Attorneys for the city said that the firefighters would receive about $2 million and that the city would pay their attorneys' fees and costs of about $3 million.
"I think it's a fair offer," said attorney Richard Roberts, who represented the city. "We're glad we can move ahead and put this behind us."
City officials said the settlement, which includes three years of pension credit, avoids the cost and uncertainty of further litigation. They said the settlement would be paid for from an account set aside for the case and insurance proceeds.
"In addition to recognizing that this resolution allows the city to move forward, I want to acknowledge the work of the New Haven firefighters who never allowed this debate to affect their performance on the fire grounds, or, with one another," Mayor John DeStefano said.
Roberts said the settlement does not require a judge's approval.
But he and Karen Torre, attorney for the firefighters, disagreed on the implications of the agreement and the value of the pension credits.
Torre said the agreement was significant because city officials, in essence, admitted to the firefighters' claims, including that the city conspired to violate their civil rights. She also said the pension credit would be worth hundreds of thousands of dollars per firefighter.
Roberts said the city did not admit to conspiring to violate civil rights, but only agreed to the Supreme Court ruling that New Haven discriminated against its white firefighters by ignoring the test results. He said the city listed all the claims in the agreement to make clear that the case had been fully resolved. He also disputed Torre's estimate of the value of the pension credits.
Torre argued in court in 2009 that the firefighters were entitled to back pay with interest for long-overdue promotions, several categories of damages, and attorney fees. She said the firefighters had been subject to "the humiliation and economic hardship of prolonged career stagnancy in a rancorous atmosphere fostered by raw racial divides."
The case, Ricci v. DeStefano, became an issue in confirmation hearings for Supreme Court Justice Sonia Sotomayor, who had ruled against the white firefighters when she served on a federal appeals court before becoming the first Hispanic member of the high court.
The lead plaintiff, firefighter Frank Ricci, told the Senate Judiciary Committee he had studied hard, played by the rules, and been denied a promotion because of the color of his skin. Sotomayor was questioned about her ruling in the case during her confirmation hearing before the Judiciary Committee, and argued that her decision was evidence that she hews to the law and precedent, not emotion or sympathies.
Ricci said Thursday, "This was a trying time for ourselves and our families, but it was also a great lesson in democracy."