Last year's champions England saw off Kenya and the hosts to seal their place in the next round before they suffered a narrow defeat to Australia in their last game.
The African minnows eventually proved stubborn opposition in the opening game, but they made an awful start as Rob Thirlby gave England the lead following a break from his own half in the third minute.
Sale's Andy Vilk - one of only two survivors from last year's triumphant side - crossed moments later and Thirlby got his second touchdown almost straight afterwards as England threatened to run riot with a 19-0 lead at the break.
Innocent Simiyu pulled a try back for Kenya following Thirlby's sin-binning before Dominic Shabbo of London Irish scored England's fourth touchdown.
Simiyu crossed again to complete the scoring as the match finished 26-14.
England consolidated their position when they edged to a tough 26-10 win over USA in their second game - Charlie Amesbury and captain Simon Amor with two tries each against the home favourites.
That win seemed to have set up a likely pool decider with Australia, but the Wallabies crashed to an embarrassing defeat to Kenya in their second game to leave England in the box seat ahead of their meeting.
However, Australia beat England 19-14 to join the holders in the quarters.
Scotland made an horrific start to their campaign as they suffered a 57-5 mauling at the hands of sevens specialists Fiji.
But they recovered to beat Argentina and the West Indies to claim a place in the quarter-finals later on Sunday.
The tournament in San Diego is the fourth of eight legs which comprise the IRB Sevens World Series - with the final leg due to take place at Murrayfield on June 2 and 3.