Be Happy in your Game!
I spent 100 Geek Gold and all I got was this lousy overtext message!
On page 11 of the rules book under step five of troubleshooting it says that if the superhero was defeated the headline is discarded.
This might be a good one for the FAQ. Under the above rule I was making the assumption that there was only one hero or multiple heroes from a single team and the district is left empty after the combat (with only the villain remaining).
Perhaps a better question is if the first hero is defeated, would the other heroes from other teams be able to continue the fight (with the initiative going to the villian after beating the first hero)? In perusing the rules I can't find where the situation in question is covered.