Christmas is in full swing at the Dunphy house until the kids get in some trouble and Phil and Claire threaten to take away Christmas until one of them fesses up. Meanwhile, Jay struggles with wanting to stick to his holiday traditions while Gloria and Manny want to incorporate some of their Colombian practices, and Mitchell and Cameron take Lily to the mall for her first picture with Santa -- but end up with a disgruntled mall Santa on their hands.

Phil and Claire have a huge fight and Phil hasn't a clue as to what it was over, so Gloria steps in to counsel Phil while Jay counsels Claire. Meanwhile, Jay has some regret in buying Gloria a karaoke machine, and Cameron is in full prep mode for a huge fund-raising event and asks Mitchell and Luke for help.

When their competitor releases a catchy ad, Claire and Jay race to shoot a commercial of their own.

Phil is surprised by Claire's reaction to Luke's arrest; Mitchell helps Gloria figure out the secret to her family sauce recipe.