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

A U.S. bankruptcy judge ruled Friday that the state of California is precluded from seeking monetary damages from the successor company to 23andMe over the 2023 data breach that exposed the personal and genetic information of an estimated 6.9 million customers. The decision stems from the genetic testing company's Chapter 11 reorganization plan, which the court found now shields its successor from such claims.

The Court's Decision

In his ruling, U.S. Bankruptcy Judge Brian Walsh in St. Louis stated that California cannot pursue monetary relief against Chrome Holding Co, which acquired 23andMe's assets. The judge's decision is based on the terms of the previously approved bankruptcy plan.

Judge Walsh gave the state 14 days to either dismiss its May 28 lawsuit, which was filed in San Francisco Superior Court, or amend its complaint to remove all claims for financial penalties. The ruling does, however, permit California to continue seeking non-monetary remedies against the company.

A Setback for State Regulators

The ruling is a significant setback for California Attorney General Rob Bonta, who had sought potentially millions of dollars in civil fines. Bonta’s office had accused 23andMe of failing to act on warnings about its system vulnerabilities and of downplaying the severity of the breach.

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The Attorney General's office had argued that bankruptcy courts do not have the authority to block state-level enforcement actions, which could turn the courts into a "haven for wrongdoers." Judge Walsh disagreed, writing that because California was a party to the Chapter 11 case and had a fair opportunity to challenge the court's jurisdiction, it cannot do so now through a separate lawsuit.

Bankruptcy and Customer Compensation

Palo Alto-based 23andMe filed for Chapter 11 bankruptcy protection in March 2025, according to Reuters. Its assets were later purchased for $305 million by TTAM Research Institute, a nonprofit controlled by 23andMe co-founder Anne Wojcicki, which now operates as Chrome Holding Co.

While the state's legal action for damages has been blocked, a separate fund was established through the bankruptcy proceedings to resolve customer claims. Judge Walsh recently authorized a $32.46 million payment from this fund, bringing the total compensation disbursed to customers to $46.75 million.