Shares in the five tobacco companies targeted by the action - Philip Morris, RJ Reynolds, Lorillard Tobacco, Brown & Williamson, and Liggett Group - rose sharply as soon as the appeals court reached its decision.
Shares in Altria, Philip Morris' parent company, were up by more than 10% in morning trade on Wall Street.
The appeals court said that while it had barred the plaintiffs from taking out a single lawsuit in a so-called class action against the tobacco firms, they remained free to sue individually.
The decision marks a major legal victory for the tobacco industry, which in recent years has been hit by numerous multi-billion dollar awards in cases brought by ill smokers.
Closing in
Earlier this year, there was speculation that Philip Morris might go bust after it said it was unable to pay a $12bn bond as part of a separate lawsuit.
The bond was later reduced on appeal.
The tobacco industry is still fighting a second case brought by the US Justice Department, which wants cigarette firms to pay $289bn in compensation for damaging public health.
The Florida appeals court decision came on the day that 192 countries, including the US, signed up to a World Health Organisation-sponsored treaty aimed at curbing tobacco use.
The treaty commits signatories to restricting tobacco advertising and emphasising the health risks of smoking.
BBCNews May 21 2003
