then it implies a duty of care outside the class setting
YOU BET IT DOES!!
We all have a duty of care to those we are with -- it just changes depending on the facts and circumstances. For example, when I'm riding my horse in the company of others, I have a duty of care NOT to do something that will cause another's horse to spook. When I'm diving I have a duty of care to be a "prudent and reasonable diver" under the circumstances as they then exist.
BECAUSE someone is an instructor, what is "prudent and reasonable" is going to be judged on a somewhat different level than what is "prudent and reasonable" for someone with just 8 dives or 150 dives (but without the extra training).
In this particular case, I hope that no one will say that it was "reasonable and prudent" for ANYONE involved to have done a 200' bounce dive, on air, at night, with a couple of very inexperienced divers, under the conditions as they then existed (cold and very poor vis). Yes "D" had a duty of care to his fellow divers and YES it is (or should be) a higher standard of care than anyone else in the group -- REGARDLESS of whether he was "teaching" at the time.
I'm pretty committed to the Libertarian political philosophy -- but that doesn't mean I'm a pure Social Darwinian. Should the others have resisted the siren song spewed forth by "D" and refused to dive? YES! But, "D" should not now be permitted to deny his culpability in the fiasco just because the other's "should have known better."
Those that encourage stupid behavior must be responsible for whatever level of encouragement they provide. NOTE -- The predictable stupid behaviour of others is NOT the "superceding, intervening" act that will break the causal chain.