Is default judgment in a Schedule A case the end of your account?

A federal court order has frozen the Etsy shop funds. The seller may not have known the case was filed – let alone that it was moving toward a default. Now a default judgment has been entered, and the question is whether anything can still be done. The short answer is: in many matters, yes. Default judgment in a Schedule A case is a serious procedural setback, not an automatic permanent loss, and the window to act – while real – exists.

TL;DRA default judgment in a Schedule A case is a federal court ruling entered against a seller who did not appear and defend the trademark or intellectual-property complaint brought in a "SAD scheme" action. On Etsy and other marketplaces, it typically triggers a permanent asset freeze and listing removal. However, federal courts retain discretion to vacate a default judgment under Rule 60 of the Federal Rules of Civil Procedure, and in many Schedule A matters the procedural posture of the case – particularly the way notice was served and joinder was structured – gives a defendant meaningful grounds to challenge what happened.

This page answers the questions sellers and their in-house teams ask most often on the day they discover a default has been entered against them. It covers what actually happened procedurally, what the realistic paths forward look like, and how to think through the decision points before any filing deadline passes.

What exactly is a Schedule A default judgment, and how did this happen?

A Schedule A default judgment is a final federal court order entered in a plaintiff's favor because the named defendant never responded – typically because the defendant was never aware the suit was pending until assets were already frozen. The "Schedule A Defendants" model – sometimes called the SAD scheme in commentary – involves brand owners filing large multi-defendant trademark or copyright infringement suits in US federal court, often in the Northern District of Illinois, where the plaintiff attaches a sealed exhibit (Schedule A) listing dozens or hundreds of marketplace seller accounts. The court issues a temporary restraining order (TRO) that freezes funds held by the marketplaces named in the order, including Etsy, before the defendants know they are being sued.

Service of process in these cases often takes the form of electronic delivery to the email address associated with the marketplace account. That email may go to a spam folder, a dormant inbox, or an address the seller stopped monitoring. The timeline from TRO to preliminary injunction to default can move quickly. By the time a seller notices that the Etsy shop funds are frozen or the shop is suspended, a default may already have been entered by the clerk, with a damages award following shortly after.

What makes the situation legally distinctive is the procedural structure. Courts have noted – in various Schedule A cases, without us naming specific decisions – that mass joinder of unrelated defendants in a single suit raises serious questions about whether misjoinder rules were followed and whether personal jurisdiction over a foreign or domestic seller was properly established. These are not marginal issues. They are the same issues that drive motions to vacate default in our practice.

Does a default judgment mean the seller permanently loses the Etsy account and funds?

A default judgment does not automatically make a permanent account loss irreversible, though it is a significant legal obstacle that requires prompt, specific action to address. Under Rule 55(c) and Rule 60(b) of the Federal Rules of Civil Procedure, a defendant can move to vacate a default or default judgment on grounds including: lack of proper notice, excusable neglect, a meritorious defense, or misconduct by the opposing party. In Schedule A matters, the absence of actual notice – because the TRO was obtained on an ex parte basis and served electronically – is a recurring and judicially recognized ground for vacatur motions.

The asset freeze that Etsy implements in response to a federal order is tied to the court order itself. If the court vacates or modifies the judgment, the marketplace is required to follow the modified order. That sequence is exactly what a motion to dissolve or vacate is designed to set in motion. In matters we handle, the first question we ask is not "did you lose?" but "what was the basis of the default, and is the judgment procedurally sound?" Those are the two levers the defense works with.

There is also a distinct track: even if vacatur is not obtained, a seller may be able to negotiate a settlement that resolves the injunction and releases the asset freeze on agreed terms. Plaintiffs in Schedule A cases bring large numbers of defendants specifically because many sellers choose not to fight – and some plaintiffs will negotiate rather than litigate a contested vacatur motion. That calculus is worth understanding before deciding on a path.

For a detailed look at how the TRO-dissolution process works in a real anonymized matter, the case account on dissolving a TRO walks through the procedural sequence step by step.

What are the grounds to vacate a default judgment in a Schedule A case?

The grounds most commonly advanced in Schedule A vacatur motions fall into three overlapping categories: procedural defect in service, lack of personal jurisdiction, and misjoinder. Each deserves a brief explanation, because which ground applies in a given matter determines the strategy entirely.

Service defects. Schedule A complaints routinely rely on electronic service to a marketplace-registered email address, authorized by a court order obtained at the TRO stage. If the service method was not properly authorized, was not reasonably calculated to give actual notice, or was directed to an outdated address, a Rule 60(b) motion on lack of notice has a foundation. Courts have vacated defaults in cases where sellers demonstrated they never received the TRO papers through no fault of their own.

Personal jurisdiction. A US federal court must have personal jurisdiction over each defendant. For an Etsy seller based outside the United States – and a significant share of Schedule A defendants are non-US sellers – the mere fact that a shop was accessible to US buyers does not automatically establish the minimum contacts needed for personal jurisdiction. A motion to dismiss for lack of jurisdiction, or a Rule 60(b)(4) motion (void judgment) on that basis, can be a strong ground where the facts support it.

