F. RICHARD WALTON, PLAINTIFF-APPELLANT,

v.

JENNINGS COMMUNITY HOSPITAL, INC. AND LOUIE C. VAUGHT, DEFENDANTS-APPELLEES

RIPPLE, Circuit Judge.

Dr. F. Richard Walton, a surgeon, filed suit against his former employer, Jennings Community Hospital, and the Administrator of the Hospital, Louie C. Vaught. He sought recovery on the ground that defamatory comments made by Mr. Vaught to a prospective employer led to Dr. Walton’s loss of an employment opportunity. The matter came to the district court pursuant to its diversity jurisdiction. 28 U.S.C. § 1332. Dr. Walton now appeals the district court’s decision that he failed to show that Mr. Vaught’s statements proximately caused Dr. Walton’s loss. For the reasons that follow, we affirm the judgment of the district court.

I

BACKGROUND.

A. Facts

On March¹,1983, Dr. Walton’s resignation from Jennings Hospital became effective; he left after several troubled months; He had been accused on May 7, 1982, of making unsolicited sexual advances to a nurse at Jennings Hospital. He denied the charges. On September 14, 1982, Dr. Walton was indicted on charges of Medicaid theft resulting from services he performed for patients at Muscatatuck State Hospital. The indictment was dismissed on December 15, 1982.1

When Dr., Walton announced that he intended to resign from Jennings Hospital, he entered into a contract with the hospital that provided as follows:

The Hospital in replying to inquiries in regard to future employment of Dr. Walton will accurately report that Dr. Walton has voluntarily resigned from the hospital and if asked, and only if asked, will reply that he was not under any investigation as of the date he submitted his resignation.

Appellant’s Br. at 5. This agreement was the basis for Dr. Walton’s breach of contract claim against Jennings Hospital and Mr. Vaught. In Walton v. Jennings Community Hospital, 875 F. 2d 1317 (7th Cir.1989), this court found the agreement to be unenforceable as against public policy because it sought, contrary to the Indiana Peer Review Act, to restrict information that could be given to prospective employers about Dr. Walton. See Ind:Code Ann. §§ 34-4-12.6-1 to -12.6-5 (West 1988 & Supp.1992).

Following his resignation, Dr. Walton pursued a position with the physicians’ group practicing at the Kendrick Memorial Hospital in Mooresville, Indiana. He disclosed to Dr. Kendrick, head of the physicians’ group, that he had resigned from Jennings Hospital and that he had been wrongfully accused of sexual misconduct and wrongfully charged with Medicaid fraud. Subsequently, Dr. Walton was invited to apply to Kendrick Memorial Hospital for staff privileges. In addition to being head of the physicians’ group, Kendrick was also Chief of the Medical Staff of the hospital, Chairman of the Board of Trustees of the Hospital, and head of the Credentials Committee of the hospital medical staff.

As part of the routine procedure to check a prospective staff doctor’s credentials, Louise Swisher, administrator of the Kendrick Hospital, made several telephone calls to the hospitals with which Dr. Walton had previously been associated. Ms. Swisher revealed in her deposition that she had spoken with Robert Kelsey, a hospital administrator in Rochester, Indiana, who told her that Dr. Walton was medically competent but unable to get along with other doctors. Ms. Swisher also spoke with the administrators of hospitals in Madison and Kokomo, Indiana, as well as representatives of the Indiana State Medical Association and the Indiana Hospital Association, all of whom assessed Dr. Walton as medically competent but unable to get along with others. -On June², 1982, Ms. Swisher spoke with Mr. Vaught. Mr. Vaught told Ms. Swisher that'Dr. Walton had resigned from Jennings Hospital under the direction of the hospital attorney, had been indicted for Medicaid theft, and had sexually assaulted a nurse at Jennings Hospital. Ms. Swisher reported these comments, along with comments from other hospital administrators, to Dr. Kendrick. Shortly after this report was made, Dr. Walton was dropped from consideration for membership in the physicians’ group by Dr. Kendrick.

B. District Court Proceedings

1.

