Key Points

  • Seventh Circuit holds Egan's bar on reviewing security-clearance decisions is nonjurisdictional, rooted in the political-question doctrine rather than subject-matter jurisdiction.
  • Panel analogizes Egan to consular-nonreviewability doctrine, which the court and Supreme Court have already treated as merits-based rather than jurisdictional.
  • Court modifies district court's Rule 12(b)(1) dismissal to a merits dismissal for failure to state a claim, affirming without requiring a cross-appeal.
  • Panel declines to adopt D.C. Circuit's Rattigan exception for knowingly false security referrals, finding it inapplicable to Shiba's claim regardless.

The Seventh Circuit has held that the Supreme Court's landmark decision in Department of the Navy v. Egan, which forecloses judicial review of executive-branch security-clearance decisions, is not a jurisdictional bar—it is a merits-based rule of deference. The ruling, authored by Judge Sykes and joined by Judges Lee and Kolar, arose from a Rehabilitation Act retaliation suit brought by Dored Shiba against the Secretary of Homeland Security after USCIS rescinded a tentative job offer when his background investigation stalled for over a year.

The district court, adopting the parties' shared assumption, had dismissed Shiba's suit under Rule 12(b)(1) for lack of subject-matter jurisdiction. On appeal, the panel flagged what it called 'an antecedent question' the parties had overlooked: whether Egan's limitation actually strips courts of adjudicative power, or instead forecloses relief on the merits within its scope. The court ordered supplemental briefing on the issue.

The panel concluded that Egan is best understood as an application of the political-question doctrine rather than a jurisdictional limit, drawing a close analogy to the court's own treatment of the consular-nonreviewability doctrine.

Key here, we held in Matushkina that the doctrine of consular nonreviewability concerns 'a case's merits rather than the federal courts' subject matter jurisdiction.'

The court criticized decades of circuit precedent that reflexively attached the jurisdictional label to Egan, invoking the Supreme Court's warnings against 'drive-by jurisdictional rulings' and its effort to 'bring some discipline' to use of the term. Turning to the merits, the panel held that Shiba's retaliation claim fell squarely within Egan's bar because resolving his pretext theory would require the court to scrutinize the agency's reasons for withholding his clearance—exactly what Egan forbids. The court also declined to adopt the D.C. Circuit's Rattigan exception for claims based on knowingly false security referrals, finding Shiba's claim did not challenge any such referral in any event. The panel modified the district court's judgment to reflect a merits dismissal for failure to state a claim, and affirmed as modified, noting the change required no cross-appeal because it did not expand the government's rights.