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California cannot seek damages from 23andMe successor over 2023 data breach

Created at 10 Jul · 10:22 PM1 source↑ Market-relevant
IN SHORT

A U.S. bankruptcy judge ruled that California cannot seek damages from the successor company of 23andMe for a 2023 data breach, citing the company's Chapter 11 reorganization plan. The state must dismiss its lawsuit or remove monetary claims.

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Key Numbers

6.9 millioncustomers' genetic and personal information exposed
14 daysdeadline for California to dismiss or amend lawsuit
$32.46 millionpayment authorized for customer claims
$14.29 millionpreviously disbursed for customer claims
$46.75 milliontotal payout authorized for customer claims
$305 millionprice 23andMe's assets were bought for

Who's Involved

Brian Walsh
U.S. Bankruptcy Judge
California
state seeking damages for data breach
23andMe
company formerly known as, subject of data breach lawsuit
Chrome Holding Co
successor company to 23andMe
Rob Bonta
California Attorney General
Anne Wojcicki
23andMe co-founder
California cannot seek damages from 23andMe successor over 2023 data breach

↳ Why This Matters

The ruling limits the ability of states to seek damages from companies undergoing bankruptcy proceedings for data breaches, potentially impacting consumer protection efforts and the accountability of companies for security failures.

Key facts

  • A U.S. bankruptcy judge ruled California cannot seek damages from Chrome Holding Co, the successor to 23andMe, regarding a 2023 data breach.
  • The judge cited 23andMe's Chapter 11 reorganization plan as precluding the state from monetary relief.
  • California's Attorney General Rob Bonta had accused 23andMe of ignoring warnings and downplaying the breach's severity.
  • The state must dismiss its lawsuit or amend it to remove monetary claims within 14 days.
  • A total of $46.75 million has been authorized for payouts to customers affected by the breach.

A U.S. bankruptcy judge has ruled that California cannot pursue damages from the successor company of 23andMe in relation to a 2023 data breach. U.S. Bankruptcy Judge Brian Walsh stated that the company's Chapter 11 reorganization plan prevents the state from seeking monetary relief against Chrome Holding Co and its affiliate.

Judge Walsh ordered California to either dismiss its lawsuit, filed in San Francisco Superior Court, within 14 days or amend its complaint to remove claims for monetary damages. This decision represents a setback for California Attorney General Rob Bonta, who had accused 23andMe of ignoring warnings about its compromised systems and downplaying the severity of the breach, while seeking potentially millions of dollars in civil fines.

The Attorney General's office had argued that bankruptcy judges do not have the authority to prohibit state law-based enforcement actions in state courts, suggesting bankruptcy courts could become "a haven for wrongdoers." However, Judge Walsh disagreed, stating that the reorganization plan did not create such a haven and that California, as a party to the Chapter 11 case with a fair opportunity to challenge jurisdiction, could not now challenge it through its lawsuit.

California's lawsuit was filed four months after Judge Walsh approved the creation of a fund to resolve most U.S. customer claims stemming from the data breach. The court has since authorized a total payout of $46.75 million for affected customers, with $32.46 million recently approved on top of $14.29 million previously disbursed. 23andMe, based in Palo Alto, California, filed for creditor protection in March 2025. Its assets were acquired last July by TTAM Research Institute, a nonprofit controlled by 23andMe co-founder Anne Wojcicki, for $305 million.

Frequently asked questions

The breach exposed genetic and other personal information of an estimated 6.9 million customers of 23andMe.

The state of California, through its Attorney General Rob Bonta, was seeking damages and civil fines.

The judge ruled that California cannot seek monetary damages from the successor company due to the Chapter 11 reorganization plan.

A total of $46.75 million has been authorized for payouts to customers affected by the data breach.

What Happens Next

01California must decide whether to dismiss its lawsuit or amend it to remove monetary claims within 14 days.

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Cadence

How It Developed

A U.S. bankruptcy judge ruled California cannot seek damages from Chrome Holding Co, the successor to 23andMe, over a 2023 data breach.
The judge stated that 23andMe's Chapter 11 reorganization plan prevents the state from pursuing monetary relief.
California must dismiss its lawsuit or amend it to remove claims for monetary damages within 14 days.
The ruling is a setback for California Attorney General Rob Bonta, who sought civil fines.
The judge disagreed that the reorganization plan created a haven for wrongdoers and stated California could not challenge the court's jurisdiction now.
California sued four months after a fund was approved to resolve most U.S. customer claims from the breach.
A total of $46.75 million has been authorized for payouts to customers.

Sources

T1
California cannot seek damages from 23andMe successor over 2023 data breachReuters

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