How to handle default judgment in a Schedule A case: a step-by-step guide

TL;DRA default judgment in a Schedule A case is a federal court order entered against a seller who did not respond to the underlying complaint – and on Etsy, it typically means a frozen payment account, permanent injunctive relief, and a damages award, all imposed without the seller ever having had a chance to contest the claims. The judgment is not final in the way most sellers assume. Federal procedural rules give defendants a defined path to challenge it, even after the fact. What that path looks like, how long it is open, and where sellers lose ground by waiting – that is what this guide covers.

This guide moves through the step sequence in order: what a Schedule A default judgment actually is, how Etsy accounts are affected, how the court process reached this point, and then – critically – what a named seller can still do. Each step carries its own decision point and its own deadline pressure. Read this end to end before taking any action in your case.

What is a default judgment in a Schedule A case, and how did you get here?

A Schedule A default judgment is a final federal court order issued against a marketplace seller who was listed as a defendant on a "Schedule A" complaint but never appeared in the case to defend it. The plaintiff – almost always a brand owner or IP licensor – filed suit in US federal court, named dozens or hundreds of sellers on a schedule attached to the complaint, obtained a temporary restraining order (TRO) that froze those sellers' marketplace and payment accounts, and then, when those sellers did not appear by the court-set deadline, asked the court to enter judgment in their favor by default.

The structure of the SAD scheme – Schedule A Defendants – is specifically engineered to reach this outcome quickly. The complaint identifies sellers by storefront alias and platform account rather than by legal name. Notice is served by email or through the platform, often to an address the seller does not actively monitor. The TRO itself is typically granted ex parte, meaning without any notice to the defendants at all. By the time an Etsy seller sees the account freeze and traces it back to a federal lawsuit, the window to respond may already be running.

So the default was not necessarily negligence on the seller's part. In many matters we handle, sellers come to us having received no intelligible notice that they were named – only a frozen Etsy payment account and a vague hold notice from the platform. That is the starting point for almost every default-judgment matter in this practice area.

A default judgment in a Schedule A case is distinct from a default entered by the court clerk: once a judge signs a final judgment order, it carries damages – often statutory damages under the Lanham Act – plus a permanent injunction. The account freeze may convert to a turnover of funds to the plaintiff. That is the commercial reality that makes acting quickly essential.

How does a Schedule A TRO freeze an Etsy account specifically?

Etsy, as a platform that processes payment on behalf of sellers, complies with federal court orders directing it to freeze and hold funds in a named seller's account. The TRO order typically instructs Etsy (and any payment processor associated with the account) to freeze balances, disable withdrawals, and preserve records. The platform does not evaluate the merits of the underlying IP claim – it receives a court order and it complies.

The freeze happens in two stages in most Schedule A matters. First, the ex parte TRO freezes the Etsy Payment account balance and may block new disbursements. Second, if the case proceeds to a preliminary injunction or to default, the freeze may be extended or the court may order the funds transferred to a registry or to the plaintiff.

For a working Etsy seller, this is not an abstract procedural event. Inventory is already paid for. Supplier invoices are due. Etsy's disbursement cycle stops. We regularly see sellers whose entire operating float – sometimes a mid-four-figure to mid-five-figure balance – is locked at the moment the TRO lands. The commercial pressure is immediate, even if the legal deadline to respond feels more distant.

One thing worth understanding: the asset freeze and the default judgment are separate orders. Dissolving or modifying the freeze does not automatically vacate the judgment, and vacating the judgment does not automatically release the frozen funds in one step. The procedural path has to address both. For more on how the freeze itself can be challenged, see our guide on how to handle a motion to modify an asset freeze.

Step 1 – Locate the case and verify the exact procedural posture

The first practical step is to confirm exactly what the court has entered and when – because the available remedies and their deadlines depend on the precise stage of the case. Before drafting any motion or making any contact with the plaintiff's counsel, a named seller needs to know the following.

• The court and case caption: which federal district court is the case in, and what is the case number? Schedule A cases cluster heavily in certain districts – the Northern District of Illinois is the most common venue – but they can be filed anywhere.
• The date of the TRO: when was the freeze order signed? In most Schedule A cases, the TRO has a short term and must be extended or converted to a preliminary injunction by a specific date.
• The date of default entry: the court clerk enters default when the defendant fails to plead or otherwise defend by the deadline. This is the administrative step that precedes the final default judgment.
• The date of the default judgment order: this is the operative deadline for calculating the window to seek relief under Federal Rule of Civil Procedure 60(b).
• Whether a final damages order has been entered: some Schedule A cases reach a damages stage quickly; in others there is a gap between the default and the final damages number.

