Isn't it simply a matter for them to sex segregate their spa, though? The state should be fine with that, right?
The state passed a law that made it illegal for any company or service to discriminate on the basis of self-declared gender identity. CA created a situation in which it was illegal for Wi Spa to prohibit males from using the female side of the spa if those males said that they were transgender.
According to you, NJ has done the same thing with respect to bathrooms at least. By making it law that people can use restrooms that align with their gender identity, they have made it illegal for businesses to sex-segregate bathrooms.
Eta: in a 'nudity casual' space, what exactly is the issue with seeing men? You're feeling good about showing the labia to any strange women, but to a guy is just weird?
If it were a
mixed sex nudity casual space it wouldn't be an issue at all. In a space that has historically been single sex, it becomes an issue when someone of the opposite sex shows up naked.
I suspect you're thinking about this from a very male perspective, Thermal. I get it - you're a heterosexual male, and it's not like you have a female brain inside your head. So let me fill in some gaps for you

.
Generally speaking, heterosexual males are perfectly fine with seeing females naked. There are some occasional outliers, but Ron White had it pretty much on the nose... males want to see all the boobs. Big one, little ones, lopsided ones, firm ones, squishy ones, ski slopes, and snoopies. It might be a bit shocking to find out that generally speaking, females don't feel the same way. We generally do NOT want to see males naked. Sometimes, some of us might want to see some specific few males naked, but we generally don't want to see them all. Most of the time, we'd like to see as few naked males as we can manage.
Similarly, being seen while naked by the opposite sex isn't identical either. Generally, most males don't really want to be seen naked by a bunch of strange females without their express consent... but it's also not something that generally makes males feel endangered or vulnerable. Embarrassed maybe, self conscious a lot of times, sure. But it doesn't generally make trigger your fight/flight reflex. On the other hand, most females are made extremely uncomfortable and exposed if they're seen naked by a bunch of males without our express consent.