189 F.3d 909 (9th Cir. 1999)
SG COWEN SECURITIES CORPORATION; REHAN SYED, Petitioners,v.UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA, Respondent, THOMAS RANDALL, et al., on behalf of themselves and all others similarly situated, Real Party in Interest.RATIONAL SOFTWARE CORPORATION AND PAUL D. LEVY, Petitioners,v.UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA, Respondent,Tom, et al., on behalf of themselves and all others similarly situated, Real Party in Interest.
No. 98-71501 No. 98-71503
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
Argued and Submitted July 15, 1999--San Francisco, CaliforniaDecided August 30, 1999

Boris Feldman, Wilson Sonsini Goodrich & Rosati, Palo Alto, California, for petitioners Rational Software Corporation and  Paul D. Levy.
Philippe M. Salomon, Wilkie Farr & Gallagher, New York, New York and Steefel, Levitt & Weiss, San Francisco, California, for petitioners SG Cowen and Rehan Syed.
Lionel Z. Glancy, Law Offices of Lionel Z. Glancy, Los Angeles, California, for the plaintiffs-real parties in interest.
Petitions for Writs of Mandamus to the United States District Court for the Northern District of California. Jeremy Fogel, District Judge, Presiding.  D.C. No. CV-97-21001-JF.
Before: Charles Wiggins, Ferdinand F. Fernandez, and Sidney R. Thomas, Circuit Judges.
THOMAS, Circuit Judge:


1
The defendants in this securities class action lawsuit seek  a writ of mandamus vacating the district court's order for limited discovery. We hold that the order violated the discovery  stay provision of the Private Securities Litigation Reform Act  of 1995, and grant the writ.


2
* The plaintiffs filed this class action lawsuit alleging violations of federal and state securities law. The complaint alleges  that on the morning of October 8, 1997, Rational Software  Corporation ("Rational") Chief Executive Officer Paul Levy  told SG Cowen Securities Corporation ("Cowen") analyst  Rehan Syed that Rational's earnings would be lower than  expected. Syed then allegedly alerted Cowen's customers,  who in turn began selling Rational shares. Rational's stock price, which began the trading day at $15 1/6, deteriorated to  $11 7/8 by mid-afternoon when trading in Rational stock was  halted. The stock price continued its downward spiral the following day, closing near $9 per share. Trading volume was unusually high; on the day of the Syed conversation, volume  increased fivefold over Rational's three-month daily average.  Plaintiffs filed this class action lawsuit against defendants  Rational, Levy, Cowen, and Syed days later.


3
The defendants moved to dismiss the action, contending  that the plaintiffs had failed to plead the requisite scienter and  personal benefit elements sufficiently to state a section 10(b)  violation, and that the complaint did not state a cause of  action under California securities law because privity was not  alleged. The district court granted the motions to dismiss,  holding that the plaintiffs had not provided any factual basis  for their contention that Levy had received a personal benefit  for tipping Syed, and that the complaint did not contain any  facts demonstrating that Syed knew or should have known  that the disclosure constituted a fiduciary breach. The court  granted plaintiffs leave to file an amended complaint.


4
Plaintiffs subsequently filed a motion for leave to take limited discovery for the purpose of uncovering facts to support  their allegations. The court granted the request, and defendants filed this petition for a writ of mandate.

II

5
At issue in this case is the scope of the discovery stay under  the Private Securities Litigation Reform Act of 1995 ("Act"),  Pub. L. No. 104-67 (codified as amended at 15 U.S.C.SS 77aet. seq.). The Act was passed in response to several perceived  abuses in securities litigation, including discovery abuses. As  the Third Circuit recently observed:


6
The purpose of the Act was to restrict abuses in securities class-action litigation, including: (1) the practice of filing lawsuits against issuers of securi ties in response to any significant change in stock price, regardless of defendants' culpability; (2) the targeting of "deep pocket" defendants; (3) the abuse of the discovery process to coerce settlement; and (4) manipulation of clients by class action attorneys.


7
In re Advanta Corp. Secs. Litig., 180 F.3d 525, 530-31(3dCir.1999).


8
The Act's reforms included the institution of heightened  pleading standards. See 15 U.S.C.A. S 78u-4(b)(1)-(2) (West  Supp. 1999); H.R. Conf. Rep. No. 104-369, 104th Cong. 1st  Sess. at 41 (1995) reprinted in U.S.C.C.A.N. Sess. 740. In addition, the Act mandated a stay of discovery during the pendency of a summary judgment or dismissal motion. Section  78u-4(b)(3)(B) provides:


9
In any private action arising under this chapter, all discovery and other proceedings shall be stayed during the pendency of any motion to dismiss, unless the court finds upon the motion of any party that particularized discovery is necessary to preserve evidence or to prevent undue prejudice to that party.


