Egan Is Nonjurisdictional: Security-Clearance Deference Requires Merits Dismissal, Not Rule 12(b)(1)

1. Introduction

In Dored Shiba v. Markwayne Mullin (7th Cir. Apr. 23, 2026), the Seventh Circuit confronted a recurring problem in federal employment litigation: how courts should treat claims that, while styled as discrimination or retaliation, would require probing the reasons an Executive Branch agency delayed or withheld a security clearance.

The plaintiff, Dored Shiba, was tentatively selected for a USCIS position requiring a security clearance. His background investigation stalled after investigators identified unresolved security issues and paused in light of another agency’s pending investigation. After more than a year without a clearance, USCIS rescinded the job offer. Shiba alleged the “stalled” clearance process was retaliatory pretext, violating the Rehabilitation Act.

The district court dismissed under Department of the Navy v. Egan, 484 U.S. 518 (1988), treating Egan as a subject-matter jurisdiction bar (Rule 12(b)(1)). On appeal, the Seventh Circuit re-framed the doctrine: Egan is best understood as a nonjurisdictional rule of mandatory deference/finality that forecloses judicial review on the merits. The court then held Shiba’s retaliation theory fell within Egan’s scope because adjudicating pretext would require second-guessing national-security judgments.

2. Summary of the Opinion

  • Nature of Egan: Egan does not strip federal courts of subject-matter jurisdiction. It is a nonjurisdictional rule of finality/mandatory deference grounded in separation-of-powers principles (akin to the political-question doctrine).
  • Scope of Egan: Shiba’s retaliation claim is barred because resolving it—especially the alleged pretext—would require scrutinizing why the agency withheld/delayed clearance.
  • Delay vs. Denial: Egan applies even if there was no “formal denial”; an indeterminate delay that effectively prevents access functions as a constructive denial and is similarly unreviewable.
  • Rattigan not adopted / not applicable: The court declined to create a Rattigan v. Holder, 689 F.3d 764 (D.C. Cir. 2012)-style exception for “knowingly false” security referrals and, in any event, found Shiba’s claim did not fit that narrow theory because he was challenging a later rescission based on a stalled clearance process, not the earlier referral itself.
  • Disposition: The Seventh Circuit modified the judgment from a jurisdictional dismissal to a merits-based dismissal (failure to state a claim) and affirmed.

3. Analysis

3.1. Precedents Cited

A. The anchor: Department of the Navy v. Egan

The opinion’s central interpretive move is to read Department of the Navy v. Egan as a decision about institutional competence and constitutional allocation, not a decision about Article III adjudicative power. Egan emphasized:

  • Security-clearance judgments are “sensitive and inherently discretionary” national-security determinations.
  • They require predictive risk assessments and expertise courts lack.
  • The Executive must have “the final say,” making such decisions effectively conclusive in court.

The Seventh Circuit uses Egan’s reasoning to support nonreviewability, but notes Egan did not frame the principle as a jurisdiction-stripping rule.

B. Distinguishing “jurisdiction” from “merits”

To support its nonjurisdictional reading, the court relies on the Supreme Court’s modern insistence that “jurisdiction” be used with discipline:

  • Steel Co. v. Citizens for a Better Env't, 523 U.S. 83 (1998): cited for the definition of subject-matter jurisdiction as the court’s “statutory or constitutional power” to adjudicate, and for skepticism toward imprecise “drive-by” jurisdictional statements.
  • Kontrick v. Ryan, 540 U.S. 443 (2004): reinforces that courts have often used “jurisdiction” “less than meticulously.”
  • Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428 (2011): emphasizes the “harsh consequences” of labeling rules jurisdictional and the need to think twice before doing so—even for “important and mandatory” rules.

These cases supply the methodology: unless the Supreme Court clearly made Egan jurisdictional, lower courts should hesitate to treat it that way.

C. Egan as political-question-adjacent (separation of powers)

The court situates Egan within the political-question tradition:

  • Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803): quoted for the proposition that questions “submitted to the executive” cannot be made in court.
  • Dalton v. Specter, 511 U.S. 462 (1994): cited for the idea that where decisions are committed to presidential discretion, judicial review is not available.
  • United States v. George S. Bush & Co., 310 U.S. 371 (1940) and Williams v. Suffolk Ins. Co., 38 U.S. 415 (1839): invoked for the principle that discretionary executive judgments can be conclusive and not present “questions of law” for courts to resolve.
  • Japan Whaling Ass'n v. Am. Cetacean Soc., 478 U.S. 221 (1986) and Baker v. Carr, 369 U.S. 186 (1962): provide the modern political-question framework and its six canonical factors (textual commitment, lack of manageable standards, need for policy determinations, respect for coordinate branches, etc.).
  • Powell v. McCormack, 395 U.S. 486 (1969): cited to support the view that separation-of-powers issues go to “justiciability,” not necessarily subject-matter jurisdiction.
  • Lee v. Garland, 120 F.4th 880 (D.C. Cir. 2024): referenced as aligned authority recognizing Egan’s political-question-like character.

