Canadian Investors' Lawsuit Over Revoked Visas Tossed, Tennessee Business in Limbo

A federal judge in Washington, D.C. has dismissed a lawsuit brought by two Canadian business owners who invested in a small Tennessee business, ending their bid to challenge the State Department's decision to revoke their U.S. investor visas. Krunal Patel and Tejal Patel, both Canadian citizens, secured E-2 nonimmigrant visas in February 2023 to run their venture in Sneedville, the Hancock County seat, only to receive notices in March that their status was being pulled based on newly obtained information suggesting they might be inadmissible to the United States.

The couple, who moved to the United States in 2020, filed suit in April against Secretary of State Marco Rubio and an unnamed consular official, arguing the visa cancellations exceeded executive authority, violated due process, and were arbitrary, according to Tampa Free Press. U.S. District Judge Dabney L. Friedrich granted the government's motion to dismiss, ruling that federal law blocks courts from reviewing discretionary visa cancellations made by consular officials and the secretary of state. The judge also rejected the Patels' argument that prudential revocations or administrative procedures permitted court intervention, and ruled they could not use their case to challenge the government's wider screening practices, finding their policy claims were tied specifically to their own individual visa cancellations.

At the center of the case was a 2022 citation Krunal Patel received for selling alcohol to a minor, which the National Crime Information Center database flagged during an automated check, according to the Patels' allegations. Krunal Patel has stated he disclosed the incident during his initial visa application. Under U.S. Department of State policy outlined in 9 FAM 403.11-5(B) and 22 C.F.R. § 41.122, consular officers can issue a prudential revocation when new derogatory information surfaces, canceling a visa preemptively without a formal inadmissibility determination.

A Family Split by an Ocean and an Expiration Date

The revocation notices, emailed by the U.S. Consulate General in Toronto in March, cited the same newly obtained information suggesting the couple might be ineligible for the E-2 status that had let them run their Sneedville business. But the practical impact on each spouse diverged sharply because of where they happened to be standing when the notices landed. Tejal Patel was traveling outside the United States with the couple's two children when her visa was canceled immediately, stranding her abroad.

Krunal Patel, by contrast, remained inside the United States, and his visa revocation only takes effect once he departs the country. That split outcome traces directly to a quirk of federal regulation: under 22 C.F.R. § 41.122, a prudential revocation takes effect immediately upon entry into government lookout databases, meaning a nonimmigrant already inside the U.S. can remain until their I-94 authorized stay expires but cannot use that visa to re-enter once they leave. The rule functions less like an internal removal order and more like a one-way door that locks the moment someone steps outside it.

Why Courts Wouldn't Touch the Case

Judge Friedrich's ruling rested on a legal doctrine with deep roots. Under 8 U.S.C. § 1201(i), the executive branch holds discretion to revoke nonimmigrant visas at any time, and that same statute restricts judicial review of such revocations. That statutory bar traces back to the consular nonreviewability doctrine established by the Supreme Court in Kleindienst v. Mandel in 1972, which holds, per EveryCRSReport.com, that federal courts generally lack jurisdiction to second-guess discretionary visa decisions made by consular officers or executive officials. The doctrine has surfaced repeatedly in other recent immigration disputes, including a related case in which a California woman's suit over her husband's visa was similarly dismissed under statutory immigration restrictions.

Attorneys who track immigration enforcement say cases like the Patels' reflect a broader shift rather than an isolated incident. U.S. immigration attorneys have reported a noticeable increase in prudential visa revocations across 2025 and 2026, driven by the federal government's expanded continuous vetting system, which cross-references law enforcement databases like the NCIC against active visa records in real time. That automated approach means even a previously disclosed, years-old citation can resurface and trigger a new round of scrutiny long after a visa has already been approved.

A Small Tennessee Town's Stake in the Outcome

The economic stakes for Sneedville are not abstract. The Hancock County seat had an estimated 2026 population of just 1,366 residents, a median household income of $24,500, and a poverty rate of 48.4%. Hancock County as a whole, created in 1844, ranks as the fourth-least populous county in Tennessee, with an estimated 2025 population of 7,075 and a median individual income of $22,834. Rural markets like this one often depend on exactly the kind of foreign capital the E-2 program is designed to attract, since the visa category requires a substantial investment relative to business cost even though, unlike the EB-5 program's fixed $800,000 investment threshold, it grants no direct path to a U.S. green card.

That distinction matters for understanding why the Patels had so little legal ground to stand on. Nationally, the State Department issued 51,047 E-2 investor visas in fiscal year 2025, a 7.7% drop from the record 55,324 issued the prior year, with Canadian citizens receiving 6,779 of them, making Canada the second-largest source country for E-2 investors after Japan. Canadian E-2 visas are typically issued through the U.S. Consulate General in Toronto with a maximum stamp validity of five years, though each entry into the U.S. grants an authorized stay of up to two years under Form I-94 rules, a structure that leaves investors perpetually subject to re-adjudication rather than settled status.

The Patels' case adds to a string of recent immigration rulings involving Secretary Rubio's authority over consular decisions, including a federal judge's separate rejection of a sweeping 75-country visa ban and a wider crackdown that has seen nearly 900 birth tourism visas revoked. For Krunal and Tejal Patel, the dismissal leaves their family split across a border and their small-town Tennessee investment in an uncertain holding pattern, with no judicial avenue left to contest the government's decision.