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

A U.S. bankruptcy judge has ruled that California cannot pursue monetary damages against the successor company of 23andMe over a 2023 data breach that affected an estimated 6.9 million customers. The decision, handed down on Friday, states that the genetic testing company's approved Chapter 11 reorganization plan prevents the state from seeking such financial relief.

The Court's Decision

U.S. Bankruptcy Judge Brian Walsh in St. Louis determined that 23andMe's reorganization plan precludes California from pursuing monetary claims against Chrome Holding Co, the entity that emerged from the bankruptcy. The state can, however, still seek non-monetary remedies.

Per the ruling, California has 14 days to either dismiss its May 28 lawsuit, which was filed in San Francisco Superior Court, or amend its complaint to remove all requests for monetary relief. Judge Walsh noted that because the state was a party to the Chapter 11 case, it cannot now challenge the court's jurisdiction through a separate lawsuit.

Setback for State Lawsuit

The ruling marks a significant defeat for California Attorney General Rob Bonta, who had accused 23andMe of ignoring warnings about its system vulnerabilities and downplaying the breach's severity. The state's lawsuit sought potentially millions of dollars in civil fines.

Ad

Bonta's office had argued that bankruptcy proceedings should not create a "haven for wrongdoers" by blocking state law enforcement actions. However, the judge disagreed that the reorganization plan created such a haven, according to the court documents.

Bankruptcy and Customer Compensation

The former 23andMe filed for Chapter 11 protection in March 2025. Its assets were later acquired for $305 million by TTAM Research Institute, a nonprofit controlled by 23andMe co-founder Anne Wojcicki.

As part of the bankruptcy, the court approved a fund to resolve most U.S. customer claims stemming from the data breach. The total payout authorized for this fund is $46.75 million, comprised of a recent $32.46 million payment on top of $14.29 million previously disbursed.