As promised, here are some additional links and some additional information on the ruling in Schroer v. Library of Congress.
A very full analysis of the opinion and the course the case took on its path to finally reaching a verdict can be found here. Additionally, this blog entry contains an analysis of the ruling and how Judge James Robertson carefully crafted and supported his opinion in this case. The full text of the Court's opinion is available here. The interesting thing to note is how the Court found for Schroer both on the sex stereotypes theory discussed below, and even more importantly found that discrimination on the basis of gender identity is sex discrimination.
A more general overview can be found in this CNN story or in this story.
Finally, if you are interested in this topic or the general topic of how 9th Circuit Courts view the "because of sex" language in Title VII sex stereotyping cases, I recommend reading two cases cited by Schroer in support of her position: Rene v. MGM Grand Hotel, Inc., (9th Cir. 2002) 305 F.3d 1061 and Nichols v. Azteca Rest. Enters., Inc., (9th Cir. 2001) 256 F.3d 864. Both cases find that the Title VII's "because of sex" language protected homosexual male plaintiff's who were harassed because they failed to fit into gender stereotypes.
Based on these prior Ninth Circuit rulings, it's my gut feeling that even prior to the ruling in Schorer, the Ninth Circuit would have found that Title VII protected transgender plaintiffs under sex stereotyping theories as the Sixth Circuit did in Smith v. Salem (6th Cir. 2004) 378 F.3d 566.
I'm quite sure that the government will appeal the ruling in Schroer so this issue is far from closed, but at least in the meantime, this gives plaintiffs more ammunition under Title VII.
--Michael Sachs