Hey EJ,
Your interpretation of the error is the most likely cause. While one cannot necessarily see the Loud Balancer resource that is deployed alongside Flexible services, they are most certainly present and generate logs. The logs can usually be viewed under Cloud HTTP Load Balancer as you no doubt have seen from the log entry you posted above.
The failed_to_pick_backend response can occur when the load balancer cannot find a healthy or available instance to which its request should be routed. It may be a good idea when seeing such load balancer errors to consult instance usage and health checks to ensure these responses are correlated.