Mitch and the Baywatch lifeguards deal with snow, romance, little people, and a con artist at Christmas. Mitch and Tracy fall in love. Mitch and Hobie let a lost boy stay with them during the holidays, only to discover he's a con artist. C.J. believes a priest has developed romantic feelings for her. Matt suspects that a group of vacationing little people are really Santa's elves.

Logan and Gator take on Matt and Barnett in a rubber ducky contest; Mitch and Tracy become romantically involved, but she keeps a personal secret from him.