                United States Court of Appeals
                     FOR THE EIGHTH CIRCUIT



                    Nos. 96-1339 and 96-2009



George E. Waddell, Jr.,         *
                                *
                   Appellee,    *
                                * Appeals from the United States
     v.                         * District Court for the
                                * Northern District of Iowa.
James Forney; Henry Garcia,     *
Individually and as Assistant   *
Regional Deputy of the National *
Credit Union Administration     *
(NCUA); Mark Treichel,          *
Individually and as Examiner    *
for the National Credit Union   *
Administration,                 *
                                *
                 Appellants,    *
                                *
DuTrac Community Credit Union, *
                                *
           Intervenor Below.    *



                  Submitted:   December 10, 1996

                      Filed: March 13, 1997


Before BOWMAN and HEANEY, Circuit Judges, and SMITH,1 District
     Judge.


HEANEY, Circuit Judge.




    1
     The Honorable Ortrie D. Smith, District Judge for the Western
District of Missouri, sitting by designation.
     After his employment termination as general manager of a
state-chartered credit union, George E. Waddell, Jr. initiated this




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                                2
action against federal and state defendants, alleging that they
deprived him of protected property and liberty interests in his
employment without procedural due process.2         The defendants appeal
from the district court's denial of their motions for summary
judgment based on qualified immunity, principally arguing that
Waddell's    alleged   constitutional      rights    were     not   clearly
established.    We affirm in part and reverse in part.


                                    I.


     As an initial matter, we address Waddell's claim, based on
Johnson     v. Jones, 115 S.Ct. 2151, 2153 (1995), that this court
lacks jurisdiction to consider an appeal from a denial of qualified
immunity based on disputed issues of fact.            The district court
denied    summary   judgment   to    the   defendants       based   on   its
determination that genuine issues of fact regarding the defendants'
conduct remain and that, construing the facts in favor of Waddell,
a reasonable jury could find for him.       While we cannot review the
district court's determination that material issues of fact remain
for trial on the merits of Waddell's claims, see Allison v. Dept.
of Corrections, 94 F.3d 494, 496 (8th Cir. 1996), we can consider
the legal question whether, in view of the facts that the district
court deemed sufficiently supported for summary judgment purposes,
the individual defendants' conduct was objectively reasonable given
their knowledge and the clearly established law.            Id.   As Justice
Scalia explains in Behrens v. Pelletier:




     2
      Waddell's action against the federal defendants falls under
Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403
U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971) and his claim
against state defendant Forney is brought under section 1983.
Because the two claims involved the same analysis, we consider them
together.

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                                     3
Johnson    reaffirmed    that     summary-judgment
determinations are appealable when they resolve a
dispute concerning an "abstract issu[e] of law"




                          -4-
                           4
       relating to qualified immunity, . . . typically,
       the issue whether the federal right allegedly
       infringed was "clearly established." . . . Johnson
       permits petitioner to claim on appeal that all of
       the conduct which the District Court deemed
       sufficiently supported for purposes of summary
       judgment met the Harlow standard of "objective
       legal reasonableness."

116 S.Ct. 834, 842 (1996) (citations omitted).                    Accordingly, we
deny   Waddell's     motion    to    dismiss     and       consider   whether   the
individual defendants are entitled to qualified immunity.


                                        II.


       Government officials are entitled to qualified immunity when
"their conduct does not violate clearly established statutory or
constitutional rights of which a reasonable person would have
known."    Harlow v. Fitzgerald, 547 U.S. 800, 818 (1982).                  Thus, we
must consider what specific constitutional rights the defendants
allegedly violated, whether the rights were clearly established in
law at the time of the alleged violation, and whether a reasonable
person in the official's position would have known that his conduct
would violate such rights.          Waddell has alleged that the defendants
unlawfully interfered with his employment relation, deprived him of
a   protected     property    interest    in    his    employment     without   due
process,    and    similarly    deprived       him    of    a   protected   liberty
interest.    After a summary of Waddell's allegations, we address
each constitutional claim in turn.


