Normally, unittest cleanly reports an exception in a setUpClass method. But if I place the attached test in a directory by itself and then run "python -m unittest discover -b" from inside of the same directory, then instead of being shown the setUpClass exception I am instead shown a long traceback because unittest seems to think that it has put a stringIO in place of sys.stdout but a file is there instead.

Thanks for finding this Brandon. The same problem probably exists for setupmodule and the teardown variants too.

The issue is that the sys.stdout manipulation is done by result.startTest but setUpClass and setUpModule are executed by the suite outside the normal startTest / stopTest cycle. 

I think the answer is to have the stdout manipulation done in separate result methods (called by stopTest / startTest) that can also be called by the suite around the setup / teardown of class and module.

New changeset d6abdd78d2af by Michael Foord in branch '2.7':
Issue #10979. unittest stdout buffering now works for class and module fixtures.
http://hg.python.org/cpython/rev/d6abdd78d2af

New changeset 0f7036ea0930 by Michael Foord in branch '3.2':
Issue #10979. unittest stdout buffering now works with class and module setup and teardown.
http://hg.python.org/cpython/rev/0f7036ea0930

New changeset 9c09ba72136e by Michael Foord in branch 'default':
Closes issue 10979. unittest buffering now works with class and module setup and teardown
http://hg.python.org/cpython/rev/9c09ba72136e