A federal appeals court told a lower court Thursday to go ahead and rule on a lawsuit by Wal-Mart workers alleging that the world's largest retailer unfairly threatened to withhold benefits from employees who unionize.

A three-judge panel of the 8th U.S. Circuit Court of Appeals in St. Louis reversed a decision by U.S. District Judge Robert T. Dawson of Fort Smith, Ark., who said the court did not have jurisdiction over the dispute because it fell under the sole authority of the National Labor Relations Board.

The original lawsuit was filed by several employees of a Wal-Mart tire and lube service center in Kingman, Ariz., who had sought a vote on unionizing in October 2000.

The appeals court said the vote was never held because the employees filed complaints with the labor relations board and in court was charging that Wal-Mart had undermined their efforts by threatening to withhold profit sharing, retirement and health benefits.

At issue is a so-called union exclusion clause that Wal-Mart at the time had in its benefits booklets for employees. The clause said unionized employees were not eligible for profit sharing, 401K and health plans.

The National Labor Relations Board brought Wal-Mart before an administrative law court that ordered the company in 2003 to drop the exclusion clause after finding the exclusion was meant "to ensure, to the extent it (Wal-Mart) could, that its employees were fearful of losing their benefits, and thus continued to reject union representation".

Wal-Mart appealed that decision and remains in settlement discussions with the labor relations board to this day, the appeals court said.

Wal-Mart has since changed the wording in its benefits booklets but the case should still be decided because the plaintiffs have outstanding claims for damages and attorneys' fees, the appeals court ruled.

The appeals court also rejected the district judge's argument that it did not have jurisdiction because the workers' complaint was pending with the National Labor Relations Board.

The appeals court said the precedent cited by the district court for that decision was meant to keep state courts from giving conflicting opinions on federal matters. But this was a case of two federal institutions, the courts and the labor board, being asked to act, the appeals panel noted.

"Because the court does have jurisdiction and the plaintiff's claims are not moot, the district court's order to dismiss for lack of subject matter jurisdiction is reversed, and the case is remanded for further proceedings with respect to those claims," the appeals court wrote.