(Adds reaction from McConnell, Chamber of Commerce)
By Susan Cornwell
WASHINGTON, Oct 22 (Reuters) - The U.S. Senate on Wednesday refused to consider a bill aimed at limiting class action lawsuits, giving a victory to lawyers and consumer groups over corporate interests who have sought the legislation for years.
The action on a procedural vote dashed the hopes of President George W. Bush and congressional Republicans for curbs on what they call runaway litigation against business.
The House of Representatives already has passed a similar measure. Although Senate Republicans said they would try again, and some Democrats spoke of possible compromise, there is little legislative time left for such efforts this year.
The blocked bill would have taken most large class action lawsuits out of state courts and moved them to more restrictive federal courts, where experts say they are less likely to get a sympathetic hearing.
The Democratic minority used a procedural motion to block a vote on bringing the bill to the floor for consideration. The mostly Republican backers of the bill needed 60 votes to clear the procedural hurdle; they came nail-bitingly close, getting 59 votes, with 39 senators voting against them.
"We're only one short," said Sen. Mitch McConnell, the Republican whip. He said it was inevitable that "we'll be coming back to this bill at some subsequent time with a pretty good likelihood that we'll be able to get the 60th vote."
Business interests were very disappointed. "This was a missed opportunity to help a struggling economy rebound," said Bruce Josten, executive vice president of the U.S. Chamber of Commerce. "Companies will have to continue to carry a reserve of financial resources to pay settlements to the trial bar."
Advocates of the bill said U.S. businesses are burdened by a torrent of class action lawsuits that have been filed in state courts where judges are more inclined to harsh judgments against out-of-town corporations.
"Some county judge in Illinois should not be making decisions that affect consumer law in all 50 states," said Republican Sen. Charles Grassley of Iowa, a co-sponsor.
But consumer groups, trial lawyers and their Democratic allies said the bill was aimed at helping special interests such as tobacco and pharmaceutical companies at the expense of ordinary citizens. Judges have expressed concern that the bill could clog the federal courts.
"Do we recognize that there are abuses (of class action lawsuits)? Of course we do. But this legislation kills a housefly with a shotgun," said Senate Democratic Leader Tom Daschle of South Dakota ahead of the vote.
The bill would have moved class action suits to federal courts when there is at least $5 million at stake, when there are over 100 plaintiffs and the plaintiffs and defendants are from different states.
Similar bills have passed the House three times in six years, most recently in June. But the closely divided Senate lived up to its reputation as a graveyard for such efforts.
Eight Democrats and one independent, Sen. James Jeffords of Vermont, voted with fifty Republicans in the failed effort to bring the bill to the floor. One Republican, Sen. Richard Shelby of Alabama, voted with Democrats to block the bill.