In announcing its decision, Florida's Third District Court of Appeal said it overturned the record tobacco award on grounds that it should not have been tried as a class-action case.
The three-judge panel said the members of the class may now seek relief on an individual basis.
It said Circuit Judge Robert P. Kaye erred when he ruled the jury could hear the first class-action case by smokers.
The ruling was issued against five cigarette makers led by Philip Morris and may have threatened the existence of some of them.
The panel said each of the 700,000 smokers has a different smoking and medical history and do not share enough of a common thread.
"Although the emotional appeal of the class representatives claims is compelling, our job as appellate judges is not to be swayed by emotion where to do so results in violating established legal principles," the panel said in a 68-page opinion.
"The law in the instant case clearly mandates that the trial court order certifying the class be reversed, with instructions that the class members may pursue their claims on an individualized basis," said the opinion, written jointly by Justices David Levy, David Gerstein and Mario Goderich.
After a two-year trial, a six-member jury found in favor of the class on April 7, 2000, and set the damages July 14 of that year in the case labeled Engle vs. Liggett. The case was first filed in 1994 by Miami Beach, Fla., pediatrician Howard Engle an emphysema patient.
Attorneys for the class, Stanley and Susan Rosenblatt, were not immediately available for comment, and it was not known if the decision would be appealed to the Florida Supreme Court.
Philip Morris' associate general counsel, William S. Ohlemeyer, said the ruling did not surprise him.
"Today's decision reversing the Engle judgment is in line with the country's legal mainstream, which does not allow class actions in smoking and health cases, but preserves the right of individual smokers in the state to pursue their claims in court," Ohlemeyer said.
"This was an eight-year experiment with a tobacco class-action lawsuit," Ohlemeyer said.
"In the end, the appellate court agreed with nearly 40 state and federal courts across the country that have concluded that the law doesn't allow claims of smokers to be tried as class actions because each claim must consider the circumstances unique to each individual," he said.
John Kiser, vice president and general counsel for Brown and Williamson, said the court's decision was consistent with virtually all courts that have considered class action suits against tobacco companies.
"The Engle case was on of the few remaining smokers' class actions against the industry," said Kiser. "This sweeping decision should finally close the door on smokers' class action litigation."
The suit was filed against Philip Morris, a unit of Altria Group Inc.; R.J.Reynolds Tobacco Holdings Inc.; Lorillard Tobacco Co.; and Brown and Williamson and the Liggett Group.