Arriving at the Lucky Smells Lumber Mill in Paltryville, the children are caught by its owner, known only as Sir, and his aide Charles. Believing the children have trespassed, they are put to work alongside the other mill works, who seem unnaturally happy to work there. They learn that Sir blames the Baudelaire parents for a fire that destroyed Paltryville.
Violet and Sunny try to clear their parents' name, while Klaus investigates the strange behavior of the workers. The foreman knocks him down, breaking his glasses, and Klaus goes to the nearby optometrist, Dr. Orwell. She hypnotizes Klaus into loving the mill while fixing his glasses. Sir tells the three they have visitors waiting for them; thinking it is their parents, they are shocked to find Dr. Orwell and her nurse, a poorly-disguised Count Olaf using the name Shirly St. Ives, waiting for them.
Meanwhile, the Father and Mother are shown not to be the orphan's parents but Mr. and Mrs. Quagmire, parents of three children.
