A federal appeals court, in a blow to the tobacco industry, has upheld a ruling that a plaintiff awaiting trial of a product-liability lawsuit can reveal much of his evidence to the public and to other plaintiffs who blame tobacco for disease and injury.

The three-judge panel of the 3rd U.S. Circuit Court of Appeals also rejected a plea to remove U.S. District Judge H. Lee Sarokin of Newark, N.J., from a suit against three cigarette makers -- Liggett Group Inc., Philip Morris Inc. and Loew's Theatres Inc., successor to P. Lorillard Inc. -- on the grounds that he was biased against the industry.

The decision, handed down in Philadelphia Monday, became available yesterday.

Judge Sarokin earlier had agreed to the disclosure of nonconfidential documents from cigarette company files that had been obtained in the case and ruled that the plantiffs' lawyers could apply to the court for release of confidential papers.

The decision was made in the case of Rose D. Cippolone, a heavy smoker for 42 years who died in 1984 of lung cancer when she was 58, and her husband Antonio.

After the companies provided hundreds of thousands of documents that were kept confidential, lawyers representing the Cippolones culled out between 2,000 and 3,000 papers that they said dealt with sensitive issues, such as what manufacturers knew of smoking-related diseases.

In a prolonged legal battle, the companies fought to keep the materials confidential until they are admitted at trial, saying that if "taken out of context and left unexplained," some of the papers could expose them to "embarrassment, oppression and apparent incrimination."

But Sarokin said that, except for trade secrets, the documents should be disseminated. He said that the public and plantiffs suing cigarette companies should be able to learn what the companies knew and when they knew it, particularly about health hazards attributed to smoking.

The cigarette companies tried to convince the appeals court that Sarokin had mischaracterized and ignored pleas that making the documents public would be a financial threat to the companies, partly because it could affect prices of their stocks.

But the decision by Chief Judge John J. Gibbons said the companies "never specifically demonstrated how dissemination would hurt their businesses," and did not produce "a single document as a concrete example of the type of harm they would suffer."

The companies asked that the Cippolone case be reassigned to another trial judge. They alleged that Sarokin had shown bias by not following 3rd Circuit mandates, making rulings showing hostility to the industry and prejudging factual disputes. Gibbons termed the allegations "entirely without merit, and a thinly disguised effort at judge shopping."