I think they can sue.
Seriosly.
I also believe that one of the things your publisher willl ask you prior to accepting your manuscript is whether or not any of the characters are based upon real people. And if the answer is yes (and you'd better not lie) they have to do some damage control before they can proceed. They'll either have you rewrite things to obscure the similarity, or else they'll ask you to get signed waivers of some kind from the persons you have lifted from (they'll provide the waivers, you have to go and hunt them down and get them to sign). And if these people want to, they can refuse to sign, or else hold out for cash.
Good luck.
No publisher has ever asked me whether a character was based on a real person, and as an editor, I would never, ever ask a writer this. People are not asked to sign waivers, no publisher would ever do this, and certainly no publisher would ever pay a dime.
1. Most good writers do base characters on real people, even when they think they don't.
2. As an editor, I assume many characters ARE based on real people. That's why I make sure the front of the book has that escape clause that reads
This is a work of fiction. Any resemblance to characters living or dead is purely coincidental.
3. If writers couldn't base characters on real people, the roman a clef, a very popular novel form, couldn't be written. Nor could anything Truman Capote or Norman Mailer wrote/writes. Truman Capote lost a lot of friends because he insisted on filling his novels and short stories with them. Nor could such books as
You Can't Go Home Again, etc., be written. Thomas Wolfe was run out of town, and had his life threatened, for writing about all the real people he knew. This isn't uncommon.
4. Even if the writer doesn't write about real people, and even if he swears this is so, real people he knows will always swear he used them in his novel. They'll "recognize: themselves, even if it isn't them.
5. It probably is them, even if the writer believes it isn't.