for regulating labor relations. A consequence of this is that the general principles of contract law do apply to such agreements. Roadway Express, Inc. v. General Teamsters, etc., 211 F.Supp. 796, 797 (W.D.Pa.1962). And one of the basic essentials of a contract is that there be parties thereto, capable of contracting regarding the subject matter involved. The Supreme Court has said that 'the ingredients of a contract are parties, consent, consideration, and obligation'. Farrington v. Tennessee, 95 U.S. 679, 685, 24 L. Ed. 558 (1877).
Plaintiff emphasizes as a reason why the contract should 'run with the plant' the circumstance that the new employer is conducting the same type of business as the former operator. Plaintiff concedes that the rule for which it contends would not apply if the premises were used by the new purchaser for a different type of business, such as the manufacture of chocolate candy. However, this continuity in the nature of the business enterprise being conducted in the plant does not seem to furnish ground for fastening upon the new employer the terms of a contract made by a previous operator.
Conceivably, a business might have been sold for the very reason that the onerous terms of an existing labor agreement made the business unprofitable to such an extent that the owner was unable to continue in business. Under such circumstances the doctrine of covenants running with the plant would simply perpetuate existing evils, with the likelihood of repeated receiverships, bankruptcies, and consequent unemployment and economic instability.
Moreover, a new employer taking over operation of a plant would not be bound by the predecessor operator's contracts regarding raw materials, supplies, purchased services, and other expenses of the business affecting his costs of operation; and it would seem anomalous if, with regard to one item of expense, namely labor, a different rule were to apply. In many industries labor costs constitute a substantial proportion of the total costs of operation.
Plaintiff also points to the circumstance that a labor contract differs from other contracts, in that dissenting employees are bound by the results of the collective bargaining process. However, this is a specific consequence of the legislation in force, and also results from general agency principles. The union is regarded as the bargaining agent of the employees. Naturally, they are bound by the contract agreed upon, just as the stockholders of a corporate employer are bound by the labor contracts concluded by the duly authorized management of the company.
We have not found any directly controlling authorities. But Isbrandtsen Co. v. Local 1291, 204 F.2d 495, 496 (C.A. 3, 1953) seems to point towards the view that only parties or direct beneficiaries of a labor contract may sue for violation thereof under 29 U.S.C. § 185.
In short we find that the doctrine advocated by plaintiff is such a complete innovation that it cannot be regarded as a feature of federal common law under 29 U.S.C. § 185, but must await adoption through the legislative sanction of Congress.
And now, this 19th day of March, 1964, after argument,
It is ordered that defendant's motion to dismiss be, and the same hereby is, granted, and that the complaint herein be, and the same hereby is, dismissed; and that plaintiff's motion for summary judgment be, and the same hereby is, denied, and that the counter-claim of defendant, Reliance Universal Inc. of Ohio, be and the same hereby is, dismissed.