It's happened a couple of times now, with both multi (one other guy) and co-op. I have the other person hang back by the vending machines, otherwise Pete doesn't kite properly.
When I hit the valves right at the beginning, the enemies don't spawn. The water comes out so I could dowse myself but it's not giving me second wind targets, much less objects for Bloodslosion chains. Hitting the valves when they turn green again doesn't yield enemies either.
It only fixes itself once both of us go down into the arena. If after a failed attempt together I go down there alone, the valves then work as normal.