                 United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 12-2696
                        ___________________________

   Bernard Jones; Alcohol and Drug Counseling Services, LLC; Healing Circle
                           Recovery Community, Inc.

                       lllllllllllllllllllll Plaintiffs - Appellees

                                           v.

  Rick McNeese, Dr., Nebraska Department of Correctional Services, Assistant
       Administrator of Behavioral Health-Substance Abuse, Individually

                      lllllllllllllllllllll Defendant - Appellant
                                      ____________

                    Appeal from United States District Court
                     for the District of Nebraska – Lincoln
                                 ____________

                             Submitted: May 16, 2013
                              Filed: March 26, 2014
                                  ____________

Before SHEPHERD, BEAM, and MELLOY, Circuit Judges.
                           ____________
MELLOY, Circuit Judge.

      This 42 U.S.C. §§ 1981 and 1983 lawsuit is before the Court on interlocutory
appeal for a second time after we remanded the case for an additional consideration
of the defendant's claim to qualified immunity. The district court determined on
remand that the defendant is not entitled to qualified immunity on any ground. We
reverse.

                                     I. Background

                                         A. Facts

      Bernard Jones, who is African American, was employed as a substance-abuse
counselor by the Nebraska Department of Correctional Services (NDOC) from 1991
to 2007. While on injury leave from his job at NDOC in 1998 and 1999, Jones
completed a practicum at First Step Recovery, Inc. ("First Step"), a privately owned
substance-abuse rehabilitation facility that coordinates with the State of Nebraska to
provide treatment services to persons on probation and parole. First Step is wholly
owned by Dianne McNeese, Dr. Richard McNeese's ("Dr. McNeese") wife. Dr.
McNeese was Assistant Administrator of Behavioral Health–Substance Abuse at
NDOC from July 2005 until he resigned in October 2009. During his Assistant
Administrator tenure, Dr. McNeese also worked as a consulting psychologist at First
Step.

       When Jones completed his practicum in 1999, Dr. McNeese offered to hire
Jones to work part-time at First Step in addition to working at NDOC. Jones declined
Dr. McNeese's offer because he perceived it to be racially motivated. Specifically,
Jones testified that Dr. McNeese wanted to hire him at First Step to "work with the
minorities, in particular the blacks," so that Jones could "attract more black clients . . .
because that's a revenue source that [Dr. McNeese] [wanted] to get."

       In 2000, Dr. McNeese again approached Jones about working part-time for
First Step. This time, Dr. McNeese told Jones that he could work for First Step but
practice at another substance-abuse treatment facility, Antlers, which had partnered
with First Step in bidding on a $14 million federal contract. Jones accepted the offer

                                            -2-
to work for First Step by way of Antlers because he would have the opportunity to
work alongside Ron Namuth, the owner of Antlers and a person whom Jones
described as a "great counselor" and perceived as having a "tremendous reputation."

       Between six and nine months after Jones started working at Antlers, Dr.
McNeese and Namuth had what Jones characterized as a "falling out." At that time,
Namuth offered to buy out Jones's contract as an independent contractor with First
Step if Jones agreed to work for Antlers and cease affiliating with First Step. Jones
accepted Namuth's offer, cut all ties with First Step,1 and continued working at
Antlers until January 2008.

        Throughout Jones's part-time employment with First Step and Antlers, Jones
continued working full-time at NDOC until he retired in 2007. In 2005 or 2006,
Jones approached Dr. McNeese about a concept that Jones was pursuing called
"Healing Circle Recovery Community."2 Jones intended to operate Healing Circle
as a treatment center while employed at NDOC, but testified in his deposition that Dr.
McNeese told him that he would be fired from NDOC if he did so. Dr. McNeese
denies making any such statement, but admits that he and two other NDOC
employees—one Caucasian and the other Pakistani—worked at First Step while still
employed by NDOC. Jones subsequently approached NDOC Deputy Director Larry
Wayne—who at all times occupied a position in NDOC superior to both Jones and
Dr. McNeese—to discuss his proposal to perform part-time work outside of NDOC
at Healing Circle. Wayne directed Jones to ask the NDOC legal department if there


      1
       Jones testified that during the time he was affiliated with First Step but
working at the Antlers facility, "the only involvement [he] had with McNeese" was
that Dr. McNeese paid him.
      2
       Jones incorporated Healing Circle Recovery Community, Inc. ("Healing
Circle") in 2004, but did not further pursue operating Healing Circle until he
approached Dr. McNeese in 2005 or 2006.

