A Manhattan federal appeals court has reinstated a lawsuit against Fox News by the family of murdered DNC staffer Seth Rich.

In May 2017 Fox News published a since retracted report alleging that Rich was murdered as part of a plot to conceal the leak of emails to WikiLeaks.

Rich's family claim that Fox New's promotion of the groundless conspiracy caused them serious distress.

"While we extend the Rich family our deepest condolences for their loss, we believe that discovery will demonstrate that FOX News did not engage in conduct that will support the Riches' claims. We will be evaluating our next legal steps," said Fox News in a statement.

A Manhattan federal court on Friday reinstated a lawsuit against Fox News by the family of Seth Rich, meaning the family can sue the network for publishing a story alleging that the DNC staffer may have been murdered as part of a conspiracy.

Rich's family in 2018 launched a lawsuit against Fox News for a May 2017 article alleging that Rich may have murdered for the leak of thousands of DNC emails to WikiLeaks.

Police in Washington DC say that Rich's death in July 2016 was the result of a botched robbery, but that has not stopped an elaborate and groundless right-wing conspiracy emerging alleging he was killed as retribution for leaking the emails.

According to a Yahoo News investigation in July, the conspiracy theory was planted by Russian intelligence, and spread by right-wing US media outlets.

Special Counsel Robert Mueller found in his report into Russian interference in the 2016 presidential election that WikiLeaks co-founder Julian Assange in public statement suggested Rich was the source of the leak of DNC emails published by the site. But according to the report the statements were designed to obscure the real source of the leaks: Russian intelligence.

Fox News eventually retracted the story after widespread criticism a week after its publication, but it had been pushed by network hosts including Sean Hannity.

In a lawsuit in 2018 Rich's parents, Joel and Mary Rich, said that Fox's promotion of the conspiracy had caused them serious distress and anxiety. But a judge in the Southern District of New York dismissed the lawsuit. Friday's court of appeals decision overturns that ruling, reported Reuters Friday.

The family is suing Fox News, Malia Zimmerman, who reported the retracted story, and Ed Butowsky, and Texas businessman and former unpaid Fox News contributor for emotional distress.

Fox News in a statement disputed the Rich family's allegations.

"The court's ruling today permits Mr. and Mrs. Rich to proceed with discovery to determine whether there is a factual basis for their claims against FOX News," the network said in a statement. "And While we extend the Rich family our deepest condolences for their loss, we believe that discovery will demonstrate that FOX News did not engage in conduct that will support the Riches' claims. We will be evaluating our next legal steps."

Zimmerman has declined to comment through a Fox News spokesperson, reported CNN.

Ty Clevenger, a lawyer for Butowsky, told CNN he is "confident we can prove that the allegations are false."

In a statement to NPR, Joel and Mary Rich said, "We would not wish what we have experienced upon any other parent – anywhere. We appreciate the appellate court's ruling and look forward to continuing to pursue justice."