A federal appeals court on Thursday tossed out its order that a trial court judge dismiss the criminal case against former Trump national security advisor Michael Flynn, and said it will rehear arguments on the issue.
The ruling is a blow to the retired Army lieutenant general and the Justice Department, which has asked the trial judge to drop the charge.
Flynn pleaded guilty in late 2017 to lying to FBI agents about his conversations with a Russian diplomat in the weeks before the inauguration of President Donald Trump.
But for more than a year, he has sought to undo the plea, and recently found support from top Justice Department officials.
The trial judge, Emmet Sullivan of U.S. District Court in Washington, D.C., has not acted on the department's motion to toss the case.
Instead, Sullivan appointed an outside lawyer to argue that the case be continued, and proceed toward sentencing of Flynn. The judge also allowed outside parties to weigh in on the question of whether to dismiss the case.
The lawyer appointed by Sullivan, John Gleeson, said in a court filing that the Justice Department's bid to abruptly drop the case after defending the legitimacy of the prosecution for years was "highly irregular conduct to benefit a political ally of the President."
Flynn's lawyers opposed Sullivan's foot-dragging on the dismissal request and related actions allowing outside commentary in the case, and asked an appeals court to force him to endorse the dismissal.
A three-judge panel in the federal Circuit Court of Appeals in Washington in late June ordered Sullivan to dismiss the case after hearing arguments.
But Sullivan asked the full appeals court to reconsider that order.
The appeals court agreed Thursday to do so, saying a majority of the 10 judges who considered Sullivan's request voted to approve it.
The order vacates the three-judge panel's order that Sullivan dismiss Flynn's case.
The full line-up of judges on the appeals court set oral arguments for the so-called en banc reconsideration hearing for Aug. 11.
The court said both sides should be ready to address the question of whether there are "no other adequate means to attain the relief desired."
Its order implies that at least some judges on the appeals court believe Sullivan should be given the opportunity to rule on the dismissal request before an appeal is heard of his refusal to do so.
Sullivan's lawyer Beth Wilkinson, in her oral argument for an en banc hearing, had said the panel's order that the case be dismissed before Sullivan ruled "marks a dramatic break from precedent that threatens the orderly administration of justice."
Flynn's lawyers responded that the three-judge panel had acted appropriately.
Wilkinson declined CNBC's request for comment Thursday.
Flynn's lawyer Sidney Powell did not immediately respond to a request for comment. Justice Department spokeswoman Kerri Kupec referred CNBC to the department's prior filings and statements about the case.Â
In a filing seeking the dismissal of Flynn's case the then-interim U.S. attorney for the District of Columbia, Timothy Shea, argued that the FBI's interview of Flynn was not justified by a counterintelligence investigation and that his lies about what he said to a Russian diplomat were not "material" to that probe.
The White House declined to comment on the appeals court order.
Flynn served as Trump's first national security adviser for only several weeks. He was fired in February 2017 after lying to Vice President Mike Pence about the nature of his pre-inauguration discussions with Sergey Kislyak, who at the time was Russian's ambassador to Washington.
Flynn had claimed falsely, both to the FBI and Pence, that he and Kislyak had not discussed sanctions imposed on Russia by the Obama administration in retaliation for Russian interference in the 2016 presidential election.
When asked on July 13 about whether he might pardon Flynn, Trump said, "I don't have a decision to make … until I find out what's going to happen."
The president earlier this month granted clemency to Roger Stone, a former Trump campaign aide whose 40-month prison term was commuted by Trump.
Stone was convicted last fall of lying to Congress, obstruction and witness tampering.
Trump had fumed that his friend Stone was a victim of a "Russia hoax," and has expressed the same view with regard to Flynn's case.
Flynn and Stone were charged as part of former special counsel Robert Mueller's probe of Russian interference in the 2016 election.
Correction: An earlier version misstated who appointed Gleeson. It was Judge Sullivan.