                                         -3-
would be any conflict of interest, and the legal department said there would not be.
The legal department concluded there was no conflict of interest because Healing
Circle, as proposed by Jones, would be a women-only treatment center whereas Jones
only worked with men at NDOC.

       After retiring from NDOC in 2007, Jones also established Alcohol and Drug
Counseling Services, LLC (ADCS), an outpatient treatment center for men only.
ADCS and Healing Circle each began accepting clients in 2008, and each received
payment for treatment services to parolees and persons on probation through different
state-funded voucher systems. Healing Circle received vouchers primarily from the
Nebraska Office of Probation, while ADCS received vouchers directly from NDOC.3
ADCS received ninety-nine percent of its funding from the NDOC voucher system,
and the NDOC vouchers to ADCS made up more than one-fourth of all distributed
NDOC vouchers.

       Dr. McNeese oversaw the NDOC voucher system from October 2008 to
October 2009. Although the NDOC voucher system draws from a different pool of
state funds than the Office of Probation voucher system, NDOC made arrangements
for the Office of Probation to administer the NDOC vouchers. Under each respective
voucher system, parolees and persons on probation are permitted to choose their own
treatment facility, provided that the facility is on a list of NDOC-approved treatment
providers. ADCS was on this list until June 30, 2009, when Dr. McNeese suspended
ADCS from the list.

         On June 29, 2009, Dr. McNeese learned from a supervisor of chemical
dependency counselors at the NDOC that, the week before, Jones had visited inmates
at a correctional facility in Lincoln, Nebraska to promote ADCS's treatment services.
During the visit, Jones distributed forms to the inmates that many of them signed,


      3
          Healing Circle did receive either one or two vouchers directly from NDOC.

                                         -4-
thereby agreeing to utilize ADCS's outpatient treatment services upon their release.
In an email dated June 29 and sent to various NDOC and Office of Probation
administrators, Dr. McNeese characterized this practice as "highly inappropriate" and
a "very serious violation" that, if true, "calls for immediate action due to [an] ethical
breach." The email read as follows:

             Here's the latest information on a practice I see as highly
             inappropriate. I continue to be concerned that Mr. Jones
             uses his knowledge of DCS and previous professional
             relationships to obtain access to the inmate population,
             misrepresent DCS support of the program, and go so far as
             to "manipulate" inmates into signing an agreement. I think
             this practice has the potential of creating an inappropriate
             power relationship in which he has perceived power over
             inmates as clients, including the implied power of
             supporting them with the Parole Board (and presumably
             the implied opposite of not supporting them).

             If [the] report is accurate, I see this as a very serious
             violation that calls for immediate action due to the ethical
             breach. . . . I also see this as something that may need
             attention from Legal.

On June 30, Dr. McNeese emailed Jones notifying Jones that he was suspending
ADCS from the NDOC approved-provider list "pending further investigation."4 Dr.

      4
       It is unclear whether Healing Circle was also suspended from the approved-
provider list. In the order on appeal, the district court stated that "Jones and his
businesses had been suspended from the [NDOC] voucher program and were no
longer on the provider list." Jones v. McNeese, 883 F. Supp. 2d 897, 906 (D. Neb.
2012) ("Jones III") (emphasis added). We find nothing in the record to indicate that
Healing Circle was ever officially suspended from the approved-provider list. We
note, however, that Dr. McNeese's June 29 and June 30 emails copied Catherine
Gibson-Beltz, who was involved in distributing the Office of Probation vouchers that
were the primary funding source for Healing Circle, and Deb Minardi, the Deputy

                                          -5-
McNeese testified in his deposition that he suspended ADCS because he believed that
Jones violated certain confidentiality provisions of the Health Insurance Portability
and Accountability Act (HIPAA). The NDOC legal department later informed Dr.
McNeese that Jones's visit to the Lincoln correctional facility was a "non-issue."
After learning that there was no HIPAA violation, however, Dr. McNeese did not
reinstate ADCS on the approved-provider list. Dr. McNeese said later that the failure
to do so was a "mistake on my part."

