Fuzzy: The Duelling Salon - Table 1
DM Ruling
The rules say that a Character is flat-footed in the first round of combat, if they lose initiative. However, this is a controlled duelling environment, not a standard fight.
The Duel starts when the duellers enter the table. Adoven has entered the duelling table and walked to the centre of the table to take his stance - right next to Cass. So there is an implied movement of 5 feet in Adoven's post. That, in my view, is enough to negate the flatfoot rule.
After this tournament is over, I will modify the house duelling rules to fix starting points for contestants - so this doesn't come up again.
On a second point - no character knows whether they have won or lost initiative, until they hit or are hit. There can't be an either/or set of action - players must post a single set of actions, regardless of whether they win or lose initiative.