A newbie! Welcome to FR! I will say you are very much more welcome than the most newbies who sign up just to troll.
Having viewed the video, it seems the city is just trying to cover their collective butt. Herring did err in not updating the chip info and the city erred in not going back to the original vet. Herring has offered to reimburse Hill for all fees and expenses that Hill has paid related to the case. If it goes to court, a judge will have to decide if the Herring error was sufficient to cause her to lose her dog. The fact that a simple backup procedure by the city (a call to the original vet) would have prevented this should give the city some pause too and maybe have them change procedures.
The original owner did err by not updating as you said but yeah, the shelter could have called the vet and didn’t. Her work number was listed and she like you mentioned, works for that same vet. I honestly don’t understand how someone could keep a dog knowing the owner is actively looking for it. Would hurt like heck to give her up but the happiness of the reunion should help heal some of that. Plus Herring could reimburse fees and you could adopt a new guy who really has no one to love them. I just got a new pet after mine died and would easily do the right thing if presented with the same problem...
Thanks for letting me join the conversation. =)