Rule 23.05.Dismissal or compromise.

Rule 23.05 keeps a certified class action's claims from being settled, dropped, or compromised behind closed doors. Any such deal needs the court's approval, and the court has to send notice to every class member who would be bound by it. If the deal would bind the class, approval can only follow a hearing at which the court finds the proposal fair, reasonable, and adequate, and the parties asking for approval have to disclose any side agreements connected to the deal. Class members can object to a proposal, though withdrawing an objection once made needs the court's approval and a showing of good cause. If the class was originally certified under the predominance-and-superiority ground of CR 23.02(c), the court can withhold approval unless members who had an earlier chance to opt out and did not take it get a new opportunity to do so.

The rule also addresses what happens to money left over after a settlement pays out. Residual funds are whatever remains once every approved class claim, expense, litigation cost, attorney's fee, and other court-approved disbursement has been paid. A settlement does not have to create residual funds at all, but when a judgment or approved settlement sets up a claims process and money is left over after that process runs its course, the rule requires that at least twenty-five percent of the residual funds go to the Civil Rule 23 Account maintained by the Kentucky IOLTA Fund Board of Trustees. From there, the money is allocated to Kentucky civil legal aid organizations under the poverty formula the Legal Services Corporation uses, supporting programs that help low-income Kentuckians reach the civil justice system.