A New Jersey Superior Court judge has ruled that Italian food company Parmalat can proceed with its lawsuit against Citigroup in the state, a blow to the bank which has campaigned for a dismissal of the suit for the past three years.

The judge ruled that it is reasonable for Parmalat to sue Citigroup in New Jersey because the company's former US unit, Parmalat USA, and subsidiary, Farmland Dairies, were based in Wallington, New Jersey.