You have already activated rack 1.1.1, but your Gemfile requires rack 1.1.2. Consider using bundle exec.

Error message:

You have already activated rack 1.1.1, but your Gemfile requires rack 1.1.2. Consider using bundle exec.

Problem:
Passenger preloads gems from global gem list if you have passenger spawn method set. My problem is two fold, i was using passenger spawn method and i didn't have version 1.1.2 of rack installed globally.

Fix:

Remove the passenger spawn method from httpd.conf and restart apache