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Diane Schroer's case against the Library of Congress went to trial on Tuesday in U.S. District Court in D.C. The basics of the case are pretty well known. As David, Schroer spent 25 years in the Army, and retired as a decorated full Colonel in the Special Forces. Her specialty at the end was counter-terrorism.

After retiring, she applied for a job as a Research Specialist in Terrorism and International Crime at the Library of Congress. She got it. But when she told her prospective boss that she was transitioning from David to Diane, and wanted to start work as Diane to minimize any fuss, things changed. Diane came to the ÀÏ°ÄÃÅ¿ª½±½á¹û LGBT Project and we sued.

There's not much dispute about what happened, just about what it means. First, there is a disagreement about the law. The government insists that the law allows it to refuse to hire someone because she or he is transgender. The ÀÏ°ÄÃÅ¿ª½±½á¹û says (to simplify a bit) that what the Library did is sex discrimination because the Library was more than happy to hire Dave, but wouldn't hire Diane with the exact same abilities and qualifications.

Three times, the Library has asked the judge to throw the case out on the basis that what it did is not sex discrimination. So far, he has refused. More about that later.

The other disagreement, more subtle but ultimately very similar, is over how people should think about sex and gender identity. That dispute is what has been unfolding during the trial.

The trial is being held in the William Bryant Annex to the U.S. District Court in D.C. The Annex is a new building, and a clear attempt to get away from the massive block type of architecture that defined federal buildings in Washington from the 30s through the 70s. But if the Annex presents the world a façade of hemispheres and broken surfaces, it is no Bejing Bird's Nest. It's a distinct but still tentative step away from old D.C.

The trial began with an opening statement from the ÀÏ°ÄÃÅ¿ª½±½á¹û's Sharon McGowan for Ms. Schroer. She laid out Schroer's version of what happened, and why the government's attempts to justify it don't make sense. It was to the point and easy to follow.

In its opening, the Library of Congress essentially protested having to go to trial at all, insisting again that it has legal right to fire or refuse to hire transgender people. The Library again asked the judge to throw the case out, and the judge again declined.

The first witness was Diane Schroer herself. Under questioning by McGowan and on a stunningly short cross-examination, her testimony was crisp, clear and logical. No long dissertations here. But no memory failures, artful evasions or government double talk either. She walked us through her military career, full of bureaucratic titles and military operations, and made it all seem pretty understandable.

That career is even more impressive than it seemed from reading the news accounts. How many had successfully graduated from Ranger school with her? 7 out of 325. Had she gotten any honors in the studies that qualified her to be a Ranger, to be a Jumpmaster, to be in the Special Forces? Actually, she made honors in all of them.

Just what was it that she did in the military? She did Special Operations in Haiti, where she ran the northern half of the country for a few years. She ran de-mining operations in southern Africa. She organized the humanitarian aid operation once the U.S. finally responded to the genocide in Rwanda. Finally, in her last position, she was director of a 120-person classified organization charged with tracking and targeting high-threat international terrorist organizations. She briefed the Secretary of Defense and usually the Joint Chiefs every two weeks.

She remained calm and direct as she began to talk about herself. She described what it meant to her to be transgender with disarming simplicity: I didn't understand why I wasn't a girl. She talked about deciding to come to grips with that, and devising a plan for transition with her counselor.

As you listen to this careful, calm, capable woman describe her work and her life, you realize this is the kind of person you want on your team - no, running your team - in a crisis. How different the world might be if the people making decisions about responding to terrorism - or running the Justice Department for that matter - thought like she does.

She approached transitioning and the Library of Congress job the same way. At the meeting a few days later, she explained that she was transgender. She said she thought she could minimize the issue by starting work as Diane, so there would be no on-the-job transition. She'd scheduled facial surgery so that she could make the Library's planned start date. She had pictures of herself presenting as a woman. She had a counselor ready to come in to explain and answer questions.

On the stand, Preece said she felt set up. But the only thing Preece was set up to do was to make a decision on the merits. Ms. Schroer did not inject gender identity into the hiring process, keeping it focused on background and ability. But once the decision on the merits had been made, she moved immediately to tell Preece, and give her the time and information she needed to stay focused on ability and make the hire work.

That isn't what happened. On the stand, Charlotte Preece was a vivid reminder that, so very often, the face of wrongdoing turns out to be not evil but ignorance. Under a classic surgical cross-examination by James Esseks, Litigation Director at the ÀÏ°ÄÃÅ¿ª½±½á¹û's LGBT Project, Preece basically confirmed Ms. Schroer's story. Schroer had the best qualifications and performed best in the interview. Schroer was the best person for the job. Schroer had the job; had it, that is, until she told Preece she was transgender.

Preece confirms she was bewildered when Schroer told her he was becoming Diane. Why would you want to do that? she asked.

It is not so hard to understand Preece's surprise that this classic man's man turned out to be a woman. Preece had never met anyone transgender before. But it's at this point that ignorance turns to wrongdoing. Preece says she worried that Diane wouldn't get a security clearance, that she'd lose her contacts in the military, that she'd have no credibility working on terrorism for the Library.

