Judge Blocks California's Bid for Damages From 23andMe Successor Over Data Breach

A U.S. bankruptcy judge has ruled that California cannot pursue financial damages from Chrome Holding Co., the successor to genetic testing firm 23andMe, over a massive 2023 data breach. The decision effectively shields the company from the state's lawsuit based on the terms of its court-approved Chapter 11 reorganization plan.

Court Blocks Monetary Claims

In a Friday decision, U.S. Bankruptcy Judge Brian Walsh in St. Louis stated that 23andMe's reorganization plan precludes California from seeking monetary relief, though it may still pursue non-monetary remedies. The state has been given 14 days to either dismiss its May 28 lawsuit or amend its complaint to eliminate all claims for financial damages, according to the report by Reuters.

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

Setback for State's Enforcement Action

The ruling represents a significant setback for California Attorney General Rob Bonta, who had accused 23andMe of ignoring warnings about its system vulnerabilities and downplaying the breach's severity. The state's lawsuit sought potentially millions of dollars in civil fines.

Ad

This decision underscores the power of a confirmed Chapter 11 plan to resolve and bar future legal claims against a reorganized company, limiting the avenues available for entities that did not fully litigate their positions during the bankruptcy proceedings.

Background on the 23andMe Case

The legal dispute originates from a 2023 data breach that exposed the genetic and other personal information of an estimated 6.9 million customers. The incident led to numerous lawsuits and significant financial pressure on the company.

• Bankruptcy Filing: Palo Alto-based 23andMe filed for Chapter 11 protection from creditors in March 2025.
• Asset Sale: Its assets were subsequently purchased for $305 million by TTAM Research Institute, a nonprofit controlled by 23andMe co-founder Anne Wojcicki.
• Customer Compensation: The bankruptcy court approved the creation of a fund to resolve customer claims, authorizing total payouts of $46.75 million to affected individuals.