A seller's path through default judgment in a Schedule A case

A federal court order can freeze an Etsy seller's funds before the seller receives any notice that a lawsuit exists. By the time the account balance shows zero and the payment processor declines transfers, the case may already have advanced through a temporary restraining order and into a default posture. That is the position many sellers arrive in when they first contact Tutamen – not at the beginning of a Schedule A case, but somewhere in the middle of it, with a judgment already entered or imminent.

TL;DRA default judgment in a Schedule A case is a federal court ruling entered against a named defendant who did not respond to the complaint within the required period. On Etsy and other marketplaces, it typically follows a temporary restraining order that froze the seller's account funds and suspended listings. Default does not end the seller's options: courts have discretion to vacate a default judgment on narrow but real grounds, and the asset freeze may be challenged or modified even while the default stands. Acting quickly matters; the window to move narrows the longer the judgment sits.

This case study traces one anonymized seller's path from a frozen Etsy account through a default judgment and into a settlement. It covers what was actually happening procedurally, the decisions the seller faced, and the lesson that applies broadly to any Etsy seller or marketplace operator named in a Schedule A action.

The situation: a frozen balance and a case the seller did not know about

The seller, a small-batch home-decor maker selling on Etsy, discovered the problem the way many Schedule A defendants do – through the payment side, not the legal side. Payments stopped arriving. Etsy's seller account showed a hold. There was no litigation notice in the shop's inbox, no process server at the door, and no correspondence from a court.

What had happened was characteristic of the SAD scheme pattern. A brand owner – or an entity claiming brand-owner status – had filed a federal complaint in a US district court naming dozens of sellers across multiple marketplaces on a single Schedule A exhibit. The plaintiff had obtained an ex parte temporary restraining order. That TRO directed the marketplaces and payment processors to freeze the defendants' funds without prior notice to the defendants themselves. Service of the complaint and TRO followed after the freeze was already in place.

In matters we handle involving this structure, the asset freeze is the first signal a seller notices. The complaint arrives later – sometimes days later, sometimes longer. By the time this particular Etsy seller located the case on the federal court docket, the TRO had been entered, the funds were frozen, and the deadline to respond to the complaint was running.

What made this situation more difficult was that the seller had not responded in time. The complaint had been served by email to an address the seller did not monitor regularly – a standard alternative-service method that federal courts permit in Schedule A cases to reach overseas or pseudonymous defendants. The seller missed the response window. The plaintiff moved for a default judgment. The court entered it.

The practical result: the frozen balance was now subject to a judgment lien as well as the TRO freeze. The Etsy shop remained suspended. And the seller, unfamiliar with US federal procedure, was unsure whether anything could still be done at all. That is the fear that the SAD scheme structure is designed to produce – and, in many cases, it works even against legitimate sellers.

What was really happening: the procedural reality of Schedule A default

Being named in a Schedule A case and having a default entered against you are two different procedural events, and each one has its own set of available responses. Understanding that distinction was the first thing the strategy turned on.

A Schedule A defendant complaint is a mass-joinder filing in which a single plaintiff names a large number of marketplace sellers – typically dozens or more – in a single action, asserting trademark or copyright infringement. The plaintiffs frequently seek ex parte TROs as a first step, relying on arguments that prior notice would allow defendants to move assets offshore. Courts in a small number of US district courts have historically been receptive to this approach. The result is a structural front-loading of the plaintiff's advantage: the freeze happens before the defendant can contest anything.

Default, in federal civil procedure, is entered by the court clerk when a defendant fails to plead or otherwise respond within the time allowed. A default judgment is the substantive ruling that follows – typically an award of damages and permanent injunctive relief. But default judgment is not the same as a judgment entered after contested litigation. Courts have discretion to set aside a default judgment under the applicable rules of civil procedure on a showing of good cause. The three classic factors are: whether the defendant had a meritorious defense, whether the plaintiff would be prejudiced by vacatur, and whether the default resulted from the defendant's excusable neglect rather than willful disregard.

In matters we work through involving this structure, the excusable-neglect and meritorious-defense prongs are the most productive points of attack when a legitimate seller is involved. Alternative email service – the most common service method in Schedule A cases – frequently supports an excusable-neglect argument, particularly when the address used was not the seller's primary business correspondence address. And a seller who can demonstrate that the accused products were genuine, authorized, or non-infringing carries a facially meritorious defense.

There was also a joinder argument available. Schedule A complaints frequently join unrelated defendants who have no connection to each other beyond appearing on the same exhibit. Federal courts have grown more attentive to misjoinder challenges in recent years. A successful motion to sever would place this seller in a separate action, potentially in a more favorable procedural posture. That option does not disappear simply because a default has been entered.