Misjoinder. Federal Rule of Civil Procedure 20 requires that defendants be jointly and severally liable, or that the claims against them arise from the same transaction or series of transactions. Mass Schedule A complaints bundling hundreds of unrelated sellers who share nothing but the alleged use of a trademark frequently fail this test. Courts have severed or dismissed misjoined defendants. If a seller was improperly joined, the entire judgment may be voidable on that basis.

Meritorious defense. A seller who did not infringe, who had authorization to sell the product, or whose listings did not use the plaintiff's mark in a trademark-infringing way may have a defense on the merits that supports vacatur even when service was technically valid. "Meritorious defense" under Rule 60(b) does not require a certainty of winning – it requires a showing that the defense is plausible and deserves to be heard.

In practice, the strongest motions combine more than one of these grounds. We regularly see situations where personal jurisdiction is contested and service was flawed and the seller has a clean sourcing record – and all three arguments are advanced together.

What does the procedural path look like after a default judgment is entered?

The first concrete step is to read the actual court order and docket, not just the notification from Etsy. The docket tells you when the default was entered, whether a damages order has followed, and what court is handling the matter. That information determines which deadlines are live and which motions are available.

If no damages order has been entered yet, there may be an opportunity to intervene before a damages judgment is added to the default. That can change the financial exposure significantly. If a damages judgment is already in the docket, the motion practice is under Rule 60(b), which has its own timing standards – "reasonable time," and no more than one year for certain enumerated grounds.

The realistic path in most matters looks like this. First, obtain and review the full docket. Second, assess grounds for vacatur and the merits defense. Third, move to vacate the default, simultaneously moving to dissolve or modify the asset freeze if the TRO is still operative. Fourth, if vacatur is granted, respond to the underlying complaint on the merits or negotiate a resolution. Fifth, if vacatur is denied, evaluate appellate options or structured settlement.

Not every case moves through all five stages. Some settle at stage three when the plaintiff understands that the default is contestable. Others reach contested briefing. The path depends on the specific facts of the complaint, the strength of the grounds available, and the plaintiff's litigation posture – which varies considerably across Schedule A filers. For a comprehensive view of the TRO defense process from the start, the complete guide to Schedule A TRO defense covers the full sequence.

One seller who came to us – an Etsy handmade-goods shop owner (fall 2025) – had a default entered after service went to an abandoned email address. We obtained the docket, identified a service defect and a misjoinder argument, and filed a motion to vacate alongside a motion to modify the asset freeze. The court granted modification of the freeze pending the vacatur hearing, allowing the seller to access funds needed to cover inventory obligations while the motion was briefed. That outcome is not guaranteed in every matter, but it illustrates the practical value of moving quickly.

What should an Etsy seller actually do in the first 72 hours?

When a seller discovers that an Etsy account is frozen or that a default judgment exists in a federal court docket, the clock begins immediately. There are things that help and things that make the position worse.

Do, as soon as possible: obtain the case number from the Etsy notification or from a PACER search using the shop name or seller email; download the complaint, the TRO, and any default order; note every date on those documents; and preserve all records of the original service email, including whether it was received, when, and in which inbox folder.

Do not: respond to the plaintiff's counsel directly without independent legal advice; agree to any settlement terms on the phone; or ignore the situation in the hope it resolves without action. Default judgments do not dissolve on their own. A damages order following a default can be enforced against other assets beyond the Etsy account.

The asset freeze that Etsy holds in place is enforced by the marketplace in compliance with the court order. Etsy does not have discretion to release funds that a federal court has frozen. The only path to unfreezing is a court order – whether a vacatur, a modification, or a negotiated agreed order. That is why the first 72 hours are about building the legal record, not negotiating with the platform.

If you are an in-house counsel or operations lead handling this for a seller, the same logic applies: the matter needs a lawyer with specific Schedule A experience, not a general litigator working from first principles. The procedural posture of these cases – ex parte TROs, sealed schedules, rapid default timelines – is a distinct subspecialty. The guide on responding to asset freeze modification motions explains the mechanics that apply across platforms including Etsy.

The bridge to getting help is shorter than many sellers expect. For a first read on the docket and the grounds available, email info@tutamenlaw.com with the case number or the Etsy notification. We review the posture and tell you what, if anything, is viable before any commitment is made.

What are the real trade-offs between fighting and settling a Schedule A default?

The most important myth to address: being named in a Schedule A case does not mean a seller automatically loses. Plaintiffs obtain defaults against sellers who do not appear. A seller who appears, contests jurisdiction, and argues misjoinder is a fundamentally different procedural opponent – and plaintiffs know it.

That said, fighting a vacatur motion is not costless, and the decision to litigate versus settle turns on several specific factors. The strength of the vacatur grounds – particularly jurisdiction and service – is the most important variable. A strong jurisdictional challenge in a case where the seller has no US establishment and minimal contacts may resolve before full briefing. A weaker record may require contested argument before a judge who has seen many Schedule A motions and whose views on the issues are known from prior rulings in the same case.

