The polarization dependence of magnon-photon scattering in an optical microcavity is reported. Because of the short cavity length, the longitudinal mode-matching conditions found in previously explored, large path-length whispering gallery resonators are absent. Nonetheless, for cross-polarized scattering a strong and broadband suppression of one sideband is observed. This arises due to an interference between the Faraday and second-order Cotton-Mouton effects. To fully account for the suppression of the cross-polarized scattering, it is necessary to consider the squeezing of magnon modes intrinsic to thin-film geometry. A copolarized scattering due to Cotton-Mouton effect is also observed. In addition, the magnon modes involved are identified as Damon-Eshbach surface modes, whose nonreciprocal propagation could be exploited in device applications. This Letter experimentally demonstrates the important role of second-order Cotton-Mouton effect for optomagnonic devices.