Why can't I rescue this custom error defined inside another class?

I'm working in Rails 6. I've defined an error class inside the class that raises it:

class MyClass < ApplicationRecord
  ...

  class CustomError < StandardError
    attr_reader :param

    def initialize(param)
      @param = param
    end
  end
end

I try to rescue it in client code, but this doesn't catch it:

rescue MyClass::CustomError => e

On the other hand this raises uninitialized constant on CustomError, exactly as I'd expect:

rescue CustomError => e

What about this?

rescue MyClass::CustomError => e
  raise unless e.instance_of? MyClass::CustomError
  # do some real error handling
  ...
end

instance_of? doesn't recognise the error and it re-raises.

I've even tried:

class MyClass < ApplicationRecord
  ...
end

class MyClass::CustomError < StandardError
  attr_reader :para
  def initialize(param)
    @param = param
  end
end

That's no better.

2 things that have worked are both code smells:

1. Defining the error outside the containing class, with no namespacing

2. Rescuing a generic error: rescue => e

It also works fine in MiniTest:

e = assert_raises(MyClass::CustomError) do
  ...
end

It feels like the error class name CustomError simply isn't resolving to MyClass::CustomError in app code, but the client code needs the containing classname to resolve the class at all.

More likely though I'm just doing something a bit naive/stupid!

Additional info:

• Ruby 2.7.1
• Rails 6.0.3.3
• The class raising the error and the class handling it are both model classes (a bit unusual)
• The runtime class raising the error is a child of MyClass: MyChild < MyClass < ActiveRecord (also unusual)