All of this information is on the public court docket, accessible through PACER. If the seller has never accessed PACER before, the case number from the Etsy hold notice or from a direct search by the seller's shop name is the starting point. Confirm the docket entries before doing anything else.

In matters we handle, the single most common error at this stage is acting on assumptions – assuming the judgment is "too old" to challenge, or assuming the case is still in the TRO phase when a final judgment has already been entered. The procedural posture determines everything that follows.

Step 2 – Identify which procedural route is still open

Once the docket is confirmed, the next step is mapping which procedural tools are still available. This is a decision point with real trade-offs, and the right answer depends on how much time has passed since the relevant orders were entered.

Federal Rule of Civil Procedure 55(c) allows a court to set aside a default (the clerk's entry, before final judgment) for good cause. The standard is relatively forgiving – courts look at whether the defendant has a meritorious defense, whether the plaintiff would be prejudiced by setting aside the default, and whether the default was culpable. If the default has been entered by the clerk but no judgment has been signed yet, Rule 55(c) is the cleanest route.

Federal Rule of Civil Procedure 60(b) governs relief from a final judgment. The most commonly applicable grounds in Schedule A cases are: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence; and (3) the judgment is void – for example, because the court lacked personal jurisdiction over this particular seller. Rule 60(b)(1) motions must generally be filed within a reasonable time and no later than one year from the judgment. Rule 60(b)(4) – void judgment – has no outer time limit, but courts apply it narrowly.

Jurisdiction arguments have become more prominent in Schedule A defense. Courts have increasingly scrutinized whether a single national venue can properly assert personal jurisdiction over dozens of foreign sellers who merely listed products on a US-accessible platform. A meritorious jurisdictional challenge can void a judgment entirely, not just vacate it for re-litigation. That is a materially different outcome. Our fuller treatment of the TRO-phase equivalent of this argument is in the guide on how to handle a motion to dissolve a TRO.

A third route – less immediately obvious – is reaching out to plaintiff's counsel to open settlement discussions, either before or alongside filing a motion. Plaintiffs in Schedule A cases often operate on volume: dozens of defendants, streamlined filings, consistent settlements. A credible defense posture (a filed or about-to-be-filed 60(b) motion) changes the negotiation dynamic. Settlement does not erase the judgment automatically – it requires either a voluntary dismissal or a consent order vacating the judgment – but it is a parallel track worth running in appropriate cases.

Step 3 – Build the record for a Rule 60(b) motion or a 55(c) motion

A motion to vacate a default or default judgment is not a general complaint that things were unfair. Courts require a specific factual showing. The record needs to address the three Rule 55(c)/60(b) factors directly: the reason for the default, the existence of a meritorious defense, and the absence of prejudice to the plaintiff.

On the reason for the default, the seller's declaration should explain, specifically and without embellishment, why no response was filed. Common grounds include: no actual notice of the suit (the summons email went to a dormant address or a spam folder); no understanding that the Etsy account hold was connected to a federal lawsuit; language or jurisdictional confusion for foreign sellers; or failure of Etsy's own hold notice to identify the case in actionable detail. Courts are not looking for a perfect excuse – "excusable neglect" is a deliberately flexible standard – but vagueness and delay hurt credibility.

On the meritorious defense, the seller does not have to prove the defense at this stage – only to show it is plausible on the facts. Common defenses in Schedule A matters include: the seller's products are genuine or authorized; the marks at issue are not validly registered for the goods sold; the seller's products differ sufficiently from the claimed infringing items; the court lacks personal jurisdiction over this seller; or the joinder of dozens of unrelated sellers in one case was improper. Each defense needs a factual hook – a supplier authorization letter, a purchase invoice, evidence of the seller's legal domicile and operations – not just a legal assertion.

On prejudice, courts are skeptical when plaintiffs claim they will be prejudiced by having to actually litigate their case. The argument is strongest for plaintiffs if significant time has passed, witnesses have become unavailable, or the seller destroyed relevant records. For most Etsy sellers in Schedule A cases, the records – inventory invoices, supplier contacts, listing histories – are still recoverable.

