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Apple has agreed to a settlement in a class action lawsuit brought by customers who experienced quality issues with the easily-scratchable surface of first generation iPod nanos.

The suit alleged Apple knew the glossy front surface scratched easily but misled customers by failing to disclose that information.

As part of the settlement, Apple has agreed to pay $22.5 million without admitting any wrongdoing. The agreement goes into effect pending an April approval hearing at California Superior Court in Los Angeles.

The announcement would bring to an end a three-and-a-half year legal battle between the iPod maker and unhappy customers. It all began mere weeks after the nano’s release in September 2005, as early adopters began to express discontent with the players’ susceptibility to scratches and, in some cases, cracks in their LCD displays. Apple acknowledged the cracking in a statement, but said it was a “real but minor issue involving a vendor quality problem” that only affected less than one-tenth of 1% of the total iPod nano units shipped.

Settlement Form: http://www.ipodnanosettlement.com/description.html