Victoria Carey and Jennifer Wood, two women associated with the People for the Ethical Treatment of Animals, had travelled to Accomack, Virginia, to help capture wild cats and dogs at a trailer park.
While there, they removed an unattended and unleashed chihuahua named Maya – who was a Christmas present to Cynthia Zarate.
The dog was put down later the same day, breaking a state law that requires a five-day grace period before an animal is euthanised.
PETA was later fined £388 for the incident, that took place in 2014, describing it as a “terrible mistake”.
However, Cynthia’s father, Wilber Zarante, sued the group, alleging they operated under a broad policy of euthanising animals, including healthy ones, because it “considers pet ownership to be a form of involuntary bondage”.
Zarante wanted £5.4m compensation but PETA has now agreed to pay the family £38,000 and donate a further £1,550 to a local branch of the Society for the Prevention of Cruelty to Animals (SPCA) to honour Maya
The family’s attorney, William H Shewmake, said: “The Zarates felt that the settlement reflects the grievous loss of their beloved Maya.
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“And it allows the Zarates to bring some closure to a very painful chapter of their lives. They’re glad the case has been settled.”
Both parties said in a joint statement: “PETA again apologises and expresses its regrets to the Zarate family for the loss of their dog Maya.
“Mr Zarate acknowledges that this was an unfortunate mistake by PETA and the individuals involved, with no ill will toward the Zarate family.”