Uhg .... this error is f * cking. It caused me so much grief at Dreamhost. My solution was to require a version that the Passenger says you βactivatedβ. In your case, 1.2.1:
gem 'rack', '1.2.1'
It is unlikely that this will cause incompatibility errors. Another option is to remove all versions of the rack, except what your Gemfile.lock indicated (1.3.4 in your case), but I had problems with this on Dreamhost.
edit You can also try installing rack 1.3.4
at the system level:
gem install rack -v 1.3.4
or
gem update rack
Hopefully Passenger will use the latest installed version by default.
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