary 7 business transactions’ a bank performs for a customer can satisfy the substantial 8 assistance element of an aiding and abetting claim if the bank actually knew those 9 transactions were assisting the customer in committing a specific tort.” Casey, 127 10 Cal. App. 4th at 1145. 11 Assuming arguendo that Konnektive’s CRM substantially assisted RMG in 12 perpetuating its free trial scheme (a point Konnektive contests), Plaintiff must 13 establish that Konnektive knew about the free trial scheme. Id. at 1144. It is 14 unclear whether or how the load balancing functionality served any legitimate 15 business purpose, and the evidence showed this functionality could be used to 16 perpetrate fraud as discussed above. Moreover, Konnektive’s decision to move 17 the load balancing functionality to the separate GT Pay platform in 2018 is 18 circumstantial evidence that Konnektive knew merchants were using the 19 functionality to evade chargeback thresholds imposed by the banks. However, the 20 evidence presented by Plaintiff did not establish by a preponderance of the 21 evidence that Konnektive had actual knowledge of RMG’s free trial scheme. 22 The testimony of Konnektive’s principals was evasive and unconvincing in 23 certain respects. It strains credulity that Matthew and Kathryn Martorano were 24 unable to recognize their son’s recorded voice. Kathryn Martorano’s answers to 25 questions about her ability to hire and fire employees were evasive. And Matthew 26 Martorano’s testimony that Konnektive’s software offered a “transaction router” 27 function but not a “load balancer” function was unconvincing. Plaintiff correctly 28 points out that the principle of falsus in uno, falsus in omnibus allows a trier of fact 1 || “to decide that a witness who has lied about one material fact must be disbelieved 2 to all facts.”. Hughes v. Rodriguez, 31 F.4th 1211, 1219 n. 2 (9th Cir. 2022). 3 || However, considering the totality of the evidence adduced at trial, the Court cannot 4 ||conclude that any false testimony by Matthew or Kathryn Martorano warrants a 5 || determination that the entirety of their testimony was false and that Konnektive had 6 ||actual knowledge of RMG’s free trial scheme. Plaintiff's failure to establish 7 |{Konnektive’s knowledge of the free trial scheme is fatal to both the aiding and 8 || abetting and conspiracy theories of liability. See Casey, 127 Cal. App. 4th at 1144; 9 || Kidron, 40 Cal. App. 4th at 1584. 10 lll. 11 CONCLUSION 12 For the foregoing reasons, the Court concludes that Plaintiff has not proved 13 ||her CLRA claims against Konnektive by a preponderance of the evidence. 14 || IT IS SO ORDERED. 15 || Dated: January 5, 2026. ait 16 Tb Lh,
18 United States Magistrate Judge 19 20 21 22 23 24 25 26 27 28