A spokesman for the city's law department said the city was reviewing the ruling.
The program became widely known after a series of articles by the Associated Press, which reported that police officers were infiltrating Muslim organizations throughout the greater New York region in the wake of the Sept. 11, 2001, attacks on the World Trade Center.
Mayor Bill de Blasio, who criticized the effort on the campaign trail, ended the program after taking office in 2014, according to media reports.
The plaintiffs in the case, including New Jersey imams, business owners and students, sued New York in 2012, claiming the surveillance subjected them to discrimination, threatened their careers and caused them to stop attending religious services, among other effects.
But U.S. District Judge William Martini in Newark, New Jersey, dismissed the case in February 2014, finding the city had persuasively argued that the surveillance was an anti-terrorism, not an anti-Muslim, program.
The appeals court decision does not resolve the merits of the case but returns the lawsuit to Martini for further proceedings.
"There is no Muslim exception to the Constitution," said Baher Azmy, legal director for the Center for Constitutional Rights, which represents the plaintiffs along with Muslim Advocates.
The case is one of several lawsuits filed against New York over the program.
The New York Civil Liberties Union brought a similar claim in Brooklyn federal court in 2013. In addition, a group of civil rights lawyers filed papers in Manhattan federal court, claiming the surveillance runs afoul of a longstanding court order limiting how the police can monitor political activity.
Both of those disputes have been settled, according to court filings.
Reuters
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