Real-life has moments that are far stranger than anything I could dream up. I’m not alone in this—everyone has a story. That story will have moments that are difficult to hear and others that are amazing.
Writing fiction allows me to put reality into more palatable chunks. It’s easier to cope with that way.
One of the ways I design my worlds is by drawing on the real world to help develop the unreal. Reshaping and reusing the scenery and terrain around you are habits of good world-building.
However, crafting characters is different. We shouldn’t use the real names and exact situations of people we are acquainted with for any reason. Don’t thinly disguise your hated boss or neighbor with a different name because they could recognize themselves and sue you.
This was made clear by the late Betty MacDonald’s situation. Her first published book was picked up by J.B. Lippincott. The Egg and I is a fictionalized account of Betty’s life as a chicken farmer. It was set in Chimacum, a small community in rural Washington State.
Many members of my family were from that area of Puget Sound and still lived there during the post-WWII years, the time frame in which Betty’s book was set.
A wide disparity in education and social services existed between urban and rural communities at that time. Only a basic education was available to most families of loggers, brush pickers, and small farmers in Washington.
Thanks to the US government’s efforts, the indigenous people were in dire straits. Traditionally, Puget Sound tribes were mainly hunter/gatherers and now suffered extreme deprivation. They had lost access to their traditional hunting and fishing territories. They were losing the culture that had been their foundation for untold thousands of years.
Betty MacDonald’s book was a success in that era and moral climate, selling well over a million copies and spinning off several movie adaptations.
The Egg and I fell into disfavor in the 1970s because cultural awareness had changed the way we view indigenous people. Critics now saw a lack of understanding and cliched treatment of our local Native people in the book.
This post isn’t intended to address or pass judgment on a 1940’s treatment of cultural issues. These are things we avoid in our modern connected society, but which people took for granted in 1946 when the book was written. Instead, we need to focus on the moral and financial repercussions of writing fictional characters too close to life.
Betty’s book motivated several lawsuits against her and her publisher for defamation of character.
Following the success of the book and film, lawsuits were filed by members of the Chimacum community. They claimed that characters in The Egg and I had been based on them, and that they had been identified in their community as the real-life versions of those characters, subjecting them to ridicule and humiliation. The family of Albert and Susanna Bishop claimed they had been negatively portrayed as the Kettles. Their oldest son Edward and his wife Ilah Bishop filed the first lawsuit, which was settled out of court for an undisclosed amount.
The second lawsuit was filed against MacDonald, publisher J. B. Lippincott Company, and The Bon Marché (a Seattle department store which had promoted and distributed the book) for total damages of $975,000, as sought by nine other members of the Bishop family ($100,000 each) and Raymond H. Johnson ($75,000), who claimed he had been portrayed as the Indian “Crowbar.” The case was heard before a jury in Judge William J. Willkins’ (who was also one of the presiding judges at the Nuremberg Trials) courtroom in King County Superior Court beginning February 6, 1951. MacDonald testified that the characters in her book were composite sketches of various people she had met. The defense produced evidence that the Bishop family had actually been trying to profit from the fame the book and movie had brought them, including testimony that son Walter Bishop had had his father Albert appear onstage at his Belfair, Washington, dance hall with chickens under his arm, introducing him as “Pa Kettle.” On February 10, 1951, the jury decided in favor of the defendants. 
We all draw inspiration from real life, whether consciously or not. However, if we are writing fiction, we must never detail people we are acquainted with, even if we change their names.
If you become a success, some people may see that as their ticket to a little extra money at your expense. This, despite the disclaimer we put on the copyright page:
This is a work of fiction. Names, characters, places, and incidents are products of the author’s imagination or are used fictitiously and are not to be construed as real. Any resemblance to actual events, locales, organizations, or persons, living or deceased, is entirely coincidental.
However, we can and will draw impressions from the people around us.
A common “coffee shop” game is a good way to develop characters for your stories and won’t get you sued. Now that the pandemic is winding down, many coffee shops offer indoor seating once again. Pick a place that is new to you and have your pen and notepad or laptop at the ready. Watch your fellow patrons. Observe their behavior, their speech habits, and their unconscious mannerisms. You can build an entire fantasy life for them.
Each character sketch is the kernel that can be the start of a short story or even a novel–and all of it is fiction.
The best thing is that you don’t actually know a thing about them other than they like a Double Tall Hazelnut Latte. Peoples’ conversations are unguarded in coffee shops, openly talking about what moves them or holds them back. They are lovers or haters, quiet or loud, and most importantly, anonymous.
The moods and mannerisms, idiosyncrasies, and habitual quirks that you see can give rise to a character you can use without risking your financial security and your reputation. People-watching is a necessary habit for the author to develop.
Credits and Attributions:
 Wikipedia contributors, “The Egg and I,” Wikipedia, The Free Encyclopedia, https://en.wikipedia.org/w/index.php?title=The_Egg_and_I&oldid=1050662692 (accessed February 8, 2022).