Dr. Walton’s original complaint was filed on November 19, 1984, and relied on a breach of contract theory. He amended his complaint to allege a second count for tor-tious interference. The district court granted summary judgment to Mr. Vaught on all counts and summary judgment to Jennings Hospital on the contract count, but denied summary judgment to Jénnings Hospital on the tort theory. The case was transferred to another judge, who denied Dr. Walton’s motion to amend and granted summary judgment to Jennings Hospital on the tort claim. In Walton, 875 F. 2d 1317 at 1323-24, this court affirmed the summary judgment on the contract claim, but reversed and remanded on the tort count.

2.

On remand, the district court conducted bifurcated proceedings. It held a bench trial on liability and then a bench trial on damages, although certain remaining liability issues were addressed in the latter phase as well. In the first phase, the court found that Mr. Vaught had indeed been vindictive and malicious toward Dr. Walton. Liability Order at 3, 11. The court found credible the nurse’s story that Dr. Walton had sexually assaulted her. Id. at 6.

The hospital attorney had requested Dr. Walton’s resignation after the nurse reported the incident, but Dr. Walton demanded a hearing. Before the issue was resolved internally, however, Dr. Walton announced that he had decided to resign. Id. at 7.

Negotiations followed that resulted in an agreement that Jennings Hospital would respond to any subsequent inquiries about Dr. Walton by saying that he was not under investigation at the time of his resignation and that his resignation was voluntary. Id. at 8.

Finally, the court found a number of' defects in the Medicaid indictment, which rendered it unworthy of credence. Id. at 8-9.2

The court ruled that Mr. Vaught’s comments to Ms. Swisher regarding the sexual misconduct claim were essentially true and were therefore protected under Indiana’s Peer Review Act. The court held, however, that the comments regarding the Medicaid fraud indictment and Dr. Walton’s resignation. “under the direction of the hospital attorney” were incomplete and misleading and had been made with a malicious purpose.3 Liability Order at 16, 20. The court further found that, at the time Mr. Vaught made the comments, the Medicaid indictment had already been dismissed, and Mr. Vaught was well aware that Dr. Walton’s resignation had not been accomplished at the direction of the hospital attorney.

In the second phase of the proceedings, the court had to deal with two more issues that bore on liability.

First, the court found for the defendants on the tortious interference with a business relationship’claim because there was no evidence that Mr. Vaught knew of the existence of the doctors’ group, and he would have assumed that Ms. Swisher’s call pertained only to staff privileges at the hospital. Order Following Bench Trial on Damages at 5 (Feb. 26, 1992) (hereinafter “Damages Order”). On the claim that Mr. Vaught tortiously interfered with a contractual relationship, the court found that no contract had been extended to Dr. Walton, although the group had invited Dr. Walton to apply for hospital privileges.

Consequently, the court held that Dr. Walton’s claim for tortious interference with a contractual relationship must fail.

3.

These rulings did not end the ease, however, because the court granted Dr. Walton’s request to amend the complaint to allege a defamation claim. In the district court’s view, the parties had squarely addressed the issue as part of the tortious interference with business relationship count. Damages Order at 9. The court noted that, while it had previously found two of Mr. Vaught’s remarks to be malicious, the question of proximate cause remained to be settled.

The court first examined the direct evidence of causation offered by Dr. Walton.

First, both Drs. Wilson and Donnally, members of Dr. Kendrick’s practitioners’ group, testified that Dr. Walton was under serious consideration for membership but that his application was dropped some time after they had heard Ms. Swisher say to Dr. Kendrick that she had received information that made Dr. Walton’s application unacceptable. Id. at 11, 12. Drs. Donnally and Wilson were not privy to Ms. Swisher’s report, however. Dr. Donnally told Dr. Walton that Ms. Swisher’s information “tipped the scales against him” and that Ms. Swisher was Dr. Kendrick’s confidante. Dr. Donnally also maintained, however, that Dr. Kendrick was the ultimate decisionmaker. Id. at 12.

He further testified that he thought that Ms. Swisher’s information did not make a difference in the final decision because there was a cloud around Dr. Walton that caused concern. Id.

Dr. Kendrick testified that Dr. Walton had told him about the difficulties at Jennings Hospital prior to Ms. Swisher’s conversation with Mr. Vaught, but that positive references from Dr. McNabb of Jennings Hospital and Dr. Otis Bowen, former governor of Indiana, had allayed his concerns. Id. at 13.

The physicians’ group invited Dr. Walton to apply for staff privileges even though the physicians already knew about the Jennings Hospital situation. Id. at 13.

