application_controller.rb

  # Failing on line 3 when the cache hits
  def find_categories
    if (@categories = Rails.cache.read('all_categories')).nil?
      @categories = Category.all(:order => 'name ASC')
      Rails.cache.write('all_categories', @categories, :ttl => 1800)
    end
  end

# Solution:
  def find_categories
    Category
    if (@categories = Rails.cache.read('all_categories')).nil?
      @categories = Category.all(:order => 'name ASC')
      Rails.cache.write('all_categories', @categories, :ttl => 1800)
    end
  end