Story related and cannot be missed.
This unlocks after defeating Nightmare at the end of the third episode, "Hulk Have Nightmare". To defeat him, just use regular attacks and then heroic attacks when you fill your meter. He will eventually throw out some mines. Using Hulk, go grab one of the candles with and use it to smash him. Repeat 4 more times. You might need to use a final heroic attack to finish him off when you run out of candles. If you do get knocked out, just run over and revive the fallen character with .