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Well...the outcome depends on the jurisdiction. Many jurisdictions are strict liability when it comes to dog attacks...the dog owner is liable, period, regardless of whose fault it actually was. Some of these jurisdictions restrict strict liability to places away from the owners' private property (or have other restrictions). (Keep in mind a dog is considered property, not a person, so you could recover for the cost of repairing the property damage but not for pain and suffering, loss of companionship, etc.)
We're going to assume, for the sake of this hypo (because lord knows my prof doesn't want me to write three sentences and stop), that we can't rely on strict liability.
(and to the other law people reading this: I know I don't have to address irrelevant stuff on my exam but I'm doing so here just to get my thoughts together.)
Generally, to prove the negligence claim, you need to prove that the dog owners had a duty to exercise reasonable care with regard to keeping their dogs from attacking your dog, and that the breach caused harm.
Negligence per se (basically, if you violate a statute, and the harm and victim are of the type the statute was addressing, you're presumed negligent) probably doesn't apply because even if there was a statute stating "dogs must be behind fences" or "dogs must be controlled" some such, the dog was behind a fence. So, we need to go on to the rest of negligence.
Animal owners have a duty to control their animals. However, the owners could say that they didn't breach that duty because they took reasonable steps to keep their animals under control -- they kept the German shepherds on their property (you weren't on public property or someone else's private property), and had a fence. To do more than that (keep the dogs inside all the time, or chained up, etc.) would be unreasonable -- the dogs need exercise, etc.
You could counter that the owners did breach their duty by not keeping their fence in good repair, which could foreseeably lead to people or animals sticking faces or hands in there. (The dog owners will probably argue that it was not foreseeable that their dogs would attack anyone -- they're sweethearts and have never ever bitten anyone.) They had safer feasible alternatives -- fence holes are cheap and simple to repair without compromising the utility of the fence. We can use the Learned Hand formula here: The burden of fixing the fence was less than the potential for loss.
The other party might also be able to argue that you and your dog were trespassers, in which case, in some jurisdictions, they could argue they only owed a duty not to intentionally harm you or your property (intent, in tort law, means either they desired to hurt you, or they knew it was substantially certain you'd be hurt). I don't think you could prove they intended to hurt you unless you heard "sic 'em!" ... so I think we'd be proving subsantial certainty, which would also be difficult -- were these dogs known to be vicious? Were they bred or trained to fight? If a judge in such a jurisdiction decides you were trespassers and owed no duty beyond that, you're out of luck.
I don't really know which way a judge would go on this...I would say (because it allows me to write more, which is what this instructor has said she wants), that yes, there was a duty that was breached. (My gut feeling is also that a judge would let this continue.)
Anyhow...if there is a duty that was breached, next, we need to show cause-in-fact: that but for the breach, things would have been different. This is pretty easy -- if the fence had been intact, your dog would not have been hurt. We also need to show proximate cause -- that the cause is not too far removed from the harm. (We can say: But for Osama bin Laden's mother giving birth, 9/11 wouldn't have happened, but that's way too far removed to hold her liable.) This is easy in this case -- the dog attack immediately caused the harm. There's no butterfly flapping its wings in Brazil.
So...once we get duty and breach out of the way, it's pretty easy to show the dog owners were negligent.
The other problem is: Were you also negligent in allowing your dog to poke her head through the fence? (again: You had a duty to exercise reasonable care in handling your animal. Did you breach it? Well...you could argue that the harm wasn't foreseeable -- that you had no way to know that there'd be vicious dogs on the other side of the fence. The dog owners could argue that, hey, see that "BEWARE OF DOG" sign, if they had one...but the dog owners' testimony that their dogs are sweethearts will help you here. The owners could show you had a safer feasible alternative -- keeping your dog on a leash -- but you might be able to argue that dogs are naturally curious creatures and you had your dog on a leash and that didn't help.)
ANYHOW. It's possible a judge will assign some liability to you.
In some jurisdictions -- pure contributory negligence jurisdictions -- if you were also negligent, even a tiny bit, you can't recover at all. In others, you can recover proportionate to the other party's fault, but only if you were less negligent (49%) (or not more negligent --50%) than the other party. In still other jurisdictions, you can recover, proportionate to the other party's fault, even if you were more negligent.
Let's say vet bills are $10,000.
Let's say the judge says you were 10% negligent in allowing your dog to poke his head in the fence. In a pure contributory negligence jurisdiction, you could not recover at all.
In every other jurisdiction, you could recover $9,000 -- the dog owners' proportion of the damages.
Let's say the judge says you were 50% neglgient. In a pure contributory negligence jurisdiction, you could not recover at all.
In a 49% jurisdiction, you could not recover at all, because you were no less negligent than the other party.
In a 50% jurisdiction, you could recover $5,000 (owners' proportion of the damages), because you were no more negligent than the other party (see the difference).
In a pure comparative negligence jurisdiction, you could collect $5,000 as well.
Let's say the judge says you were 75% negligent. In pure, 49% or 50% jurisdictions, you couldn't recover at all. In a pure comparative negligence jurisdiction, you could collect $2,500.
For the record, Wisconsin is either a 49% or a 50% jurisdiction, although I don't remember which. (It's not on the test.)
My gut feeling says she should recover most, if not all, of her damages either due to strict liability or because I don't think a small-claims judge will apportion the bulk of the damages to her.
DISCLAIMER: NOT LEGAL ADVICE. NOT A PROMISE. DON'T RELY ON THIS. I DID CRAPPILY ON MY PRACTICE EXAM. I MAY HAVE DONE JUST AS CRAPPILY HERE.
Best of luck to your sister.
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