Where was the owner? If that were my dog, I never would have allowed that and would have known the laws and been prepared. But then, I'd never put an animal through that (even proper storage) unless we were moving permanently to a new location, and it was too distant to drive. The airline was totally stupid as usual, but the owner killed the pet by allowing it to be stuffed up there and left. Ultimately, it is the owner's responsibility to safeguard their animals.
No, you get on a plane and it is the airline's responsibility to get you and your baggage to your destination safe and sound.
That airline is going to pay through the nose for one dead pet.