Story
California Blocked from Seeking Damages from 23andMe Successor Over 2023 Data Breach
Summary
A U.S. bankruptcy judge ruled that California cannot seek monetary damages from the successor to 23andMe, citing the company's Chapter 11 reorganization plan. The decision is a setback for the state's lawsuit over the 2023 data breach affecting 6.9 million customers.
A U.S. bankruptcy judge has ruled that California cannot pursue monetary damages against Chrome Holding Co., the successor to genetics company 23andMe, in connection with the 2023 data breach that compromised the information of millions of customers. The decision, rooted in the terms of the company's previously approved Chapter 11 reorganization plan, requires the state to alter its legal strategy.
The Court's Ruling
In a decision issued Friday, U.S. Bankruptcy Judge Brian Walsh in St. Louis stated that 23andMe's bankruptcy plan precludes California from seeking financial penalties. The court has given the state 14 days to either dismiss its May 28 lawsuit or amend its complaint to remove all claims for monetary relief.
According to the ruling, the state can still pursue non-monetary remedies. Judge Walsh reasoned that because California was a party to the Chapter 11 case, it had a fair opportunity to challenge the court's jurisdiction during those proceedings and cannot do so now through a separate legal action for damages.
Setback for State Enforcement
The ruling is a significant setback for California Attorney General Rob Bonta, who was seeking potentially millions of dollars in civil fines. Bonta's lawsuit accused 23andMe of ignoring warnings about its system vulnerabilities and downplaying the severity of the breach, which exposed the genetic and personal data of an estimated 6.9 million people.
AdThe attorney general's office had argued that bankruptcy court should not become "a haven for wrongdoers," but the judge reportedly disagreed that the reorganization plan created such a situation.
Context of the Bankruptcy
Palo Alto-based 23andMe filed for Chapter 11 bankruptcy protection in March 2025 amid growing legal and financial pressures from the data breach. The company's assets were subsequently purchased for $305 million in July 2025 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 U.S. customer claims. According to Reuters, the court recently authorized a payment that brought the total approved payout to affected customers to $46.75 million.