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Hello, Thank you for your quesitions about Lexi. I am a veterinarian and will do my best to help.
It is not normal or common, but sometimes puppies are born with a short tail, or a short leg, or sometimes without a leg of a tail. These things do just happen sometime. If her parents are AKC registered Labrador Retrievers, so is Lexi. Since she has a short tail she can't be shown, and probably should not be used for breeding since there is a chance she could pass on the short tail to her pups.
I think the breeder was very responsible in giving her away. Some breeders, believe it or not, will kill puppies at birth with congenital anomalies, or the wrong color, so no one knows their dogs produced them. White Boxers used to be killed at birth. So you breeder was honest to admit there was a small deformation in this puppy, compassionate not to kill her, and ethical not to ask money for a pup that can't be shown or used for breeding.
How is Lexi? Can I help with or answer anything else?