Joe dies of gunshot wounds. Kelly is arrested and held overnight until the shooting is ruled a justifiable homicide. The police consider charging her with possession of an unlicensed firearm, but Matt appeals to the department's sense of decency. David asks Dylan to move out. Dylan takes up residence at a hotel, and Gina joins him after Donna boots her out for talking to reporters about Kelly. Wayne annoys Donna with his cavalier attitude, particularly when he fails to show sensitivity toward Kelly. She realizes that they do not have a future together. Noah ignores Donna and fools around with one of his employees. Janet's erratic behavior confuses Steve. She secretly applies for a job with another newspaper, and tells Steve that she isn't sure if their relationship will work out. Janet confesses to Kelly that she is four months pregnant.

Kelly and Donna invite Janet to move into the apartment. She tries to tell Steve that she is pregnant, but stops when he mistakenly assumes that she has gotten breast implants. When Janet finally reveals the truth, Steve becomes outraged that he had been kept in the dark for so long. He avoids Janet and whines about the situation to the other guys and Gina. Janet tells Steve that he can choose how much involvement he wants with the child; he is unsure of what to do. Kelly and the gang throw a surprise birthday party for David at the After Dark. The uninvited Gina foils their plans by slashing her own tire and calling David for help. After patching things up with David, Gina takes him to the club and drops him off without spoiling the surprise. A young woman whom Dylan knows from his years at the hotel gets busted for drug possession. He pays for her legal services, and encourages her to get clean and find some direction for her life. He agrees to return to college if she also enrolls.

Steve tells Janet that he wants to raise the baby with her. He later upsets her by expressing uncertainty. Kelly considers a career change. Matt pays Gina to help out with preparations for the boutique's re-opening. She tries to burn a prominent fashion critic's invitation, and accidentally starts a fire. She ruins Donna's new men's wear line with the fire extinguisher. Although Gina blames faulty lighting, Matt catches her with the burnt invitation. He forces her to bring the critic to the re-opening to make amends, while everyone chips in to help Donna put together new outfits. Cherise breaks up with Noah for postponing their weekend getaway and spending too much time with Donna. Steve suddenly proposes to Janet during the fashion show. She accepts, but then changes her mind because she fears they would be marrying for the wrong reasons. California University denies Dylan's application, citing his brazen essay. They refuse to give him a second chance. David pulls the revised essay ou