Ah, yes. Job security.
Otto, I am currently without television, and so haven’t seen the episode to which you refer. I wonder, though, if the issue isn’t so much “we’ll get sued for misrepresentation” as it is “we’ll be accused of misrepresentation and it will damage our reputation.”
Under California law, misrepresentation is representation that an important fact is true (“Claudia is a woman”); the representation is false (Claudia is not a woman, under some definition – more on that in a moment); the representation is made with knowledge that it is false, or made without regard to whether it is false or true (“we’ll just say what we have to say to get the job”); an intention that the plaintiff rely on the representation; actual reliance; causation; damages.
I think the weak points here are falsity and damages. Is Claudia a woman? There are arguments (as have been made in this thread) that she is, regardless of the status of her transition. If she has had her gender recognized by the state (and California at least is pretty advanced in this regard, as it permits gender to be changed in some respects without surgery or hormone therapy), then the representation isn’t false. Indeed, under California law, I’d be pretty okay making an argument that if Claudia represents herself as female (and has changed her name to a female name, gotten her drivers license changed to F, etc.), she is female for all intents and purposes. I also fail to see damages, really (how could you be damaged?).
Bottom line, I agree that the investors were not worried about legal repercussions, in the sense that they feared being sued should they hire Claudia. I suspect that their fear was more generalized, that someone may hire Claudia and later discover that she is a transsexual and for whatever reason make a stink. (And that, of course, is always the problem with discrimination.)
matt_mcl, in the US there is also the concept of a bona fide occupational qualification that permits discrimination (but only if the discrimination is due to a BFOQ). I remember we discussed it in the context of Jonathan Pryce playing the Engineer in Miss Saigon. He is, pretty clearly, not Asian. Is being Asian a BFOQ for playing the Engineer, such that the producers of the play could have only auditioned Asians for the role? Could you similarly audition only black men for the role of Othello? Or only white women for the role of Desdemona? (Because this was law school, I don’t know what the answer is.)
But sex stereotyping is not permitted under US federal law; you cannot discriminate against someone because they do not act the way you expect someone of their gender to act. This is increasingly a tool for the transgendered, because the argument is that, for example, as a male to female transgendered person, you are being discriminated against because you do not exhibit stereotypically male characteristics, but instead act female.
So maybe the investors should have been more worried about Claudia suing them, than someone else suing them for hiring Claudia.