From the Super Mario Wiki
After a dinner party is crashed by King Windbag and Luigi, who have been turned into dogs, Herman is called to capture the two. Chasing the two through a hotel resort, Herman managed to successfully capture King Windbag and Luigi.
Dumping the two in his van, Herman drove-off to Florida State Poochitentiary. After delivering Luigi and King Windbag to their cell, Herman left to sleep in his office. Luigi, with the help of several dogs, managed to sneak through the air-vents of the pound and managed to release all the dogs in the pound, who proceeded to bowl-over the panicking Herman.
Luigi and King Windbag managed to evade Herman just long enough to reclaim King Windbag's magic scepter. With the scepter, King Windbag managed to transform himself and Luigi back to normal. King Windbag than proceeded to use his wand to put Herman to sleep, though not before briefly transforming him into a poodle.