Drummond and Mr. Ramsey learn the truth about Mr. Horton, the seemingly friendly bicycle shop owner with a very sinister side. It soon becomes a race against time to get details out of Arnold after learning that Dudley is about to become Mr. Horton's latest victim.

Kathy transfers to Arnold's school and is treated very poorly because of her disability. When she becomes hall monitor, she rules with an iron fist and doles out demerits to everyone except Arnold. When Arnold feels the heat from his friends over getting away with everything, he tries to get Kathy to lighten up, but she refuses and gets tough with Arnold instead.