       Beginning in September 1985, Waddell was the general manager
of First Family Credit Union in Dubuque, Iowa.                  The deposit funds
at the credit union were insured by the National Credit Union
Administration ("NCUA"), an independent, federal regulatory agency
that has the authority and obligation to periodically examine,


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                                         5
investigate, and assist federally insured, state-chartered credit
unions pursuant to the Federal Credit Union Act, 12 U.S.C. §§ 1751-




                               -6-
                                6
1795k.     The NCUA has the authority to terminate a credit union's
insured status, 12 U.S.C. § 1786(b) & (c), and to remove an officer
or director of a credit union after notifying the individual of the
charge and setting a hearing, 12 U.S.C. § 1786(g).           According to
the   NCUA   Examiner   Guide,   however,   an    examiner   should   never
recommend the removal of credit union management or personnel
except for criminal acts.    (Jt. App. at 131.)       The guide provides:

      Removal of credit union management and/or personnel
      may be one of the alternatives presented to the
      officials, but any removal action must clearly be
      the officials' decision. Removal of officials and
      management by NCUA can be done only in accordance
      with the Act and the Rules and Regulations.

Id.     At all times relevant to this action, defendant Henry Garcia
was an Assistant Regional Deputy of the NCUA and Mark Treichel was
an NCUA examiner in the region supervised by Garcia.


        First Family is also regulated and supervised by the Iowa
Credit Union Division (ICUD), under the direction of defendant
James Forney, the Superintendent of Credit Unions for the State of
Iowa.     See Iowa Code § 533.55 (1993).         Forney similarly has the
authority to remove any officer, director, employee, or committee
member of a credit union if, after notifying the individual of the
charge against him and giving him a reasonable opportunity to be
heard, he determines that the individual has either violated a law
or has engaged in an unsafe or unsound practice in conducting the
business of a credit union.      Iowa Code § 533.6(5) (1993).


      In 1990, after several years of concern about First Family's
financial stability, the ICUD and the NCUA conducted a joint
examination of the credit union.     In August, Forney requested First
Family to show cause why he should not initiate formal proceedings
to revoke its charter.       First Family prepared a business plan

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                                    7
addressing the concerns raised by Forney and presented it at a
meeting of the board, Forney and other ICUD members, and NCUA




                               -8-
                                8
officials including Treichel.         At that time, Forney did not decide
whether he would seek revocation of the credit union's charter.


       Both Forney and the NCUA continued to monitor First Family's
progress.    Treichel, on behalf of the NCUA, conducted an audit of
the credit union.    He concluded that First Family was insolvent and
that its problems were due in large part to Waddell's negligence.
He submitted a written report to Garcia, recommending that as a
condition of further assistance to First Family, its Board should
terminate Waddell "for negligence" without paying him termination
compensation as provided under his contract.            (Jt. App. at 129-30.)
Garcia   adopted    the    report    as     NCUA's   official   position.     In
September, Garcia gave Forney a copy of Treichel's report and told
him that in the opinion of the NCUA, First Family was insolvent and
its manager had disregarded prudent lending practices when making
business loans.


       On Friday, September 28, Forney met with Waddell and requested
his resignation.     Waddell refused, denying the allegations in the
NCUA report and requesting a hearing to clear up the matter.
Forney arranged for a meeting with the credit union board that
evening.     At    the    meeting,    Forney    told   the   board   about   his
discussions with the NCUA officials and their recommendations,
including their demand that Waddell be removed immediately.                  He
then   presented    the    board     with    three   alternatives,   which   he
indicated came from the NCUA through Garcia.             The first option was
that the NCUA could take over the credit union the following Monday
and appoint its own manager to replace Waddell.                 Alternatively,
First Family and Forney could select a manager to replace Waddell
and take over the credit union in a short time period.                Finally,
the Board could retain Waddell as manager, but Forney indicated
that he would initiate administrative proceedings against the
credit union and require the credit union to immediately post a

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sign on its doors stating that in one year it would no longer have
insurance.




