California Blocked From Seeking Damages Against 23andMe Successor in Data Breach Case

A U.S. bankruptcy judge has blocked the state of California from seeking financial damages against the successor company to 23andMe related to a 2023 data breach that compromised the personal and genetic information of millions. The ruling shields the new entity, Chrome Holding Co, from the state's monetary claims, though non-monetary remedies may still be pursued.

The Court's Decision

In a decision issued Friday, U.S. Bankruptcy Judge Brian Walsh in St. Louis stated that 23andMe's Chapter 11 reorganization plan precludes California from pursuing monetary relief against the company's successor, according to a report by Reuters. The judge's order gives California 14 days to either dismiss its May 28 lawsuit or amend it to remove all claims for monetary damages.

Judge Walsh disagreed with the state's argument that the bankruptcy plan created a "haven for wrongdoers." He wrote that because California was a party to the Chapter 11 proceedings and had a fair opportunity to challenge the court's jurisdiction, it cannot do so now through a separate lawsuit.

A Setback for California

The ruling marks 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 incident's impact. Bonta's office was seeking potentially millions of dollars in civil penalties.

Ad

The attorney general had argued that Congress did not grant bankruptcy courts the power to prohibit state-level enforcement actions. However, the judge found that the confirmed reorganization plan was binding on the state.

Breach and Bankruptcy Context

The legal battle stems from a 2023 data breach that exposed the information of an estimated 6.9 million 23andMe customers. Following the incident, the Palo Alto-based company filed for Chapter 11 bankruptcy protection in March 2025.

As part of the bankruptcy proceedings, a fund was established to resolve customer claims. Judge Walsh recently authorized a payment that brought the total customer payout to $46.75 million. In July of last year, TTAM Research Institute, a nonprofit controlled by 23andMe co-founder Anne Wojcicki, acquired the company's assets for $305 million, leading to the formation of Chrome Holding Co.