Loney's test for drugs and alcohol came back negative, according to the city attorney's office, which said there was "insufficient evidence" to proceed with the case.
Loney was under investigation for his role in a multiple-car accident on the 101 Freeway in Sherman Oaks on Nov. 14. Loney sideswiped three cars, stopped in the fast lane, passed out, then awakened and tried to flee the scene only to crash again, according to the California Highway Patrol. He was arrested at the scene and taken to Sherman Oaks Hospital.
Loney declined to comment through his agency, CAA Sports. His attorney, Dmitry Gorin, said his erratic behavior that day was the result of a head injury.
"Independent lab analysis re-confirmed that Mr. Loney did not have any unlawful substances or alcohol in his blood," Gorin wrote in a statement. "The traffic accident reports described that Los Angeles Fire Department paramedics quickly responded to the scene and determined that Mr. Loney displayed symptoms consistent with head trauma, including disorientation."
The explanation was similar to the one Loney offered in December to the Dodgers, who signed him to a one-year, $6.375-million contract two weeks ago.
Loney, 27, will be eligible for free agency at the end of next season.
Loney last season drove in only 65 runs, fewer than he drove in as a rookie in 96 games in 2007. His slugging percentage of .415 was third-lowest among all first baseman in the major leagues with at least 500 plate appearances.
The Dodgers reportedly tried to upgrade at first base this winter by making a run at free agent Prince Fielder, who signed with the Detroit Tigers. Had the Dodgers signed Fielder, they probably would have traded Loney or moved him to the outfield.