OK so. Long story short there's a very incriminating video of Ashlee Simpson, Ryan Ross, and Pete Wentz getting into a car together where they're all visibly incredibly intoxicated and Ryan says something to Pete along the lines of "Pete you know that's MY leg, not hers, right?" And then later that same night Pete posted a bunch of tongue-in-cheek cryptic live journals about 'having a sleepover' and 'staying up all night reading Oscar Wilde.' OK.
Either that night or very soon after that Pete and Ryan had a falling out that led to the first panic! breakup. So I call it the threesome of doom because something clearly happened that night and I like to imagine (with all the context clues they've given us) that the 3 of them hooked up and the sex was so bad that panic had to break up because Ryan and Pete could never look each other in the eyes again