Worried about my daughter's safety I decide to sit in class with her.
Wow...I don't think it would have been possible for you to do anything that would have made the situation worse than "sit[ting] in class with her."
Do I have a case?
A case of what? You can google something like "school bullying law in california," but I don't imagine there's a whole heck of a lot that's going to happen because of some name callling. Also, it strikes me as more than a little inappropriate for a SEVENTH grader to be publicly announcing or displaying a SEXUAL orientation. This might just be something your daughter has to deal with for the rest of the school year and then a change of schools may be in order.