The state of California cannot seek monetary damages from the company that acquired 23andMe’s assets for harm tied to a 2023 data breach, a U.S. bankruptcy judge ruled Friday — a setback for Attorney General Rob Bonta and state efforts to secure civil fines over the exposure of millions of customers’ genetic and other personal information.
U.S. Bankruptcy Judge Brian Walsh, sitting in St. Louis, said the Chapter 11 reorganization plan approved for the Palo Alto-based genetic testing company prevents the state from pursuing monetary relief against Chrome Holding Co. and a related affiliate. The judge left open the possibility of nonmonetary remedies under state law.
What the ruling means for California residents
California must either dismiss its May 28 lawsuit filed in San Francisco Superior Court within 14 days or amend the complaint to remove claims for monetary relief, Walsh wrote. The decision does not bar the state from seeking changes that do not involve financial payments.
"Because the state was a party to the Chapter 11 case and was given a fair chance to challenge this court’s subject-matter jurisdiction, the state cannot challenge it now,"
The lawsuit accused 23andMe of ignoring warnings and downplaying the severity of the 2023 breach, which the company and regulators say exposed personal data belonging to an estimated 6.9 million customers. Bonta had sought potentially millions in civil fines.
Bankruptcy payouts and corporate changes
The ruling follows bankruptcy court approvals tied to a claims resolution process. Judge Walsh previously authorized a $32.46 million payment in addition to $14.29 million that had already been disbursed, for a combined total of $46.75 million available to resolve most U.S. customer claims related to the breach.
| Item | Amount |
|---|---|
| Earlier disbursement | $14.29 million |
| Authorized payment this week | $32.46 million |
| Total customer payout | $46.75 million |
23andMe filed for Chapter 11 protection in March 2025. Last July, TTAM Research Institute — a nonprofit controlled by co-founder Anne Wojcicki — purchased the company’s assets for $305 million.
Legal stakes and next steps
The state's defeat in bankruptcy court centers on the interaction between federal bankruptcy proceedings and state-law enforcement actions. Bonta’s office has argued Congress did not authorize bankruptcy judges to bar state court enforcement of state laws, warning that allowing such protection would permit bankruptcy to become "a haven for wrongdoers." The judge disagreed with that characterization as applied here.
- California must dismiss or amend its lawsuit within 14 days to remove monetary claims.
- The decision leaves open nonmonetary remedies the state may pursue.
- Bankruptcy-approved payouts total $46.75 million to resolve U.S. customer claims.
The attorney general’s office did not immediately respond to requests for comment after the ruling. The order could prompt California to reassess its legal strategy in state court or pursue regulatory and injunctive relief that does not seek money damages.
Consumers concerned about the breach should monitor notices from the attorney general’s office and 23andMe regarding eligibility for the claims fund and any recommended steps to protect personal information.