       Around the same time that ADCS and Healing Circle were suspended from the
approved-provider list, NDOC was soliciting bids from treatment facilities for a
contract to become the sole provider of outpatient services for parolees and persons
on probation; the contract was worth $200,000. Prior to ADCS's and Healing Circle's
suspensions, ADCS and Healing Circle had received more NDOC vouchers than any
other group of treatment facilities owned by and/or affiliated with a single participant
in the NDOC voucher system; First Step had received the second-most vouchers.
Because ADCS—and likely Healing Circle5—were suspended from the approved-
provider list, they were also in effect precluded from bidding on and being awarded
the sole-provider contract because one criteria was that the bidder be a current
voucher recipient.

     NDOC issued a letter of intent to award the sole-provider contract to First Step
on August 25, 2009. On August 26, NDOC received a notice of grievance from an
unsuccessful bidder and subsequently rescinded its letter of intent to contract with

Probation Administrator of the Nebraska Supreme Court. Additionally, as mentioned
above, NDOC made arrangements for the Office of Probation to administer the
NDOC vouchers. So while Healing Circle might not have been officially suspended
from the approved-provider list, Dr. McNeese's emails that copied Gibson-Beltz and
Minardi may have effected a de facto suspension of Healing Circle by way of its
association with Jones.
      5
          See footnote 4, supra.

                                          -6-
First Step. NDOC then issued a second letter of intent to contract with a different
treatment facility. On August 31, NDOC sent a third letter that rescinded all
previously issued letters of intent and placed the NDOC sole-provider contract on
hold.

       Shortly after the August 26 grievance was filed, officials placed Dr. McNeese
on unpaid administrative leave due to a conflict of interest. Although Dr. McNeese
did not participate in evaluating the bid proposals to become NDOC's sole provider
of treatment services, he was deemed "instrumental" in developing the criteria and the
weighting system used to evaluate the proposals. Further, Dr. McNeese directly
supervised the individuals who were responsible for evaluating the proposals, and he
provided the written justification for initially awarding the contract to First Step. Dr.
McNeese disclosed that his wife owned First Step, but failed to disclose the extent of
he and his wife's financial interest in the entity as required by Nebraska law and
NDOC Administrative Regulations. Dr. McNeese resigned from NDOC on October
8, 2009.

       As a result of ADCS and Healing Circle being suspended from the NDOC
approved-provider list, and thus losing their primary funding sources, ADCS closed
in July or August 2009 and Healing Circle closed in October 2009. Jones eventually
filed for personal bankruptcy due to his inability to make payments on loans that he
took out in connection with ADCS and Healing Circle.

                                B. Procedural History

      Jones, ADCS, and Healing Circle (collectively, "Plaintiffs") sued Dr. McNeese
pursuant to 42 U.S.C. §§ 1981 and 1983 on December 28, 2009. The complaint
alleges that Dr. McNeese treated Plaintiffs disparately because Jones is African
American. Jones claims that Dr. McNeese's threat to fire him if he worked part-time
at Healing Circle was based on Jones's race because non-African American NDOC

                                          -7-
employees were permitted to "moonlight" at First Step. Jones also claims that Dr.
McNeese, in his role as Assistant Administrator at NDOC, made statements to third
parties that defamed Jones's character, that resulted in "loss of [Jones's] employment
opportunities, loss of two viable businesses," and that "prevented [Jones] from
pursuing [his] profession." Specifically, Jones testified in his deposition that Dr.
McNeese told other State of Nebraska employees that Jones had "done fraudulent
work," "gotten information from inmates illegally," and "entered corrections facilities
illegally." Additionally, Jones testified that Dr. McNeese made statements to an
administrator at a local college that Jones was being investigated for fraud. As a
result, according to Jones, the college stopped sending students to Healing Circle to
intern.

      Dr. McNeese moved to dismiss the claims against him based on qualified
immunity, and later moved for summary judgment on the same basis. The district
court denied Dr. McNeese's motion for summary judgment. Jones v. McNeese,
No. 4:09CV3264, 2011 WL 2200763, at *2 (D. Neb. June 6, 2011) ("Jones I").
Dr. McNeese appealed the district court's denial of summary judgment, and this Court
vacated the denial and remanded the case "for a more detailed consideration and
explanation of the validity, or not, of the defendant's claim to qualified immunity."
Jones v. McNeese, 675 F.3d 1158, 1163 (8th Cir. 2012) ("Jones II").

