A federal judge has decided to allow parts of a $40 million lawsuit filed by a University of Virginia student against state Alcoholic Beverage Control agents to move forward.

Elizabeth Daly sued the state and seven ABC agents after they arrested her in an undercover sting in April 2013. The agents mistook sparkling water for beer - but the state argues the agents had probable cause to arrest Daly when she tried to get away.

Daly says the terrifying experience caused her post-traumatic stress.

In a ruling obtained by the Richmond Times Dispatch, the judge dismissed nine of the 12 counts in the lawsuit, but allowed the case to continue on charges of false arrest, common law malicious prosecution, and assault charges involving three agents.

All charges against Daly have been dropped and her record is expunged.