There wasn't any mention of cops or social workers in this story. You also realize, probably, that "shows it to his buddies without opening it" is the version of the story the kid chose to tell. Fine, but I bet they all wanted to see the knife, not the case.
I know that is sounds nuts to expel the other kid, I wish it was practice to take it away and send him home to his parents with a note too, but look at all the parents here who would likely sue to get the knife back.
In one of her posts she said the police and SS called. You could be right about opening but do you see my point about how this zero policy causes over reaction. It may be a relief for teachers/principals not to have to make decsions but it also takes away using good judgment. Boys can be very loyal. I used to hear all the time "I'm not ratting". You can't make them, and I don't think you should but kids have to learn to make good decisions too. Ex:, If they are with someone that gets caught stealing or with drugs they are in trouble too.