Tan v. Quick Box, LLC

• Decision Date: 08 December 2020
• Docket Number: Case No.: 3:20-cv-01082-H-DEB
• Parties: LEANNE TAN, an individual, on behalf of herself and all persons similarly situated, Plaintiff, v. QUICK BOX, LLC, et al., Defendants.
• Court: U.S. District Court — Southern District of California

LEANNE TAN, an individual, on behalf of herselfand all persons similarly situated, Plaintiff, v. QUICK BOX, LLC, et al., Defendants.

Case No.: 3:20-cv-01082-H-DEB

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

December 8, 2020

ORDER:

(1) GRANTING IN PART AND DENYING IN PART LA PURA DEFENDANTS' MOTION TO DISMISS

[Doc. No. 25]

(2) GRANTING IN PART AND DENYING IN PART KONNEKTIVE DEFENDANTS' MOTIONS TO DISMISS; AND

[Doc. Nos. 29, 30, 31, 32, 33, 34.]

(3) GRANTING IN PART AND DENYING IN PART QUICKBOX DEFENDANTS' MOTIONS TO DISMISS

[Doc. Nos. 36, 37, 38, 39, 40.]

On June 12, 2020, Plaintiff Leanne Tan filed a class action complaint against alleged operators of online "celebrity free trial" scams alleging violations of various consumer protections laws. (Doc. No. 1, Compl.) On August 14, 2020, Defendants Beautiful Skin and Health SL, Inc., Coastal Beauty Care KV, Inc., Coastal Health & Body TML, Inc., Coastal Skin Care DC, Inc., Complete Beautiful Skin DT, Inc., Complete Dietary Health DT, Inc., DL Group, Inc., Diet and Beauty Enterprise JB, Inc., Dietary 8 Leaves TL, Inc., Dietary Care Group MK, Inc., Dietary Health DL, Inc., Dietary Health Management SL, Inc., Dietary Health Supplements ADN, Inc., Dietary Mind & Body AR, Inc., Dietary Pills TTH, Inc., Dietary Supplements 8 Leaves TL, Inc., Dietary Supplements NS, Inc., EM Strength & Wellness Products, Inc., EW Ideal Health Store, Inc., EW Radiant Skin Store, Inc., Fit Body Forever KZ, Inc., Fit Lifestyle Enterprise JD, Inc., Fit and Slim Body Olo, Inc., Fitness & Health Supplements PKL, Inc., Flawless Beauty Forever MC, Inc., Forever Beautiful Products KZ, Inc., Forever Beauty and Balance JL, Inc., Health & Body Care TN, Inc., Health & Skin Nutrition JLN, Inc., Health & Wellness Products EM, Inc., Health Enterprise AR, Inc., Health Enterprise LT, Inc., Health Skin and Beauty MAYA, Inc., Health Skin and Body JB, Inc., Health and Diet Products ISA, Inc., Health and Fitness Lifestyle JL, Inc., Healthy Beautiful Skin JD, Inc., Healthy Body & Balance CD, Inc., Healthy Fit Lifestyle DC, Inc., Healthy Leaves TL, Inc., Healthy Lifestyle Diet JL, Inc., Healthy Skin Group TQH, Inc., Healthy Skin Lifestyle JB, Inc., Healthy Supplements MAYA, Inc., Healthy and Slim TT, Inc., Ideal Skin & Health Care NA, Inc., Lasting Fitness & Beauty JLN, Inc., PKL Everlasting Beauty, Inc., Radiant Skin & Body Shop ATN, Inc., Remarkable Beauty TN, Inc., Remarkable Health Supply PO, Inc., Skin Beauty & Health JN, Inc., Skin Beauty Products ISA, Inc., Skin Beauty and Balance CD, Inc., Skin Care Enterprise TTH, Inc., Skin Care Group MK, Inc., Skin Products Rubio, Inc., Skin and Beauty NS, Inc., Strength & Fitness Lifestyle LT, Inc., Total Fitness & Health MC, Inc., Total Health Supply TUA, Inc., and Vibrant Face & Beauty Shop ATN, Inc. (collectively, the "La Pura Defendants") filed a motion to dismiss Plaintiff's complaint for failure to statea claim and lack of subject matter jurisdiction. (Doc. No. 25.)¹ On September 7, 2020, Plaintiff filed her opposition. (Doc. No. 27.) On September 14, 2020, the La Pura Defendants filed their reply. (Doc. No. 35.)

On September 9, 2020, Defendants Konnektive Corporation, Konnektive LLC, Konnektive Rewards LLC, Kathryn Martorano, Matthew Martorano, and Martorano Holdings LLC (collectively, the "Konnektive Defendants") each filed a motion to dismiss Plaintiff's complaint for failure to state a claim and lack of personal jurisdiction. (Doc. Nos. 29-34.) On September 14, 2020, Defendants Quick Box, LLC, Quick Holdings, LLC, Stephen Adelé, James Martell, and Chad Biggins (collectively, the "QuickBox Defendants") each filed a motion to dismiss Plaintiff's complaint. (Doc. Nos. 36-40.) On October 26, 2020, Plaintiff filed her oppositions to the Konnektive Defendants' and the QuickBox Defendants' motions. (Doc. Nos. 49-59.) On November 16, 2020, the Konnektive Defendants and the QuickBox Defendants filed their replies. (Doc. Nos. 63-67, 73-78.) On December 7, 2020, the Court took the matter under submission. (Doc. No. 87.) For the reasons below, the Court (1) grants in part and denies in part the La Pura Defendants' motion to dismiss, (2) grants in part and denies in part the Konnektive Defendants' motions to dismiss, and (3) grants in part and denies in part the QuickBox Defendants' motions to dismiss.