       On remand, the district court again determined that Dr. McNeese was not
entitled to qualified immunity on any ground. Jones III, 883 F. Supp. 2d at 914–15.
Dr. McNeese subsequently filed this interlocutory appeal in which he raises two
arguments. First, Dr. McNeese claims that the district court erred by adopting Jones's
version of the facts and by failing to employ the proper standard to evaluate his claim
to qualified immunity on summary judgment. Second, Dr. McNeese argues that,
applying the proper standard, he is immune from suit.




                                         -8-
                                     II. Analysis

        "Qualified immunity 'is an immunity from suit rather than merely a defense to
liability.' It entitles an individual to not be subject to trial or the other burdens of
litigation and 'is effectively lost if a case is erroneously permitted to go to trial.'"
Solomon v. Petray, 699 F.3d 1034, 1038 (8th Cir. 2012) (quoting Mitchell v. Forsyth,
472 U.S. 511, 526 (1985)). An individual is only denied qualified immunity if the
answers to the following two questions are yes: "(1) whether the plaintiff has shown
the violation of a statutory or constitutional right, and (2) whether that right was
clearly established at the time of the alleged misconduct. We retain discretion to
decide which of the two questions to answer first." Heartland Acad. Cmty. Church
v. Waddle, 595 F.3d 798, 805 (8th Cir. 2010).

       This Court reviews de novo the district court's denial of summary judgment
based on qualified immunity. Bearden v. Lemon, 475 F.3d 926, 929 (8th Cir. 2007).
In so doing, we consider the evidence presented in a light most favorable to the
nonmoving party. Id. See also Scott v. Harris, 550 U.S. 372, 378 (2007) ("When [the
parties' versions of events differ substantially], courts are required to view the facts
and draw reasonable inferences 'in the light most favorable to the party opposing the
[summary judgment] motion.' In qualified immunity cases, this usually means
adopting . . . the plaintiff's version of the facts." (second alteration in original)
(quoting United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam))).
However, "[w]hile we review the record in the light most favorable to . . . the
non-moving party, we do not stretch this favorable presumption so far as to consider
as evidence statements found only in inadmissible hearsay." Mays v. Rhodes, 255
F.3d 644, 648 (8th Cir. 2001) (emphasis added). See also Moore v. Indehar, 514 F.3d
756, 758 (8th Cir. 2008) ("[I]n construing the record, the 'court may consider only the
portion of the submitted materials that is admissible or useable at trial.'" (quoting
Walker v. Wayne County, 850 F.2d 433, 434 (8th Cir.1988))).



                                          -9-
                                   A. Jurisdiction

     Before turning to the merits, we first address our jurisdiction. In Mitchell, the
Supreme Court articulated the role of appellate courts in reviewing the denial of
summary judgment based on qualified immunity:

             An appellate court reviewing the denial of the defendant's
             claim of [qualified] immunity need not consider the
             correctness of the plaintiff's version of the facts, nor even
             determine whether the plaintiff's allegations actually state
             a claim. All it need determine is a question of law: whether
             the legal norms allegedly violated by the defendant were
             clearly established at the time of the challenged actions or,
             in cases where the district court has denied summary
             judgment for the defendant on the ground that even under
             the defendant's version of the facts the defendant's conduct
             violated clearly established law, whether the law clearly
             proscribed the actions the defendant claims he took.

472 U.S. at 528. The Court "emphasize[d] . . . that the appealable issue is a purely
legal one: whether the facts alleged . . . support a claim of violation of clearly
established law." Id. at 528 n.9.

       Here, Plaintiffs contend that Dr. McNeese's argument on appeal "is not based
on an abstract issue of law," but instead is "one of fact." Plaintiffs are correct that
throughout his brief, Dr. McNeese argues that the district court improperly denied
summary judgment to him based on erroneous factual findings. These evidentiary
challenges asserted by Dr. McNeese are outside the scope of our review on appeal.
See Kahle v. Leonard, 477 F.3d 544, 549 (8th Cir. 2007) ("In [an appeal from denial
of qualified immunity], jurisdiction does not extend to issues of 'evidence sufficiency,
i.e., which facts a party may, or may not, be able to prove at trial.'" (quoting Johnson
v. Jones, 515 U.S. 304, 313 (1995) (internal quotation marks omitted))).