10
15 U.S.C.A. S 78u-4(b)(3)(B) (West Supp. 1999).


11
This section was "intended to prevent unnecessary imposition of discovery costs on defendants." H.R. Conf. Rep. No.  104-369, 104th Cong. 1st Sess. at 32 (1995), reprinted in  1995 U.S.C.C.A.N. Sess. 731. As the House and Senate managers further noted in their Joint Explanatory Statement of the Committee of Conference:


12
The cost of discovery often forces innocent parties to settle frivolous securities class actions. According to the general counsel of an investment bank, "discovery costs account for roughly 80% of total litigation costs in securities fraud cases." In addition, the threat that the time of key employees will be spent responding to discovery requests, including providing deposition testimony, often forces coercive settlements . . . .


13
The Conference Committee provides in new section 27(b) of the 1933 Act and new section 21D(b)(3) of the 1934 Act that courts must stay all discovery pending a ruling on a motion to dismiss,unless exceptional circumstances exist where particularized discovery is necessary to preserve evidence or to prevent undue prejudice to a party. For example, the terminal illness of an important witness might require the deposition of the witness prior to the ruling on the motion to dismiss.


14
Id. at 736.


15
In this case, plaintiffs requested discovery to learn the identity of Rational traders on October 8, 1998, and to determine  the nature of the relationship between Cowen and Rational.  They argued that failing to allow the requested discovery  would shield the defendants from liability, causing them the  "undue prejudice" contemplated by S 78u-4(b)(3)(B).


16
In granting the discovery motion in part, the district court  reasoned that:


17
a securities class action plaintiff may establish the existence of undue prejudice by (1) alleging specific facts which while insufficient in and of themselves to meet the heightened pleading requirements of the Reform Act nonetheless give rise to a strong and credible suspicion that a defendant may be liable for securities fraud, and (2) demonstrating a reasonable probability that such defendant is likely to avoid liability absent discovery. If this threshold showing is made, a plaintiff must then show that the requested discovery is sufficiently limited and particularized that permitting the discovery will not defeat the express intent of the Reform Act by placing an undue legal and economic burden on the defendant.


18
Applying the test, the district court then explained:


19
Plaintiffs have alleged narrow claims based upon the disclosure of specific inside information by a specific person on a specific date and the subsequent "dumping" of large blocks of Rational stock on that same date. For the most part, Plaintiff's allegations are supported by specific facts which at a minimum give rise to an appearance of impropriety on the part of Levy and Syed. The consolidated complaint was dismissed not because Plaintiffs' claims as a whole were vague and conclusory but primarily because Plaintiffs failed to allege facts tending to show that Levy actually received a personal benefit from disclosing the information or that Syed actually knew that Levy's disclosure was a breach of fiduciary duty, elements without which Plaintiffs cannot state a cause of action . . . . As Plaintiffs point out, facts supporting [their] theory are of a type likely to be solely within Defendants' possession. Under these circumstances, even though Plaintiffs have alleged significant and specific facts in support of their insider trading claims, there is a reasonable probability that Defendants will be shielded from liability unless Plaintiffs are permitted to take limited discovery regarding the relationship between Cowen and Rational.


20
The district court thereupon permitted plaintiffs to propound ten interrogatories upon Cowen to inquire into the relationship between Levy and Cowen, and permitted plaintiffs to  issue subpoenas on the NASD and brokerage firms to determine who sold Rational shares on October 8, 1997. The court denied the rest of the motion for discovery because it was not  sufficiently particularized.


21
Distilled to its essence, the district court granted plaintiffs leave to conduct discovery so that they might uncover  facts sufficient to satisfy the Act's pleading requirements.  This is not a permissible reason for lifting the discovery stay under the Act. As we plainly stated in Medhekar v. United  States Dist. Ct.:


22
Congress clearly intended that complaints in these securities actions should stand or fall based on the actual knowledge of the plaintiffs rather than information produced by the defendants after the action has been filed.


23
99 F.3d 325, 328 (9th Cir. 1996).


