Last year, a jury had acquitted Stern and Eroshevich on most of 11 charges involving drug prescriptions given to the former Playboy model in the months before she died of an accidental drug overdose in February 2007.
Judge Robert Perry dismissed conspiracy counts against both Stern and Eroshevich and reduced another conviction to a misdemeanor.
A co-defendant, Dr. Sandeep Kapoor, who was Smith's physician, was acquitted of all charges.
On Monday, the prosecutor from the Los Angeles County District Attorney's Office told a state appeals court panel that the judge was biased and had created a celebrity exception to the law. Arguments hinged on whether Stern knew that supplying the meds with false names on the prescriptions was illegal. Perry had said there was no evidence Stern knew the law.
Justice Orville Armstrong asked the defense whether a licensed lawyer in California should know that. Stern's defense attorney said hospitals, pharmacies and doctors were known to use fake names to protect the privacy of celebrity clients. The prosecution countered referring to the volume and types of medications supplied assert that Stern's actions were evidence he was aware he was breaking the law.
The justices also had questions about whether it was the defense or the prosecution who had to prove Stern's intent was in good faith or malicious.
The justices have asked for further briefs from both sides by Friday.