                                         -10-
         Nevertheless, "a determination that there are controverted issues of material
fact . . . does not mean that every . . . denial of summary judgment is nonappealable."
Behrens v. Pelletier, 516 U.S. 299, 312–13 (1996) (citation omitted). "[S]ummary
judgment determinations are appealable when they resolve a dispute concerning an
'abstract issu[e] of law' relating to qualified immunity—typically, the issue [of]
whether the federal right allegedly infringed was 'clearly established.'" Id. at 313
(second alteration in original) (citations omitted). Here, in addition to objecting to
the district court's factual findings, Dr. McNeese also challenges the district court's
determinations that he violated Jones's constitutional rights and that such rights were
clearly established at the time of the alleged violations. We are thus satisfied that we
have jurisdiction over the interlocutory appeal.6

                                       B. Merits

      Jones alleges that Dr. McNeese violated his rights pursuant to the Fourteenth
Amendment's Equal Protection Clause and Due Process Clause, respectively. We
address each claim below.

                                  1. Equal Protection

                               a. Racial Discrimination

       Jones grounds his equal-protection claims in 42 U.S.C. §§ 1981 and 1983.
Section 1981 is limited to race and provides in relevant part that "[a]ll persons . . .
shall have the same right . . . to make and enforce contracts . . . as is enjoyed by white
citizens." 42 U.S.C. § 1981(a). Jones alleges that because he is African American,


      6
       Accordingly, Plaintiffs' motion to dismiss the appeal for lack of jurisdiction
and Dr. McNeese's motion to strike Plaintiffs' dismissal motion as untimely filed are
denied.

                                          -11-
ADCS and Healing Circle were precluded from submitting bids for the NDOC
sole-provider contract and were thus discriminated against on account of Jones's race.
See Domino's Pizza, Inc. v. McDonald, 546 U.S. 470, 476 (2006) (noting that "a
contractual relationship need not already exist[] because § 1981 protects the would-be
contractor along with those who already have made contracts"). Although § 1981
permits a cause of action against private actors, where, as here, a plaintiff brings a
claim pursuant to § 1981 against an individual who was acting under color of law, the
claim must be asserted through § 1983. Artis v. Francis Howell N. Band Booster
Ass'n Inc., 161 F.3d 1178, 1181 (8th Cir. 1998).

        In support of his § 1981 claim, Jones points primarily to one instance of alleged
racial discrimination—the allegation that Dr. McNeese told Jones that Jones would
be fired if he formed and operated Healing Circle and worked there part-time while
still employed at NDOC. Jones asserts that because Dr. McNeese permitted two non-
African American counselors to "moonlight" at First Step while still employed at
NDOC, Dr. McNeese harbored a racial animus towards Jones and thus discriminated
against Jones, Healing Circle, and ADCS when he suspended the businesses from the
approved-provider list during the time that NDOC was accepting bids for the
sole-provider contract. Dr. McNeese maintains, however, that the suspension was
based on his perception of an alleged HIPAA violation.

     Dr. McNeese asks this Court to employ the three-step burden-shifting standard
in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802–03 (1973). Under a
McDonnell Douglas analysis,

             [a plaintiff] has the initial burden to establish a prima facie
             case of discrimination. If [the plaintiff] establishes a prima
             facie case, the burden shifts to [the defendant] to articulate
             a legitimate, non-discriminatory reason for [the allegedly
             unconstitutional] action. If [the defendant] articulates such


                                          -12-
             a reason, the burden returns to [the plaintiff] to prove that
             the proffered reason is pretextual.

Wimbley v. Cashion, 588 F.3d 959, 961 (8th Cir. 2009) (citations omitted).
Regardless of whether Jones meets his initial burden and Dr. McNeese fails to carry
his responsive burden, however, the "ultimate question" that remains is "whether the
employer engaged in intentional discrimination" on the stated basis. Rothmeier v.
Inv. Advisers, Inc., 85 F.3d 1328, 1334–35 (8th Cir. 1996). Thus, "proof that the
defendant's articulated explanation is false or incorrect does not, standing alone,
entitle the plaintiff to judgment; instead, the showing must be that the explanation is
a pretext for discrimination." Hutson v. McDonnell Douglas Corp., 63 F.3d 771, 777
(8th Cir. 1995); see St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 511 n.4 (1993)
("Even though . . . rejection of the defendant's proffered reasons is enough at law to
sustain a finding of discrimination, there must be a finding of discrimination.").