She may have felt that. But instead of trying to find out if her worries were justified, she simply gave into them. There's a legal issue here. The government is not supposed to simply capitulate in the face of prejudice, imagined or real. But the more interesting issue is the human failure. Preece didn't ask Schroer's references - almost all of them military and Special Forces veterans - if they'd still respect Schroer as Diane. And it turned out, many of them already knew. Knew and considered Diane, not Dave, at the top of the list when it came to counter-terrorism.

Preece didn't find out if transitioning by itself created a problem with security clearances. It turns out that it doesn't, and in fact Diane's clearance - the highest - has been renewed.

The way Preece assumed what seemed to be her own reaction - loss of respect - on to the military and veterans was almost comic. It turns out that after the job was taken away, Diane created her own consulting business. She did it with the help of, and she is now working with, the very people Preece assumed wouldn't respect her.

And that - Charlotte Preece's reaction to the news of Diane Schroer's transition - is the heart of the case. Is it okay, today, for an employer to refuse to hire somebody who can do the job, and do it well, because the employer doesn't respect something about their identity that has nothing to do with the job?

In the America of the past, we'd likely have said that Charlotte Preece's assumptions were enough to justify taking away the job. In the past, failing to live up to society's expectations about who men are and who women are, would surely have been taken as a sign of instability. But in the America we aspire to be, we won't be willing to accept stereotypes as shorthand for capacity. Knowing how wrong that kind of shorthand has been, and how much people have been hurt by it, we'll insist on keeping our eyes on what really counts: ability.

The question posed by what the Library of Congress did to Diane Schroer is just how far we have, if you'll pardon the expression, transitioned from the America we have been to the America we hope to be.

That question about where we are on the path to a society that truly reflects our ideals is also the question posed by the legal issue the Library keeps coming back to. When the law says you cannot discriminate on the basis of sex, the Library says, it means something certain, genetic and unchangeable. It is okay to discriminate against someone because their gender identity is different from their genetic gender, the Library says, because gender identity isn't part of sex.

In the careful hands of ÀÏ°ÄÃÅ¿ª½±½á¹û lawyer Ken Choe, also representing Ms. Schroer, Dr. Walter Bockting, the incoming head of the World Professional Association for Transgender Health, explained that science doesn't support the Library. Sex as we understand it today isn't just chromosomes, it's anatomy, it's the physiology of the brain, and it is, above all gender identity. While at one time, we may have thought of sex as one thing, today we understand that sex is made up of many things, and most profoundly, our own sense of who each of us is.

Science doesn't matter, the Library insists, it's what Congress was thinking of when it passed the 1964 Civil Rights Act. Everett Dirksen, a reporter said to me in the hall outside Court, wasn't thinking of Diane Schroer when he helped pass the Civil Rights Act. Probably true, I said as she headed off to meet her cameraman, but James Madison wasn't thinking of TV when he penned the First Amendment either.

The issue isn't the way someone who wrote or voted for a law was thinking it would apply; the issue is the concept embodied in the law. What was the idea? The flip answer is that on this point, Congress didn't have an idea; many of those who voted to put sex into the 1964 Civil Rights Act were hoping it would kill the bill.

But in 1964, as today, it is hard to believe that anyone thought sex was just about chromosomes or even just anatomy. It was about the whole package. The issue in the case is how does that idea apply in a world where the package is different than we thought in 1964, a reflection of more things than we thought, maybe not including a lot of things we thought, maybe more fluid than we thought.

You don't have to get too deeply into the science of sex and gender to see that what happened here is sex discrimination. The Library may have been willing, in the abstract, to hire either a man or a woman. But it was not willing to hire someone who, identified by parents and doctors at birth as a man, turned out to have the gender identity of a woman. It was, in short, not willing to hire this person because she turned out to be a woman and not the man people thought.

In the America we aspire to be, that has to be sex discrimination.

But as is sometimes the case, the legal lens may not be the best way to look at what happened to Diane Schroer. One of people who testified for her yesterday was Dr. Kalev I. Sepp, Deputy Assistant Secretary of Defense for Special Operations Capabilities.

Sepp gave powerful testimony about how smart, strategic and intellectually focused Schroer was as David and is as Diane. He also told the Court that several years ago, Schroer asked to see him to talk about a big problem. When they met, Schroer explained that he was transgender, and that he was on the path to becoming Diane. Sepp listened, and when Schroer finished, he said, that's all fine, but what's the big problem we need to talk about?

These men who have spent their lives in the military, in Special Forces, parachuting in to dirty little wars all over the world, may have been surprised to learn that Dave was Diane. But after getting past the initial surprise, they have had remarkably little trouble seeing that Diane is the same person they've relied on, trusted, respected. The Library of Congress, on the other hand, couldn't see.

Americans, who, like Charlotte Preece, think they've never met anyone transgender, might think her reaction was not only understandable, but acceptable. Diane Schroer is the powerful counterargument. How could we let someone this good, this dedicated, with skills we need so badly, slip through our fingers?

Diane Schroer's story tells us that we can't afford to live in the America of the past much longer. For our own sake, we have to become the America we aspire to be.