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Williams, who is black, had accused the Tupelo Police Department of blocking her entry to the force because of her sex and race.
U.S. District Judge Sharion Aycock threw out Williams' lawsuit against the city in 2010.
The city contended that Williams, who later became a police officer in Grenada, was not qualified for the police department after she failed two parts of her training in 2008.
The 5th U.S. Circuit Court of Appeals in New Orleans ruled Tuesday that there were sufficient questions about Williams' treatment by the police department and the city's explanation of her dismissal from the training program to justify her lawsuit being heard.