The probability of meeting someone you know increases dramatically when you are with someone you don’t want to be seen with. Via nedhardy.com.
If you're the one they don't want to be seen with you've been empowered. You can go two ways. You can try to alleviate the feeling of the person you're with by making it sound like it was a random encounter by saying something like, "I don't know how I can every thank you enough for finding my dog." Or better yet, you can do something totally insane and enjoy your companion's anguish.