The motion itself must be filed in the correct district court, must comply with the local rules on page limits and formatting, and must be accompanied by a supporting brief and declaration. Missing a local rule is an unnecessary credibility cost at a moment when credibility is the primary asset.

Step 4 – Address the asset freeze in parallel

The motion to vacate the judgment is the headline procedural move, but the frozen Etsy balance has its own track. A court can order the funds released or partially released as a condition of or consequence of vacating the default. It can also be persuaded to modify the freeze on hardship grounds before the 60(b) motion is decided, particularly if the frozen amount significantly exceeds any plausible damages range on the underlying claim.

The argument for release or modification of the freeze follows different logic than the argument to vacate the judgment. Here, the seller is arguing proportionality: the amount frozen bears no reasonable relationship to the damages likely to be awarded even if the plaintiff won on the merits. Courts have discretion to limit asset freezes to a reasonable estimate of recoverable damages. This is worth pursuing separately, because the freeze is doing real commercial harm every day it is in place.

Etsy's own processes for responding to court orders are typically passive – the platform holds and waits for further court instruction. A court order directing Etsy to release the funds is the operative mechanism; an informal request to Etsy's seller support will not override a standing court order. That is a common misconception, and acting on it wastes time that could be spent on the actual motion practice.

Step 5 – Navigate settlement or defend on the merits

If the court vacates the default and reopens the case, the seller now faces a decision: defend on the merits or negotiate a settlement? This is a genuine trade-off, and the right answer depends on factors specific to the matter.

Defense on the merits makes most sense when the seller's factual position is strong – genuine goods, a clear authorization trail, a jurisdiction argument that the court has accepted as at least plausible – and when the cost of continued litigation is manageable. A Schedule A plaintiff that faces a seller actually contesting the case often re-evaluates the economics of the claim, particularly if the seller is one of dozens of defendants.

Settlement makes sense when the defense is more conditional, when the seller's primary goal is releasing the funds and closing the matter, or when the cost of full litigation (attorney time, expert costs, court appearances) exceeds the commercial benefit of winning outright. A negotiated resolution that includes a stipulated dismissal with prejudice and a joint motion to release the asset freeze is a clean outcome for many Etsy sellers in this position.

One caution: some sellers receive what appear to be settlement offers from plaintiff's counsel before they have any legal representation. Accepting a settlement that does not include a court order releasing the asset freeze – or that contains broad injunctions going beyond the products at issue – can leave the seller worse off than if they had done nothing. The document that ends the case matters as much as the number on the check.

A clothing accessories brand on Etsy (spring 2026) came to us after a default judgment was entered in a Northern District of Illinois Schedule A case; the seller had received the Etsy hold notice but had not understood its connection to a federal lawsuit until the judgment was final. We reviewed the docket, identified a personal jurisdiction argument and a meritorious defense based on supplier authorization, filed a Rule 60(b) motion on both grounds, and opened parallel settlement discussions. The case resolved on terms that included a release of the full frozen balance and dismissal of the judgment.

Where this process goes wrong: the most common failures

At this stage of a Schedule A matter, the seller has already missed one deadline – the response to the complaint. The question is how many more can be avoided. In our experience, these are the failure points that most often turn a recoverable situation into a permanent loss.

Waiting too long after learning about the judgment. Rule 60(b)(1) has an outer limit of one year. Courts also apply a "reasonable time" standard within that limit, and unexplained delays of several months raise questions about good faith. The moment a seller learns about the judgment – from Etsy's hold notice, from PACER, from any source – the clock on acting in a reasonable time starts running.

Filing without addressing all three Rule 60(b) or 55(c) factors. Courts deny motions that spend five pages on the defense and two sentences on the reason for the default. The reason for the default is not a formality – it is a condition of relief, and courts read the declaration carefully.

Ignoring the asset freeze as a separate track. Sellers who focus only on vacating the judgment and assume the funds will follow automatically can find that the funds require a separate motion, and by the time that motion is filed the money has already been transferred to the plaintiff.

Contacting the plaintiff or plaintiff's counsel without understanding the procedural posture. An informal outreach that includes admissions about the seller's products or business practices can create a factual record that makes the defense harder. Every communication with opposing counsel in active litigation should be treated as potentially significant.

