In this second round of hearings the TMP argued that the so-called "separate sexes, separate rooms rule" was necessary in order to prevent sexual relations from occuring within the House for Youth. According to the TMG's interpretation of this rule, it could be applied to homosexuals given that they are mutually attracted to each other and that having more than one homosexual in a single room would be equivalent to allowing male and female heterosexuals to share the same room. In addition, the TMG argued that the Tokyo Board of Education had broad powers of discretion as to what would consititute the sound upbringing of Tokyo's youth and that even if the Board's decision had been mistaken it could not be considered negligent given the overwhelming amount of negative information concerning homosexuality that was in circulation at the time. But the Court rejected all of these arguments.

Concerning the separate sexes, separate rooms rule, the court stated that (1) an exclusive focus on the possibility of sexual relations would make it impossible for homosexuals to use the facility; (2) that not only is it highly unlikely that such relations might actually take place but that the matter would ultimately be decided by the guests themselves; and finally (3) that there were several instances in which exceptions had been made to the rule in the light of extenuating circumstances (such as the need for a nurse of the opposite sex to stay in the same room with a disabled guest).

The Court also rejected the TMG's claim to "wide discretionary powers," and went on to state that (1) young people are perfectly capable of understanding homosexuality; (2) that it is entirely to provide educational guidance in the event that confusion or tension result from the presence of homosexuals in a public facility. The court pointed out that Tokyo's failure to provide such guidance was not covered by its "discretionary powers."

As for the TMG's failure to gather sufficient information concerning homosexuality, the Court's opinion was indisputably clear. The decision states that when a governmental agency "performs its duties, it is obligated to pay careful attention to the situation of homosexuals as a minority and to guarantee that their rights and interests be upheld. Indifference and ignorance regarding homosexuality are inexcusable on the part of persons in the position of wielding governmental authority."

The court also confirmed the illegality of the TMG's refusal even to accept for consideration the form submitted by OCCUR requesting accomodation at the House for Youth.