The United Federation of Teachers and the NAACP had sued to prevent the Department of Education from closing 19 low-performing schools and co-locating 16 charters in public school buildings.
Supreme Court Justice Paul Feinman denied the groups' request for a preliminary injunction late Thursday. He said there was no clear evidence the failing schools could be easily fixed.
Schools Chancellor Dennis Walcott applauded the decision. He says the decision will come as a relief to students who had been in limbo waiting for the outcome.
A spokesman for the UFT said: "While Judge Feinman has declined our request for an injunction, his decision does not affect the underlying issues of fairness and due process in the school co-locations and closings that are part of this lawsuit. These issues remain to be resolved, and the UFT intends to continue to litigate this matter."