The court candidly acknowledges the Supreme Court sometimes uses jurisdictional language in political-question settings (e.g., Rucho v. Common Cause, 588 U.S. 684 (2019)), but emphasizes the Court has also described political questions as merits-adjacent refusals to address issues (United States Department of Commerce v. Montana, 503 U.S. 442 (1992)) and has affirmed nonjurisdictional dismissals on political-question grounds (Nixon v. United States, 506 U.S. 224 (1993)).

D. The key analogy: consular nonreviewability

The Seventh Circuit’s most operational precedent is its own treatment of an analogous separation-of-powers nonreviewability doctrine:

  • Matushkina v. Nielsen, 877 F.3d 289 (7th Cir. 2017) and Hazama v. Tillerson, 851 F.3d 706 (7th Cir. 2017): hold consular nonreviewability is a merits doctrine, not a subject-matter jurisdiction limit.
  • Dep't of State v. Muñoz, 602 U.S. 899 (2024) and Trump v. Hawaii, 585 U.S. 667 (2018): cited for the Supreme Court’s confirmation that consular nonreviewability is not jurisdictional.
  • Pak v. Biden, 91 F.4th 896 (7th Cir. 2024) and Yafai v. Pompeo, 912 F.3d 1018 (7th Cir. 2019): reinforce the doctrine’s separation-of-powers basis and deference to executive foreign-relations judgments.
  • Fiallo v. Bell, 430 U.S. 787 (1977): quoted (via Trump) for admission/exclusion decisions as “fundamental sovereign” attributes.
  • Allen v. Milas, 896 F.3d 1094 (9th Cir. 2018): offered as sister-circuit support that consular nonreviewability is not jurisdictional.

This analogy does doctrinal work: if a closely related deference-based nonreviewability rule is not jurisdictional, Egan should not be presumed jurisdictional either.

E. Lower-court “jurisdictional” descriptions treated as unpersuasive

The court confronts conflicting circuit descriptions of Egan:

  • United States ex rel. Johnson v. Raytheon Co., 93 F.4th 776 (5th Cir. 2024) and Mowery v. Nat'l Geospatial-Intel. Agency, 42 F.4th 428 (4th Cir. 2022): noted for using “subject-matter jurisdiction” language, but the Seventh Circuit discounts them as not squarely analyzing the jurisdictional question and as relying on older reflexive usage.
  • Builders Bank v. FDIC, 846 F.3d 272 (7th Cir. 2017): cited to explain earlier eras’ overuse of “jurisdiction” to mean any barrier to review.

F. Egan’s scope applied to pretext-based employment claims

On the merits, the court relies on decisions treating Egan as foreclosing pretext inquiries that would require assessing the reasons for clearance action:

  • El-Ganayni v. U.S. Dep't of Energy, 591 F.3d 176 (3d Cir. 2010): used for the “inevitably involve scrutiny” framing; courts cannot demand reasons or weigh the agency’s security rationale.
  • Brazil v. U.S. Dep't of the Navy, 66 F.3d 193 (9th Cir. 1995): cited for the proposition that deciding whether reasons were “legitimate or pretextual” is barred.
  • Ryan v. Reno, 168 F.3d 520 (D.C. Cir. 1999): quoted for the point that pretext review “runs smack up against Egan.”

G. Rattigan and the proposed “knowingly false referral” carveout

Shiba’s principal attempted escape hatch was Rattigan v. Holder, where a divided D.C. Circuit allowed a Title VII claim based on “knowingly false” security referrals to proceed, over a dissent by then-Judge Kavanaugh.

The Seventh Circuit does not adopt Rattigan, expresses doubt about compatibility with Egan, and finds Rattigan inapplicable on its own terms because Shiba’s claim challenged a later rescission based on the stalled clearance process rather than the earlier referral itself.

H. Procedural modification without cross-appeal

  • Matushkina v. Nielsen: cited for the principle that modifying a jurisdictional dismissal to a merits dismissal does not require a cross-appeal where the practical effect is the same (no judicial forum for merits relief) and the modification does not expand the defendant’s rights.
  • Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017 (7th Cir. 2013): cited for pleading-stage treatment of facts and reliance on complaint-consistent narrative.

3.2. Legal Reasoning

A. The new rule: Egan is a nonjurisdictional finality/deference doctrine

The Seventh Circuit’s doctrinal innovation is not that Egan bars review—courts widely accept that. The new and clarifying rule is how it bars review:

  • Egan is best understood as a mandatory deference/finality rule grounded in separation of powers and political-question principles.
  • It therefore forecloses judicial review on the merits rather than depriving courts of subject-matter jurisdiction.

The court emphasizes Egan’s text: the Supreme Court spoke in terms of the Executive having “the final say,” not in terms of jurisdictional stripping. And the court’s insistence on “discipline” in jurisdictional labeling follows the Supreme Court’s broader “jurisdictional brand” jurisprudence.

B. Why Shiba’s retaliation claim is within Egan’s heartland

A Rehabilitation Act retaliation claim in this posture would require the standard burden-shifting inquiry into causation and pretext. Shiba’s theory was that “security concerns” were not the true reason for delay; retaliation was.

