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A judge has denied ad agency J. Walter Thompson's and parent company WPP's motions to dismiss a discrimination lawsuit that accused former JWT Chief Gustavo Martinez of sexist and racist behavior.

In a March lawsuit, Erin Johnson, chief communications officer at JWT, accused Mr. Martinez of sexist comments and unwanted touching, including grabbing her by the throat. She also alleged that he made inappropriate comments about African-Americans and Jews. Soon after filing the lawsuit, Ms. Johnson's lawyers presented video evidence of Mr. Martinez making a rape joke.

Ms. Johnson has accused Mr. Martinez, JWT and WPP of gender discrimination after she said she complained repeatedly about his behavior then subsequently had her bonus cut and job responsibilities diminished.

Judge J. Paul Oetken of the U.S. District Court for the Southern District of New York determined that the case can proceed because Ms. Johnson adequately supported plausible claims of a hostile work environment and retaliation.

Ms. Johnson's "allegations of physical contact plausibly allege a pattern wherein Martinez asserted physical power over Johnson without her consent," Judge Oetken wrote in Tuesday's court opinion and order.

"In threatening to 'rape' Johnson (even jokingly) and asking which other female employees he could rape, Martinez asserted power over Johnson in an explicitly sexualized and gendered form," the filing added.

The order means that the high-profile lawsuit will be able to continue in court after drawing much attention on Madison Avenue this year and prompting fierce debate about diversity in the advertising industry.

The judge also lifted a "stay of discovery," which means that Ms. Johnson and her lawyers will be able to subpoena potential witnesses and request access to documents that could strengthen their argument.

"For us, it means we're entering the next phase of the litigation," said Anne Vladeck, one of Ms. Johnson's lawyers. She said that her team plans to subpoena at least 10 to 12 people for depositions, including Mr. Martinez. "I think there are a fair number of people who have information we'd like to have on the record," added Ms. Vladeck.

"We think the opinion has given us a road map as to what the judge sees as important, and we believe that we're going to be able not only to prove that, and more," she said.

JWT said in a statement emailed by its public relations firm Finsbury, "Motions to dismiss employment cases are not often granted, particularly since the law requires that all facts be presumed for the sake of the argument in a light most favorable to the other side. We remain confident that we will prevail at trial."

WPP referred a call for comment to Finsbury.

In the original motion to dismiss filed in May, lawyers for JWT and WPP said Ms. Johnson's claims were "baseless" and that she didn't have enough evidence to support her case.

Mr. Martinez, who has denied wrongdoing, resigned as the agency's CEO shortly after the suit was filed. His lawyers' motion to dismiss was also denied.

Lawyers for Ms. Johnson and the defendants have been instructed to meet in court on Dec. 22 to discuss a "proposed case management plan."

Write to Alexandra Bruell at alexandra.bruell@wsj.com

(END) Dow Jones Newswires

December 13, 2016 14:45 ET (19:45 GMT)

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