Assuming the case is over because a default judgment has been entered. That is the myth we encounter most often. A default judgment in a Schedule A case is not the same as a litigated judgment after a full trial on the merits. The procedural mechanisms to challenge it – Rule 55(c), Rule 60(b), jurisdictional motions – exist precisely because the default process does not guarantee actual notice or a fair opportunity to defend. Courts use them regularly.

For a broader treatment of the entire Schedule A process from TRO through final resolution, see our complete guide to Schedule A TRO defense for sellers.

A handmade-goods seller on Etsy (winter 2025) reached us after a default judgment and damages order had both been entered in the same case. The seller had received the Etsy hold email but believed it was a platform-level dispute, not a federal lawsuit. By the time the seller understood the situation, approximately seven months had passed since the judgment. We filed a Rule 60(b)(4) motion on personal jurisdiction grounds – the seller operated entirely outside the US and had no other US contacts – while simultaneously pursuing settlement. The jurisdictional motion was filed within the applicable window, and it changed the settlement calculus materially.

The seller's decision matrix at each stage

The right procedural move at any given moment in a Schedule A default judgment case depends on three variables: where the case is procedurally, how much time has passed, and what the seller's factual position is on the merits.

If the clerk's default has been entered but no final judgment exists yet – the route is a Rule 55(c) motion, which carries a forgiving good-cause standard and should be filed immediately. The seller's defense does not need to be airtight, only plausible.

If a final default judgment has been entered within the past year and the seller has a specific excuse for the default plus a facially meritorious defense – the route is Rule 60(b)(1), combined with a parallel motion to modify or release the asset freeze.

If a final default judgment has been entered but the court arguably lacked personal jurisdiction over this specific seller – Rule 60(b)(4) is available without the one-year outer limit, though courts apply it strictly.

If the judgment is old, no clear jurisdictional argument exists, and the defense is factually thin – the realistic option is settlement, with attention to the terms of the order releasing the asset freeze and the scope of any injunction the seller agrees to accept.

If a first motion to vacate was already filed and denied – the window narrows sharply, but a second look at the record can sometimes identify a ground that was not fully developed or a jurisdictional argument that was not raised. This is where the cost of a poorly drafted first motion is most visible.

If a first appeal or filing already came back rejected, a second review can find the specific reason it failed and whether anything remains open. Email info@tutamenlaw.com to request a docket review.

Related areas

• Schedule A / TRO Defense – full practice coverage for marketplace sellers named in federal IP cases
• Amazon account reinstatement – account deactivations, Plans of Action, and funds recovery for Amazon sellers

Frequently asked questions

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

The timeline varies considerably depending on the procedural route taken and the specific court. A Rule 60(b) or 55(c) motion typically takes several weeks to brief after filing, and courts in high-volume Schedule A venues may take additional weeks or months to rule. Settlement discussions, run in parallel, can sometimes shorten the overall timeline, particularly if the plaintiff's counsel is managing a large docket of defendants. There is no single answer, but from the moment a motion is filed, sellers should expect the process to run at minimum several months. The asset freeze typically remains in place during this period unless a separate motion to modify it succeeds first.

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

The most serious risk is missing the applicable deadline under Rule 60(b)(1) – generally one year from the judgment, but subject to a "reasonable time" standard that courts apply strictly when the delay is unexplained. A second risk is filing a motion that addresses only one of the three required factors and is denied on that basis, narrowing what options remain. Federal court filings must also comply with local rules on format, page limits, and service; errors at this level consume credibility. Finally, direct contact with plaintiff's counsel without understanding what can and cannot be said creates a factual record the plaintiff can use.

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

Technically, a seller who is an individual can appear pro se in federal court. In practice, Schedule A default judgment motions require knowledge of the Federal Rules of Civil Procedure, the local rules of the specific district court, and the developing body of case law on personal jurisdiction, joinder, and the appropriate scope of Lanham Act damages in Schedule A cases. Judges in high-volume Schedule A districts have seen large numbers of these motions and apply established standards closely. The stakes – a permanent injunction, a damages award, a frozen account balance – typically justify attorney-led representation, and the fixed-fee model that Tutamen uses means the cost is known up front.

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. To discuss your situation, email info@tutamenlaw.com.

This page was prepared by Sofia Marchetti, Partner, Schedule A / Federal Defense at Tutamen.

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.