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

A U.S. bankruptcy judge has ruled that the state of California cannot seek monetary damages from the successor company to 23andMe over a 2023 data breach that exposed the personal and genetic information of approximately 6.9 million customers. The decision effectively shields the new entity from the state's legal action seeking potentially millions of dollars in civil fines.

The Court's Decision

U.S. Bankruptcy Judge Brian Walsh in St. Louis determined that the Chapter 11 reorganization plan for the former 23andMe precludes California from pursuing monetary relief against the successor, Chrome Holding Co. According to the Friday ruling reported by Reuters, the state is still permitted to seek non-monetary remedies.

Judge Walsh gave California an ultimatum: either dismiss its May 28 lawsuit within 14 days or amend the complaint to remove all claims for financial damages. The judge argued that because California was a party to the Chapter 11 case, it had a fair opportunity to challenge the court's jurisdiction and cannot do so now through a separate lawsuit.

A Setback for State Regulators

The ruling marks a significant defeat for California Attorney General Rob Bonta, who had accused 23andMe of ignoring security warnings and downplaying the severity of the breach. Bonta's office had argued that bankruptcy courts should not become a "haven for wrongdoers" by prohibiting state-level enforcement actions.

Ad

Judge Walsh disagreed with this characterization in his decision. He stated that California could not now attack the reorganization plan it had a chance to challenge during the bankruptcy proceedings.

Case Background

Palo Alto-based 23andMe filed for Chapter 11 bankruptcy protection in March 2025 following widespread litigation over the data breach. In July 2025, its assets were acquired for $305 million by TTAM Research Institute, a nonprofit controlled by 23andMe co-founder Anne Wojcicki, which now operates as Chrome Holding Co.

Separately from the state's lawsuit, the bankruptcy court has approved a fund to resolve claims from affected U.S. customers. Judge Walsh recently authorized a final payment, bringing the total customer payout to $46.75 million.