Jesse is still a captive of white supremacist gang leader Jack, who kidnapped him and forced him to work as a meth cook after Walt's hit job went wrong. The last time they saw each other, Walt and Jesse were on opposite sides of a betrayal and a shootout, and Walt believed Jesse to be dead.
Having used Todd and Lydia to get a meeting with Jack, Walt pretends to be there to offer up a new formula. Jack declines and orders him killed, but not before Walt distracts him and tricks him into bringing Jesse into the room.