The opener features a young boy who walks into the bar and asks for Sam Malone. When he's told that Sam is the bartender, the boy remarks on how old Sam has gotten and then proceeds to ask him for a favor. He tells Sam that he would like to get a baseball signed for his brother, a Red Sox fan who is in the hospital. Sam is the more than happy to sign it but the boy tells him that he doesn't want Sam's autograph, he wants Carl Yastrzemski's. Sam, getting offended, tells the boy that he doesn't keep in touch with Carl. The boy is disappointed but asks if Sam can sign it claiming that his brother won't know the difference because he doesn't know what Carl's signature looks like.
In the first scene, after the opening titles, Carla barges in from the back room, grumpy because it's her birthday, and let's everyone know that if anyone wants to acknowledge that it's her birthday they should just do it and get it over with. The first to whip out a present for Carla is Cliff who hands her a small blue perfume box. Carla is pleased...until she opens the box and finds a tiny toilet inside. Cliff tells her that it's not perfume, it's toilet water. Next is Norm, who brings a big a box out of Sam's office. When Carla opens it, the only thing she finds in it is a garlic-flavored jelly bean at the very bottom. Finally, it's Sam's turn and he hands Carla a wooden silverware box. Carla is thrilled when she thinks she's being given silverware. But when she opens the box, all she finds inside is a black Lone Ranger mask. Sam remarks, "You wear it when to ride on Silver!" Everyone laughs as Carla leaves in a huff.
Diane and Frasier enter the bar discussing if they should make a certain announcement to Sam or not. Frasier insists that it is important and they must tell Sam. Finally, they reveal to Sam that Diane is going to move in with Frasier. Sam, not bothered by their decision, says he's happy for them. When Frasier steps out to fetch Carla's present from his car, Sam teases Diane about how long their new arrangement is going to last but Diane suspects that Sam is only teasing because he feels hurt by the whole thing. Frasier returns with Carla's gift. Carla doesn't get her hopes up, suspecting that it's another gag gift. She's overjoyed when she discovers that Frasier and Diane have given her a set of crystal wine glasses. She decides to use them with some of Sam's wine so that she can toast Frasier and Diane for being kind enough to give her a real gift. As she takes a drink, she realizes that she has been given yet another gag gift as soon as wine dribbles out of a secret hole in the glass and stains her shirt.
Sam, Coach, Norm and Cliff see that Carla is sore and upset about all the gag gifts given to her so they decide to chip in together and get her a real gift. Cliff volunteers to go out and pick out something nice for Carla. Diane comes into work and tries to pretend that things are going well between her and Frasier since moving in together but she can't hide the fact that she's suffering from allergies caused by Frasier's puppy Pavlov. Sam accuses Diane of being afraid of commitment and that her allergies aren't being caused by Pavlov but are actually psychosomatic symptoms brought on by the stress of her new living arrangement. Diane scoffs at the theory. Frasier arrives at the bar to tell Diane that her happiness is important to him so he's decided to give up Pavlov. Sam offers to take Pavlov off of their hands and Frasier is more than happy to give Pavlov to a friend. Diane, on the other hand, seems hesitant about the idea. Most likely because she's afraid that Sam might be right about her allergies being caused by Frasier and not the dog.
Frasier returns to the bar the following week. He asks Sam how little Pavlov is doing and Sam informs him that he changed the name of the dog to "Diane". Sam adds that he enjoys the fact that he can swat the dog on the behind and say, "Shut up, Diane!" Sam asks Frasier if Diane's allergies have cleared up since Frasier got rid of the dog. Frasier admits that her allergies have worstened and she has adopted a new sympton which causes her voice to change. Cliff comes into the bar with the gift he was supposed to get for Carla. Carla, thinking it's another gag, refuses. But the boys assure her that it's a nice gift this time. She gives in and opens it to find a lovely sweater. Happy to finally receive a real gift, Carla thanks the boys. After Carla leaves, Cliff tells everyone that when the sweater comes in contact with body heat, the words "I am horny as a hoot owl" appear on the back. As punishment, Norm gets two large bar patrons to give Cliff a wedgie and toss him out of the bar.
Diane, with a stuffed up nose, enters to find Frasier waiting for her. Diane can't understand why she is still suffering from allergies despite having redecorated Frasier's apartment in order to get rid of any traces of Pavlov. Frasier snaps at Diane for not being able to admit that her allergies are psychosomatic and the result of her fear of commitment. While trying to defend herself, Diane's voice changes and becomes very high-pitched, as if she just sucked on helium. She heads for the ladies room so that she can take some medication. Since it's obvious that Diane will have to move out, Frasier insists that Sam give back Pavlov but Sam, who has grown to love the pup, refuses to give him up. Diane returns to hear them fighting and immediately assumes that they are fighting over her. Impressed by what she thinks is Frasier's dedication and love for her, Diane's allergies clear up. Frasier and Diane makeup and make a date to see a Kurosawa film.
After they leave, Norm comments that, once again, Frasier walks out with Diane leaving Sam alone. Sam smiles and replies, "Yeah, somebody up there likes me."