Inside default judgment in a Schedule A case: the seller's real options

A federal order froze the Etsy shop's funds before the seller had ever seen a complaint. The listings were pulled. The balance was locked. And somewhere in a US District Court docket, a default judgment may already have been entered – or may be imminent. This is the operational reality of the SAD scheme, and it is the moment where the window to act is narrowest and the cost of inaction is highest.

TL;DRA default judgment in a Schedule A case is a federal court order entered against a seller who did not appear or respond to the complaint, typically after a temporary restraining order (TRO) already froze the seller's marketplace accounts and funds. On Etsy and other platforms, the judgment can be entered within weeks of the original filing. Being named as a Schedule A defendant does not mean an automatic loss – but it does mean that the path to relief is procedurally constrained, time-sensitive, and different depending on how far the case has progressed.

This analysis covers what default judgment actually means in a Schedule A context, why so many Etsy sellers end up in default without realizing the case existed, the procedural routes that remain open, and the decision points every seller faces when weighing a motion to vacate against a negotiated resolution.

What is a Schedule A case, and how does an Etsy seller end up in one?

A Schedule A case is a US federal intellectual-property action filed against a large group of online sellers – often hundreds at once – listed by pseudonym or shop name on an exhibit ("Schedule A") rather than by legal name. The plaintiff, typically a brand owner or its litigation counsel, files a complaint alleging trademark or copyright infringement, then immediately seeks a TRO and an asset freeze against every account on the list.

The TRO is usually granted ex parte – meaning without the seller's knowledge or participation. The court issues the order, the platform (including Etsy) receives it through a designated legal process, and the shop's funds are frozen, often within days of the complaint being filed. The seller may learn about the case only when Etsy notifies them that their account has been suspended or that a hold has been placed on their payment account.

By the time a seller searches for an explanation, the procedural clock is already running. If no response is filed within the time permitted by the court's scheduling order – which in Schedule A cases can be compressed relative to standard federal litigation – the plaintiff will move for a default to be entered by the clerk, followed by a motion for default judgment. In matters we handle, sellers routinely contact us at this stage or, more often, after default has already been entered and judgment is being sought or has been granted.

The asset freeze is the critical early mechanism: it prevents funds from being moved, which is its design purpose, but it also creates immediate cash-flow pressure that pushes some sellers toward ignoring the case entirely, which is exactly the wrong response. Understanding the SAD scheme's structure is the starting point for any rational decision – for a fuller account of the overall process, see our complete guide to Schedule A TRO defense for sellers.

How does a default judgment in a Schedule A case actually work?

Default judgment in federal court follows a two-step process: first, the clerk enters a default when the record shows the defendant failed to plead or otherwise defend; second, the court enters judgment, either automatically for a sum certain or through a judicial determination of damages.

In a Schedule A case, the plaintiff typically seeks statutory damages under the Lanham Act for trademark infringement. Statutory damages do not require proof of actual loss – the plaintiff selects a per-mark, per-type-of-good figure from a statutory range, and courts have broad discretion in awarding them. Willful infringement carries a higher statutory ceiling under the Lanham Act than non-willful infringement, and default judgments are frequently treated by courts as establishing willfulness because the defendant failed to appear and contest liability.

The practical effect is that a seller who does nothing in a Schedule A case may end up with a federal money judgment against them personally – not just against the Etsy shop. That judgment can be enforced against US bank accounts, can appear in public court records searchable by future business partners or landlords, and can complicate cross-border operations for sellers who rely on US payment processors.

There is a further procedural consequence: once a preliminary injunction is entered following a TRO, the asset freeze that covers the Etsy account may become permanent pending the outcome of the case. The frozen balance can be used to partially satisfy a money judgment if the plaintiff pursues that route. Understanding what your frozen balance actually represents – and how it interacts with the likely judgment amount – is a central part of the early analysis in any matter we review.

Why do so many sellers miss the deadline to respond?

The answer has more to do with process design than negligence. Schedule A complaints name defendants by marketplace username or shop name. The plaintiff serves process – or attempts to – through a combination of email addresses associated with the account and, increasingly, through court-approved alternative service methods. If the email address on file with Etsy is a dormant address, a shared inbox, or an address that routes automatically to spam, the seller genuinely may not receive notice until the freeze is already in place.

Even sellers who do receive some notification often misread the situation. The initial contact from Etsy or a payment processor explains the freeze but may not explain that there is a pending federal case with a filing deadline. Sellers sometimes spend the first critical weeks trying to resolve the matter through Etsy's own support channels, which cannot lift a court-ordered freeze. That delay can be fatal to the default timeline.

