Baio, 56, filed a police report accusing Smith's wife Nancy MACk of shaking and pushing him in front of their children at a school function in Thousand Oaks, California in December (16).
The former child star alleged that Nancy, who has been married to the Californication rocker, 55, since 2004, had attacked him due to his outspoken support of U.S. President Donald Trump.
The case was passed to officials at the Ventura County, California District Attorney's office, who according to editors at TMZ.com have declined to prosecute as they do not believe the altercation was severe enough to present a reasonable chance of obtaining any conviction.
It was alleged that MACk, an architect who has three young children by Smith, confronted Baio in the presence of their kids by screaming the phrase, "Grab 'em by the p**sy".
The explicit words were ones Trump was caught on tape using to refer to women he found attractive years ago in a leaked off-camera conversation with former Access Hollywood co-host Billy Bush.
The leak of the tape in the run up to the November (16) election prompted multiple women to come forward and accuse the Republican candidate of sexual assault, but Trump denied the claims and went on to defeat his rival Hillary Clinton in November's (16) presidential election.
Trump's alleged sexism prompted millions of women across the world to protest against him on the weekend of his inauguration as president in January (17).
Baio was reportedly targeted by protesters while attending an inauguration ball in Trump's honour, with demonstrators calling him "a f**king fascist", according to editors at the New York Post.