Yesterday's hearing was treated by Kamehameha Schools and its supporters as a sober occasion, drawing a crowd of officials and students to the downtown courtroom.

The plaintiff in the case, an unnamed, non-Hawaiian student, filed an appeal after a ruling last year by U.S. District Judge Alan Kay. The school's admission policy is legal, Kay ruled, largely because it serves a "remedial" purpose by advancing the education of a Native Hawaiian population that became marginalized after its monarchy was overthrown in 1893.

Kamehameha Schools was established as a beneficiary of the estate of Bernice Pauahi Bishop, a princess of the Hawaiian kingdom who inherited the lands owned by the Kamehameha royal dynasty.

The question before the panel of judges is whether the policy should be judged within this historical context. Eric Grant, the plaintiff's attorney, yesterday argued that "there is no exception for Native Hawaiians."

The panel consists of Judges Robert Beezer, Susan Graber and Jay Bybee.

Grant cited previous rulings suggesting that the federal civil rights law at the heart of his lawsuit has applied to public and private institutions, adding that the source of the school's funding is irrelevant.

"The court has said that regardless of the origin of the funds the regular rules apply," Grant said. He was referring to a case challenging an all-white academy in Pennsylvania.

However, Graber said she saw a distinction between Kamehameha Schools and the Pennsylvania school: "There wasn't a king of Pennsylvania that I know of," she said.

Attorney Kathleen Sullivan, representing Kamehameha Schools, said the federal law in question never meant to remove remedial institutions such as Kamehameha.

Grant rebutted by saying the term "remedial" is being misused here. "Certain remedial programs are permitted, but those are programs that remediate discrimination within the institutions being challenged," he said.

Sullivan also said that the school receives no federal money and was established to serve a native population.

"Context is important," she said. "This is an education case. It matters that this is an indigenous group that has no other homeland on the face of the earth."

Kamehameha Schools trustees Robert Kihune, left, and Constance Lau embrace students at a rally held after the Honolulu hearing by a panel of judges from the 9th U.S. Circuit Court of Appeals. Richard Ambo • The Honolulu Advertiser

Kamehameha Schools students leave Kawaiaha'o Church after a prayer service held before yesterday's court hearing. Jeff Widener • The Honolulu Advertiser

She pointed to Kamehameha Schools' programs beyond the schools' three campuses that are open to non-Hawaiians and said the policy shouldn't be viewed too narrowly.

"It's not absolute, and it's not permanent," Sullivan said. "It's transitional. It's successful."

Some observers said characterizing the policy as temporary might represent an astute legal strategy but it won't sit well with some school supporters.

"I think Hawaiians have a different feeling," said Williamson Chang, a native rights specialist and professor at the University of Hawai'i law school. "They feel that (the school) is something that should always be for us, the only thing we have left."

Chang and a group of law students watched the proceedings via a live video feed transmitted to the campus. Because seating in the gallery was so limited, most observers watched either the UH campus feed or one sent to another courtroom at bankruptcy court.

Chang said he heard some evidence that the judges were sympathetic to the school. The fact that it is privately funded was mentioned repeatedly, he said, also noting that Beezer drew a distinction between the actual language of the will and the way the bequest is being executed. Beezer asked whether Grant was finding fault with the will or only with the actions of trustees who have interpreted it over the years.

This distinction is important, Chang said, because it suggests a desire to stop short of invalidating the entire foundation of the school.

"To strike down the will would have been devastating," he said.

After the hearing, Grant expressed some surprise that the judges were asking questions about the status of a movement establishing Hawaiians as a federally recognized political group, adding that both he and Sullivan agree that the Kamehameha Schools case does not hinge on the sovereignty issue.

Some observers thought the school's legal team was wise to restrict the arguments to issues of education and civil rights law.

"They really have a strong case based on the precedent of Judge Kay," said Amy Ono, a graduate of both the law school and Kamehameha Schools who now advises 'Ahahui o Hawai'i, a law students' group with a focus on native issues.

The school marked the occasion yesterday with campus prayer services and one at Kawaiaha'o Church. A group of about 200 Kamehameha students and supporters then marched through 'Iolani Palace grounds to the court, stopping first outside the Bishop Street tower where it's housed and sounding the pu, or conch shells.

Randie Fong, the school's director of performing arts, led the group in a chant and singing a school song, "Imua Kamehameha."

Many watched from the overflow courtroom in the lobby, but a small group of students was admitted to the sixth-floor gallery to hear the case. One, senior Namahana Tolentino, said the mood of the students is subdued.

"It's almost a sterile disregard for emotion," she said.

"We're trying to preserve our energy for achieving the equality that we aim to."

Outside, as the supporters gathered in Fort Street Mall, the atmosphere was more cheerful. Dee Jay Mailer, the school chief executive officer, and trustees addressed the crowd.

"They (the judges) could see the pride and success of Kamehameha Schools," Mailer said.