But the court reasons that determining whether the agency’s security-related rationale was genuine, sufficient, or pretextual necessarily requires:

  • assessing what the “serious issues” were,
  • evaluating their significance,
  • judging whether delay was justified, and
  • second-guessing the acceptable “margin of error” in national-security risk prediction.

Those are exactly the determinations Egan places within Executive discretion and beyond judicial competence.

C. No formal denial required (constructive denial by delay)

Shiba tried to avoid Egan by asserting there was no “security-clearance decision,” merely a stalled process culminating in rescission. The court rejects the distinction: if the practical effect is refusal to grant access (whether by express denial or by delay that prevents clearance), Egan’s rationale still applies.

D. Rattigan’s exception not reached and not helpful

Even if Rattigan’s “knowingly false referral” exception were doctrinally sound, Shiba did not plead the kind of claim Rattigan contemplates. The employment action challenged here was the 2019 offer rescission, not the 2011 referral. The alleged causal chain—from a purportedly false 2011 referral to a 2020 clearance stall—was viewed as, at minimum, too attenuated to re-characterize the case as a “referral claim.”

3.3. Impact

A. Procedural consequences in the Seventh Circuit

By holding Egan nonjurisdictional, the decision meaningfully affects litigation mechanics in future Seventh Circuit cases:

  • Proper dismissal vehicle: challenges invoking Egan’s bar should generally be treated as merits dismissals (e.g., Rule 12(b)(6)) rather than Rule 12(b)(1).
  • Jurisdictional side effects avoided: because the rule is not jurisdictional, courts and litigants should not presume jurisdiction can be raised at any time in the same manner, nor should they import jurisdiction-specific doctrines unnecessarily.
  • Judgment characterization: a merits dismissal better reflects the court’s reasoning: the court has power to hear the type of case, but the law requires deference that prevents the plaintiff from obtaining a judicial merits determination about security judgments.

B. Substantive consequences for employment discrimination/retaliation claims

The opinion underscores that plaintiffs cannot repackage security-clearance challenges as retaliation or discrimination claims if success requires a court to evaluate the Executive’s security rationale. “Pretext” theories are especially vulnerable because they demand comparative evaluation of the agency’s stated reasons.

C. Doctrinal alignment and potential circuit influence

The Seventh Circuit’s explicit reclassification of Egan as nonjurisdictional may prompt reevaluation in circuits that continue to describe Egan as jurisdictional without analysis. The decision supplies a blueprint: (i) examine Egan’s language; (ii) apply the Supreme Court’s modern jurisdiction/claims-processing discipline; and (iii) compare to consular nonreviewability, now explicitly nonjurisdictional at the Supreme Court level.

D. Limited room for “false referral” theories

The court does not foreclose the possibility that some narrow category of “false referral” claims might be justiciable (it expressly declines to decide whether Rattigan is correct). But it signals skepticism and, at minimum, sets a high bar: plaintiffs must plead a theory that does not require probing the substance of security-clearance reasoning and that truly targets a separable, non-security merits question.

4. Complex Concepts Simplified

  • Subject-matter jurisdiction vs. merits dismissal: Jurisdiction asks whether a court has power to hear the category of dispute at all. A merits dismissal means the court can hear the case type, but the plaintiff loses because the substantive law (here, mandatory deference to the Executive) defeats the claim.
  • Political-question doctrine: Some issues are constitutionally committed to the political branches (Congress or the President) or lack judicially manageable standards. Courts therefore refrain from deciding them to respect separation of powers.
  • Mandatory deference / finality rule: Even where a court has jurisdiction, it may be required to treat certain Executive decisions as conclusive—meaning courts cannot second-guess them.
  • Consular nonreviewability: Courts generally cannot review consular officers’ visa decisions. The Seventh Circuit treats this as a merits-based deference doctrine, and uses it as an analogy for Egan.
  • Pretext: In discrimination/retaliation law, “pretext” means the employer’s stated reason is not the true reason. But testing pretext often requires evaluating the legitimacy of the employer’s asserted rationale—precisely what Egan forbids when that rationale is security-based.
  • Constructive denial by delay: Even without a formal “denial,” an indefinite or prolonged delay that prevents clearance and employment can function as a practical denial; under this opinion, it remains protected by Egan’s nonreviewability.

5. Conclusion

Dored Shiba v. Markwayne Mullin clarifies and reshapes Egan practice in the Seventh Circuit. The court held that Egan’s security-clearance nonreviewability is not a subject-matter jurisdiction limitation but a nonjurisdictional rule of finality and mandatory deference rooted in separation of powers. Applying that rule, the court concluded Shiba’s Rehabilitation Act retaliation claim could not proceed because adjudicating pretext would require second-guessing the Executive’s security-clearance reasoning—even where the clearance was effectively withheld through delay rather than formally denied.

The decision’s significance is twofold: it tightens the conceptual link between Egan and political-question-style deference while simultaneously correcting the procedural framing. Going forward, litigants in the Seventh Circuit should expect Egan disputes to be resolved as merits dismissals—and should recognize that claims hinging on “why” a security clearance was delayed or withheld are likely to be nonjusticiable in practical effect, regardless of the statutory label placed on the claim.