The asset freeze, meanwhile, operated on a separate track. The TRO froze the funds. A preliminary injunction – entered after a brief hearing or on consent – can continue that freeze pending the outcome of the case. But courts retain the authority to modify or narrow the freeze, and the constitutional underpinnings of a Mathews v. Eldridge-style deprivation-without-notice argument remain available even after a default. We assessed whether a motion to modify the asset freeze was warranted in parallel with the default vacatur work, as the frozen balance was the seller's most immediate commercial injury. For a full treatment of that motion type, see our page on why a motion to modify an asset freeze arises in US marketplace cases.

Strategy: working the default vacatur and the freeze simultaneously

The first decision was sequencing. Should the seller prioritize vacating the default judgment, attacking the asset freeze, or attempting to open settlement? The answer depended on the strength of the underlying defense, the amount of frozen funds, and what the plaintiff actually wanted from this particular defendant.

On the defense merits, the seller's products were handmade. They were not counterfeit goods, not imported goods bearing a third-party mark, and not products sourced from a grey-market supply chain. The infringement theory – that a design element in the seller's listings resembled a trademarked pattern – was facially weak for an Etsy maker who had designed the items independently and could document the creative process. That was a meritorious-defense argument worth making.

On the freeze, the balance held by Etsy's payment processor was the seller's working capital. With the account suspended and no new sales, that balance was the only liquid asset available to fund the defense. An argument to modify or partially release the freeze on hardship grounds – allowing the seller to access a portion of the balance for living expenses and legal costs – was worth pursuing alongside the vacatur motion. Waiting for the vacatur to succeed before touching the freeze would have taken too long given the seller's financial position.

On settlement, the plaintiff's litigation posture mattered. In our experience handling Schedule A matters, many plaintiffs in multi-defendant Schedule A cases are willing to settle individual defendants relatively early, particularly once a defendant appears with counsel and signals a contest. The economics of litigating a vacatur motion, a joinder/severance challenge, and a freeze modification simultaneously can make settlement attractive to a plaintiff who obtained the TRO primarily to deter infringement rather than to litigate every defendant to judgment.

The strategy that emerged had three tracks running in parallel. First, we filed a motion to vacate the default, grounded in the excusable-neglect of the alternative-service mechanism and the meritorious-defense of originality and non-infringement. Second, we filed a motion to modify the asset freeze to release a defined portion of the frozen funds, documenting the seller's financial hardship and the absence of any flight risk. Third, we opened a settlement channel with plaintiff's counsel simultaneously, so that the cost of contesting the motions was visible to the plaintiff from day one.

For the broader procedural steps in this type of case from the TRO stage onward, see our detailed step-by-step guidance on dissolving a TRO in a marketplace case. The full context of the Schedule A scheme, including how these cases are filed and what defendants face, is covered in our complete guide for sellers facing a Schedule A or TRO action.

Outcome and the decision points that shaped it

The matter resolved without a final contested ruling on the vacatur motion. That outcome is qualitative – we do not quantify settlement terms and do not guarantee any resolution in any matter. But the path that led there illustrates the decisions that every Schedule A defendant in a default posture needs to weigh.

The first decision point was whether to appear at all. Many sellers in default posture assume the judgment is final and the case is over. That assumption is wrong in a meaningful share of cases, and acting on it – ignoring the matter or simply abandoning the marketplace account – can convert a manageable situation into an unchallenged permanent injunction and a judgment that can be domesticated and enforced against the seller's other assets. Appearing, even late, changes the plaintiff's calculus.

The second decision point was the vacatur standard itself. Not every default in a Schedule A case will be vacatable. A seller who was properly served at a monitored address and chose not to respond faces a harder excusable-neglect argument than a seller who was served at an unmonitored alternative-service address. Honest assessment of that standard early – before drafting the motion – is what separates a motion worth filing from one that will fail and harm the seller's credibility with the court. We reviewed the service record carefully before committing to that argument.

The third decision point was the freeze. Releasing frozen funds, even partially, through a hardship modification is not automatic. The seller needed to document actual financial harm and demonstrate that the funds were not being withheld to facilitate continued infringement – which was straightforward given that the account was already suspended. What the motion required was a clear record, and assembling that record efficiently was the practical work.

The settlement, when it came, included a consent order that resolved the injunctive claims, a release of a substantial portion of the frozen funds, and a coexistence arrangement allowing the seller to continue selling non-infringing products. No admission of infringement was part of the resolution. The seller restarted on Etsy under a restructured shop with compliant listings.

A second, related matter we handled from a different context involved an Amazon US seller (winter 2025) who faced a default judgment in a Schedule A action after missing service of an amended complaint. We moved to vacate the amended-complaint default, raised a personal jurisdiction argument tied to the seller's non-US domicile, and ultimately secured a settlement that released the account funds and avoided a contested injunction. The jurisdiction argument is worth examining wherever the defendant lacks meaningful US connections – courts apply it unevenly, but it remains a live option. What both matters share is this: the result in each case turned not on the default itself but on what was done after it.

