First sidequest: Katie's Strip MMA.
Katie originally floats the idea of a strip MMA battle at the matriculation ceremony; the first game actually had a check there, so strip MMA was disabled unless you answered correctly. As the game found it's voice, I decided to be more permissive, so you can do strip MMA even if you talked about playing for a good bottle of booze.
Katie's a seasoned fighter, and while not as strong as the player she's fast, learns and adapts quickly, and extremely brutal.
There are 3 'strategies' that you can use (brute force, countering, feinting); the trick to defeating her is that your stats need to be high enough. Brute force requires a STR of 10, Countering requires an INT of 10, and feinting requires a CHR of 10. In case you were tempted to just get one stat high enough, trying to reuse a technique will not work (she'll counter your counter), so make sure you don't reuse the same move.
After you defeat her, she'll offer to continue the fight on the ground; you've got the option to say no (I'm adding that for all optional events), or get into a ground-and-pound match with her.
If you lose the fight, head back to Chloe at the Crowley, and purchase a bottle of whisky for Katie to get a rematch; there's a CHR check that allows you to get a staff discount.