At the pre-graduation party, Principal Weber is looking for Will, so Will goes home. The principal follows Will to his door and tells Will that they have discovered that he cheated on both his biology paper and his calculus exam. Will will not be permitted to graduate, and he and his parents will be required to meet with the principal the next morning to determine whether or not he will be allowed to return to Oakdale Latin next fall. Gwen follows Will home, and he gives her a nice graduation gift, but does not tell her the bad news.
Mike coldly and angrily tells Katie that Nick is dead. Hal and Margo determine that Katie shot Nick in self-defense, so Mike and Katie go home in stony silence.
Holden returns from his trip and orders Damian out of the house. Holden has a long talk with Luke and decides that he will not stand in the way of a renewed relationship between Luke and Damian, although he is worried about the influence Damian will have on Luke. Damian checks in at the Athletic Club and chats with Lisa.
It's graduation day at Oakdale Latin! Margo is so happy for Casey that she tells him they've changed their mind – Casey can go to college in Wisconsin, after all! But Casey surprises her by saying, nah...and admitting that Maddie has a lot to do with it. Maddie overhears. Meanwhile, as Will struggles with being expelled, Barbara pulls Gwen away for a little "girl talk." Gwen tells Barbara to back off and suggests that the pair of them just respect each other. Will arrives at graduation, prepared to tell Gwen the truth. But before he can confess, the principal announces he won't be graduating with his class. Katie offers to help Mike claim Nick's body, but he snaps that he doesn't want her help! Mike rants that it's bad enough Nick is gone but.... That Katie also killed him, she guesses. Katie wonders if Mike blames her for his cousin's death. Mike declares his love for Katie, but doesn't deny her accusation. Jennifer takes Johnny to the doctor's and meets his new intern – Lucy – who, despite Jennifer's concern, insists Johnny should have his scheduled shot today. Jen bristles, accusing Lucy of speaking for Craig. Lucy denies. Jen admits to Dusty she may have been a bit paranoid, but Dusty assures her she's not. Jessica called. Craig is trying to block Dusty's adopting Johnny. Dusty orders Lucy to stay away from Jen and Johnny.
Jack and the kids come to take Carly home from the hospital. Carly insists on going to Gwen's graduation and Jack surprises her by having thought to bring the perfect dress. Meanwhile, Will admits to the entire school that he cheated and is now being expelled. Gwen realizes Jade helped Will do it, but Will tells her not to blame Jade. It was all his fault. Gwen calls Jade a user and the other girl, hurt, runs off. Gwen asks Will why he did it. He says that he did it for Gwen. Their fight is cut short by Casey arriving to say it's time to graduate. Gwen goes. Will does not. A sobbing Gwen is comforted by Carly, who starts to feel ill and Jack insists on taking her home. Afterwards, Gwen desperately tries to reach Will amidst the raucous graduation celebration. But Will is busy getting drunk with Jade. At home, Carly asks Jack to hold her and he does, but while Carly thinks this means he's back for good, Jack is much more conflicted. Dusty wants to know why Lucy is trying to make Jennifer look like an unfit mother and accuses her of working for Craig. Lucy guesses that Dusty isn't upset about Craig, he's upset about Lucy walking out on him! Dusty simply turns around and walks away in response. Later, Lucy meets up with Luke, and the cousins catch up. Lucy laments how much she once hurt Dusty. Luke asks if Lucy is still in love with Dusty. Meanwhile, Dusty gets word that his adoption of Johnny is official as of today.
Susan demands to know: is Emily having her baby or not? Emily says that depends on what happens next. After assuring Meg that he can make Emily do whatever he wants, Paul tells Emily he's sure she doesn't really want to destroy something they made together – does she? Emily, clearly as in love with Paul as ever, is about to respond when Emily spots another patient's new private nurse – Meg Snyder. Emily, furious, orders Paul to get out. Lucinda informs Lily and Holden that Damian isn't just in town for a short visit – he's moved into Fairwinds! Meanwhile, Damian explains to Luke that his son is a man capable of making his own choices. Damian says he doesn't just accept Luke, he supports him, too. And he intends to stay in Oakdale until Lily feels the same way. Luke leaves and Holden shows up. He accuses Damian of using Luke, while Damian retorts that Holden is ruining Luke's life. Holden takes a swing at his rival just as Luke returns. Meanwhile, Lucinda tells Lily that if she thinks Damian will help her with her Luke "problem" she's deluding herself. Gwen demands to know why Maddie didn't tell her about Will cheating, but Casey wants Gwen to stop blaming his girlfriend for Will's mistakes! Gwen realizes the person she should be talking to is Will. A drunken Will comes to the same conclusion and asks Gwen if she forgives him. She says, sure. Relieved, Will kisses her but Gwen pulls away, protesting that he's drunk. Will interprets her hesitation to mean Gwen thinks he's a failure. He blurts that he never even wanted to graduate. It was Gwen's dream, not his. Gwen admits that she doesn't understand where he's coming from, so what kind of marriage do they have then?
