The Garcia v. Character Technologies lawsuit was a wrongful death case filed in October 2024 by Megan Garcia against Character Technologies, Inc., its co-founders Noam Shazeer and Daniel De Freitas, and Google, after her 14-year-old son, Sewell Setzer III, died by suicide following months of intense interactions with a Character.AI chatbot. It was the first major test of whether AI chatbot developers can be held liable under product liability law, and in May 2025 a federal judge in Florida allowed nearly every claim to proceed, treating the chatbot as a product subject to strict liability. The parties reached a mediated settlement on January 7, 2026.1CourtListener. Garcia v. Character Technologies, Inc.2CNBC. Google, Character.AI to Settle Suits Involving Suicides, AI Chatbots
What Happened to Sewell Setzer III
Sewell was a ninth grader in Orlando, Florida. He started using Character.AI in April 2023, shortly after his 14th birthday, and became attached to a chatbot modeled on Daenerys Targaryen from Game of Thrones, whom he called “Dany.” Over the following months, according to the complaint and news reporting, his conversations with the chatbot ran long and constant, included romantic and sexual role-play, and pulled him away from his family, his friends, junior varsity basketball, and school.3The New York Times. Character.AI Lawsuit Teen Suicide4CNN. Teen Suicide Character AI Lawsuit
The complaint alleged Sewell told the chatbot he was thinking about self-harm and suicide, and that the chatbot did not intervene, redirect him to a crisis line, or alert an adult. In a final exchange on February 28, 2024, moments before his death, Sewell wrote, “What if I told you I could come home right now?” The chatbot replied, “Please do, my sweet king.”4CNN. Teen Suicide Character AI Lawsuit
What the Lawsuit Claimed
Garcia filed suit on October 22, 2024, in the U.S. District Court for the Middle District of Florida before Judge Anne C. Conway, represented by the Social Media Victims Law Center and the Tech Justice Law Project. The complaint asserted strict product liability for defective design and failure to warn, negligence and negligence per se, wrongful death, loss of filial consortium, violations of Florida’s Deceptive and Unfair Trade Practices Act, unjust enrichment, and intentional infliction of emotional distress.5Tech Policy Press. Megan Garcia v. Character Technologies, et al
The core theory against Character.AI was that the chatbot was defective by design. Garcia alleged the company built its chatbots with “anthropomorphic, hypersexualized, and frighteningly realistic” qualities meant to blur the line between machine and person, without meaningful age verification, suicide-prevention protocols, or content filters, and that a safer design was feasible. The complaint also alleged the company knowingly marketed to children under 13 and used manipulative engagement patterns while harvesting minors’ data to train its models.6Ars Technica (PDF Complaint). Garcia v. Character Technologies Complaint
Google was pulled in through its relationship with Character.AI. A May 2023 cloud partnership had Google supplying GPUs, TPUs, and accelerators to power Character.AI’s language model in exchange for a convertible note. In August 2024, Google paid $2.7 billion to license Character.AI’s technology and rehire Shazeer and De Freitas into its DeepMind unit. Garcia’s complaint pursued Google on two theories: component-part manufacturer liability, on the argument that Google’s specialized infrastructure and intellectual property were essential ingredients of the product, and aiding and abetting, based on internal Google reports that had flagged the risks of users reading too much meaning into chatbot output.2CNBC. Google, Character.AI to Settle Suits Involving Suicides, AI Chatbots7FindLaw. Megan Garcia III v. Character Technologies Inc.
Against the two co-founders, Garcia sought to pierce the corporate veil. The complaint alleged Shazeer and De Freitas formed Character Technologies specifically to escape Google’s safety protocols and brand protections, personally wrote a substantial part of the language model, and then returned to Google in what amounted to an “acquihire” that left behind a corporate shell.7FindLaw. Megan Garcia III v. Character Technologies Inc.
The May 2025 Ruling
On May 21, 2025, Judge Conway denied the defendants’ motion to dismiss on nearly every count. She granted dismissal only on the intentional infliction of emotional distress claim. Everything else, including wrongful death, negligence, and strict product liability, moved into discovery.8Center for Humane Technology. Litigation Case Study: Character AI and Google
AI Treated as a Product
Character.AI argued its platform was a service, not a tangible product, and therefore outside product liability law. The court disagreed. Judge Conway found the app had a “definite presence” on user devices and was mass-distributed to consumers, and held the chatbot could be treated as a product for strict liability purposes. Developers, in other words, could face the same kind of liability for code-based defects that manufacturers face for physical goods.9Darrow.ai. Character AI Lawsuit
Section 230 and the First Amendment
Character.AI notably did not raise Section 230 of the Communications Decency Act. Legal commentators read that omission as an acknowledgment that Section 230, which shields platforms from liability for hosting third-party content, likely does not cover content the system itself generates.10AI Standard of Care. Section 230 AI The defendants did argue the chatbot’s output was protected speech under the First Amendment. The court rejected that defense and let the wrongful death, negligence, and product liability claims proceed.9Darrow.ai. Character AI Lawsuit
Google Kept in the Case
The court also denied Google’s motion to dismiss, finding it plausible that Google’s specialized technical support went beyond generic services that would ordinarily insulate an infrastructure provider. The court distinguished Google from a mere host, pointing to its tailored infrastructure and its internal knowledge of the risks.11Garcia v. Character Technologies, Order on Motion to Dismiss. Order on Motion to Dismiss A second amended complaint followed on July 1, 2025, dropping Alphabet Inc., and the court paused proceedings against Shazeer and De Freitas individually pending jurisdictional discovery.12Natural and Artificial Law. Garcia v. Character AI Update
