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From reason.com

A female nude spa in Washington state cannot bar preoperative transgender women, a federal court ruled last week, rejecting the claim that forcing the business to serve customers with male genitalia violated its First Amendment rights.

In 2020, Haven Wilvich, who identifies as a "nonbinary trans woman," filed a complaint with the Washington State Human Rights Commission (WSHRC) after allegedly being turned away from Olympus Spa in Lynnwood, Washington, for having a penis. Olympus, which has another location in Tacoma, is a traditional Korean spa that offers full-body scrubs and massages, and requires nudity in its pool area, which is why it caters to a single-sex clientele. (The spa also accepts postoperative transgender women.)

The WSHRC, however, said the business's policy ran afoul of the Washington State Law Against Discrimination, otherwise known as WLAD, which prohibits discrimination on the basis of "race, creed, color, national origin, citizenship or immigration status, sex, honorably discharged veteran or military status, sexual orientation, or the presence of any sensory, mental, or physical disability." Sexual orientation, under state law, is defined to mean "heterosexuality, homosexuality, bisexuality, and gender expression or identity."

After entering into a settlement with the WSHRC in October 2021, Olympus Spa sued, alleging the state's enforcement against it violated its rights to free speech, freedom of religion, and freedom of association.

But none of those were applicable to this case, ruled the U.S. Court of Appeals for the 9th Circuit in May. "We are not unmindful of the concerns and beliefs raised by the Spa," wrote Judge M. Margaret McKeown for the 2–1 majority. "Indeed, the Spa may have other avenues to challenge the enforcement action. But whatever recourse it may have, that relief cannot come from the First Amendment."

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At the core of the decision is Washington state's definition of sexual orientation. "Washington chose an expansive definition" of that term, the 9th Circuit said. "The Spa simply did not challenge the statute itself"—opting instead for its First Amendment argument—"and it is not our role to rewrite the statute." That would have to come from the Legislature.

The decision "seems correct to me under current law," says Eugene Volokh, an expert on First Amendment issues and formerly a professor of law at UCLA. Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission (2018)—the Supreme Court decision that ruled in favor of a cake baker who declined to make a wedding cake for a same-sex couple—would not apply here, Volokh notes, as that ruling was narrowly based on the Colorado Civil Rights Commission's explicit hostility toward the baker's religious views. "There was nothing like that in this case," he says, "nor was there evidence (which the Masterpiece Cakeshop majority also pointed to) that religious objectors were being treated worse than people with very similar secular objections."

That will likely dissatisfy many people, however, who do not want to see a private establishment legally obligated to place naked biological men among biological women—a requirement that would upend the sex-segregated business model core to Korean spas.

So how might Olympus Spa have proceeded in court with more success? "I expect there might be some constitutional right to privacy claim, either under the federal Constitution or the Washington Constitution," says Volokh. "But it's not clear whether that applies outside the context where the observation by the opposite sex is genuinely coerced, as it is in prisons. There is no federal constitutional right to be naked in a relatively public place ."

That leaves another avenue: changing the law itself....