A state appeals court today reversed course and revived the threat of a crippling multibillion-dollar punitive damage award against the tobacco industry.

The Third District Court of Appeals ruled that the jury in a landmark class action case involving 500,000 Florida smokers can award punitive damages in a single lump sum instead of deciding cases one smoker at a time.

Tobacco attorneys argued before a three-judge panel for damage decisions on a smoker-by-smoker basis. The companies could more easily defend against individual lawsuits than one large suit carrying a potentially huge verdict.

In July, jurors found the nation's five largest cigarette makers and industry groups had produced a defective and deadly product. The same jury is to determine damages in the second phase of the trial, to begin Nov. 1.

"The stakes have suddenly become humongous," said Northeastern University law professor Richard Daynard, head of an anti-tobacco clearinghouse. "The fate of the industry rests on this jury that has already found that the industry has behaved outrageously."

The appeals court had ruled Sept. 3 that damage claims in the landmark smoking case must be considered case by case, raising the prospect of more manageable multimillion-dollar individual awards.

The appeals court vacated its decision later that month and called for oral arguments.

Dan Webb, lead attorney for the tobacco companies, insisted today that a single award would cause an "enormous amount of irreparable harm to the industry."

Presiding Judge David L. Levy asked Webb why tobacco lawyers did not raise the punitive damage issue earlier, since the structure was set by another judge "almost two years ago."

Stanley Rosenblatt, attorney for the plaintiff smokers, said industry attorneys were trying to get a year's worth of trial erased. "They want to bury and cause to disappear one year of very hard work by a jury that focused on . . . the misconduct of these defendants," said Rosenblatt.

U.S. juries have awarded damages in smoking liability cases only five times--twice in Florida and once in New Jersey, Oregon and California. Both Florida verdicts and the New Jersey verdict were overturned on appeal.

The $206 billion national settlement reached with the tobacco industry in November bars states from suing to recoup the costs of treating sick smokers, but does not stop lawsuits by individuals.

Cigarette company stocks fell on the news.