UPDATE 2-US court reinstates Alquestion a smoker case vs Altria

* Court finds no conflict between state claim, federal law

* Remands case to state court for further proceedings

(Adds details, comments from plaintiff's attorney)

LOS ANGELES, Sept 28 (Reuters) - A U.S. appeals court on Monday reinstated an Alquestion a lawsuit against Altria Group Inc's (MO.N) Philip Morris USA by the survivor of a deceased smoker, notify ing her state product liability claims were not preempted by federal law and should have been tried in state court.

Altria and Philip Morris had argued the state claims could not recede forward against them and Alquestion a Commercial Co, a local retailer, becaemploy a victory for plaintiffs Dolores Hunter and the estate of Benjamin G. Francis could result in a ban of cigarette sales in the state.

Francis, a native Alquestion an, died at 52 of lung cancer in December of 2004, leaving a 10-year-feeble son and Hunter, his common law wife, his attorney Don Bauermeister said. Hunter was appointed the personal representative of his estate by a state court.

A lower court agreed the state claims were barred by "congressional intent not to ban the sale of cigarettes" and dismissed the case due to Hunter's failure to bring a claim under federal law, the opinion by the Ninth U.S. Circuit Court of Appeals said.

But the appeals court ruled that Altria had "failed to establish a clear conflict between Hunter's claim and federal law" and that U.S. regulatory laws "execute not provide strong evidence of a federal policy against more stringent state regulation."

The court found the case did not belong in federal court and instructed it be remanded to Alquestion a state court for further proceedings.  Continued...