When a jury awarded $5.5 million to Food Lion in a lawsuit filed against ABC News, it changed the rules of American newsgathering.

That 1997 federal court jury award was subsequently reduced by a judge to $315,000, but the message was clear: A jury was ready to severely punish illegal or unethical newsgathering even if the reporting was in the public interest.

Now a new decision from the Fourth U.S. Circuit Court of Appeals has reduced the award once again, giving Food Lion just $2 in damages, but reasserting that the nation's news media are not above the law.

The case stems from a 1992 "Prime Time Live" report that some Food Lion stores engaged in highly questionable food handling practices, including the repackaging and sale of spoiled meat. Documentation for the report was obtained by two ABC reporters who applied for jobs with Food Lion and taped the company's employees with hidden video cameras.

Food Lion chose not to challenge the truthfulness of the reporting. In order to prevail, it would have had to prove the reporting was false or that ABC acted in reckless disregard of the facts, a difficult burden.

Instead, Food Lion attacked the gathering of the news, charging that by lying on their applications and proving fake references, the ABC reporters engaged in fraud and trespass. The original jury verdict shocked many in the news media because it punished the process of reporting rather than the report itself. Food Lion had found a way to bypass the press' constitutional protection, winning a verdict without challenging the facts of the case.

That suggested to many editors and news executives that undercover reporting could no longer be a part of their newsgathering arsenal. Although not a common practice, there's a long history of courageous and public-spirited reporting in which reporters misrepresented their identities. Bending the rules was justified by the overall benefit to the public.

As a brief filed by news organizations in the appeal of the case noted, "The jury's verdict in this case casts a long bone-chilling shadow over the future of undercover reporting, which has played an integral role in the history of American journalism."

That "bone-chilling shadow" has been tempered considerably by the new decision by The Fourth U.S. Circuit Court of Appeals.

The appellate court certainly didn't exonerate ABC News. The court's decision points out that the press has to obey the same laws as the rest of society, absent some showing of a substantial impact on the First Amendment right to gather news.

The court found that the reporters were indeed guilty of trespass and of violating a breach of loyalty as Food Lion employees. "We are convinced that the media can do (their) important job effectively without resort to the commission of run-of-the-mill torts," the court wrote.

But there's a world of difference in damages recoverable for "run-of-the-mill torts" and damage to reputation. Food Lion had sought to recover millions of dollars for damages to its business without proving the falsity of the news report that harmed its image.

The court refused to accept that approach, noting that "such an end-run around First Amendment strictures is foreclosed."

The decision — which may be appealed by Food Lion — holds lessons for both the press and potential plaintiffs.

For the news media, there's a reminder that the First Amendment doesn't give reporters a license to break the law. Juries — drawn from a general public that doesn't hold the news media in high regard anyway — can and will punish illegal conduct.

For companies like Food Lion, there's a different lesson. If you're the subject of an unflattering investigative piece, you may well want to protect your reputation in court, demonstrating that the reporting was false.

But if there's some merit to the reporting, you may find a public apology and renewed commitment to quality control a better strategy than an "end run" around the First Amendment. For its substantial investment in litigation, Food Lion walked away with $2 and years of news coverage linking the supermarket chain to tainted meat. Payback may not be worth the price.