The Rescue - S1-E8
Trivia: Seth is surprised that Summer has read the book "Madame Bovary". She explains that it's the favorite book of patient Tom Shales, who is incontinent (lacking normal voluntary control of excretory functions). Tom Shales is a Washington Post critic who blasted "The O.C." in his review.
Answer: She is referring the episode entitled: The Best Chrismukkah Ever, episode 13, season 1. She goes out christmas shopping with Ryan and gets stopped by a security when she is out by Ryan's car. He asks to look inside her bag and finds a stolen watch and some other stolen things.