There is also a structural feature of the SAD scheme worth understanding: volume. A single complaint may name dozens or hundreds of defendants. Courts and plaintiffs' counsel are processing large dockets. The individual seller receives no personal attention from the court; the case moves on its own schedule regardless of whether any particular defendant has worked out what is happening. What looks like a gap in communication is, in many instances, a predictable outcome of the volume-litigation model itself.

What options remain after a default is entered?

Entry of default by the clerk is not the same as a final judgment, and a final judgment does not permanently foreclose all options. The procedural choices narrow at each stage, but options exist at each one.

Stage 1 – Before default judgment is entered: A motion to set aside the entry of default is the most straightforward intervention. Under the Federal Rules of Civil Procedure, default can be set aside for "good cause." Courts look at whether there was a culpable failure to respond, whether the defendant has a meritorious defense, and whether setting aside the default would prejudice the plaintiff. In Schedule A cases, service-related issues – alternative service that did not actually reach the seller, or a time-compressed schedule that left insufficient time to respond – can support a good-cause argument. This is the stage where moving quickly matters most, because the plaintiff will typically seek default judgment as soon as the clerk's default is entered.

Stage 2 – After default judgment is entered but before enforcement: A motion to vacate under Rule 60(b) of the Federal Rules of Civil Procedure is available for reasons including excusable neglect, newly discovered evidence, fraud, or the judgment being void. In matters we handle, the most commonly viable routes are excusable neglect and voidness arguments – the latter particularly where personal jurisdiction over a foreign seller is genuinely contestable. Rule 60(b) has time limits: the motion must be filed within a reasonable time, and for the first three enumerated grounds (including excusable neglect) within one year of judgment. That one-year window sounds long but is not generous when factoring in the time needed to locate counsel, gather evidence, and prepare the motion.

Stage 3 – Settlement at any stage: Plaintiffs in Schedule A cases file for a commercial purpose. Many are willing to resolve against defendants who engage, because pursuing enforcement against a foreign seller with limited US assets can be expensive and uncertain. Settlement can involve a negotiated license, a consent injunction that permits continued selling under new conditions, or a payment arrangement. We regularly see cases resolve through early engagement even after default has been entered – the seller's leverage diminishes at each step, but it does not disappear.

For a more granular look at how the freeze interacts with these options, see our analysis of whether a motion to dissolve a TRO ends your account and the mechanics of responding to a motion to modify an asset freeze.

Decision matrix: which path fits which situation?

The right approach depends on the specific notice received, the stage of the case, the nature of the underlying complaint, and the seller's commercial circumstances. The following is a realistic map of the main scenarios.

If the clerk's default has been entered but judgment has not yet been entered, and the seller has a plausible service or jurisdiction argument, the primary route is a motion to set aside the default combined with an appearance in the case. The motion should be accompanied by a proposed answer or motion to dismiss, demonstrating the meritorious defense the court is required to weigh. Timing is the controlling variable: move as soon as possible, because every day of delay is a day the plaintiff can argue prejudice.

If default judgment has been entered and it has been less than one year, Rule 60(b) is available. The excusable neglect analysis will examine why the seller did not respond – and the quality of that explanation matters. Courts in Districts with high Schedule A filing volume have seen these motions repeatedly; a formulaic argument is less likely to succeed than one that engages with the specific procedural record and the specific facts of service. The plaintiff's conduct in the case – including whether they took genuine steps to ensure the seller received notice – is part of that record.

If the judgment is final and the one-year period has passed, or if the seller's analysis is that the cost and risk of contesting the judgment exceeds the benefit, structured settlement negotiation is often the most rational course. The goal at that point is to unbind the Etsy account and payment processor from the judgment's reach, and to agree terms that do not prevent the seller from continuing to operate in the relevant product category on other surfaces.

A micro-case illustrates the Stage 2 route. An accessories seller on Etsy (winter 2024) reached us after discovering a default judgment had been entered without their knowledge – the complaint had been served to an outdated email address that had not been monitored in over a year. We reviewed the service record, identified that the alternative service methods used had not included a step that would have reliably reached the seller, and filed a Rule 60(b) motion on excusable neglect grounds supported by a detailed factual declaration. The case remained pending at the time of the seller's last update, but the court set a briefing schedule rather than denying the motion outright, which was the necessary first step toward a contested resolution. No outcome guarantee is implied.