The plaintiff's damages demand matters too. Schedule A plaintiffs often claim statutory damages under the Lanham Act in ranges that can reach significant figures per mark per counterfeit use. If the vacatur motion succeeds, the seller faces those claims on the merits. If it fails, the damages judgment stands. Settlement at a number that terminates the injunction and releases the freeze may represent a better commercial outcome than protracted litigation even with strong grounds – particularly for a seller whose business depends on the Etsy shop reopening quickly.

A second micro-case illustrates the other end: an Etsy jewelry shop (winter 2024) came to us after a default judgment had been entered and a damages order was pending. The personal jurisdiction argument was strong – the seller was based in Europe, with no US business presence and no US shipments. We moved to vacate on jurisdictional grounds. The plaintiff, facing a contested motion in a case where joinder was also being challenged by several other defendants in the same action, opened settlement negotiations. The matter resolved on terms that released the asset freeze and closed the case without a damages award. The outcome was right for that client's specific situation. It is not a template for every case.

The decision matrix in plain terms: if the grounds are strong and the damages exposure is high, contesting the judgment is often the correct path. If the grounds are moderate and the plaintiff will settle on reasonable terms quickly, settlement may be faster and cheaper. If the grounds are weak and the damages are modest, structured settlement that gets the shop running again may be the only viable commercial option. The analysis starts with the docket, not with assumptions about what Schedule A cases "always" do.

Related areas

• Schedule A / TRO Defense – federal IP actions, asset freezes, and default vacatur for marketplace sellers
• Amazon Account Reinstatement – deactivation appeals, Plan of Action drafting, and Section 3 defense

If a first motion or settlement approach already came back without resolution, that is not necessarily the end of the road. A second read of the docket can identify grounds that were not raised the first time, or shifts in the plaintiff's posture that open a different path. Email info@tutamenlaw.com with the current status for a second-look assessment.

Frequently asked questions: default judgment in a Schedule A case

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

There is no fixed timeline, and the range is wide. A vacatur motion, from filing to ruling, typically takes several weeks to a few months depending on the court's docket, whether the plaintiff opposes, and whether oral argument is requested. Asset freeze modification can sometimes be obtained on an expedited basis before the main motion is resolved. Matters that settle – rather than proceed through full briefing – often resolve faster than fully litigated motions. The most important variable is how quickly the seller engages counsel: waiting weeks after discovering the default shortens the available window and may allow additional court orders to be entered in the interim.

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

The primary risk is missing a procedural deadline or failing to raise the correct legal ground in the right motion, which can waive arguments that would otherwise be available. Rule 60(b) motions have strict timing requirements, and the specific grounds – jurisdictional challenge, service defect, misjoinder – require precise legal framing that courts scrutinize carefully. A pro se motion that raises the right instinct but the wrong legal standard can be denied on technical grounds, eliminating the argument for a later properly-framed motion. Beyond the motion itself, engaging directly with plaintiff's counsel without understanding the posture of the case can result in inadvertent admissions or unfavorable settlement terms. Schedule A cases are handled by specialized IP litigation firms with significant experience in these proceedings; the defense needs equivalent specialization.

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

In practical terms, yes. Vacating a federal court default judgment requires motion practice in US federal court under specific procedural rules, and for non-US sellers, navigating jurisdiction, service, and local court rules without counsel is extremely high-risk. Even for US-based sellers, the Schedule A / SAD scheme environment involves specific procedural patterns – sealed complaints, ex parte TROs, rapid default timelines – that are not standard civil litigation. A lawyer with Schedule A defense experience can assess the specific grounds, file the motion correctly, and handle negotiations with plaintiff's counsel from an informed position. Tutamen's work on these matters is attorney-led and confidential, with fees quoted up front after a short review of the docket.

Can the asset freeze on my Etsy funds be released before the default judgment is fully resolved?

In some cases, yes. A motion to modify the asset freeze – separate from the full vacatur motion – can be filed on the basis that the frozen amount is disproportionate to the claimed damages, that certain funds are unrelated to the allegedly infringing listings, or that the seller needs access to funds for legitimate ongoing business expenses. Courts have granted partial modifications in Schedule A cases to allow sellers to pay obligations unrelated to the infringement claim. This is a distinct procedural step that can run in parallel with the vacatur motion. Whether it is available in a specific case depends on the order entered by the court and the amount frozen.

What happens to the Etsy account itself after a default judgment?

The court order typically directs the marketplace to disable the infringing listings, freeze associated funds, and in some cases disable the account itself. Etsy complies with the federal order; the account status is tied to the order's terms, not to Etsy's own policy process. If the default judgment is vacated and the underlying case is resolved or dismissed, the court can issue an order directing Etsy to restore the account and release the funds. The marketplace follows the most recent valid court order. This is why the legal strategy focuses on the court proceeding, not on communication with Etsy support directly.

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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, default vacatur, asset freeze modification, and settlement – from the first docket review through resolution. 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.

Written by Sofia Marchetti – Partner, Schedule A / Federal Defense, Tutamen. Published January 28, 2027.