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Saying they 'dispensed deception,' a federal judge in Atlanta has ordered the founders and operators of a now-defunct online pharmacy business to pay the FTC $15.8 million for fraudulent claims associated with the drugs they peddled. In his order, issued June 4, U.S. District Judge Charles A. Pannell also found Dr. Terrill Mark Wright, a physician associated with the online pharmacies, liable for $15.4 million to compensate consumers for false advertising claims.

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This edition of the Quarterly State Compliance Review looks at some legislation of interest to corporate lawyers that went into effect during the last three months. It also looks at some recent decisions of interest, including two decisions from the Delaware Supreme Court involving challenged stock options.

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The problem of child pornography on the Internet has long bedeviled Congress. But the legislature has floundered between the First Amendment's protection of speech and the self-evident evils involved in child porn's production and consumption, leaving a trail of laws invalidated by the High Court. The most recent legislative iteration ' the PROTECT Act, upheld on May 19 by the Supreme Court in <i>United States v. Williams</i> ' raises new and intriguing questions about the relation of sexual and political speech.

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In two recent decisions, the Delaware Court of Chancery found advance notice bylaws to be ineffective in preventing stockholders from nominating alternative director candidates without providing the requisite advance notice, indicating that any ambiguities in these bylaws will be construed against the corporation and in favor of activist stockholders.

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National rulings of interest.

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Recent rulings of importance to your practice.

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In February 2007 the Illinois Supreme Court in a unanimous decision held as a matter of first impression that a parent corporation could be directly liable for its negligence to the estates of two employees of its subsidiary corporation. <i>Forsythe v. Clark USA.</i> The Illinois Court relied extensively on the unanimous 1998 opinion of the U.S. Supreme Court in <i>U S v. Bestfoods.</i> Both courts limited the reach of their opinions by making explicit the common law principle that corporate shareholders are not generally liable for the acts and omissions of their subsidiaries in the absence of active involvement of the parent in those acts or omissions.

In last month's issue, the bio note for Darryl Vernon failed to mention that he served as counsel for tenants in Riverside Syndicate, Inc. v. Munroe. We apologize for the omission.&#133;