       Here, Jones has not put forth sufficient evidence to demonstrate that Dr.
McNeese's decisions to permit other employees to "moonlight" while employed at
NDOC, and later to suspend ADCS and Healing Circle from the approved-provider
list during the time that NDOC was accepting bids, were motivated by any racial
animus. Jones himself previously moonlighted at First Step while employed at
NDOC in 1998 and 1999 and at Antlers from 2000 through his retirement from
NDOC in 2007. Thus, even accepting the district court's finding that Dr. McNeese
was aware that there was no HIPAA violation, see Jones III, 883 F. Supp. 2d at 915,
there is no evidence to support the district court's findings that the adverse actions
against Healing Circle and ADCS were taken on account of Jones's race.7 See, e.g.,


      7
        Jones also points to one instance in which Dr. McNeese called Jones into his
office and asked Jones to help him assist in finding "people of color" to become
substance-abuse counselors. Jones testified that he perceived the comment to be
racist. However, such "[s]tray remarks are not sufficient to establish a claim of
discrimination." Clearwater v. Indep. Sch. Dist. No. 166, 231 F.3d 1122, 1126 (8th

                                         -13-
Twiggs v. Selig, 679 F.3d 990, 994–95 (8th Cir. 2012) ("Because [plaintiff] has failed
to offer evidence that could convince a reasonable jury that [defendants'] stated
reason for firing her was pretext for intentional discrimination, her claim fails as a
matter of law, and [the defendants] are entitled to qualified immunity."); Omni
Behavioral Health v. Miller, 285 F.3d 646, 655 (8th Cir. 2002) (affirming grant of
summary judgment to § 1983 defendant because the plaintiff's "evidence of
intentional [racial] discrimination [was] insufficient as a matter of law"). The fact
that Jones is African American appears to have been of no consequence as it related
to Dr. McNeese allegedly threatening to fire Jones if he were to operate Healing
Circle while still employed at NDOC. Rather, instead of race, the characteristic that
distinguishes Dr. McNeese's treatment of Jones from his treatment of the two non-
African American employees was the outside business for whom the other two
employees worked—First Step.8 In any event, for the above reasons, we reverse the
district court's judgment that Dr. McNeese is not entitled to qualified immunity on the
§ 1981 claim.




Cir. 2000) (internal quotation marks omitted); see, e.g., Simmons v. Oce-USA, Inc.,
174 F.3d 913, 915–16 (8th Cir. 1999) (terminated employee failed to establish causal
link between adverse employment action and one-time use of racial slur and racial
joke in the context of employment relationship, where the racial slur and racial joke
were made two years prior to the employee's termination).
      8
        In this regard, we note that the record could conceivably support a cause of
action predicated on some type of legal theory tethered to nepotism: that is, favoritism
toward Dr. McNeese's wife's business, First Step, and a desire to protect it from
competitors like Jones. Accord Backlund v. Hessen, 104 F.3d 1031, 1034 (8th Cir.
1997) ("[N]epotism in governmental hiring requires some measure of justification
before it can pass constitutional muster. Such justification must connect the
challenged hiring criterion to the capacity of the applicant to perform the duties of the
job applied for."). Plaintiffs never advanced such a theory for their equal protection
claim, though, and we decline to consider it for the first time in this appeal.

                                          -14-
                                    2. Due Process

       Plaintiffs also allege that Dr. McNeese violated their rights under the
Fourteenth Amendment's Due Process Clause. In particular, they claim that Dr.
McNeese made stigmatizing comments about Jones that deprived Jones of his liberty
interest to earn a living in his profession as a substance abuse counselor.

