California Polytechnic State University at San Luis Obispo has settled a lawsuit filed by a student who said the university had violated his First Amendment right to free speech. The 10-month legal battle ended on Thursday, when the university announced that it would pay Steven Hinkle $40,000 to cover his legal fees and would clear his disciplinary record.

The university issued a brief statement explaining the terms of the settlement. The statement began with the assertion that both Cal Poly and the California State University System "deny any claims of wrongdoing or violation of the law." The statement also specified that the $40,000 was a partial reimbursement of the $70,000 that Mr. Hinkle had requested.

According to Greg Lukianoff, a spokesman for the Foundation for Individual Rights in Education, Mr. Hinkle will not have to pay the remaining $30,000 in legal fees because the rights group provided the student's legal representation pro bono.

Still, Mr. Lukianoff said, the settlement was "ultimately a vindication for free speech," although he expressed disappointment at the duration of the conflict.

"When this case first came to me, I thought it would be over in a week," said Mr. Lukianoff. "It looked largely like a misunderstanding, but I think the university was just too stubborn to admit they had made an error."

Settlement discussions began several months ago, according to university spokeswoman Teresa M. Hendrix. Ms. Hendrix said that before those discussions, Mr. Hinkle's terms were unreasonable. Furthermore, she added, the final terms had to be approved by several university administrators.

According to a transcript of a university judiciary hearing, the controversy began in November 2002, when Mr. Hinkle attempted to post a flier in a campus building while a group of black students was holding a Bible-study meeting there. The black students told Mr. Hinkle, who is white, that they thought his flier -- promoting a speech by the conservative black author C. Mason Weaver -- was offensive.

Mr. Hinkle offered to discuss the flier with the students, but they called the police. Although he did not post the flier and left before the police arrived, the students complained to the university.

After a seven-hour judiciary hearing, the university concluded that Mr. Hinkle had violated the campus's code of conduct by disrupting the Bible-study meeting, and it ordered him to draft a letter of apology to the student group. Mr. Hinkle refused to do so and filed suit.

In the lawsuit, Mr. Hinkle's lawyers asserted that the university had used the charge of disruption to violate Mr. Hinkle's free-speech rights.

Despite Cal Poly's retraction of Mr. Hinkle's punishment on Thursday, the university issued an additional statement saying that it would not alter the definition of disruption in its code of conduct. The university also said that the settlement was a "reaffirmation of the standard that existed before the case."

Asked about that assertion, Mr. Lukianoff said, "If they're claiming the definition they had in the first place was correct, then this never should have happened."