How to reproduce:
* Run the attached file with Python 2.7 without any modifications. This will produce an error, as described below.
* Uncomment line 2 (the decorator @unittest.expectedFailure) and run the file with Python 2.7. This will not produce an error.

Description:
Adding the decorator @unittest.expectedFailure to a unittest.TestCase causes the TestLoader().loadTestsFromTestCase(...) to fail with the following output:

===============================================================
$ python2.7 mwe.py
Traceback (most recent call last):
  File "/usr/lib/python2.7/runpy.py", line 174, in _run_module_as_main
    "__main__", fname, loader, pkg_name)
  File "/usr/lib/python2.7/runpy.py", line 72, in _run_code
    exec code in run_globals
  File "[...]/mwe.py", line 12, in <module>
    tests = unittest.TestLoader().loadTestsFromTestCase(TestClassThatFails)
  File "/usr/lib/python2.7/unittest/loader.py", line 50, in loadTestsFromTestCase
    if issubclass(testCaseClass, suite.TestSuite):
TypeError: issubclass() arg 1 must be a class
==============================================================

The error does only occur when adding the test manually to a test suite. Running unittest.main(), does not produce the error.

AFAIK this helper is meant to be used with test function not the TestCases.

I can't reproduce the issue on 3.10, I believe it was fixed by this: 

https://github.com/python/cpython/commit/c9b3ef2df06818f055e555c1d23e3ff2d5bf2d74

in particular:

- def expectedFailure(func):
-     @functools.wraps(func)
-     def wrapper(*args, **kwargs):
-         try:
-             func(*args, **kwargs)
-         except Exception:
-             raise _ExpectedFailure(sys.exc_info())
-         raise _UnexpectedSuccess
-     return wrapper
+ def expectedFailure(test_item):
+     test_item.__unittest_expecting_failure__ = True
+     return test_item


2.7 won't be fixed, so closing.