       In Paul v. Davis, the Supreme Court made clear that injury to reputation alone
is not sufficient to state a § 1983 claim. 424 U.S. 693, 712 (1976) ("[I]nterest in
reputation . . . is neither 'liberty' nor 'property' guaranteed against state deprivation
without due process of law."). The Court intimated, however, that reputational harm
coupled with "some more tangible interests such as employment," can together be
"sufficient to invoke the procedural protection of the Due Process Clause." Id. at 701.
See, e.g., Owen v. City of Independence, Mo., 560 F.2d 925, 935 (8th Cir. 1977) ("In
determining whether a government employer has deprived its employee of a liberty
interest in the termination of employment, the crucial issue is whether the government
employer, in connection with the termination of government employment, including
a refusal to rehire or reemploy, makes a charge which might seriously damage the
employee's standing and reputation in the community."), vacated and remanded on
other grounds, 438 U.S. 902 (1978).

       For a defamatory statement to be actionable under § 1983, it must go beyond
"alleging conduct [by the plaintiff] that fails to meet professional standards," Raposa
v. Meade Sch. Dist. 46-1, 790 F.2d 1349, 1354 (8th Cir. 1986). Rather, the statement
must "damage[] a person's standing in the community or foreclose[] a person's
'freedom to take advantage of other employment opportunities.'" Id. (quoting Bd. of
Regents of State Colleges v. Roth, 408 U.S. 564, 573 (1972)). "The requisite stigma
has generally been found in cases in which [a government official] has accused the
[plaintiff] of dishonesty, immorality, criminality, racism, or the like." Shands v. City
of Kennett, 993 F.2d 1337, 1347 (8th Cir. 1993) (collecting cases).

                                          -15-
       Although Paul's "stigma-plus" test arises most often in situations where the
plaintiff is (or was) a government employee, e.g., Brown v. Simmons, 478 F.3d 922,
923 (8th Cir. 2007), the liberty interest also extends to independent contractors.9 See,
e.g., Transco Sec., Inc. v. Freeman, 639 F.2d 318, 321 (6th Cir. 1981) ("While the
deprivation of the right to bid on government contracts is not a property interest . . . ,
the bidder's liberty interest is affected when that denial is based on charges of fraud
and dishonesty." (internal citation omitted)); see also Neu v. Corcoran, 869 F.2d 662,
667 (2d Cir. 1989) ("[Paul] did not say that 'employment' had to be government
employment.").

       Here, Plaintiffs allege in their complaint, and Jones testified in his deposition,
that Dr. McNeese told third parties numerous stigmatizing comments about Jones.
To wit, Jones testified that Dr. McNeese told "numerous State of Nebraska
employees," as well as an administrator at a local college, that Jones was "under
investigation," that he "had done fraudulent work," that he "had stolen or gotten
information from inmates illegally," and that he "had entered correctional facilities
illegally." Jones III, 883 F. Supp. 2d at 906. On their face, such statements, if untrue,
appear to be sufficiently "stigmatizing" to satisfy Paul insofar as they relate to
"dishonesty, immorality, [and] criminality." Shands, 993 F.2d at 1347. Further,
Jones was removed from the voucher list—which effectively eviscerated his ability
to work in his chosen profession—so he could conceivably show a causal connection
between the alleged comments and Jones' inability to work in his chosen profession
going forward. See Raposa, 790 F.2d at 1354.

     The problem for Jones, however, is that in the procedural posture of this
case—an appeal from a summary judgment order denying qualified immunity—Jones


      9
      We assume without deciding that ADCS's and Healing Circle's receipt of
vouchers was sufficient for Plaintiffs to be considered independent contractors.

                                          -16-
has not presented enough admissible evidence to go forward on his due process
claim. Specifically, Plaintiffs' assertions in their complaint and Jones's deposition
testimony about Dr. McNeese's alleged statements to third-parties are hearsay and
cannot be used to defeat a motion for a summary judgment. See F. R. Evid.
801(c)(1)–(2) ("'Hearsay' means a statement that . . . the declarant does not make
while testifying at the current trial or hearing; and a party offers [the statement] in
evidence to prove the truth of the matter asserted in the statement."); Brunsting v.
Lutsen Mountains Corp., 601 F.3d 813, 817 (8th Cir. 2010) (noting that "inadmissible
hearsay evidence cannot be used to defeat summary judgment"). Importantly,
whether or not McNeese's statements (e.g., that Jones was "under investigation" and
had done "fraudulent work") are true does not matter for the purposes of the hearsay
analysis on this issue. What matters is that Jones offers the third-parties' statements
for their truth—specifically, that McNeese said these things about Jones to them. The
third-parties' statements as described by Jones are hearsay, not within any exception,
and therefore are of no use to Plaintiffs in their efforts to defeat Dr. McNeese's
summary judgment motion. See Brunsting, 601 F.3d at 817.