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Background

The following facts are taken from Plaintiff's class action complaint. This lawsuit involves an alleged fraudulent scheme in which the Defendants allegedly use fake celebrity endorsements and reviews and misrepresentations about price and limited availability, to induce consumers into purchasing beauty and skincare products. (Doc. No. 1 ¶¶ 8-12.) The Defendants allegedly advertise that the products are available as a "free trial," then subsequently bill consumers for the full price of the products as well as monthly subscription charges. (Id.) They allegedly make it difficult or impossible to return the products or receive a refund and operate "false front" websites to mislead banks and credit card companies investigating chargebacks. (Id.)

I. Plaintiff's Experience With La Pura

Plaintiff is a citizen of California. (Id. ¶ 13.) In January 2020, she received a text message purportedly from Amazon claiming she would receive a free "La Pura" cosmetics product if she completed an online survey. (Id. ¶ 112.) The advertisement claimed she would only pay a total of $4.94 for shipping and handling. (Id.) Plaintiff completed the survey and was taken to La Pura's website order page (which Plaintiff refers to as a "hidden" landing page). (Id. ¶ 113.) She completed her order, believing she would only be charged for the shipping of her free trial product. (Id. ¶ 114.) She then received a confirmation email from info@la-pura-skinproducts.com, which stated the order would appear on her credit card statement under three separate merchant accounts: (1) "beautifullyremarkableh," (2) "beautyhealthremarkable," and (3) "skincarehealthybeautygroup." (Id.) The email did not specify the products ordered or the amount to be charged; Plaintiff emailed La Pura's customer service to confirm she would only be charged $4.94 but did not receive a response. (Id. ¶ 114-15.) On January 26, 2020, Plaintiff's credit card was charged $88.46 by a merchant account titled "beautifullyremarkableh." (Id. ¶ 118.) On January 27, 2020, Plaintiff's credit card was charged $84.37 by a merchant account titled "beautyhealthremarkable." (Id. ¶ 119.) When Plaintiff discovered the charges, she called La Pura's customer service to obtain a refund;the representative initially refused on the basis that Plaintiff had used the products. (Id. ¶ 120.) Plaintiff ultimately obtained a refund of only $120.97. (Id. ¶ 121.)

II. The Alleged Fraudulent Scheme

Plaintiff alleges Defendants' fraudulent scheme operates as follows. Consumers allegedly encounter an advertisement for a "free trial" of a La Pura product via text message or a third-party website, which "funnels" them to a landing page for the product. (Id. ¶¶ 124-25.) These landing pages are allegedly inaccessible to anyone who does not view the advertisements or are deleted after a few weeks or months to avoid detection. (Id. ¶ 126.) Because of this, Plaintiff states she is unable to provide the specific landing page that she viewed but provides two other known landing pages for La Pura products. (Id.) Plaintiff reached the landing page via a text message but alleges other victims of the scheme viewed "affiliate pages" with fake reviews, celebrity endorsements, and false claims about the effectiveness of the product. (Id. ¶¶ 127-34.) Once on the La Pura landing page, consumers are shown their final order, which allegedly states that all they will pay for their "free trial" product is shipping and handling, and are prompted to enter their credit card information. (Id. ¶¶ 142, 159.) On these pages, Plaintiff alleges that the terms and conditions of purchases are hidden or buried; consumers are not required to agree to the terms to complete the purchase. (Id. ¶¶ 137-42, 153.) The terms of service state that, rather than the product being a free trial for which the consumer need only pay shipping and handling, consumers will be billed $88.46 unless they cancel within fourteen (14) days of their order. (Id. ¶ 141.) Additionally, by making the initial order, consumers have unknowingly signed up for a continuing subscription of La Pura products, for which they will be billed $93.42 every 30 days. (Id.) Plaintiff alleges these hidden terms directly contradict what is displayed on the advertisement, the La Pura landing page, and the final order page, all of which say nothing about signing up for a subscription or the need to cancel within 14 days to avoid being billed. (Id. ¶¶ 142-43.)

After providing their credit card information and completing their purchase, consumers are subsequently billed for an additional $88.46. (Id. ¶ 143.) When consumersseek to dispute the charge with their bank or credit card company, the Defendants allegedly present the investigators with a second website, which Plaintiff terms a "false front" website. (Id. ¶¶ 165-74.) These "false front" websites are visually similar to the landing pages consumers used to make their purchase, but the terms and conditions are clearly stated, thus deceiving the investigators into believing consumers agreed to the full terms of sale. (Id.) Additionally, the Defendants allegedly create multiple shell companies, each of whom signs up for a unique merchant account; these accounts are then rotated through customer billings with a "load balancing" software to prevent any individual account from being flagged for fraud due to high levels of chargebacks. (Id.)

Plaintiff alleges the named Defendants are involved in this scheme as follows. The La Pura Defendants are the marketers and/or branders of the La Pura products who allegedly operate the hidden landing pages viewed by consumers as well...