Near the end of the chapter 'Plushy Fight!', you will head into the storage room of Tom and Tessa's shop to help Michael. After helping Michael, you both will start throwing plushies at each other. All you need to do is win by hitting Michael 3 times before he can hit you 3 times. This is not difficult at all, just stay in cover and wait for Michael to pop out and put your over him to hit him. You can replay any section of the Episode in Isolation mode without overwriting your story progress.