Sorry for the delay, If I remember correctly, you run from the first battle, or lose to it. you report it to the police you get R again and after that he basically gives you options. (Sorry I don't remember it specifically but it is something like that) I will probably edit soon or reply to this, since I'm going through all quest to add the new quest journal system.
Edit> You need to run from the first time you encounter him and report him *same npc that gives the hobo quest* and if you get defeated after going back again, you get it