Prior to the decision not to extend privileges to Dr. Walton, Ms. Swisher had given Dr. Kendrick her notes regarding her credentials check with Mr. Vaught and five others. The news was not encouraging; the referees spoke of personality and eollegiality problems and coun-selled caution in considering Dr. Walton’s application. Id. at 13-14. Dr. Kendrick testified that he made the decision not to extend an invitation on his own. He denied that the information conveyed by Mr. Vaught had had any effect on his decision. The court stated unequivocally that it found Dr. Kendrick’s testimony believable. ■ Id. at 22.

The court concluded that the most likely chronology of events was that Ms. Swisher got a negative report from Howard County, then Mr. Vaught’s report, followed by the remaining reports. The court also concluded that the critical conversation between Dr. Kendrick and Ms. Swisher occurred after Ms. Swisher had completed her research. Id. at 16. In addition, the court found that, while all of the group doctors had known about the Jennings Hospital situation prior to Ms. Swisher’s revelations, Ms. Swisher learned of them first from Mr. Vaught. Id. at 22.

The court then considered Dr. Walton’s assertion that Ms. Swisher had convinced Dr. Kendrick not to extend privileges on the strength of Mr. Vaught’s comments. The court declined to draw this conclusion saying that to do so would be to conclude that Ms., Swisher’s influence over Dr. Kendrick was greater than that of both Dr. MeNabb and Dr. Otis Bowen, both of whom had discounted the Jennings Hospital stories. Id. at 19. In addition, the court chose to believe Dr. Kendrick when he said that Ms. Swisher did not influence his decision and that the negative reports about Dr. Walton’s inability to get along with other doctors were key. Indeed, the court rejected all of Dr. Walton’s efforts to cast doubt on Dr. Kendrick’s credibility. Id. at 21-23.

Accordingly, the court held that Mr. Vaught’s comments had not proximately caused an injury to Dr. Walton.

4.

During the course of the trial proceedings in the district court, the court excluded the portion of Ms. Swisher’s deposition testimony (she was unable to testify at trial because she had suffered a debilitating stroke) in which she stated that it was her opinion that Mr. Vaught’s information influenced Dr. Kendrick to terminate negotiations with Dr. Walton. Additionally, the district court-excluded testimony by personnel from the other hospitals where Dr. Walton had worked that contradicted the information that Ms. Swisher was given on her credential cheeks. Dr. Walton now appeals from these two eviden-tiary rulings and from the ruling that Mr. Vaught’s comments had not proximately caused Dr. Walton’s injury.

II

ANALYSIS

A. Standard of Review

We review the district court’s fact-finding under a clearly erroneous standard, but we review the court’s legal analysis de novo. Fed.R.Civ.P. 52(a); Ambrosino v. Rodman & Renshaw; Inc., 972 F. 2d 776, 784 (7th Cir.1992).

If the district court’s factual findings are plausible in light of the record, we may not reverse merely because it would have weighed the facts differently. See Anderson v. City of Bessemer City, 470 U.S. 564, 574, 105 S.Ct. 1504, 1511-1512, 84 L.Ed.2d 518 (1985); United States v. Skinner, 986 F. 2d 1091, 1095 (7th Cir.1993).

When a trial judge must choose between testimony giving two versions of the facts that are plausible and uncontradicted by extrinsic evidence, a reviewing court will “virtually never [find] clear error.” Anderson, 470 U.S. at 575, 105 S.Ct. at 1512. Because, in this diversity case, the district court reached its legal conclusions based on its reading of state law, we must review the decision de novo. Salve Regina College v. Russell, 499 U.S. 225, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991).

When legal determinations are based on findings of fact, we accept the district court’s findings unless they are clearly erroneous. Business Records Corp. v. Lueth, 981 F. 2d 957, 959 (7th Cir.1992) (citing Mucha v. Ring, 792 F. 2d 602, 605-06 (7th Cir.1986)).

We review a trial judge’s decision to admit or exclude evidence under an abuse of discretion standard. Ross v. Black & Decker, Inc., 977 F. 2d 1178, 1183 (7th Cir.1992), cert. denied, — U.S. -, 113 S.Ct. 1274, 122 L.Ed.2d 669 (1993); Nachtsheim v. Beech Aircraft Corp., 847 F. 2d 1261, 1266 (7th Cir.1988).

B. Causation