In the familiar experiment to derive time dilation we have observer A traveling with a light clock. The light clock sends a light pulse from the roof of the spaceship bouncing it off a mirror on the floor (one tick event). A observes the light pulse moving through twice the height D of the spaceship.
Observer B is outside to the right of the spaceship and stationary. B observes the pulse moving through 2S, where S is the square root of the sum of squares of D and L, where L is the distance the spaceship travels while the pulse moves through D. A and B measures different times for the event because of time dilation in the different reference frames.
Observer C is situated in line and at rest with B but "above" the spaceship. C and B have synchronized their clocks and agreed on a reference frame. C observes the pulse moving through distance 2L and measures a different time than B. However B and C are in the same reference frame, how can they observe different values for time dilation of the same event?