I display a balloon callout after casting a axMapControl.Map to a IActiveView and doing this:
pGraphicsContainer = activeView as IGraphicsContainer;
pGraphicsContainer.AddElement(pElement, zOrder);
pElement.Activate(activeView.ScreenDisplay);
The problem is the balloon callout displays below the place labels layer. The text "Minneapolis" is visible on top of my balloon callout. I have tested zOrder with values from -10 to 10000 and the place labels still render on top of the balloon callout.