From what I understand, truth is a defense against a charge of libel. More to the point, I've been told that a statement need not be true if it represents a "fair comment" based on the underlying facts.
For instance, suppose there is a person that frequents parties, bars, etc., goes "one on one" with people of the opposite sex and engages in public displays of affection. Under the circumstances, a statement that this person "gets around"/dates/sleeps a lot would be "fair comment," reasonably inferable from known facts. My understanding is if this person were somehow actually a virgin, s/he would not be able to prove libel. Whereas a "recluse" who was "never" seen in public with someone of the opposite sex might.
In the Red Hat Club case, plaintiff Vick Stewart won a libel case because defendant created a character, Susu, whose "backstory" was virtually identical to Stewart's (meaning that she was poorly disguised). The author then created a "front story" of an alcoholic and promiscuous woman very different from Stewart's real "story." Given these circumstances, I doubt that the purported "fiction" represented "fair comment" on Stewart, given her real back story. Meaning that the writer would also have to fictionalize the backstory to avoid a charge of libel.
Two questions, one for lawyers and one for writers. For lawyers, is my understanding of "fair comment" correct? For writers, if the author of the Red Hat Club had changed Vicki Stewart's "backstory" to the point where the "novel" reasonably followed from the backstory, and avoided unnecessary "incriminating" details, could that be a good way of disguising Stewart?