Court Blocks California From Seeking Damages Against 23andMe Successor

A U.S. bankruptcy judge has blocked the state of California from seeking monetary damages from the successor to genetic testing company 23andMe related to a 2023 data breach that exposed the data of millions. The ruling, issued Friday, found that the company's approved Chapter 11 reorganization plan precludes the state from pursuing such financial claims.

The Court's Decision

U.S. Bankruptcy Judge Brian Walsh in St. Louis stated that California's lawsuit for monetary relief is barred by the previously confirmed bankruptcy plan. According to the decision, California must either dismiss its May 28 lawsuit or amend it within 14 days to remove all claims for financial penalties. The state is, however, permitted to continue seeking non-monetary remedies.

Judge Walsh noted that because California was a party to the Chapter 11 case and had the opportunity to challenge the court's jurisdiction at that time, it cannot do so now through a separate lawsuit. The judge disagreed with the state's argument that the reorganization plan created a "haven for wrongdoers."

Setback for State Action

The ruling is a significant setback for California Attorney General Rob Bonta, who was seeking potentially millions of dollars in civil fines. The state's lawsuit accused 23andMe of failing to act on warnings that its systems were vulnerable and of downplaying the impact of the breach, which affected an estimated 6.9 million customers.

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Bonta's office had argued that federal bankruptcy law did not grant judges the power to prohibit state-level enforcement actions. The attorney general's office did not immediately respond to requests for comment on the decision, according to Reuters.

Bankruptcy and Breach Context

Palo Alto-based 23andMe filed for Chapter 11 bankruptcy protection in March 2025. Last July, its assets were acquired for $305 million by TTAM Research Institute, a nonprofit controlled by 23andMe co-founder Anne Wojcicki. The successor company is now known as Chrome Holding Co.

Separate from the state's lawsuit, the bankruptcy court approved the creation of a fund to resolve customer claims. The court recently authorized a payment that brings the total payout for affected customers to $46.75 million.