Negotiations between smokers' lawyers and two major tobacco companies to resolve a federal case in New York have stalled and may fall apart, lawyers representing both sides said yesterday.

With the encouragement of Judge Jack B. Weinstein, the federal judge hearing the case in Brooklyn, the Lorillard Tobacco Company and Liggett Group have been meeting with plaintiffs' lawyers for more than a month. The goal has been to reach nationwide settlements that would cover all individual smokers' claims for punitive damages against the two companies, providing a possible model for other cigarette makers embroiled in similar litigation around the country. The first and largest of the agreements would have required Lorillard, the manufacturer of Newport cigarettes, to pay roughly $7.5 billion over at least 30 years. Liggett was also close to reaching a settlement of $500 million, an amount that reflected its comparatively small share of the tobacco market. Though they probably would have been difficult to enforce, the settlements represented a way for both companies to limit their exposure to larger judgments handed down against tobacco manufacturers by other courts. Earlier this year, a Florida jury awarded a record-breaking $144.8 billion in punitive damages to roughly 500,000 smokers and to relatives of people who died of cancer and other smoking-related illnesses. Seeking a new venue in which to contest the verdict, the nation's largest cigarette manufacturers including Philip Morris, R. J. Reynolds Tobacco, the Brown & Williamson Tobacco Corporation, Lorillard and Liggett sought to transfer the Florida case to federal court. But last week, a federal judge rebuffed the attempt and sent the case back to state court. The award was then upheld on Monday. At that point, the negotiations between Lorillard and Liggett and the smokers' lawyers began to break down, lawyers in the case said. As long as the Florida ruling was up in the air, the tobacco companies had a strong incentive to strike a deal in New York in an effort to pre-empt the larger verdict. But once the Florida judgment appeared fixed, there was little left for the companies to do but fight it on appeal. Even if a settlement had been reached before the Florida award was upheld, lawyers for the plaintiffs agree, it probably would have been challenged from many sides. Efforts to combine lawsuits around the country under one settlement have failed in the past, largely because of widely varying legal standards from state to state. "It was a long shot when we started," said John P. Coale, a lawyer with Coale Cooley, a Washington firm representing smokers in the New York case. "Now it's back to the drawing board. We'll litigate the cases and see how they go." Mr. Coale said it might still be possible to bring the Florida verdict under Judge Weinstein in an effort to keep hopes alive of a settlement. But plucking the case from the Florida courts would be viewed as an affront to the state's legal system, and the victors in the lawsuit, including Stanley Rosenblatt, the lawyer for the plaintiffs there, would no doubt be enraged. Since the Florida judgment was upheld, officials from the major tobacco companies have vowed to overturn it on appeal. Even some anti-smoking advocates and lawyers concede that they are likely to succeed. A Florida law prohibits any jury's award from being large enough to bankrupt an industry.

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