The reversal of the record $145bn verdict against US tobacco companies removes a threat that had cast a cancerous shadow over the industry for three years. The original trial was ruled unconstitutional.

The US tobacco industry won a major legal victory on Wednesday when a Florida appeals court overturned a $145bn verdict against it – the biggest punitive damages award in US legal history.

The court also decertified the class in the case and said it should never have been allowed to proceed as a class action suit.

Cigarette makers including Philip Morris, RJ Reynolds, and BAT’s Brown & Williamson had appealed against a jury verdict in July 2000 that they should pay $145bn compensation to hundreds of thousands of sick smokers in Florida.

Florida’s Third District Court of Appeal said on Wednesday the original proceedings were “irretrievably tainted” by misconduct by attorneys for the class. Lawyers had made prejudicial comments inciting jurors to ignore the law.

The way the trial was conducted violated both Florida law and an earlier decision on certification of class actions. It was also unconstitutional, the three-judge panel added.

The decision was a significant legal boost for the industry after a series of losses in recent years.

Philip Morris USA, the US tobacco arm of Altria Group, was also ordered in March to pay $10.1bn damages in another class action when an Illinois judge ruled it had misled smokers into believing “light” cigarettes were safer than regular ones.

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