Michael learns that Toby will be taking a leave of absence to go on jury duty for the Scranton Strangler trial, leading the corporate office to send Holly to cover for him. Michael forces Pam to plan a second, classier Christmas party for
Holly's return to Scranton. Michael welcomes Holly back, but becomes upset when she tells him that she and A.J. are still in a relationship. Holly then tells the women of the office that she's giving A.J. an ultimatum: either propose to
her by year's end or their relationship is over. Michael lies to Holly and tells her that he's seeing a woman named Tara from New York, and Holly shows curiosity, but Michael interprets this as potential jealousy.
When Michael gets
further upset over hearing about Holly's relationship with A.J., he takes her toy Woody from Toy Story—a present from A.J.—throws it in the trash, and pours his coffee on it. When Holly uncovers this, she demands to know who did it,
and Michael comes forward and admits that he still has feelings for her and is hurt that, while they had to break up due to their long distance, she is nevertheless able to make such an arrangement work with A.J. This, in turn, makes
her feel bad for Michael. A.J. arrives in Scranton to surprise Holly and Michael welcomes him politely. After cleaning Holly's Woody, he leaves the office and Pam follows him out, where he breaks down. In order to lift his
spirits, Pam tells him about Holly's ultimatum, suggesting their relationship is not going to last very long. He returns to the party where he overhears Holly and A.J. talking about Woody, with Holly fabricating a story
to cover for Michael's actions.
Darryl is upset that his daughter Jada would rather spend Christmas with her mother than him. At the party, Jada begins to lose interest, but Pam and Andy try to find fun activities for her; however, Andy ends up ruining most of them,
specifically by setting up a trivia contest instead of a scavenger hunt. Darryl then takes her to the break room, where she is impressed with the snacks in the vending machines. They take out the snacks and hand them to employees.
When she hands one to Michael, he decides to dress up as Santa again so she can tell him what she wants for Christmas as Holly looks on with admiration. Angela Martin invites her new boyfriend Robert Lipton, a charming State Senator,
to the party, however Oscar believes that Robert is secretly gay, when Robert takes keen interest upon meeting him, and when Oscar later notices him discreetly checking out Ryan's backside.
Pam says that her husband Jim always makes her great Christmas gifts so she wants to make him one too. She creates a hand-drawn comic book about Jim who gets attacked by a radioactive bear and takes its powers. She asks for
others' opinions before giving it to Jim, but most of them give her harsh critiques. Jim gives Pam a beautiful bracelet and he is equally amazed at the comic book she gives him. Jim and Dwight agree to a snowball fight after
Jim throws a snowball at Dwight indoors. When he is first challenged outside, however, he finds the doors chained. Dwight then emerges from a snowman, throwing multiple snowballs at Jim and leaving him with a bloody nose.
Throughout the day, Dwight torments Jim with increasingly elaborate snowball ambushes, some of which involve Dwight disguising himself as Pam (he explains that he has a wig for every person in the office) and making a
spring-loaded trap present. Jim tries to surrender, but Dwight refuses. At the end of the day, Jim is too afraid to go outside. He and Pam find multiple snowmen, and Jim attacks them all hoping to find Dwight. Dwight,
however, is on the roof of the building, watching Jim with a satisfied look on his face. He claims that the greatest snowball in a snowball fight is fear, and smilingly wishes the camera "Merry Christmas".