In contrast with 10 days in a Victorian loony-bin, ABC News' investigation of the Food Lion supermarket chain in 1991 seems like the stuff of cub reporters.

Two researchers with the news magazine programme Primetime applied for jobs as workers at a Food Lion branch, and using hidden cameras revealed unsanitary practices among the staff, included relabelling meat that was past its sell-by date.

In the history of undercover reporting, there have certainly been more dynamic stories. But the news item last week entered the legal history books when a North Carolina jury took the unprecedented step of awarding US$5.5 million (HK$42.3 million) in punitive damages against ABC for its back-door methods.

What has raised eyebrows about the payout is that Food Lion never contested that the facts presented by ABC were correct. Libel never entered the equation. ABC was punished for broadcasting a factually correct item that was entirely in the public interest - because its researchers technically committed trespass by falsely filling out application forms to get their jobs.

Despite conceding that its employees were handling food in such a way as to cause a grave health risk to shoppers, Food Lion complained to the jury that the TV report caused its stock value to plunge US$1.5 billion and its profits to drop US$233 million. But the fact that a media outlet could be fined such a substantial amount of money for compiling a justified and correct report sent shivers through every newsroom in America.

The award was '5.5 million lashes - a case of whipping the messenger,' said Bruce Sanford, a prominent lawyer specialising in First Amendment freedom of speech issues. 'It ought to be perfectly logical; you can't levy punitive damages when the only harm was embarrassment from truthful reporting.' The jury in the case later said they were simply trying to send a message to the American media that some of its tactics in pursuing stories have got out of hand. The moral of the story, as they tell it, is that the end of revealing wrong-doing in a corporation or in some government bureaucracy is not justified by the means.

That may be a simple message, and one that is backed by a majority of the media-saturated American public. But Americans, especially TV viewers, are wary of the excesses of the proliferation of news magazine shows, whose ratings battle forces producers to opt for the sensational, even in the name of the public interest.

However, the verdict and payout has opened up a perplexing Pandora's Box where freedom of speech and journalistic ethics lie entangled. Critics of the decision cite several other cases of undercover reporting, where major shifts in public perception were brought about by exactly the kind of methods employed by Primetime.

Some say the Food And Drug Administration, the government's regulator of food and medical products, might not have come into existence when it did were it not for the landmark book, The Jungle, which exposed horrific conditions in the meat processing industry in Chicago. And more recently, who is to say whether a Dallas TV reporter was wrong to use a hidden camera to film Dallas Cowboys star Michael Irvin buying cocaine from a dealer? The TV station was dismissed as 'sleazy', yet Irvin went on to plead guilty last year to cocaine possession.

The case could not come at a worse time for the news industry, nor ABC. After decades in which the courts were inhospitable to libel cases - the right to free speech usually victorious over any damage done to the victim - several juries have recently been coming down on the side of libel plaintiffs. So fearful were ABC's lawyers of losing a libel case to tobacco giant RJ Reynolds, the station last year apologised rather than fight a legal battle over a story in which it claimed the company added nicotine to raw tobacco to make cigarettes more addictive.

And now, news producers must ask themselves not just whether their story is correct, but whether the end justifies the means they use to get it.