A second example: a handmade-goods seller on Etsy (spring 2025) was named alongside more than a hundred other defendants in a single Schedule A complaint. They contacted us after receiving Etsy's account suspension notice but before the clerk's default had been entered. We filed a notice of appearance and a motion to dissolve the TRO on personal jurisdiction grounds, moved to sever the defendant from the mass joinder, and opened settlement discussions in parallel. The preliminary injunction was modified to release a portion of the frozen balance for ordinary business expenses while proceedings continued – a partial outcome we note without framing as typical or guaranteed.

The myth that being named means automatic loss

In our practice, the most damaging thing a Schedule A defendant can believe is that the case is already over. It is not. The SAD scheme's volume and speed are designed to create exactly that impression – and a seller who internalizes it and takes no action turns a contested situation into an uncontested one.

Being named as a Schedule A defendant is a serious matter that requires attention and, in most cases, specialist counsel. But the presence of a TRO, a preliminary injunction, or even a default does not mean the underlying liability findings are unreviewable or that the judgment amount is non-negotiable. Courts retain discretion. Plaintiffs have settlement incentives. Procedural avenues exist.

The realistic position is this: the earlier a seller engages – ideally before any response deadline passes – the more options remain open and the more leverage the seller retains. Each procedural step that passes without a defense response narrows the field. But "narrowed" is not the same as "closed." The analysis at each stage is a cost-benefit exercise over the remaining options, and that exercise requires an accurate picture of where the case actually stands.

The alternative – waiting, hoping the platform resolves it, or assuming the freeze will lift on its own – does not improve the position. A frozen Etsy balance does not unfreeze because the seller feels the TRO was unfair. It unfreezes because a court order modifies or dissolves it, or because the case settles. Both of those outcomes require action.

What Tutamen does in Schedule A matters

In Schedule A cases, we move to dissolve or narrow the restraining order, challenge jurisdiction and joinder, and open settlement on better terms. Where a default has already been entered, we assess whether Rule 60(b) grounds are genuinely available – not every case has them – and, where they are, we prepare the motion with a full factual record rather than a template argument.

For sellers who are at the earliest stage – Etsy has suspended the account or frozen the balance and the seller does not yet know which case they are in – the first task is identification. Schedule A complaints are filed in US federal courts, most commonly in certain high-filing Districts; identifying the specific case, the plaintiff, the asserted marks or copyrights, and the exact stage of proceedings is the prerequisite for any further advice. That initial review is where every engagement begins.

If you have received a suspension notice from Etsy or a freeze from a payment processor and you do not know why, this may be a Schedule A matter. Contact Tutamen at info@tutamenlaw.com – we can usually identify the case from basic account information and give you an initial read on where things stand.

If a first motion or appeal has already been filed and was denied or ignored, a second review can identify the specific reason it failed and whether the record can be supplemented. Email us at info@tutamenlaw.com with the relevant court or platform correspondence and we will assess what, if anything, is still open.

Related practices

Related areas

• Schedule A / TRO Defense – federal court defense for marketplace sellers named in mass IP actions
• IP & Brand Registry – complaint retraction, counter-notice, and Brand Registry disputes on major platforms
• Frozen Funds Recovery – mapping held balances and pressing disbursement and reimbursement claims

Frequently asked questions

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

There is no single timeline, and the range is wide. A motion to set aside a clerk's default that proceeds without opposition from the plaintiff can be resolved in a matter of weeks in some courts; a contested Rule 60(b) motion in a high-volume District can take several months to brief and be decided. Settlement discussions can run in parallel with motion practice, sometimes shortening the overall timeline. The controlling factor is usually the court's docket and the plaintiff's responsiveness to engagement. Early action compresses the timeline; delay extends it.

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

The central risk is procedural default amplified into a substantive loss. Responding without counsel in federal court often means missing procedural requirements – a motion that is technically deficient, an answer that is filed without the right defenses, or a settlement reached without understanding which terms prevent continued selling. A second risk is that self-represented sellers sometimes trigger a response from plaintiff's counsel that accelerates judgment rather than pausing it. The third risk is waiver: certain defenses, including personal jurisdiction, are waived if not raised in the first responsive pleading.

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

In practical terms, yes. Federal court motion practice – particularly Rule 60(b) work – requires compliance with the local rules of the specific District, the court's individual standing orders, and the Federal Rules of Civil Procedure. An Etsy seller appearing without counsel faces the same procedural requirements as a party represented by attorneys. Errors at the motion stage can be irreversible. The question is not whether to retain counsel but how quickly, because the procedural window available to a seller narrows with each passing week.

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 the full case lifecycle – from TRO response to default-judgment vacatur to settlement – with the same attorney handling every stage. To discuss your situation, email info@tutamenlaw.com.

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.

Page authored by Sofia Marchetti, Partner, Schedule A / Federal Defense, Tutamen.