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Your neighbor will need to sue the people who took the dog.
This is a small claims type of lawsuit, so they will not likely need an attorney (unless they want an attorney, of course).
In the lawsuit, they will have to prove that the dog is theirs. This could likely be done in a number of ways. But if the judge allows it, I would think that bringing the dog to court and having her interact with your neighbors would be sufficient evidence. After all, I would expect the dog to know her master. Of course, there may be other evidence as well, such as vet testimony, pictures, etc.
In order to sue in small claims court, they will need to visit the local court clerk and get the proper forms. The forms will need to be filled out, filed with the court clerk, and then the sheriff can serve the people who took the dog.
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