A US court of appeals on Wednesday ruled that actress Ashley Judd has the right to pursue her sexual harassment lawsuit against disgraced Hollywood producer Harvey Weinstein, overturning a lower court's decision.

The three-judge panel on the Ninth Circuit Court of Appeals found that Weinstein, who is in prison, held power over the actress and her career when he invited her to his room in a luxury Los Angeles hotel in the mid-1990s.

The lower court had previously dismissed Judd's claim on grounds that the sexual advances Weinstein allegedly made to her were not covered by sexual harassment laws relating to a professional relationship since she was not his employee.

But it had allowed the actress to pursue defamation claims against the producer.

But the appeals court disagreed, saying that Weinstein and Judd's relationship "consisted of an inherent power imbalance wherein Weinstein was uniquely situated to exercise coercion or leverage over Judd by virtue of his professional position and influence as a top producer in Hollywood."

(COMBO) This combination of pictures created on July 18, 2018 shows US actress Ashley Judd (L) and disgraced film producer Harvey Weinstein
(COMBO) This combination of pictures created on July 18, 2018 shows US actress Ashley Judd (L) and disgraced film producer Harvey Weinstein GETTY IMAGES NORTH AMERICA / Frederick M. Brown

"Therefore, the district court erred when it dismissed Judd's sexual harassment claim," the ruling added.

Judd was one of the first women to come forward with sexual harassment claims against Weinstein, and sued him in April 2018 over the incident at his Beverly Hills hotel where she met with him to discuss potential film roles.

She alleges that after she rebuffed his advances, Weinstein defamed her and damaged her career by discouraging "Lord of the Rings" director Peter Jackson from giving her a role, claiming she was a "nightmare" to work with.

Her lawyer Theodore Boutrous Jr. hailed Wednesday's ruling, saying it marks an important victory for all victims of sexual harassment in professional relationships.

"The court correctly holds that California law forbids sexual harassment and retaliation by film producers and others in powerful positions, even outside the employment context, and we look forward to pursuing this claim against Mr Weinstein at trial," he said.

Actors Reese Witherspoon, Eva Longoria, Salma Hayek, and Ashley Judd attend The 75th Annual Golden Globe Awards at The Beverly Hilton Hotel on January 7, 2018 in Beverly Hills, California
Actors Reese Witherspoon, Eva Longoria, Salma Hayek, and Ashley Judd attend The 75th Annual Golden Globe Awards at The Beverly Hilton Hotel on January 7, 2018 in Beverly Hills, California GETTY IMAGES NORTH AMERICA / Frazer Harrison

The Screen Actors Guild also welcomed the ruling.

"The California Legislature took action to make sure that individuals like Ashley Judd, who may not be traditional employees, would have remedies against abusers, and that those abusers couldn't escape responsibility based on technicalities related to employee status," it said in a statement. "The Ninth Circuit has rightly determined that statute means what it says, and that victims of harassment, abuse, and assault will not be cut off from justice based on technical details of employee status."

Weinstein's attorney Phyllis Kupferstein told AFP in a statement that she looked forward to a trial "where we expect the truth will come to light."

"The most minimal investigation of the events will show that Mr. Weinstein neither defamed Ms. Judd, nor hindered or interfered with her career, and certainly never retaliated against her," Kupferstein said.

"In addition, the record on 'Lord of the Rings' will finally be made absolutely clear -- that Mr. Weinstein had no authority over the project as it belonged to a different production company that had full staffing control of the film," she added.

In February, Weinstein was found guilty of a criminal sexual act in the first degree and rape in the third degree in a landmark verdict for the #MeToo movement.

He is currently serving 23 years in prison.

The lengthy sentence capped a remarkable downfall for the 68-year-old, who has been accused of years of vile predatory behavior by almost 90 women, including Angelina Jolie and Salma Hayek.