The Iowa Supreme Court has upheld a decision to levy corporate income taxes against fried chicken giant KFC.

At question is whether the state can impose income tax on revenue received by a company that doesn't have a presence in Iowa. KFC doesn't own any restaurants or have employees in Iowa. All KFC's in the state are owned by independent franchisers.

The Iowa Department of Revenue and Finance assessed KFC more than $248,000 for unpaid corporate income taxes in 2001.

Mark Schuling, the agency's director, says any corporation that collects revenue in Iowa should pay taxes.

KFC Corp., whose parent company is Louisville, Ky.-based Yum Brands Inc., challenged the assessment saying under Iowa law it was not subject to taxes because it didn't have property in the state.

The city's campaign to scare smokers with grotesque images of decaying teeth or a diseased lung wherever tobacco products are sold was struck down Wednesday by a federal judge who concluded that only the federal government can dictate warnings that must accompany the promotion of cigarettes.

U.S. District Judge Jed S. Rakoff handed a victory to the nation's three largest tobacco manufacturers and the retailers who sell their products when he ruled on the legality of a 2009 city Board of Health code change requiring the display of smoking cessation signs where tobacco products are sold.

"Even merchants of morbidity are entitled to the full protection of the law, for our sake as well as theirs," Rakoff said. He released the written decision just days before an agreement among the parties to delay enforcement of the rule was to expire on Saturday.

He said the federal Labeling Act, first enacted in 1965, sought to balance public and commercial interests with a comprehensive federal program to deal with cigarette labeling and advertising. He said it was created in part to prevent "diverse, nonuniform and confusing cigarette labeling and advertising regulations." Part of the law dictated that no state law could impose a requirement or prohibition with respect to advertising or promotion of cigarettes, he noted.

The Nebraska Supreme Court has reinstated a lawsuit against an attorney that was filed by a former client convicted of securities fraud.

Bryan Behrens had sought to sue Christian Blunk for more than $8 million due to Behrens client-investors. In court filings, Behrens says Blunk gave him bad advice and was to blame for the securities fraud. But a Douglas County district judge dismissed the case in March, because Behrens had sought Fifth Amendment protection from self-incrimination.

In the opinion issued Thursday, the high court says the judge was wrong to throw out the lawsuit and should have delayed the case until after Behrens' criminal trial.

Behrens, of Omaha, pleaded guilty to securities fraud and was ordered to spend five years in prison and repay his victims.

A subway driver who authorities say was texting his girlfriend just before his trolley slammed into the back of another one near an underground station, injuring more than 60 people, pleaded guilty Wednesday and was sentenced to probation.

Aiden Quinn appeared in Suffolk Superior Court to plead guilty to gross negligence by a person in control of a common carrier. Judge Carol Ball sentenced him to two years probation and 100 hours of community service.

Quinn admitted typing a text message to his girlfriend just before the May 2009 rush-hour crash at the Government Center subway stop, prosecutors said. He ran through yellow and red warning lights and into the two-car train ahead of his. He was later fired.

Assistant District Attorney Paul Treseler asked Ball to sentence Quinn to six months in jail followed by probation, pointing to the injuries and cost of the accident.

Treseler said approximately 65 riders on the two trains sought medical care for injuries ranging from bumps and bruises to broken bones.

A divided Michigan Supreme Court has issued an opinion that would continue to prevent an energy company from discharging treated wastewater into the headwaters of the Au Sable River in Otsego County.

The 4-3 decision would deny the water discharge plan for Merit Energy Co. because the court's majority ruled it is "manifestly unreasonable."

The company already had abandoned the discharge plan and considered the case moot. A previous Supreme Court ruling would have prevented the discharge.

The new ruling, however, could set precedents for future environmental cases in which the state has issued permits.

Conservative justices who currently form the court's minority blast the more liberal majority for using a moot case to "reach desired policy results."

The court is expected to return to conservative control in 2011.

Gov. Mitch Daniels has appointed new judges in two central Indiana counties.

The governor's office says Daniels appointed J. Jeffrey Edens as judge of the Boone Circuit Court. Edens succeeds Justice Steven David, who was appointed to the Indiana Supreme Court in September. Edens has been serving as judge pro tempore since David's appointment.

Edens is a former Boone County chief deputy prosecutor and past president of the Boone County Chamber of Commerce.

Daniels also appointed David Riggins as a Shelby County Superior Court judge. Riggins succeeds Judge Russell Sanders, who announced his retirement in August.