A Los Angeles judge dismissed the misdemeanor charge Thursday.
Francis recently was released from a Nevada jail where he was held to face tax-evasion charges. He then was taken to Florida to answer to charges that his company filmed underage girls there. He entered a no-contest plea in that case and was sentenced to time served.
In the latest case, Francis was accused of groping a woman's breasts and buttocks at a birthday party in Hollywood in 2007. The millionaire founder of the sex-video empire could have faced up to six months in jail.
Defense attorney Mark Werksman said Francis never touched the woman and the case was based on lies and exaggerations.
"This was just yet another false allegation against me in the past year," Francis said. "Every single time a case like this gets levied against me, it has been proven false. I have never lost a case, criminally or civilly. I feel this may finally bring an end to these frivolous allegations."
Francis still faces a federal trial in Los Angeles on two counts of tax evasion. A federal grand jury indicted Francis and his companies Mantra Films and Sands Media in April 2007. A trial date has not been scheduled.