The lesson: being named is not losing, and default is not the end

The dominant myth in the seller community is that being named in a Schedule A case means the brand owner wins and the seller loses. That framing is inaccurate as a legal matter and damaging as a practical matter, because it leads sellers to do nothing – which is the one response that genuinely does produce the worst outcome.

Default is a procedural event, not a substantive verdict. Courts enter defaults when defendants fail to respond, but courts also have the authority to vacate defaults when the circumstances justify it. The Schedule A structure – mass joinder, alternative service, ex parte TROs – is precisely the environment where vacatur arguments arise most frequently, because the procedural front-loading of the plaintiff's advantage is also the source of the most defensible excusable-neglect arguments.

The real question for any seller in this situation is not "can anything be done?" but "what specifically can be done, given this service record, this defense, and this freeze amount?" That is a concrete legal assessment, not a general reassurance. It takes a day or two to form a clear view on whether a vacatur motion is worth filing, whether a freeze modification has legs, and whether the plaintiff is likely to settle rather than litigate. Starting that assessment immediately, rather than waiting to see what happens, is what preserves optionality.

Sellers who handle Schedule A cases alone face specific risks. Without familiarity with local rules in the relevant federal district, filing deadlines are easy to miss – and missing a deadline on a motion to vacate can close the vacatur window entirely. Without knowledge of the plaintiff's litigation pattern across prior Schedule A actions, it is hard to calibrate whether to settle early or contest. And without a structured approach to the freeze modification, sellers often leave funds frozen far longer than necessary while they concentrate on the judgment itself.

The attorney-led, confidential approach that Tutamen applies to these matters – with fixed fees quoted up front after a short review – exists precisely because the decisions that matter most in a Schedule A case are made in the first days after the account freeze, not weeks later.

Related areas

• Schedule A / TRO Defense – full practice coverage for US federal marketplace IP actions
• Frozen Funds Recovery – mapping and pressing held balances across marketplaces

If a default judgment has already been entered against your Etsy account – or if a TRO has just arrived and you want to understand your position before the response window closes – contact Tutamen at info@tutamenlaw.com for a review of the specific filing and a clear assessment of what options remain open.

Frequently asked questions

How long does resolving default judgment in a Schedule A case usually take on Etsy?

Resolution timelines vary considerably depending on the federal district, the plaintiff's willingness to engage, and whether the vacatur motion is contested. In matters we handle, the period from first engagement to a final resolution – whether by settlement or contested ruling – typically spans several months. The freeze modification, if granted, can produce a partial fund release well before the overall case resolves. Early action compresses the timeline; delay almost always extends it, because courts require a showing that the defendant acted promptly once aware of the default.

What are the main risks if I handle default judgment in a Schedule A case alone?

The primary risk is missing the procedural window to contest the default. Federal courts apply deadlines strictly, and an untimely motion to vacate is generally denied regardless of the underlying merits. A second risk is misjudging the vacatur standard – filing a motion that does not address the correct legal factors weakens the record and can affect the court's view of later filings. A third risk is leaving the asset freeze unaddressed while focusing only on the judgment, which prolongs the financial impact even if the vacatur succeeds. Each of these errors is difficult or impossible to correct after the fact.

Do I need a lawyer for default judgment in a Schedule A case?

For a US federal court proceeding, attorney representation is strongly advisable. Schedule A cases involve federal civil procedure, local district-court rules, and IP law – three overlapping bodies of rules where procedural errors carry significant consequences. A vacatur motion that does not meet the applicable standard will fail; a freeze modification that does not document hardship correctly will fail. Beyond procedure, the negotiation dynamics with plaintiff's counsel in multi-defendant Schedule A actions are specific to this type of litigation. A lawyer with direct experience in the SAD scheme context is able to assess the plaintiff's prior litigation pattern and calibrate the strategy accordingly.

About Tutamen

Tutamen is an independent law firm for online marketplace sellers. We represent Amazon, Walmart, Etsy and eBay sellers in account deactivations, frozen-funds recovery, intellectual-property disputes, arbitration and Notices of Dispute, and US federal Schedule A defense, plus EU marketplace regulation. Our work is attorney-led and confidential, with fees quoted up front. We act for founders, brand owners and in-house teams who need a specialist for a marketplace dispute. Our Schedule A practice covers TRO dissolution, asset-freeze modification, default vacatur, personal-jurisdiction challenges, and settlement negotiation – the full procedural range from first freeze to final resolution. To discuss your situation, email info@tutamenlaw.com.

By Sofia Marchetti, Partner – Schedule A / Federal Defense, Tutamen

Published December 31, 2026

Disclaimer: This article is general information, not legal advice, and does not create an attorney-client relationship. Marketplace policies and the law change, and every account and case is different. For advice on your situation, contact Tutamen at info@tutamenlaw.com.