California Barred From Seeking Damages From 23andMe Successor Over 2023 Data Breach

A U.S. bankruptcy judge has blocked the state of California from seeking financial damages from the successor company to 23andMe over a 2023 data breach that exposed the personal and genetic information of millions of customers. The ruling effectively shields the new entity, Chrome Holding Co., from the state's claims for civil fines, citing the terms of 23andMe's Chapter 11 reorganization.

The Court's Ruling

U.S. Bankruptcy Judge Brian Walsh in St. Louis determined that 23andMe's court-approved reorganization plan prevents California from pursuing monetary relief. According to the decision reported by Reuters, the state is permitted to seek non-monetary remedies but must either dismiss its May 28 lawsuit or amend it to remove all claims for financial damages within 14 days.

Judge Walsh rejected the state's argument that bankruptcy courts lack the power to prohibit state-level enforcement actions. He wrote that because California was a party to the Chapter 11 case and had a fair opportunity to challenge the court's jurisdiction at that time, it cannot do so now through a separate lawsuit.

A Setback for State Action

The decision is a significant defeat for California Attorney General Rob Bonta, who had accused 23andMe of failing to act on warnings about its system vulnerabilities and downplaying the severity of the breach. Bonta's office was seeking potentially millions of dollars in civil penalties.

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The attorney general had argued that allowing the bankruptcy plan to block the state's lawsuit would turn the court into a "haven for wrongdoers." However, Judge Walsh disagreed with this characterization in his ruling.

Bankruptcy and Breach Background

The 2023 data breach compromised the information of an estimated 6.9 million 23andMe customers. Following the incident and mounting legal challenges, the Palo Alto-based company filed for Chapter 11 bankruptcy protection in March 2025.

In July 2025, the company's assets were acquired for $305 million by TTAM Research Institute, a nonprofit controlled by 23andMe co-founder Anne Wojcicki, and the business was reorganized as Chrome Holding Co. Separately from the California lawsuit, the bankruptcy court has approved a settlement fund for affected customers, authorizing a total payout of $46.75 million to resolve most U.S. claims.