The claims, issues, or defenses of a certified class may be settled, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval. The following procedures apply to a proposed settlement, voluntary dismissal, or compromise:
Rule 23.05.Dismissal or compromise.
Current through June 18, 2026 · Last verified July 9, 2026
In one sentenceCR 23.05 requires court approval, class notice, and a fairness hearing before a certified class action's claims can be settled, dismissed, or compromised, and directs that a share of unclaimed settlement funds go to Kentucky's IOLTA-administered civil legal aid account.
Full Text of Rule 23.05
(1) The court must direct notice in a reasonable manner to all class members who would be bound by the proposal.
(2) If the proposal would bind class members, the court may approve it only after a hearing and on finding that it is fair, reasonable, and adequate.
(3) The parties seeking approval must file a statement identifying any agreement made in connection with the proposal.
(5) Any class member may object to the proposal if it requires court approval under this subdivision (5); the objection may be withdrawn only with the court's approval upon a showing of good cause.
(6) Disposition of Residual Funds
(a) "Residual Funds" are funds that remain after the payment of all approved class member claims, expenses, litigation costs, attorneys' fees, and other court-approved disbursements to implement the relief granted. Nothing in this rule is intended to limit the parties to class action from agreeing to, or the trial court from approving, a settlement that does not create residual funds.
(b) Any order entering a judgment or approving a proposed compromise of a class action certified under this rule that establishes a process for identifying and compensating members of the class shall provide for the disbursement of residual funds. In matters where the claims process has been exhausted and residual funds remain, not less than twenty-five percent (25%) of the residual funds shall be disbursed to the Civil Rule 23 Account maintained by the Kentucky IOLTA Fund Board of Trustees pursuant to Supreme Court Rule 3.830 (20). Such funds are to be allocated to the Kentucky Civil Legal Aid Organizations based upon the current poverty formula established by the Legal Services Corporation to support activities and programs that promote access to the civil justice system for low-income residents of Kentucky.
Amendment History
(Amended November 3, 2010, effective January 1, 2011; amended October 22, 2013, effective January 1, 2014.)
Plain-English Summary
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.
Frequently Asked Questions
Can a class action lawsuit be settled without a judge's approval?
No. CR 23.05 requires court approval for any settlement, voluntary dismissal, or compromise of a certified class action's claims, along with notice to class members who would be bound and, where the deal binds the class, a hearing on whether it is fair, reasonable, and adequate.
What happens to money left over after a Kentucky class action settlement is paid out?
Those funds are called residual funds. When a settlement or judgment sets up a claims process and money remains after paying approved claims, expenses, and fees, CR 23.05 requires at least twenty-five percent of the residual funds to go to the Civil Rule 23 Account maintained by the Kentucky IOLTA Fund Board of Trustees, which allocates the money to Kentucky civil legal aid organizations.
Can a class member object to a proposed settlement?
Yes. CR 23.05 allows any class member to object to a settlement, dismissal, or compromise that requires court approval. An objection, once filed, can only be withdrawn with the court's approval and a showing of good cause.
Source & verification. The rule text is reproduced verbatim from the
official Kentucky Rules of Civil Procedure (Ky. R. Civ. P. 23.05). Prescribed by the Supreme Court of Kentucky (Ky. Const. § 116). The plain-English summary is original and written by us. Last verified July 9, 2026. ·
Official source
Also known as: class action settlement approvalresidual funds class action kentuckyobjecting to class action settlementcivil rule 23 account IOLTAunclaimed class action money kentuckyCR 23.05