Gwen and Will argue outside Crash, with Jade watching out of their view. Will demands to know if Gwen is with him or not; Gwen says she can't talk to Will while he's drunk like this. Will says school's over for him, that he's never going to go back, that he doesn't want college and a professional career like Gwen thinks he does. Principal Weber comes outside and tells Will this is a private party, and Will needs to leave. Will yells that Weber doesn't get to tell him what to do anymore because he expelled him, and Gwen takes Will aside, telling the principal she's sorry about this; Will is angry that she's apologizing for him. Mr. Weber tells Gwen that she has a contract to sing at the party tonight and he expects her to honor it, and he tells Will if he doesn't leave, he'll call the police. Gwen goes back inside; seeing Casey, she goes to him and cries that she doesn't know what to do about Will. Maddie leaves to get her a glass of water, and while Casey hugs Gwen, reassuring her that she won't lose Will, Will looks in and sees them together. He storms off; Jade looks through the window, too, and sees Casey and Gwen together, then she follows Will. Maddie returns with the water and says the principal is insisting that Gwen perform, and Gwen says she can't sing the song she rehearsed because it was all about having a future, and she's not sure if she still has one. Casey and Maddie tell her she graduated and did great and should sing a song for all of them, even if it's not the one she rehearsed. After Casey tells her it had better be good, because he's going to act like Simon Cowell, Gwen goes to the stage and sings a plaintive song that includes the lyrics, "I'll remember you that way."
Meanwhile, Will goes to Mathers Bridge, with Jade close behind. She tells him that if he feels like he's been a bad boy, maybe it's because he's always been bad, and he should embrace that part of himself and shout from the bridge that he doesn't care what other people think of him anymore. Will ends up doing just that and tells Jade he feels better; when he stumbles away from the bridge rail, Jade steadies him, and they end up kissing and begin ripping at each other's clothes.
Jennifer, Dusty, Johnny, Barbara, Kim, and Bob are all at dinner, hoping to get word soon about Dusty's efforts to become Johnny's legal guardian. Meanwhile, Lily comes up to the table and says hello to everyone, then Lucy walks in, and Lily explains that she was there to meet Lucy for dinner. They go to their own table, and Lily realizes there's still some tension there between Lucy and Dusty. Back at their table, Jennifer takes out a letter that Jessica asked Dusty to write to the judge, explaining why he wants to adopt Johnny, and she reads part of it and then has Dusty finish reading it. Just then, a waiter brings Dusty an envelope from Jessica, and it contains the papers stating that Dusty is now Johnny's legal guardian. They all celebrate the news. Meanwhile, Lily gets a call from Damian and leaves, so Lucy calls the hospital to tell them she'll take the extra shift tonight if it's still available. Kim wants to take a picture of Johnny with Dusty and Jennifer, but when Jenn goes to pick up Johnny from the stroller, she says something's wrong, that he's listless and very warm and isn't focusing on her. Bob goes over and takes a look at Johnny and says they should get him to the hospital so they can have him checked to find out what's wrong.
In the Lakeview lobby, Holden punches Damian, just as Luke arrives. Luke asks Holden to be cool and tells him that he's agreed to talk to Damian and that it's safe. Holden wants to know why Damian is in town and tells Luke he wishes he'd come home with him right now. Damian asks Luke to stay, but Luke decides to leave with Holden, telling Damian he'll come back later to talk with him. Damian then calls Lily and says they have a problem; he asks her to come to him, now. Lily goes to meet Damian but tells him not to summon her again with cryptic messages and think she'll come running. Damian tells Lily about Holden punching him but makes it sound like he did this when he and Luke were in the middle of a conversation, telling her that it "ruined everything" he was trying to do with Luke. Lily tells Damian that she can't take his side against Holden. Damian tells Lily that he understands that, but he adds that if she allows Holden to push Damian out of Luke's life, Luke will make bad choices. He asks Lily to have lunch with him tomorrow because he has someone he'd like her to meet.
Meanwhile, Holden and Luke have arrived back home, and Holden tells Luke he's sorry for how he acted at the hotel; Luke says sometimes Damian asks for it. Holden is happy to hear that Luke doesn't trust Damian completely. Luke asks Holden why he punched Damian. Holden tells him it was because Damian accused him of being a bad father to Luke, saying that people can tell you you've been a bad parent and sometimes you'll believe them. Luke tells Holden that sometimes he used to think about what it would be like to grow up with Damian as his father, about how he'd be like a 007 kid, with intrigue and fancy cars and things; he says he would be suave and cool, but he'd still be gay. He tells Holden that how he was raised had nothing to do with him being gay, and Holden thanks him for saying that. Luke thanks Holden for being accepting of who he is, and Holden says he'd had time to think about it and realize that the important thing was that he loved Luke. Luke wonders if Lily will come to that same conclusion and says he thinks the one good thing about having Damian around is that he appears to be softening Lily up in that regard.
At the hospital, Emily tells Paul to leave because Meg is now there. She says she's ending the pregnancy. Meg and Paul leave the room, and Paul asks Meg why she's there. She tells him a job as a private nurse came up suddenly and involved a patient in the mental ward of the hospital. She also tells him she can keep an eye on Emily if she's working there, but he's upset that she's disturbed his attempts to get Emily to agree to have the baby. Emily overhears all of this. Meg tells Paul that Emily is just manipulating him again. Paul says if Emily thinks the baby is coming between him and Meg, she won't have an abortion, but Meg says if that means that Paul has to say and act like he's made at Meg, she doesn't want any part of that; she really needs Paul to act like he's in love with her. Paul asks for one more chance and goes back inside to talk to Emily. Emily accuses Paul of putting on an act for her. Meg comes in, and Paul decides to tell the truth, saying that he loves Meg and wants to spend the rest of his life with her. Emily says, "Then say goodbye to your child!" Paul responds angrily, telling her that he's sick of her holding the baby over his head, and he gives her the papers authorizing the abortion, telling her to sign them if she wants to, and then she can be the one to say goodbye to their child.