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                               10
     The board considered the first two options unrealistic due to
the time pressures and the lack of input the credit union would
have.       The final option, according to Carl McCarthy, the board's
chairman, was in "fact," "a threat saying--telling our depositors
that their money is no longer insured . . . ."            (Dist. Ct. Op. at
7 (quoting McCarthy Dep. at 36).)          McCarthy explained, "the effect
of [the third option] would be that the day after you put that
[sign] on your door, there wouldn't be a credit union because there
would be no funds there."        (Id. (quoting McCarthy Dep. at 35).)         In
light of the alternatives, the board suggested a fourth option:               a
merger with another credit union.              Forney accepted the merger
option but maintained that Waddell would still have to be fired.
(Id. at 8.)       According to McCarthy, the board wanted to retain
Waddell and did not believe that the charges against him were
substantiated, but the directors' hands were essentially tied
because the message from the NCUA was clear--they had no real
choice but to terminate Waddell.


     Over the course of the next few days, the threats and demands
of the NCUA were repeated to the board members and expanded to
include      threats   that    the   individual   directors   could    be   held
personally liable for damages if the demands were not met. (See
Joint App. at 218 (McCarthy Dep. at 190-1).)             It is also alleged
that Forney and Garcia began dictating the manner in which the
board would carry out Waddell's termination.                  They instructed
McCarthy       that    "they   wanted    [Waddell]   terminated       effective
immediately under paragraph 13.2.5 of the contract,"3 and they

        3
      Article 13.2.5 of Waddell's employment contract with First
Family provides:

     13.2 Termination--This Agreement shall terminate .
     . . upon written notice of one party to the other,
     provided that in case of termination by Credit
     Union, there is formal action at a duly called

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                                         11
specified what benefits should be paid out to Waddell under the
contract.   McCarthy requested substantiation of the charges against
Waddell and reminded Forney and Garcia that Waddell's contract
entitled him to prior written notice and an opportunity to respond
to the charge before any termination decision was officially made.
The board never received any documentation and Forney and Garcia
continued to insist that Waddell be terminated immediately.


     On October 8, 1990, the board made a motion "pursuant to the
demand of the NCUA per telephone calls" to terminate Waddell "for
failure to follow credit union policies and failure to properly
document a number of commercial loan files."     (Joint App. at 110
(Minutes from Board Meeting, Oct. 8, 1990).)        The board sent
Waddell's attorney a letter, notifying him of the charges against
him and informing him that he could make a presentation to the
board at the next meeting.   Waddell claims that although he made a
presentation to the board:




     meeting, by the Board of Directors by way of a
resolution clearly adopted by two thirds of the total number of
members of the Board to give such notice, and first to occur of any
of the following events:

     . . . .

        13.2.5 The material breach of this Agreement, or
     the   negligent   or  willful   misperformance   by
     Executive of Executive's obligations under this
     agreement or the dishonest, fraudulent or criminal
     acts on the part of Executive, provided, however,
     Executive shall be given prior written notice of
     the charges against Executive, an opportunity to
     respond in person or in writing, at the option of
     Executive, to the charges before a final decision
     is made to terminate this Agreement.

(Jt. App. at 106 (emphasis added).)

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                                 12
[I]t was not really a defense because it was
already known that I was going to be terminated no
matter what because that's the only way the merger
could go through. And that's the only way they




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                          13
     could get any guarantees for the merger, per
     stipulations from the department, NCUA or whatever.

(Id. at 180 (Waddell's Dep. at 247-8).)      McCarthy also believed
that the outcome of the hearing was "mandated by NCUA through Mr.
Forney and phone conversations with Mr. Garcia."        (Id. at 217
(McCarthy's Dep. at 189).)    Thus Waddell alleges that the First
Family Board terminated him involuntarily, pursuant to the threats,
demands, instructions, and terms dictated by the defendants.


                                III.


