The online provider loses its argument about the preemptive reach of an FCC rule.

Charter Communications has failed in its latest bid to deter a lawsuit alleging the company has misled subscribers by promising reliable access to Netflix, online content and online games. On Thursday, a New York appeals court rejected Charter's argument that the FCC has preempted claims made by the state's top law enforcement official.

The latest decision comes after the FCC voted to repeal net neutrality rules, and Charter used the rollback to buttress its position that the FCC's "Transparency Rule" was the final word when it came to characterizing the speed and reliability of its internet service.

In February, a state judge allowed the New York Attorney General to move forward in its lawsuit alleging Charter has engaged in false advertising and deceptive business practices.

On Thursday, New York Appellate Division, First Department affirms the decision.

"The court correctly rejected defendants' argument that the claims based on allegations of false promises about broadband speeds involve an irreconcilable conflict between federal and state law that requires a finding of preemption," states the short decision (read here).

Charter could pursue a further appeal, and as a handful of states across the country look to fill the net neutrality void and enact their own protections ensuring the reliability of internet traffic, the significance of this case could grow.

Recently, the defendant demanded emails from the Columbia Law School professor who coined "net neutrality" and accused the New York AG of conspiring with a "cabal" to bring the lawsuit. Charter has suggested the objectivity of the law enforcement investigation about its practices was compromised and that it will pursue an unclean-hands defense.