A federal judge in Texas on Thursday allowed a lawsuit filed by Elon Musk's X against the liberal group Media Matters to proceed to trial after denying the group's dismissal request.

Musk's X filed the suit against Media Matters in November after the group published a report that showed pro-Nazi posts and antisemitic or otherwise hateful content on the platform appearing next to advertisements from major U.S. corporations. Several companies, including Apple, IBM, Comcast and Lionsgate Entertainment, paused their advertising in response to the controversy.

X pushed back on Media Matters' report, saying the group "completely misrepresented the real user experience" on the platform and manipulated the algorithms that curate users' feeds to get "racist, incendiary content" to appear next to large advertisers' paid posts. Attorneys representing the company said the report was "intentionally deceptive" and caused financial harm.

U.S. District Judge Reed O'Connor of the Northern District of Texas ruled that X had Media Matters' request to dismiss the case on jurisdictional grounds and what it viewed as X's failure to state a claim was faulty and dismissed the request. 

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The judge found that because Texas-based companies including AT&T and Oracle were among the blue-chip advertisers targeted in the Media Matters report, X's suit could proceed in the district. 

Among the claims contained in X's suit against Media Matters are tortious interference with existing contracts, business disparagement and tortious interference with prospective economic advantage. Judge O'Connor ruled that X's claims were plausible and allowed them to proceed.

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The judge's ruling noted that the two Media Matters employees who are defendants in the suit didn't deny that they were aware of the alleged manipulation and were undertaking activities aimed at driving away advertisers from X. The two employees had argued the report was not connected to Texas despite the inclusion of AT&T and Oracle in articles on the subject.

Media Matters has defended its reporting and previously said that the lawsuit was frivolous. FOX Business reached out to Media Matters for comment.

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The judge's decision to reject Media Matters' motion to dismiss X's lawsuit sets up a trial that is expected to proceed in April 2025.