I received this message when I ran cucumber tests but not when I used script/console. Kinda strange. Perhaps this is because I didn't configure cucumber for my dev environment?? Anyway, the fix:

1 2	gem uninstall rubygems-update gem update --system 1.4.3

In the words of Yoda, "Unfortunate this is, and unexpected."

References
=======
Can not install redmine
Gist -- Undefined local variable dep
RubyGems Developers Mailing List
StackOverflow -- How do you downgrade RubyGems