Recent experiments with pure electron plasmas in a Malmberg-Penning trap have observed the algebraic damping of m ¼ 1 diocotron modes. Transport due to small field asymmetries produces a low density halo of electrons moving radially outward from the plasma core, and the mode damping begins when the halo reaches the resonant radius r ¼ R w at the wall of the trap. The damping rate is proportional to the flux of halo particles through the resonant layer. The damping is related to, but distinct from, spatial Landau damping, in which a linear wave-particle resonance produces exponential damping. This paper explains with analytic theory the new algebraic damping due to particle transport by both mobility and diffusion. As electrons are swept around the "cat's eye" orbits of the resonant wave-particle interaction, they form a dipole (m ¼ 1) density distribution. From this distribution, the electric field component perpendicular to the core displacement produces E Â B-drift of the core back to the axis, that is, damps the m ¼ 1 mode. The parallel component produces drift in the azimuthal direction, that is, causes a shift in the mode frequency.