It's Christmas time at Greendale and Jeff's throwing a party for the study group. Annie's arrived early with party decorations - definitely not furnishings that fuel her fantasy of playing house with Jeff... the curtains might have been a bit much. The rest of the gang starts to arrive, and it becomes painfully clear Jeff was the only one who took the "no gifts" policy at face value. Before the festivities begin, Annie has some bad news to break to everyone: they failed their history paper. Jeff needs a passing grade to graduate, so she invited the teacher to come to their party. If they can show him a good time, maybe, just maybe, he'll reconsider their failing grade...
Professor Cornwallis arrives to an overly congenial group of partygoers. He can't stay long and is quick to criticize Jeff's apartment as being very "feminine." Britta takes offense to his phallocentric worldview and becomes convinced he gave them a failing grade because she wrote her portion from the perspective of an empowered female. Her hubris forces Troy to drift away and give Abed his early Christmas present - a replica tank top of John McClane from "Die Hard." With Britta alone, Jeff confides to her that he tanked his portion of the paper because he figured everyone else would ensure they got a C- at the worst. Britta is furious, but Jeff promises to make it right.
When Jeff goes back into the party to suck up to Cornwallis, the professor tells Jeff his pathetic attempts are off-putting. Cornwallis assumes he's doing so on account of his C- grade, but when Jeff hears this tidbit he pulls Annie aside. A C-? Jeff though they failed! Well, for Annie, who has dreams of being valedictorian, a C- will "fail" her chances at achieving her goal. When Jeff's disparaging comments towards Annie and Cornwallis accidentally get too loud, the professor overhears and decides to interject. Cornwallis tells Jeff he succeeded at his initial goal: his grade's been changed... they now have an F.
Jeff pulls the group aside and promises to talk Cornwallis into moving their grade back up, but he's annoyed Annie dragged them into the situation to begin with. Suddenly, a scream comes from the main room and the gang finds Cornwallis tied up on a chair. Chang thinks he's proven his worth to them. With a moment of maximum leverage seized, Jeff decides to keep Cornwallis in his current situation. Cornwallis turns the tables when he offers an A to the first person to get him out of his hostage situation.
Cornwallis knows every empire crumbles from within and is convinced one of the group members will crack and let him free. Jeff has faith in his fellow man. But as Cornwallis begins to egg them on, the signs of structural weakness become evident. Cornwallis asks if anyone is annoyed by Britta and Troy dating, and when Britta nervously mentions her past with Jeff, Cornwallis realizes he's found his love triangle with the three of them. Jeff urges everyone to keep information to themselves, but Cornwallis already has the upper hand.
Professor Cornwallis invites the would-be valedictorian to free him and guarantee her honor, but tensions rise further when Annie realizes Shirley's the student he's referring to. Cornwallis turns his attention to Annie, providing her an enticing offer. If she frees him, Cornwallis will give her an A and Shirley will fail, causing Annie to become valedictorian. Annie wavers, but ultimately declines. With no more options, Cornwallis plays his final card. He asks Jeff to tell the group why they failed...
Jeff tells everyone he tanked his portion of the paper because he knew they'd carry him to a passing grade. Everyone in the room is rightfully annoyed. He cost Annie - and Shirley - valedictorian! But when Dean Pelton barges in and throws a fit about not being invited to the party, the group panics about the felony kidnapping charges most definitely pending. When they focus their attention back on Cornwallis, though, his chair is empty. He escaped when they weren't looking!
Cornwallis is seated triumphantly at the bar. Someone untied him, and Cornwallis is eager to see the "Benedict Arnold" of the group step forward and admit their crime. Jeff tells Cornwallis their group isn't an empire - they're just a bunch of flawed selfish people. But that's not a weakness... it's a strength. At any time with the group, they're all dealing with the mistakes of another, so naturally the cycle works out where they're all helping each other along every day. Jeff says he doesn't care who did it. Cornwallis knows that's exactly what a betrayer would say. Jeff proves it wasn't him by tying the professor back up. If he had an A, he doesn't anymore.
With Cornwallis neutralized for the moment, the gang decides to open up presents. But when Chang's presents are pathetically wrapped and the ribbons around each aren't even tied properly, everyone realizes the professor was never tied up to begin with! Chang doesn't remember how to tie a knot! Cornwallis realizes he's caught and apologizes for his manipulation. To make up for the mental anguish he's caused everyone, the professor agrees to give them all a C+. The group rejoices. It's a Christmas miracle.
With their problem solved, the group enjoys the rest of the party and exchanges presents with one another. Dean Pelton stops by again and gives everyone in the group little kittens - two for Jeffrey! Chang takes the opportunity to step outside and make a call. Whomever he's speaking to on the phone, Chang let's them know he unfortunately couldn't manage to get the study group expelled. He'll have to come up with another way...