     Waddell claims that the defendants' conduct deprived him of
his right to be free from unlawful government interference in his
employment relation.    He separately alleges that their conduct
deprived him of a protected property interest in his employment
based on his contract, which provided that he could only be
terminated for cause, after written notice and an opportunity to
respond.   (Joint App. at 106-7.)   As we understand them, these two
claims involve essentially the same right:   some form of procedural
due process if Waddell can demonstrate that the government agents
have "`exercised coercive power or [have] provided such significant
encouragement' that [First Family's] decision to fire [him] must be
deemed to be that of the government."     Chernin v. Lyng, 874 F.2d
501, 508 (8th Cir. 1989) (quoting Blum v. Yaretsky, 457 U.S. 991,
1004 (1982)).4   Thus, we address the two claims together.


    4
      In the Ninth Circuit, a claim of unconstitutional government
interference is dependent on the employee's enforceable entitlement
to continued employment. Merritt v. Mackey, 827 F.2d 1368, 1371
(9th Cir. 1987). In Chernin v. Lyng, 874 F.2d 501 (8th Cir. 1989),
however, our court determined that "[e]mployees have an interest in
their employment relations which the Fifth Amendment protects from
arbitrary government interference, regardless of whether their
employment relation may be dissolved at will." Id. at 506. In any
event, we need not address this conflict as it is undisputed that

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                                 14
Waddell had a legitimate expectation of continued employment based
on his employment contract.

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                               15
A.     Property Right


       As of 1989, the right to be free from government interference
with an employment relation was clearly established by our court in
Chernin v. Lyng, 874 F.2d 501 (8th Cir. 1989).         See Holloway v.
Conger, 896 F.2d 1131, 1136 (8th Cir. 1990) (acknowledging Chernin,
but holding that it was not "clearly established"      for conduct that
occurred in 1987).      Prior to Chernin, the Ninth Circuit explicitly
recognized the same constitutional right.        Merritt v. Mackey, 827
F.2d 1368 (9th Cir. 1987).         In both cases, a government agency
required a private employer over whom it had regulatory authority
to fire an employee against the employer's own judgment or will.
In Chernin, the USDA refused to provide a meatpacking company with
inspection services--without which meatpackers may not operate--
until the company agreed to fire the plaintiff.         Id. at   502-3.
The USDA believed that the plaintiff's involvement in the company
rendered it unfit for operation because he was a convicted felon.
Id. at 503.     The allegations in Chernin were that the company
wanted to retain the plaintiff as an employee, but was forced to
fire him due to the severe economic pressure from the USDA.      Id. at
507.   Our court concluded that Chernin's termination constituted a
deprivation of a right for which the Fifth Amendment guarantees due
process of law.      Id. at 509.     Similarly, in Merritt, state and
federal officials conditioned further funding of a drug and alcohol
treatment center on its firing one of the counselors "at the
earliest possible date."     827 F.2d at 1370.   After determining that
the plaintiff had more than a "unilateral expectation" of continued
employment, the Ninth Circuit concluded:

       Merritt had a protected property interest in his
       continued employment . . . . Thus, the Due Process
       Clause entitled Merritt to a meaningful hearing at
       a meaningful time to challenge any deprivation of
       that interest by the state or federal government.


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Id. at 1371.




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                17
      In   both     cases,   the    defendants   argued    that      because   the
terminations were the result of a purely private decision, the Due
Process Clause does not come into play.               Both our court and the
Ninth Circuit soundly rejected this argument.             Chernin, 874 F.2d at
508; Merritt, 827 F.2d at 1371.          As the Ninth Circuit stated:

      "The requisite causal connection [between the
      government conduct and the deprivation] can be
      established not only by some kind of direct
      personal participation in the deprivation but also
      by setting in motion a series of acts by others
      which the actor knows or reasonably should know
      would cause others to inflict the constitutional
      injury."

Merritt, 827 F.2d at 1371 (quoting Johnson v. Duffy, 588 F.2d 740
(9th Cir. 1978)).


