The city of Los Angeles will pay $4.2m (£2.8m) to two women shot by police as they searched for an ex-policeman on a murder spree.
Margie Carranza and her mother Emma Hernandez were delivering newspapers early on 7 February when officers fired about 100 bullets into their car.
Ms Hernandez was shot in the back and Ms Carranza sustained minor injuries.
Christopher Dorner is believed to have killed three people in California before dying in a shootout with police.
The ex-Navy reservist died in a gunfight at a mountain cabin near the Big Bear Lake ski resort, after a massive manhunt across southern California.
'Assuming responsibility'Los Angeles police were looking for Dorner when they misidentified the vehicle the women were driving and opened fire.
A lawyer representing Los Angeles said a "fair and swift" settlement had been reached, which was a "win-win" for both parties.
"In reaching the settlement we hope that Margie and Emma will be able to move on with their lives," lawyer Carmen Trutanich said, adding, "The city will be spared literally millions of dollars in litigation fees."
The two women will split the settlement, taking $2.1m each.
Glen Jonas, the lawyer representing the women, said his clients would accept the payment after the end of the current fiscal year on 30 June, to help ease the city's financial troubles.
He added the police and other city leaders were consulted throughout the negotiation process.
"The LAPD, the chief, were consulted at every step of the way," Mr Jonas said. "We weren't going to have an agreement unless the city leaders - all of them - thought that it was a fair agreement for everyone involved."
Dorner's killing spree began on 3 February when he shot dead the daughter of a former police captain who represented him at a police disciplinary board, and her fiance.
Police say he then shot and killed a Riverside policeman in an ambush on 7 February.
In an online manifesto, Dorner, who was black, suggested that racism was still rife in the LAPD.
It was an unwelcome allegation for a department that overhauled itself after the notorious police beating in 1991 of a black man, Rodney King.
During the manhunt police guarded about 50 families, many of which were connected to former Los Angeles Police Department colleagues against whom Dorner had vowed revenge for allegedly ruining his career.
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