       Admissible evidence contained in the summary judgment record shows that Dr.
McNeese sent an internal memorandum to personnel in other state governmental
agencies, see supra note 4, alleging that Jones may have engaged in ethically
questionable conduct. Specifically, Dr. McNeese's June 29 email alleged that Jones's
visit to inmates at a prison was "a practice [Dr. McNeese] see[s] as highly
inappropriate" because it "has the potential of creating an inappropriate power
relationship in which [Jones] has perceived power over inmates as clients." Dr.
McNeese said that he viewed the visit as an "ethical breach." Jones was not made
aware of these allegations against him until Dr. McNeese sent Jones an email on June
30 suspending ADCS from the approved-provider list "[p]ending further
investigation."




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       We conclude that the substance of these two emails, standing alone, does "not
create the level of stigma required to implicate a constitutionally protected liberty
interest." Shands, 993 F.2d at 1347. Dr. McNeese admits that the legal department
told him that Jones's visit to the prison was a "non-issue," but Dr. McNeese did not
describe them as such at the time he sent the emails and removed Jones from the
voucher list. In hindsight, Dr. McNeese may have overreacted to Jones's
conduct—conduct that the legal department found perfectly permissible.10 Dr.
McNeese admitted that he should have taken action to place Jones back on the list
after consulting the legal department; he called his failure to do so "a mistake." But
while the emails raised concerns about Jones's actions, they did not rise to the level
of constitutional stigma we have found in other cases. Compare Shands, 993 F.2d
at 1347 (finding insufficient stigma where a fire chief fired certain firefighters and
made public statements concerning the firefighters' "insubordination and
misconduct"), with Winegar v. Des Moines Indep. Cmty. Sch. Dist., 20 F.3d 895, 899
(8th Cir. 1994) (finding sufficient stigma where a school district leveled "allegations
of unjustified child abuse" against a school teacher).

       Dr. McNeese received a report from a supervisor of substance abuse counselors
at NDOC that Jones had visited a prison facility to hand out fliers for ADCS. Dr.
McNeese forwarded this report, along with his "concerns," to other people involved
in the voucher system. He voiced his opinion that "he s[aw]" Jones's actions as
"highly inappropriate," and that he thought Jones's visits to the inmates "had the
potential of creating" appearances of impropriety. Dr. McNeese's analysis was
mistaken, and when the legal department did not find any wrongdoing with Jones's
conduct, Dr. McNeese could have, and probably should have, sent a follow-up email.
Here, it was Dr. McNeese's inaction that further harmed Jones; however, without


      10
         The record provides one explanation for Dr. McNeese's overreaction: his
interest in protecting First Step (his wife's business) from competitors. See footnote
8, supra.

                                         -18-
additional evidence, we decline to draw any inferences from Dr. McNeese's "mistake"
in not placing Jones back on the approved-provider list. In the final analysis, Dr.
McNeese harmed Jones's ability to pursue his chosen profession. Even so, the
evidence presented is not enough to show that Dr. McNeese stigmatized Jones to such
a degree as to violate the Constitution. See, e.g., Winegar, 20 F.3d at 899 ("An
employee's liberty interests are implicated where the employer levels accusations at
the employee that are so damaging as to make it difficult or impossible for the
employee to escape the stigma of those charges.").11 As Jones cannot demonstrate a
constitutional violation, Dr. McNeese is necessarily entitled to qualified immunity.
See White v. Smith, 696 F.3d 740, 753 (8th Cir. 2012) (noting that both prongs of the
qualified immunity analysis must be met to defeat qualified immunity).

                                  III. Conclusion

       For the reasons set forth above, we hold that Dr. McNeese is entitled to
qualified immunity on Jones's §§ 1981 and 1983 claims. We reverse the judgment
of the district court with instructions to dismiss the complaint.
                         ______________________________




      11
        Because we hold that Plaintiffs have not produced sufficient evidence to
establish constitutional stigma, we do not address whether Jones was unable to pursue
his chosen profession generally because of Dr. McNeese's statements. See Habhab
v. Hon, 536 F.3d 963, 968 (8th Cir. 2008).

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