Ok, a little bit of necroposting.
I fought my friend in arena today.
We had same formation. Exactly the same.
I had more initiative on every character, except for hinata, but she doesn't matter(she had only 15 more, so in summary among all characters i had more initiative than my friend).
And all my 3 other characters went 2nd. Even the one that has 100 more initiative in normal.
So... yeah. We are same levels, i have more initiative but i'm still going 2nd. The only thing i can think of is that my friend has more power. So whoever has more power goes first.