SEATTLE -- A Washington state judge has rejected a lawsuit aimed at undoing a deal to build a new professional basketball and hockey arena in Seattle -- a key part of plans to bring the NBA back to town.

King County Superior Court Judge Douglass North held that the agreement between the city of Seattle, King County and an investment group led by hedge fund manager Chris Hansen does not violate state environmental law.

The longshoreman's union and attorney Peter Goldman argued the city, county, and investor had violated environmental law by designating the site with their memorandum of understanding (MOU).

The International Longshore and Warehouse Union (ILWU) is concerned that adding a third stadium to the area south of downtown would choke freight traffic and cost jobs. The union sued, saying an environmental review should have preceded any agreement.

A private individual should not be able to dictate the parameters of a public project, Goldman argued.

Hansen's attorney Jack McCollough argued that no final decision on the site has been made and the case should be thrown out.

Judge North didn't even wait for Goldman to return to his seat before making his decision.

North said the MOU is legal and threw out the lawsuit. The judge said the agreement technically set out a framework for a future deal, but didn't commit the city or King County to building an arena south of downtown.

I think we got over a hurdle today in the sense we are able to put this litigation behind us now, McCollough said.

As we've said all along, there are many steps that still require to be addressed before we achieve our ultimate goal of bringing the Sonics back to Seattle and the region, said King County Executive of Staff Sung Yang.

Arena opponents expressed their disappointment, but vowed to keep fighting.

This is one bump in the road, I think, said Peter Steinbrueck, an arena opponent and mayoral candidate. There are still some really substantive issues to be resolved.

What's being sold is this is a done deal and the NBA's being asked to relocate this team in april, but it's not a done deal, said ILWU attorney, David Mann.

The ILWU said they have no plans to appeal at this point.

The NBA is planning to vote on the proposed move on the Sacramento Kings to Seattle. Hansen must have a team before he can begin construction on an arena.

KING5's Chris Daniels and GENE JOHNSON of the Associated Press contributed to this story.

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