      Accepting     Waddell's      allegations   as    true,   the   defendants'
conduct falls squarely within Chernin and a reasonable person in
defendants' positions should have known that his conduct would
violate Waddell's right to due process.               The defendants required
First Family to fire Waddell immediately or lose the insurance on
its deposit funds.        The defendants' initial demands and subsequent
threats of personal liability led the board to believe that it had
no   choice   but    to   terminate    Waddell's      employment     as   manager.
Although Waddell was given written notice of the charges against
him and, in form, an opportunity to respond, the hearing was not a
meaningful one.       As the deposition testimony of both Waddell and
McCarthy reveal, the board was predisposed to find against him.
The defendants were aware of Waddell's rights under his contract
and should have known that he was entitled to due process before he
was terminated.       Accordingly, the district court was correct in
concluding that a genuine issue of fact regarding the defendants'
conduct remains and that summary judgment on the basis of qualified
immunity for this claim was not appropriate.

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     The defendants argue that Waddell's right to be free from
governmental interference was not clearly established because none
of the cases relied on by the district court involved a troubled
financial institution.    Relying on United States v. Gaubert, 499
U.S. 315, 329-31 (1991), the federal defendants specifically argue
that because they have the regulatory authority to either terminate
a credit union's insured status with notice of termination to the
public or terminate Waddell directly, they also have the discretion
to pursue informal, more efficient, corrective action.         Although
Gaubert recognizes such discretionary authority, it does not alter
the clearly established right of an individual to be free from
arbitrary government interference with an employment relation.       In
Gaubert, the Court was concerned with whether the federal agents'
conduct, including obtaining the resignation of a savings and
loan's management and board of directors and involvement in its
day-to-day   business,   fell   within   the   discretionary   authority
exception to liability under the Federal Torts Claims Act.          The
Court considered the general supervisory authority of the federal
agency and not whether its specific actions in fact deprived the
plaintiff of a due process right to continued employment.         Thus,
defendants' reliance on Gaubert is misplaced.


     Defendants also point to Mann v. Carver, 644 F. Supp. 129
(E.D. Mo. 1986), a case involving a nearly identical facts in which
a district court stated, in dicta, that had plaintiff alleged a
constitutional claim, he would not have succeeded.         Id. at 132.
Again, the court was not addressing head-on the constitutional
claim.   Further, Mann was pre-Chernin and cannot displace what our
court later clearly outlined as a protected legal right.       Moreover,
"[i]n determining whether a legal right is clearly established,
this circuit applies a flexible standard, requiring some, but not
precise factual correspondence with precedent, and demanding that


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                                   20
officials apply general, well-developed legal principles."   J.H.H.
v. O'Hara, 878 F.2d 240, 243 (8th Cir. 1989).   In fact, our court




                               -21-
                                21
in   Holloway     recognized    the     authority     of   Chernin    despite    its
different factual context.            896 F.2d at 1136.


      The defendants additionally argue that because First Family
was given options, and even was permitted to suggest its own
alternative, its decision cannot be deemed attributable to the
government.      See O'Bannon v. Town Court Nursing Ctr., 447 U.S. 773,
787-90 (1980) (finding no liability when the adverse consequence
flows only indirectly from the federal government's determination
to take action against a direct recipient of federal benefits).
Moreover, they contend that because their actions were not directed
at Waddell, but rather at returning the credit union to financial
stability, they cannot be held responsible for Waddell's loss.
Waddell's allegations, and the supporting deposition testimony,
support a finding of more than simply suggesting alternatives.                   All
of the alternatives, except for the third, which essentially would
have closed down the credit union the next business day, included
a demand for Waddell's immediate termination.                 Such a demand, if
proven, would be in direct violation of the NCUA Examiner's Guide.
First Family felt it had no options with respect to Waddell.
Similarly, in both Chernin and Merritt, the government action was
directed    at     the   employer,      not    the    plaintiff-employee        and,
ostensibly, was in the best interests of the employer.                     What the
cases stand for is that the government, in seeking to address a
problem,    must    ensure     that    individuals'        basic    constitutional
guarantees are met.


