The cargo bays are divided into sections, with aircraft framework usually parking the divisions. They're called "bays." As I understand it, luggage has to be placed properly to maintain the weight and balance of the aircraft. Other factors include the number of passengers, and fuel load. There could be times when they need all the cargo in a certain place to maintain the weight and balance.
I can see reimbursing the passenger for soiled luggage if the airline soiled it, but should the person with the child seat somehow track down the dog owner? After all, it's the dog that soiled the luggage, not the airline.
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