24
The "Stay of Discovery" provision of the Act clearly  contemplates that "discoveryshould be permitted in securities  class actions only after the court has sustained the legal sufficiency of the complaint." S. Rep. No. 104-98, at 14 (1995)  reprinted in U.S.C.C.A.N. 693 (emphasis added). The Act  requires the trial court to dismiss the complaint if it fails to  satisfy the Act's heightened pleading standards. See S 78u4(b)(3)(A). Thus, as a matter of law, failure to muster facts  sufficient to meet the Act's pleading requirements cannot constitute the requisite "undue prejudice" to the plaintiff justifying a lift of the discovery stay under S 78u-4(b)(3)(B). To so  hold would contravene the purpose of the Act's heightened  pleading standards. Accordingly, we conclude that the district  court clearly erred in granting the limited discovery request.1

III

25
Determining that the district court erred in granting the discovery request does not end our inquiry, for we must also  consider whether issuance of a writ of mandamus is appropriate. Mandamus is "an extraordinary remedy limited to exceptional circumstances." Wilson v. United States Dist. Ct., 103  F.3d 828, 829 (9th Cir. 1996) (internal citation and quotation  marks omitted). The burden is on the petitioner to show that  his right to the writ is "clear and indisputable. " Calderon v.  United States Dist. Ct., 103 F.3d 72, 74 (9th Cir. 1996).


26
We apply a five-factor test, first articulated in Bauman  v. United States Dist. Ct., 557 F.2d 650 (9th Cir. 1977), to  determine whether the exercise of its mandamus jurisdiction  is proper. See United States v. Amlani, 169 F.3d 1189, 119394 (9th Cir. 1999). The factors are:


27
(1) The party seeking the writ has no other adequate means, such as a direct appeal, to attain the relief he or she desires.


28
(2) The petitioner will be damaged or prejudiced in a way not correctable on appeal. . . .


29
(3) The district court's order is clearly erroneous as a matter of law.


30
(4) The district court's order is an oft-repeated error, or manifests a persistent disregard of the federal rules.


31
(5) The district court's order raises new and important problems, or issues of law of first impression.


32
Amlani, 169 F.3d at 1193-94. The factors should be weighed  together based on the facts of the individual case. See  Calderon v. United States Dist. Ct., 163 F.3d 530, 534 (9th  Cir. 1998), cert. denied, 119 S. Ct. 1377 (1999).


33
Here, application of the Bauman factors demonstrates  that the writ should be granted. First, defendants have no  other adequate means to obtain the relief desired. They may  not directly appeal the discovery order because discovery  orders are not final, appealable orders under 28 U.S.C.  S 1291. See Admiral Ins. Co. v. United States Dist. Ct., 881  F.2d 1486, 1490 (9th Cir. 1989). Appellate review pursuant to  28 U.S.C. S 1292(b) is unavailable because the district court  did not certify the issue for appellate review. See 28 U.S.C.A.  S 1292(b) (West Supp. 1999). Neither does Federal Rule of  Procedure 54(b) apply, as this rule applies to situations in  which final judgment is entered as to some but not all claims  or parties. See Fed. R. Civ. P. 54(b). Although Cowen could  refuse to comply with the discovery orders directed at it and  then appeal from the contempt order, the majority of discovery is directed at third-parties who could not be expected to  do so. See In re Grand Jury Subpoena 92-1(SJ) , 31 F.3d 826,  829 (9th Cir. 1994).Thus, the first Bauman factor indicates  that the defendants have no other adequate remedy.


34
Second, a petitioner is damaged or prejudiced if his claim  will be moot on appeal. Compliance with a discovery order  moots an appeal of that order. See Medhekar v. United States  Dist. Ct., 99 F.3d 325, 326-27 (9th Cir. 1996). Thus, the second Bauman factor also indicates that the petition should be  granted.


35
Third, as we have previously discussed, the district court  clearly erred in holding that a plaintiff may obtain discovery  under the undue prejudice exception to 15 U.S.C. 78u4(b)(3)(B) in order to plead a sufficient complaint.


36
Fourth, defendants concede that the district court's order is  not an "oft-repeated error" that "manifests persistent disregard  of the federal rules." Fifth, plaintiffs concede that there is  "scant appellate authority addressing the Act " and so that the  order raises issues of first impression.


37
In short, four of the five Bauman factors suggest that  the petition be granted. Only the fourth--whether the district  court's order is an "oft-repeated error"--suggests otherwise,  but this court has noted that "[t]he fourth and fifth Bauman  factors are rarely, if ever, present at the same time." Amlani, 169 F.3d at 1194.


38
Accordingly, we conclude the writ should issue.

PETITION GRANTED


Notes:


1
 We also reject plaintiffs' argument that the district court should have permitted discovery because plaintiffs asserted state claims. As the district court correctly explained, "Congress' attempt to address [concerns of discovery abuse] would be rendered meaningless if securities plaintiffs could  circumvent the stay simply by asserting pendent state law claims in federal  court in conjunction with their federal law claims."