      Finally,     Treichel     argues     that      he    should    not   be   held
responsible for violating Waddell's constitutional rights because
of his limited involvement in the "coercive" dealings with First
Family.    We agree with the district court, however, that Treichel's
involvement was more than minimal.             He recommended to Garcia that
Waddell be terminated and denied the termination benefits provided

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                                         22
under his contract.   Although Treichel's recommendations only went
directly to Garcia, he stated them as terms and conditions of




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                                 23
financial assistance to First Family and he should have known that
they would be communicated to the board.                  Treichel, essentially,
set the constitutional deprivation in motion.                      Again, Waddell's
allegations remain to be proved at trial, but in light of the
record     before    us,    we    affirm    the    district      court's    denial   of
qualified immunity for each of the named defendants.


B.    Liberty Interest


      Waddell also contends that the defendants' actions deprived
him   of   a   constitutionally         protected     liberty      interest     in   his
reputation and his ability to pursue his profession.                    Waddell bases
his liberty claim on comments that there was a bond claim against
him and that he was not bondable made by each of the defendants at
meetings discussing First Family's merger.                Waddell claims that the
statements     were       false   and   that       they   were    damaging     because
bondability     is    a    requirement       for    employment     in   a     financial
institution in the State of Iowa.                    The district court denied
defendants' motion for summary judgment based on qualified immunity
finding     that     Waddell's     allegations       supported      a   due    process
violation.


      To establish a constitutionally-protected liberty interest,
Waddell must demonstrate that the defendants, in connection with
discharging him, publicly made untrue charges against him that
would stigmatize him so as to seriously damage his standing and
associations in the community, or foreclose his freedom to take
advantage of other employment opportunities.                  See Board of Regents
v. Roth, 408 U.S. 564, 573 (1972); Shands v. City of Kennett, 993
F.2d 1337 (8th Cir. 1993).              Accepting Waddell's allegations as
true, he has failed to establish a protected liberty interest based
on the statements regarding his "bondability."


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                                            24
     As   an   initial   matter,    the   alleged   comments   were   not
sufficiently stigmatizing to constitute a protected liberty




                                   -25-
                                    25
interest.      The requisite stigma has generally been found in cases
in which the employee has been accused of dishonesty, immorality,
criminality, racism, or the like.          Shands, 993 F.2d at 1347.       The
statement that Waddell had a bond claim against him certainly
implied negligence or mismanagement, but did not necessarily impugn
his honesty or morality, as the district court concluded, nor does
it suggest that he has engaged in criminal activity.               Although
"bondability" is a requirement for employment in credit unions,
Waddell has not set forth any facts to support a finding that he
has had trouble obtaining subsequent employment because of the
defamatory statements.        See Green v. St. Louis Housing Authority,
911 F.2d 65, 70 (8th Cir. 1990).        According to his own version of
the facts, Waddell was not hired by the newly-merged credit union,
not because of any statements about his bondability but because of
the demands made by Forney and Garcia.           Further, Waddell has not
demonstrated that the statements were made public.         The statements
were allegedly made during a private meeting about the merger of
First Family with another credit union.


       Finally, Waddell has not established that the statements were
"uttered incident to" or in connection with his discharge.                 See
Siegert v. Gilley, 500 U.S. 226, 234 (1991); LaSociete Generale
Immobilier v. Minneapolis Community Dev. Agency, 44 F.3d 629, 640
(8th    Cir.   1994)   (the   alleged   injury   to   reputation    must   be
accompanied by an alteration of Waddell's legal status).           Waddell's
allegations are vague as to exactly when the statements were made:
they were made sometime after the board members felt compelled to
terminate Waddell due to the defendants' demands but before Waddell
was officially terminated.        It is undisputed, however, that the
statements were made in the context of merger discussions at which
it was already a foregone conclusion that Waddell was to be
terminated from his management position at First Family.            Because
we do not believe Waddell has alleged a constitutionally-protected

                                    -26-
                                     26
liberty interest, we reverse the district court's denial of summary
judgment on this claim.




                               -27-
                                27
                                 III.


     Accordingly, we affirm the district court's denial of summary
judgment to the defendants for Waddell's property claim and reverse
with respect to his alleged liberty interest.


     A true copy.


        Attest:


                    CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




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