???
Um, yeah, he could have said, “Excuse me, PetSmart policy is no pets in the store without a leash, so I’ll have to ask you to either put a leash on your dog, or else leave the store.”
And, you could have done something, had you been so inclined. 
Here’s what I would have done: Made A Scene. Yes, I know, we Good Little Girls have been taught never to Make A Scene in public, but if it involves the mistreatment of animals, then we scrap the rule book, roll up our sleeves, and wade in.
In clear, carrying voice, I’d have said to the employee, “Excuse me, this dog is frightening these birds…” and I’d have included a pointed look and an all-inclusive gesture towards the situation.
And if the employee gave any response other than a direct order to the stupe to get his dog out of the store or else buy a collar and leash, then I’d have continued, in the same clear, carrying voice, “I’d like to speak to a manager, please,” and I’d have made sure my voice went up just a tiny bit on the word “manager”, for emphasis, see. And I’d have kept saying that to the employee, raising my voice in one-decibel increments, until a manager magically appeared.
And when the manager appeared, I’d have said in the same clear, carrying voice, “This person over here brought in his dog without a collar or leash, and was allowing his dog to jump on the parakeet tank and frighten them, and this employee over here did absolutely nothing to stop him when I asked him, plus he doesn’t seem to have noticed that this dog is in the store with no collar and leash, I thought that was PetSmart’s policy. And by the way, why are the parakeets down at floor level, where they can be stressed by every movement? They’re supposed to be up high…” Which is true.
Anyway, you Make A Scene, and hopefully you will have made the world a better place when it’s over, although you will also have embarassed your mother. But hey, Gandhi and Mandela went to jail, so if that’s all you have to deal with… 