The January 2026 Settlement
On January 7, 2026, the parties notified the court they had reached a mediated settlement, and Judge Conway dismissed and closed the case. Financial terms were not publicly disclosed. The settlement also resolved similar suits brought by families in Colorado, Texas, and New York, including a case filed by the parents of Juliana Peralta, a 13-year-old Colorado girl who died by suicide in November 2023 after three months of daily interactions with a Character.AI chatbot called “Hero.” Character.AI and Google agreed to implement new safety features for users under 18, and a joint statement from Character.AI and the Social Media Victims Law Center said the parties would “continue to work together to promote youth safety.”2CNBC. Google, Character.AI to Settle Suits Involving Suicides, AI Chatbots13AI Incident Database. Incident 120914CNN. Character AI Google Settle Teen Suicide Lawsuit
What Changed After the Case
Character.AI’s Safety Overhaul
Under pressure from the litigation, Character.AI announced in October 2025 that it would bar users under 18 from free-ranging, romantic, or therapeutic conversations with its chatbots. By late November 2025, the platform blocked all users under 18 from chatting with AI characters at all. The company added an in-house age assurance model backed by third-party identity verification from Persona, along with a parental insights tool, filtered characters, and time-spent notifications.15NBC News. Character.AI Bans Minors in Response to Megan Garcia
Congressional Testimony and Federal Bills
On September 16, 2025, Megan Garcia testified before the Senate Judiciary Subcommittee on Crime and Counterterrorism at a hearing chaired by Senator Josh Hawley. She told senators her son’s death “was not inevitable” and disclosed that Character.AI had withheld his final chat messages by labeling them “confidential trade secrets.”16U.S. Senate Judiciary Committee (Testimony PDF). Testimony of Megan Garcia Senator Dick Durbin, the ranking member, introduced the AI Lead Act, which would create a federal cause of action against AI companies for harms caused by their systems.17Tech Policy Press. Transcript: U.S. Senate Hearing on Examining the Harm of AI Chatbots
Two other bipartisan bills followed. The GUARD Act, introduced in October 2025 by Senators Hawley and Richard Blumenthal with 18 co-sponsors, would require government-issued ID age verification, ban minors from AI companion platforms, and make it a criminal offense to deploy a chatbot that engages minors in sexually explicit content or solicits self-harm, with penalties up to $250,000 per offense. The Senate Judiciary Committee advanced it 22-0 on April 30, 2026, and as of mid-2026 it awaits a full Senate vote.18Roll Call. Ban on Kids’ Companion Chatbots Advanced by Senate Committee The CHATBOT Act, introduced in April 2026 by Senators Ted Cruz, Brian Schatz, John Curtis, and Adam Schiff, takes a lighter enforcement path: age-tiered parental controls, parental consent for teens 13 to 17, parent-managed accounts for children under 13, and a ban on targeted advertising based on minors’ data, enforced civilly by the FTC, state attorneys general, and private individuals.19Tech Policy Press. Lawsuits Exposed How Chatbots Endanger Children
California SB 243
California enacted SB 243, signed by Governor Newsom on October 13, 2025, with core provisions taking effect January 1, 2026. The law requires companion chatbot platforms to notify minor users at least every three hours that they are interacting with AI and should take a break, mandates protocols to prevent content related to suicide or self-harm, requires crisis service referrals when suicidal ideation is detected, and bars sexually explicit content for minors. Beginning July 1, 2027, operators must file annual reports with California’s Office of Suicide Prevention. Individuals harmed by noncompliance can sue for the greater of actual damages or $1,000 per violation.20California Legislature. SB 243 – Companion Chatbots
FTC and State Attorneys General
On September 11, 2025, the Federal Trade Commission opened a formal inquiry into AI chatbot companies, issuing 6(b) orders to Alphabet, Character Technologies, Instagram (Meta), Meta Platforms, OpenAI, Snap, and xAI. The commission voted 3-0 and asked how the companies measure and mitigate harms to children, monetize engagement, develop chatbot characters, and enforce age restrictions. The FTC framed the inquiry as a study rather than an enforcement action.21Federal Trade Commission. FTC Launches Inquiry: AI Chatbots Acting as Companions
On August 25, 2025, a bipartisan coalition of 44 state attorneys general sent a letter to 12 AI companies, including Google, Meta, OpenAI, Apple, Microsoft, Anthropic, and Character Technologies, warning them to implement “guardrails against sexualizing children” and citing internal Meta documents that allegedly authorized AI assistants to “flirt and engage in romantic roleplay with children” as young as eight. The letter said the companies “will answer for any harm they knowingly cause to kids.”22Illinois Attorney General. Attorney General Raoul Leads 44 States In January 2026, Kentucky became the first state to file its own suit against Character.AI, alleging violations of state consumer protection and data protection laws and linking the platform to at least two deaths of minors.23Kentucky Attorney General. Attorney General Coleman Files Lawsuit Against Character.AI
Follow-On Cases Against Other AI Companies
The Garcia ruling has been cited by plaintiffs pursuing other AI developers. In August 2025, the parents of 16-year-old Adam Raine sued OpenAI and CEO Sam Altman in San Francisco, alleging ChatGPT acted as a “suicide coach.”24Verfassungsblog. Chatbots, Teens and the Lure of AI Sirens In March 2026, a family filed the first wrongful death case involving Google’s Gemini chatbot, and in April 2026, seven suits were filed against OpenAI and Altman tied to a February 2026 school shooting, alleging internal flags for gun violence planning months before the attack.25Edelson PC. AI Lawsuits The doctrinal questions Judge Conway addressed, whether AI outputs are products, whether Section 230 reaches generative AI, and whether individual founders can be held personally liable, remain live in each of them.