By Andrew Quinn

SAN FRANCISCO, Mar 28 (Reuters) -- A California jury on Monday ordered two major tobacco companies to pay $20 million to a dying woman who began smoking after health warnings first appeared on cigarette packets -- a fresh blow for an industry already reeling under legal attack.

The San Francisco Superior Court jury found that Philip Morris Cos. Inc. and R.J. Reynolds Tobacco Holdings Inc. -- the nation's top two tobacco companies -- were each partly to blame for the terminal lung cancer suffered by Leslie Whiteley, a 40-year-old mother of four from Ojai, California, who smoked for 25 years.

The decision blew apart one of the tobacco industry's key defense strategies, holding for the first time that cigarette makers are responsible for health problems among smokers who ignored the government-ordered health warnings that began appearing on cigarette packages in 1969.

"One of the most worrying aspects about this is that the industry put on a very strong defense and failed," industry analyst Martin Feldman of Salomon Smith Barney said on Monday.

While the California case was unprecedented, tobacco shares dropped only modestly after news of the punitive award. Philip Morris stock was down 2/16 to 19-11/16 in afternoon activity on the New York Stock Exchange while shares of R.J. Reynolds were off 1/8 to 17.

But the San Francisco verdict was only one of a number of storm clouds gathering for the beleaguered tobacco industry. In Miami, closing arguments began Monday in the penalty phase of a major anti-tobacco class action lawsuit filed on behalf of hundreds of thousands of sick Florida smokers. One tobacco industry lawyer said the jury's rulings, which could come within weeks, could top a staggering $300 billion.

Meanwhile, the nation's attorneys general, scrambling to protect more than $240 billion in landmark settlements with major cigarette makers, on Monday moved to hire bankruptcy counsel to make sure the states are listed as creditors should any tobacco company be pushed into bankruptcy court by major jury awards such as the one looming in Florida.

"This is nothing more than due diligence," North Dakota Attorney General Heidi Heitkamp, chairwoman of the National Association of Attorneys General's tobacco committee, said.

"Given the complexity and duration of the tobacco settlement, it is rational to anticipate the possibility of a bankruptcy filing or filings at some point," Heitkamp said.

For industry analysts, the California case was already troubling enough. And while lawyers for Philip Morris and RJR both vowed immediately to appeal the decision, it appeared to mark a gaping new hole in their legal defense.

Whiteley began smoking in 1972, three years after the Surgeon General's explicit health warnings were put on every US cigarette pack. She also admitted to smoking marijuana, a fact tobacco industry lawyers attempted to link to her eventual cancer diagnosis.

But the jury disagreed, deciding first last week that the makers of Marlboro and Camel cigarettes acted with malice, knew about the health hazards of smoking and deliberately misled the public about those dangers and should pay Whiteley and her husband $1.7 million in compensatory damages.

On Monday, they decided that each company should also pay $10 million in punitive damages.

Madelyn Chaber, Whiteley's lawyer, said the decision was an important victory despite the fact that the jury's award was significantly less than the $115 million she had demanded.

"I think they (the tobacco companies) did not think they could lose a post-warning case," Chaber, said. "I think it will encourage people that it can be done. That they can take on the tobacco industry," she added.

But some tobacco analysts noted that the industry still has some arrows in its quiver, notably the attitude of the public, which often blame smokers for their illnesses.

In six cases before the Whiteley verdict, juries found for the cigarette makers.

"The case is newsworthy because it's so surprising. Most people I've talked to are very surprised that a jury would award a smoker money. That mentality is very helpful to cigarette makers and that's why they've won most cases," David Adelman, an analyst at Morgan Stanley Dean Witter, said.

And there are always appeals, such as the one the tobacco companies have vowed to file in the Whiteley case. Earlier appeals have either drastically cut or completely overturned jury awards to sick smokers in California, New Jersey, Florida and Oregon.

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